Banks May Still Be Getting Away With Crimes in Miami Foreclosure Cases

December 2, 2011

Homeowners battling foreclosure in Miami know how tough the system can be. Mortgage servicers and real estate investors continue to face civil and criminal prosecution. But as a recent column by new deal 2.0, a news project of the Franklin and Eleanor Roosevelt Institute in New York, opines that mortgage servicers are getting away with the perfect crime because years after warnings were put out about fraud in the country's banking system, there have been relatively few criminal prosecutions.

This is a shame and a failure by our criminal justice system. While Miami foreclosure defense lawyers understand that it takes quite a bit of time and effort to build a criminal case against bank officials, mortgage servicers and other real estate professionals, we also believe that the longer banks are able to conduct Miami foreclosures unlawfully, the more victims there are.
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The columnist agrees. In the piece he writes that in 2004, FBI agents warned Congress that there was an "epidemic" of mortgage fraud. Within two years, Fannie Mae endured an accounting scandal.

What happened next was criminal, yet little has been done about it. Wall Street CEOs began signing documents they didn't know where accurate or knew were inaccurate, The New York Fed began blindly lending money despite conflicts of interest. Balance sheets of banks were manipulated to hide the problems they were having as foreclosures ruled the news.

Despite all the problems, there were few arrests being made. Most of the prosecutions related to the problems with foreclosure and banks have been minor contractors or low-level bank employees, who were likely just following orders from above. There have been civil suits, and states are negotiating a settlement with banks for foreclosure fraud, but that will result in payoffs and not prison time.

As the column goes on to say, the problem with this is that when all of the illegal activity continues to go unpunished, it continues to happen. There have been recent reports of foreclosure defense attorneys uncovering robo-signed documents to this day, despite banks being busted for this more than a year ago.

A New Orleans bankruptcy judge recently said in court that Lender Processing Services, a company that handles 80 percent of foreclosures for big banks, has been programming fraud into the software used to process foreclosures. The judge said the company uses highly automated software that applies payments "contrary to the terms of the notes and mortgages."

The article goes on to say that mortgage loan notes are supposed to be paid first to interest, then principal and then other fees. Investors get paid first and servicers, who collect fees for themselves, get paid when they collect late fees or if the house goes into foreclosure. What the columnist reports is that they are using software to prioritize their fees above the interest and principal that is getting paid to investors.

Additionally, if homeowners are late one month with a payment, it's supposed to be a one-time miss. The programing, however, can lead to a glut of fees that can lead to homeowners missing payments again and again, causing them to spiral into foreclosure.

If our prosecutors aren't going to help, then the only way to fight back on your Miami foreclosure is to use the banks' mistakes and unlawful activity against them. Consult with a Miami foreclosure defense lawyer today to ensure your rights are upheld.

If you're battling foreclosure in Miami or the surrounding areas, contact Jacobs|Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.

More Blog Entries:

Nevada AG Fights Back on Foreclosures With Charges Against 'Robo-Signers': November 25, 2011

Additional Resources:

Mortgage Servicers: Getting Away with the Perfect Crime?, by Matt Stoler, new deal 2.0