Aiding and Abetting Mortgage Fraud
Posted by Larry Doyle on October 19, 2010 4:54 AM |
While selected Wall Street banks and their cronies in Washington may want to downplay the depth and impact of the mortgage fraud embedded in our national foreclosure crisis, anyone with a modicum of ‘sense on cents’ knows that this fiasco has many players with their hands in the till. Our friends at The Center for Public Integrity recently highlighted the manner in which those in the legal profession have aided and abbeted this enormous fraud. Let’s navigate.
The role of lawyers in the foreclosure process has garnered less attention, but they play a big role, especially in those states that require banks to go to court to get a foreclosure order. (The same states where the lenders have suspended foreclosures). In these states, banks are required to produce a notarized affidavit of a loan officer and submit the mortgage documents. Those documents, though, are difficult to produce, thanks to the securitization craze.
As CNBC notes in this helpful primer to the foreclosure crisis, every time a mortgage changes hands, the new owners are supposed to receive an “assignment” of the mortgage notes from the buyers. For securitized loans, the mortgages are assigned to a specially created investment vehicle.
During the housing bubble, however, the notes and other critical documents were often either not properly transferred or simply not created. Other records vanished along with failed brokers and lenders. This means that lawyers charged with putting together the paper trail often have a tough job. Over the past few years, some have used shortcuts.
Under the law, a firm must complete, sign, and notarize the document that affirms who holds the mortgage, and is thus legally permitted to seize someone’s home. As Mother Jones reported in August, the David J. Stern law firm, which once controlled one-fifth of Florida’s foreclosure services market, backdated dozens of these mortgage assignments, allowing them to file with the court first and do their paperwork later.
RACES AMONG ROBO-SIGNERS
A subsequent deposition with Tammie Lou Kapusta, a former paralegal at the firm, by Florida Attorney General Bill McCollum’s office exposed the scope of the wrongdoing at the law firm. Kapusta alleges that the lawyers were robo-signing thousands of documents each day without reading them. She said they were also manufacturing documents, forging the signature of one senior paralegal on key documents, and writing in false Social Security numbers, all with one aim: To process as many foreclosures, and to collect as much money in fees, as possible.
“Somebody would get a 76-day foreclosure,” one former employee of the firm recalled, “and then someone else would say, ‘Oh, I can beat that!’”
The firm also failed to give homeowners notice that the bank was foreclosing and invented John and Jane Does to be served, even if they didn’t exist.
McCollum’s office is also investigating Florida Default Law Group, the Law Offices of Marshall C. Watson, and Shapiro & Fishman — three firms that may have employed similar tactics.
Evidence of lawyer wrongdoing is spreading. From an attorney writing for Daily Finance:
I’ve reviewed a couple documents from New York involving a lawyer/robo-signer named Elpinicki Bechakas of the firm Steven J. Baum, where she signs on behalf of mortgage loan registry MERS, assigning mortgages to the firm’s clients to enable them to foreclose. At least one judge in a case involving her documents has recognized the conflict of interest inherent in a law firm assigning the property of one entity, presumably its client, to another entity, also its client, at least without written permission from both entities.In Maryland, the Baltimore Sun reported this week that two firms handling foreclosures filed court documents in that state without signing the papers themselves. The two attorneys, Jacob Geesing, of Bierman, Geesing, Ward & Wood in Bethesda and Thomas P. Dore of Covahey, Boozer, Devan & Dore have filed more than 20,000 foreclosure cases in Maryland courts since 2008.
How deep will the robo-signing foreclosure scandal spread into law firms that service big lenders?
With investigations just ramping up across the country, these examples of wrongdoing are likely the tip of the iceberg.
The fact of the matter is our national economy has already hit the iceberg. While the wizards in Washington try to stave off the sinking of our economy, will the fraudsters be held accountable? Will the Wall Street-Washington incest be exposed in the process? Those with sense on cents know that fraud and incest very often go hand in hand.