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Tuesday, October 19, 2010

Willie Sutton, a nation turns its lonely eyes to you

by John MacBeath Watkins

One of the more curious aspects of the Great Depression was that bank robbers became national heroes. Now, how did that happen?

I'm starting to understand, since the foreclosure mess started getting a little publicity. Currently, a number of banks have a temporary freeze on foreclosures, at least one of which ends Oct. 25.

From Joseph Tauke's great article in the Daily Caller:

"What’s most insidious is where the foreclosure freezes are taking place. Many banks have only ordered foreclosures to cease in 23 states. Why 23? Because there are 23 states that require courts to review foreclosures. And every single one of those states is on the list."

Read more: http://dailycaller.com/2010/10/14/thedc-op-ed-one-nation-under-fraud/4/#ixzz12sAPhJzP

Read the whole article, it's well worth it. Hell, I wish some of their advertisers weren't so objectionable, so I could click on them and help support the site. This is really good enterprise reporting.

The banks have a huge mess on their hands because during the housing bubble, they were writing mortgages so fast they weren't taking much trouble to make sure the documents were right. And now that they've got a huge number of foreclosures on their hands, they've taken even less trouble.

There's a big problem with fraudulent papers being used to foreclose. In some cases, the documents are missing, so a specialized industry has grown up to provide them...and they can say exactly what you want. But why are the documents so hard to find?

Again, from the Daily Caller:

"Banking officials happily told the Florida court system in 2009 that the documents had been shredded. At the time, lenders were trying to prevent some foreclosure rule changes, so they sent a letter to the Florida Supreme Court. Among other things, the letter stated that it was standard practice to destroy mortgage papers once the mortgages were sold into MERS in order to avoid confusion. (“A” for effort on that front.) Something funny happens when tearing up a contract, and it might best be explained by a certain common phrase. That phrase is, “Tearing up a contract.” Unless very specific conditions are met, the contract becomes null. Void. Not worth the paper it is printed on.

"The fact that so many contracts were torn up explains why DOCX didn’t deal in affidavits of foreclosure, at least not according to a DOCX price sheet posted on attorney Matthew Weidner’s website. The sheet lists the going rates for tasks such as, “cure defective mortgage.” Nowhere on the document does DOCX say that its services were limited to 23 states. Quite the opposite, in fact—DOCX proudly boasts of its “nationwide” presence at the very top of the sheet. Any mortgage that became “defective,” something that tends to occur when banks can’t find anything signed by homeowners with “mortgage” written in nice big letters somewhere, could be “cured” by DOCX, no matter what state contained the relevant property."

Which means that in states where there are weak controls on the banks, they've continued to use possibly fraudulent documents to foreclose, because who's going to stop them?

And once word gets around that the banks are engaging in fraud to take peoples' homes from them (and often everything inside those homes) how long until people start thinking it's morally acceptable to take what's in the banks?

DCOX, the company referred to above, advertised that it could provide all the proof of ownership a bank could want for the low, low price of $35. I'm sure that buys a lot of due diligence.

And they offered a volume discount if you bought a lot of these papers.

Now, one of the reasons that the property bubble was so damaging to the Japanese economy was that in some cases, title to property wasn't clear, and when that happens, it takes a lot longer to clean up the mess. As Paul Krugman points out, we were very smug about how this could never happen to us.

Until it did.

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