Author: Matthew G. Saroff

Well, This Has Me Confused

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New York Attorney General Eric Schneiderman has filed suit against the big banks for fraudulent use of the MERS electronic title registry.

He is claim fraud, deception, and illegal evasion of recording fees (to the tune of more than $2 billion on just the fees).

This is interesting. It appears that the settlement, for which Schneiderman is the most prominent hold out would not shut down any suits already filed.

To my mind, this is likely a bad thing, because it implies that Schneiderman is getting his ducks in a row in preparation for signing onto the sellout settlement with the banks.

I just hope that I am wrong about that last bit.

Full release from the AG after the break:

A.G. SCHNEIDERMAN ANNOUNCES MAJOR LAWSUIT AGAINST NATION’S LARGEST BANKS FOR DECEPTIVE & FRAUDULENT USE OF ELECTRONIC MORTGAGE REGISTRY

Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings  

Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable

 

Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process

NEW YORK – Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as “MERS certifying officers,” have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.
The lawsuit further asserts that the MERS System has effectively eliminated homeowners’ and the public’s ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.
“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.

Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the “nominal” mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a “nominee” (or agent) for most major lenders, it remains the “mortgagee” in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.
MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.
MERS’ conduct, as well as the servicers’ use of the MERS System, has resulted in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially clouded titles on properties throughout the State of New York. In fact, several New York judges have questioned the standing of the foreclosing party in cases involving MERS loans and the validity of mortgage assignments executed by MERS certifying officers.
The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:
  • MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.
  • MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and “robosigned” by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party’s inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.
  • MERS’ indiscriminate use of non-employee “certifying officers” to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an “Assistant Secretary,” “Vice President,” or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer’s own employer. Moreover, as a result of the defendants’ failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.
  • MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS’ role with respect to their loan by providing inadequate disclosures.
  • The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.
The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices. 
The matter is being handled by Deputy Bureau Chief of the Bureau of Consumer Frauds & Protection Jeffrey K. Powell, Assistant Attorney General Clare Norins, and Assistant Solicitor General Steven C. Wu, under the supervision of First Deputy Attorney General Harlan Levy.

This is an Epic Prank

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Righteous!

Something to add my rules to live by: Don’t use prison labor to do graphic design for law enforcement:

How did an image of a pig — the infamous ’60s-era epithet by protesters for police officers — wind up on a decal used on as many as 30 Vermont State Police cruisers?

State officials Thursday pointed to the failure of the quality assurance office within the Vermont Correctional Industries Print Shop in St. Albans to detect a prisoner-artist’s addition made four years ago to the traditional state police logo. A spot on the shoulder of the cow in the state emblem was modified into a pig.

An investigation has begun into how the computer program was improperly modified to insert the image, Vermont Corrections Commissioner Andy Pallito said.

I really hope that whoever did this does not get caught.

Seriously, Susan G. Komen is Looking Worse and Worse

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It looks like their latest gaffe, in which they defunded Planned Parenthood, was masterminded by Ari Fleischer:

Ari Fleischer, former press secretary for George W. Bush and prominent right-wing pundit, was secretly involved in the Komen Foundation’s strategy regarding Planned Parenthood. Fleischer personally interviewed candidates for the position of “Senior Vice President for Communications and External Relations” at Komen last December. According to a source with first-hand knowledge, Fleischer drilled prospective candidates during their interviews on how they would handle the controversy about Komen’s relationship with Planned Parenthood.

Fleischer’s relationship with Komen and the Planned Parenthood controversy was previously undisclosed. He confirmed to ThinkProgress his recent role in filling a key communication position at Komen. Fleischer stressed, however, another communications firm (Ogilvy PR) was retained by Komen to deal with crisis communications over the last few days and he has not been involved.

Seriously, this just get better and better.

Komen for the Cure isn’t a charity, it’s yet another Republican full employment program masquerading as a charity.

I’m Expecting an Alien Tort Claim Act Against Apple

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William Black makes the convincing case that the widespread abuse of contractors’ employees in the manufacture of Apple products is the product of deliberate management decisions:

Apple has released a report on working conditions in its suppliers’ factories. It highlights a form of control fraud that criminology has identified but rarely discussed. I write overwhelmingly about accounting control fraud because it drives our recurrent, intensifying financial crises. The primary intended victims of accounting control frauds are the shareholders and the creditors. Other private sector control frauds target customers (e.g., George Akerlof’s 1970 article on “lemons”), and the public (e.g., the unlawful disposal of toxic waste, illegal logging, and tax fraud).

