(Photo: Wikimedia Commons.)

By Howard Goodman
Florida Center for Investigative Reporting

Rob a 7-Eleven and there’s a pretty good chance you’ll go to jail. Seize the homes of thousands of people through sloppy, unjustified or just plain fraudulent foreclosure proceedings, and you’ll get away scot-free.

That basically has been the story since the housing market’s collapse put some 11 million Americans underwater on their homes — including a whopping 45 percent of Florida homes. So far, the banks, financial companies and law firms that helped turn the U.S. mortgage industry into a Wall Street casino have escaped serious penalty.

But, finally, we might see the arrival of the sheriff. Yesterday, attorneys general of the 50 states were being polled to see if they’re on board with a multibillion-dollar settlement with the nation’s biggest banks over the awful foreclosure practices of the late 2000s.

Hopes were rising because California and New York, which had held out, were taking a warmer view of the potential settlement. The AGs in those states had wanted more leeway to probe banks’ past misdeeds, and more oversight to make sure the banks abide by the deal and give out the money — a potential $25 billion — to worst-hit homeowners.

The New York Times explained:

The settlement would require banks to provide billions of dollars in aid to homeowners who have lost their homes to foreclosure or who are still at risk, after years of failed attempts by the White House and other government officials to alter the behavior of the biggest banks.

The banks — led by the five biggest mortgage servicers, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — want to settle an investigation into abuses set off in 2010 by evidence that they foreclosed on borrowers with only a cursory examination of the relevant documents, a practice known as robo-signing. Four million families have lost their homes to foreclosure since the beginning of 2007 …

As it stands now the deal would set aside up to $17 billion specifically to pay for principal reductions and other relief for up to one million borrowers who are behind on their payments but owe more than their houses are currently worth. The deal would also provide checks for about $2,000 to roughly 750,000 who lost homes to foreclosure.

Less than two weeks ago, Florida’s attorney general, Pam Bondi, blasted states that wouldn’t sign on to the settlement. But now it looks as though the holdouts had it right in forcing tougher terms on the financial institutions.

Last week, Bondi watched her own foreclosure-mill investigation fall apart when an appeals court denied her request to take an adverse ruling to the state Supreme Court.

Her office had been trying to investigate David J. Stern, whose Plantation law firm churned out an astounding 200 foreclosure cases per day on average at the height of the housing crisis, and several other law firms.

The strategy, however, was to use the Florida Deceptive and Unfair Trade Practices Act. The act governs trade and commerce, but was unclear whether it covers law firms. In December, the state’s 4th District Court of Appeals ruled that it doesn’t — and last week the court punctuated that ruling by saying the AG couldn’t appeal to the Supreme Court.

Now the future of the prosecutions is in doubt. As reporter Kimberly Miller put it in the Palm Beach Post: “More than a year and a half after the investigations were announced during a news conference convened by former Attorney General Bill McCollum, [Assistant Attorneys General Theresa] Edwards and [June] Clarkson have been fired, two of the firms have closed, and it is debatable whether there is a legal path to hold the Florida firms accountable.”

Some critics think Bondi is crying crocodile tears over the cases’ disarray. Other avenues are available to prosecutors, so why insist that this court ruling ties kills fraud investigations? “An unbelievable bit of chutzpah,” said the progressive Firedoglake blog.

Of course, there’s a long history of government institutions dragging their feet or looking the other way when it comes to foreclosure fraud. A great case history was provided in Sunday’s New York Times by the redoubtable business reporter Gretchen Morgenson. She told the story of Nye Lavalle, a Naples businessman who suspected he’d been fleeced when his family lost a home to foreclosure in the 1990s. Lavalle began investigating the mortgage industry and sent a load of evidence of improprieties — including shenanigans at the Stern law office — to mortgage giant Fanny Mae. That was back in 2003 and 2005.

Morgenson writes:

In hindsight, what he found looks like a blueprint of today’s foreclosure crisis. Even then, Mr. Lavalle discovered, some loan-servicing companies that worked for Fannie Mae routinely filed false foreclosure documents, not unlike the fraudulent paperwork that has since made “robo-signing” a household term. Even then, he found, the nation’s electronic mortgage registry was playing fast and loose with the law — something that courts have belatedly recognized, too.

