Bank and Lawyer Lying Epidemic

As more and more facts come out, the existence of an enormous epidemic of lying and perjury by banks and their law firms in the past decade or more is becoming very clear.

Banks created mortgage securities by transferring originated mortgage loans to a trust.  But they violated most state fraud laws by not recording assignments of the transfer of the loans.  Hence under state law, the trust did not legally own the loan.  When trouble arose, the same bank - now under the guise of the servicer of the trust - proceeded to lie to courts or in filings by saying the trust did own the mortgage loan and had the rights to foreclose.  They were simply making it up - no one checked the loan papers to see that the trust in fact did own the loan.  Those statements were made under oath subject to perjury laws. 

Often law firms hired by the banks did that last step.  The bank management did not care about accuracy - they simply send the work to the low bidder, which might even have been a legal boiler room.

How many of these defective mortgage loans exist?  My guess is millions.

I personally know a several cases of this happening in both residential and commercial mortgage loans.  This travesty is not simple speculation or anti-capitalist rant.

Land records of millions of homes is now under a cloud. 

Think about this:  you eventually pay off the mortgage loan.  The servicer signs a release of lien which needs to be recorded.  But what happens when the entity signing that release is not in the chain of ownership back to the original lien recorded.  I wonder if the county will reject the recording?  What about a new title insurer when you try to sell the property?  The title search will show a lien from some entity that has never been properly extinguished.  This problem could arise 10 or 20 years from now.

What happens if the original company - perhaps a special purpose subsidiary of the bank - now longer exists?  Perhaps it was closed when the mortgage origination business soured in 2008-9.  Now what?  No corrective papers can ever be filed.  This is no wild speculation.

Today's FT online"  The Attorney General of Massachusetts has filed suit against five major banks "accusing them of “corrupting” the state’s land records through pervasive use of fraudulent documentation in seizing borrowers’ homes."  Further, "[Ms] Coakley seems to believe what only a few of us have said publicly: robosigning was often only a symptom of failure to properly assign and endorse mortgages from originators to the trusts,” said Mr Rosner, in reference to home loans bundled into securities."

What is to be done? 

The only solution is a massive class action that would require the banks to stand behind the title to all the real estate involved in these mortgage loans, and to commence action to repair the title to every single property affected.  With massive penalties for noncompliance.  And to take it out of bank top management pay.  After all, top management is ultimately responsible.

Word of the Day

"Spoliation" - noun [$10] an old one from the file
Spoliation means 1. the act of plundering; 2. the act of injuring beyond reclaim.
Sentence:  The spoliation by the major banks of the entire land ownership system in America is a colossal fraud that needs severe punishmant on the banks themselves and on the top management who were captains of that fleet of financial Vikings.