Anti-employee control frauds most commonly fall in four broad, but not mutually exclusive, categories – illegal work conditions due to violation of safety rules, violation of child labor laws, failure to pay employees’ wages and benefits, and frauds based on goods and loans provided by the employer to the employee that lock the employee into quasi-slavery. Apple has just released a report on its suppliers that shows that anti-employee control fraud is the norm. Remember, fraud is hidden and is often not discovered and Apple did not have an incentive to make an exhaustive investigation. Apple calls its inquiries “audits” and it is apparent that most of its information comes from reviewing written and electronic records at its suppliers. That is exceptionally revealing. The suppliers know that they can defraud their employees with such impunity that they don’t even bother to get rid of records that prove their frauds. Apple has resisted making public its suppliers and the report refused to identify which suppliers committed which violations – often for years despite repeated, false promises to end their anti-employee control frauds. Two other facts are evident (but not reported). First, Apple rarely terminates suppliers for defrauding their employees – even when the frauds endanger the lives and health of the workers and the community – and even where Apple knows that the supplier repeatedly lies to Apple about these fraudulent and lethal practices. Second, it appears unlikely in the extreme that Apple makes criminal referrals on its suppliers even when they commit anti-employee control frauds as a routine practice, even when the frauds endanger the worker’s and the public’s health, and even when the supplier repeatedly lies to Apple about the frauds. Apple’s report, therefore, understates substantially the actual incidence of fraud by the 156 suppliers (accounting for 97% of its payments to suppliers).

The ATCA has been used in cases like this, and what is clearly a policy of deliberate blindness to these abuse by Apple, seems to me to bean opening for a very well deserved lawsuit.

You Have Got To Be Kidding

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Guess what, the heavy duty Randroids out there are now going after their enemy du jour, George Bailey, president of the Bailey building and loan:

It’s been a standing joke for ages to claim that some free-market Randroid was so clueless that he or she would watch “It’s A Wonderful Life” and cheer for Mr. Potter while hissing at George Bailey. It would be the equivalent, say, of someone hoping that Scrooge would tell the Ghosts of Christmas Past, Present and Future to sod off or that Spielberg would leave E.T. to die alone in a ditch in Southern California or that Dorothy would be stranded in Oz for the rest of her life as the Wizard’s concubine.

But, of course, this, or so everyone thought, was all just cute and snarky hyperbole. No one, not even the High Priestess Ayn Rand herself, could possibly actually watch “It’s A Wonderful Life” and come away not sobbing like a child but instead thinking that George Bailey was a social parasite spouting vile commie propaganda against the heroic Mr. Potter, the job creator who knew what was really best for the people of Bedford Falls.

Yes, they are demonizing the hero, played by honest to God war hero Jimmy Stewart, of Frank Capra’s treacly bit of cinema, It’s a Wonderful Life, which is considered by many (not me) to be an American cinematic icon.*

Seriously, what the f%$# are wrong with these folks?

I’m beginning to understand what led Ayn Rand to have a doting crush on one William Edward Hickman, a monster who kidnapped and dismembered a twelve year old girl, it’s because Randian libertarianism is not so much a philosophy as it is a beard to conceal from the rest of the world that they are sociopaths.

*Personally, I’m not a big fan of the movie, and it was viewed as a resounding failure when released.  My interest was in the fact that it became popular when it passed out of copyright, and TV stations showed it repeatedly in the holiday season, creating a classic.  My interest is how a series of court rulings allowed it to be snatched out of the public domain.

But They Still Suck

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So the Susan G. Komen Race for the Cure has sort of backed down:

The Susan G. Komen for the Cure Foundation announced Friday that it would revise a new policy that barred the organization from funding Planned Parenthood, a move that had thrust the breast cancer foundation into a national controversy.

Komen apologized “to the American public for recent decisions that cast doubt upon our commitment to our mission of saving women’s lives.”

The foundation said that Planned Parenthood would now be eligible to apply for grants. It did not, however, address other reasons Komen has cited for why it might choose not to approve such grants.

“Our original desire was to fulfill our fiduciary duty to our donors by not funding grant applications made by organizations under investigation,” a Friday statement said. “We will amend the criteria to make clear that disqualifying investigations must be criminal and conclusive in nature and not political. That is what is right and fair.”

“We will continue to fund existing grants, including those of Planned Parenthood, and preserve their eligibility to apply for future grants, while maintaining the ability of our affiliates to make funding decisions that meet the needs of their communities,” the statement continues.

What they are saying that they aren’t cancelling current grants, which they never said they would, and Planned Parenthood can apply for grants next year, but there are “no promises”.

There may be grants to Planned Parenthood next year, but they will eventually cut them off, assuming that these folks aren’t (hopefully) a dead corporatist charity walking.

Btw, in the, “It sucks when an angel pees down the barrel of your rifle,” department, a documentary, called “Pink Ribbons, Inc.,” is hitting theaters in Canada, and film festivals in the United States as I am typing this.