In 2006, Fannie Mae’s lawyers wrote a 147-page report corroborating most of Lavalle’s findings. But they didn’t act on what they found. They didn’t make the report public. They didn’t even send a copy to Lavalle. He didn’t even know the report existed — until a few weeks ago when Morgenson informed him.

It’s a story of epic blindness. A must-read.

Lavalle, by the way, now works as an expert witness, advising lawyers in Orlando and Boca Raton. He told Morgenson: “From my own personal experience and 20 years of research and investigation, nothing — and I mean nothing — that a bank, lender, loan servicer or their lawyer says or puts on paper can be trusted and accepted as true.”




2 Responses

  1. Roy Jenkins

    I appeared at the Royal Courts of Justice in London on the 25th January 2012 in Court 76 befor Lord Justice Richards and Mr Justice Maddison. This was an oral hearing after my Judicial Review was tossed out as having no Merit.

    Mrs Justice Thirwall claimed Judge Wickham had done nothing wrong in entering into secret correspondence and accepting secret defence documents without my being made aware of them and further basing her judgment on the secret correspondence and secret defence papers.

    I had requested arrest warrants be issued against two CEOs of the Bradford and Bingley bank who were also involved in the USA mortgage crash. The head of legal service for the Bradford and Bingley. Two Chief Constables of Staffordshire police force one who i had forced to resign. And an ex Treasury Minister A. Darling MP. Luckily there are honest people in government circles who informed me that Cameron our Prime Minister his office had ordered Judge Wickham to “BURY MY CASE”

    Again on being informed of what was going to happen on the 25th January i ensured this time the truth would out.

    I knew it was a stitch up from the moment one of the judges opened his mouth, when i made the comment that i still had not been informed of what documentation of mine had been put before Thirlwall, Richards stated “WE MUST ASSUME YOUR BUNDLE WAS HANDED TO THIRLWALL” this from a top judge in the land:)) this pair left the courtroom for 3mins and 20 seconds or it couldhave been four minutes and twenty seconds to discuss my case then came out and read a legnthy judgment out. Someone in the judges chambers must have been awfully quick to type out an 8 to ten page judgment in the time they were in chambers.

    They got dates, years wrong, they missed out a full bundle i had presented to the courts, they cherry picked the banks defence. When i pointed out that “IF YOU HAVE READ THE SECOND BUNDLE YOU WILL SEE A FALSE STATEMENT OF TRUTH SIGNED BY JORDAN THE HEAD OF LEGAL SERVICES OF THE BRADFORD AND BINGLEY. THIS WAS ENTERED INTO THE COURT SYSTEM WHICH IS A SERIOUS CRIMINAL ACT”. i then pointed out to Richards and Maddison “THE VERY NEXT PAGE TO JORDAN’S FALSE STATEMENT OF TRUTH IS A COPY OF HALSBURY’S LAWS OF ENGLAND: FRAUD” this law pointed out that what Jordan had done was illegal and a serious criminal act, at this point Maddison told me to shush they then got up and walked out of court.

    I am applying to the Courts of Appeal and also taking other avenues to expose how high up the ladder in government and law the corruption goes. Richards stated “YOU HAVE SENT SEVERAL LETTERS TO CONMERAN THE PRIME MINISTER, I REPLIED YES I HAVE BUT ALWAYS WITH PROOF TO BACK UP WHAT I SAY AS I HAVE DONE IN COURTS. They claim to have read my letters to Conmeran our Prime Minister but failed to mention i had requested that Conmeran have me arrested and why.

    I have been trying for some time now to contact genuine campaigners in the USA to compare cases. Judges are just mouthpieces for whatever governments and banks tell them to do. Hope to hear from you.

    Roy Jenkins. Get snouts out the trough party.

  2. Roy Jenkins

    I have tried every national newspaper and every TV media in the UK to print articles not only mine but others as well. I was informed by an independent journalist they couldn’t write/print my article as a super injunction had been imposed by our Prime Ministers office. He also belongs to a banking family as does the Treasury Minister at Number 11 Downing Street, Osbourne.

    Roy Jenkins. Get snouts out the trough party.


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