The film alleges that Komen is “Pink Washing” companies that are suspected of exposing the population to carcinogens that might cause breast cancer, among other things.

And Mitch Daniels Signs the Union Busting Bill Into Law

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There is a lesson to be learned here.

The first priority* of Democrats is to implement decent policy, and the first priority* of Republicans is to change the rules in order to strengthen their allies and diminish their opponents.

In the long run, the latter strategy gives better results.

Case in point, the Republicans in Indiana passing union busting right to work legislation:

Indiana became the 23rd state to pass anti-union “right-to-work” legislation on Wednesday and the first in the nation’s manufacturing heartland, dealing a blow to organized labor by allowing workers to opt out of paying union dues.

Indiana’s Republican governor Mitch Daniels signed the legislation into law immediately after it was given final approval in the state Senate, making Indiana the first state to adopt such a measure since Oklahoma did so a decade ago.

This is why Obama should have attempted to re-institute the fairness doctrine, and pass the Employee Free Choice Act (card check) when he had overwhelming majorities in the House and Senate in 2009.

If Democrats ever again have such a large majority, how about repealing Taft-Hartley, and adding the right to organize the workplace to the Civil Rights Act?

*OK, truth be told, the truth be told, the real first priority of all politicians is reelection.

Now They Tell Us

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One of the architects of the European austerity program is now saying that austerity is making things worse:

A leading architect of the austerity programme in Greece – one of the harshest ever seen in Europe – has admitted that its emphasis on fiscal consolidation has failed to work, and said economic recovery will only come if the crisis-hit country changes tack and focuses on structural reforms.

Poul Thomsen, a senior International Monetary Fund official who oversees the organisation’s mission in Greece, also insists that, contrary to popular belief, Athens has achieved a lot since the eruption of the debt crisis in December 2009.

“We will have to slow down a little as far as fiscal adjustment is concerned and move faster – much faster – with the reforms needed to modernise the economy,” he told the Greek daily Kathimerini, adding that the policy shift would be “reflected” in the conditions foreign lenders attached to a new rescue programme for Athens.

Hoocoodanode?

Taking a pay cut makes it harder to pay off your debts.

Boycott the Susan G Komen Foundation

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You’ve probably heard how the Komen foundation created trumped up reasons to defund Planned Parenthood.

What we also know now is that their senior management is a vipers den of ‘Phant political operatives, (their founder and CEO is a former Bush appointee) and failed right wing candidates, and (only a Wiki away) that they have aggressively harassed other non-profits in an attempt to prevent them from using the term “for the cure”.

What you may not know is that their top top public-health official resigned in protest over the decision, and that the board overruled the professional staff who recommended against defunding PP.

And finally, we have a report that they aggressively lobbied against the Breast & Cervical Cancer Prevention & Treatment Act because they wanted the money to go through them, they lobbied against single payer in Obamacare, and fought to neuter the Breast Cancer & Environmental Research Act, and they appear to be attempting to use this as a wedge in order to create a Republican political opening.

That, and the fact that Republicans want women to be punished for having sex, so they oppose birth control and things like the HPV vaccine.

I’m with what Atrios says:

It’s OK To Say You Suck

Just echoing what tbogg had already said, but what Komen has done is made it ok to point out that they kind of suck. And they kind of sucked before all this, but not many people ever want to rain on the pink paradise parade. They managed to associate their brand with a cause, and to criticize the brand was to criticize the cause.

Now we all get to say: you suck hard.

I don’t think that they realize is just how much scrutiny they will be getting as an organization now that they will no longer be seen as synonymous with the fight against breast cancer.

[on edit]
Well, now that their original explanation, that they cut off any organization under an official (trumped up in the case of PP) investigation, because they are continuing to give to Penn State, home of the pedophile friendly athletic department, which is under a legitimate investigation, they have a new alibi.

In the Interest of Fairness

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And because I respect Yves Smith a lot, I have to note that she takes issue with the Pro Publica report about Freddie Mac betting against homeowners:

A new ProPublica story, “Freddie Mac Betting Against Struggling Homeowners,” treats the fact that Freddie Mac retains the riskiest tranche of its mortgage bond offering, known as inverse floaters, as heinous and evidence of scheming against suffering borrowers.

The storyline in this piece is neat, plausible, and utterly wrong. And my e-mail traffic indicates that people who are reasonably finance savvy but don’t know the mortgage bond space have bought the uninformed and conspiratorial ProPublica thesis hook, line, and sinker.

Basically, she says that what we are looking at are normal hedges against interest rate fluctuations, and this was one part of this strategy, and, “Looking at one position in isolation is meaningless.”

Additionally, she implies that this might be a hit job from the Obama administration, because FHFA head Edward DeMarco, who supervises the GSEs in receivership, is not moving aggressively to refinance troubled mortgages, and he’s signed off on some of the big paydays for officials at Fannie Mae and Freddie Mac.

Additionally, FHFA has become increasingly aggressive about forcing banks to take back fraudulent mortgages (Put-backs), which opens a multi-billion dollar can of whup ass on the big Wall Street banks, which almost certainly puts DeMarco on Timothy “Eddie Haskell” Geithner’s naughty list, and leaking this to the press is very much the Treasury Secretary’s style.

Truth be told, I don’t know who is right, though if I were betting, I would take wrong and evil for both DeMarco and Geithner, but I’m a cynic.

It’s Romney in Florida

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And it’s looking to be a blowout, with a 15%+ margin, and nearly half of all the votes.

It comes down to a few things:

  • Money & organization.
  • He rest on inevitability and let Gingrich beat him up.
  • Money & organization.
  • People realized that Newt was that obnoxious asshole from the 1990s.
  • Money & organization.
  • Seriously, Moonbase Gingrich?
  • Money & organization.

And, of course, he had a money and organization advantage.

The only question now is just how crazy this makes Newt.

I fully expect Newt’s head explode in the next few debates.

Facepalm

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Just when you thought that New Jersey could not get any more pathetic, New Jersey Governor Chris Christie said that civil rights leaders in the 1950s and 1960s would have been cool with a referendum to give civil rights without regard to race:

The verbal feud over gay marriage in New Jersey got more personal Monday with Gov. Chris Christie firing a slang term [numb nuts] at a lawmaker, and a hero of the Civil Rights movement chastising the governor for a separate remark.

………
The issue also brought U.S. Rep. John Lewis of Georgia to Trenton on Monday to take Christie to task for comments linking gay marriage to the civil rights struggle of the 1960s.
Christie last week vowed to veto any gay marriage bill that reaches his desk. He instead called for the question to be put to voters in November.
“I think people would have been happy to have a referendum on civil rights, rather than fighting and dying in the streets in the South,” Christie said after an event in Central Jersey.
Black leaders pounced. Newark Mayor Cory Booker said baseball great Jackie Robinson would not have had the opportunity to break the sport’s color barrier had the matter been put to a vote, and the mayor himself would not have had the opportunity, years later, to be elected to lead New Jersey’s largest city. Assembly Speaker Sheila Oliver said many felt the sting of Christie’s comment.
Gusciora, who is white, said Christie would have found allies in late Alabama Gov. George Wallace and late Georgia Gov. Lester Maddox, both segregationists.

This is what qualifies as a deep thought by the ‘Phants.

God, what a repulsive person.

That’ll Teach Him

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The British are finally cracking down on the Banksters.

What are they doing? They are rescinding knighthoods:

The former chief executive of the Royal Bank of Scotland, Fred Goodwin, has been stripped of his knighthood by the Queen for his role in the creation of the biggest recession since the second world war.

With unceremonial haste, a committee of five senior civil servants took away the knighthood given to Goodwin by the last Labour government in 2004 for services to banking.

The chancellor, George Osborne, welcoming the move, said: “RBS came to symbolise everything that went wrong in the British economy over the past decade.”

The move provoked a cacophony of calls for honours to be stripped from other miscreant bankers, politicians and regulators. The campaign to humble Goodwin was reignited by the Daily Mail a fortnight ago and then hastily backed in a highly political move by David Cameron as he sought to show he will side with the public against crony capitalists and bonus-seeking bankers.

You know, I thought that Geithner’s charades about supporting ordinary homeowners were lame, but the Brits have taken lame to a while new level.

Marketplace Gets It Wrong

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I was listening to marketplace, and they noted the good news that incomes rose in December rose at the fastest rate in months, and that people saved more too.

They said that this is good, but what it really means is that consumer spending fell in December:

U.S. consumer spending was flat in December as households put the largest rise in income in nine months into their savings, potentially signaling slower consumption early in 2012.

It was the weakest reading on spending since June, the Commerce Department said on Monday, and it followed two tepid gains in October and November.

Still, economists were cautiously optimistic that rising wages as labor markets improve will keep demand supported.

“I do believe there is some underlying trend that gives us some reason to feel a little bit better about what lies ahead regarding spending, and the main reason is the labor market,” said Anthony Karydakis, chief economist at Commerzbank in New York.

U.S. economic growth quickened in the fourth quarter and hiring picked up, but activity is expected to soften early this year. Federal Reserve Chairman Ben Bernanke said last week that the central bank was considering a further easing of monetary policy to support growth.

Reuters gets it. This is not good news.

This is deleveraging in  a depressed economy.