A recent article about the problems with the bank industry concluded that despite ongoing settlement talks between banks and state governments, foreclosure fraud and securitization fraud will continue for those involved in Miami foreclosures.
Miami foreclosure defense lawyers have witnessed the major problems with securitization of mortgages and how the buying and selling of mortgage loans has caused many problems with banks’ abilities to prove who should be bringing a foreclosure action. This has created more frustration for distressed homeowners, who are stuck paying more for their home than it’s worth.
The article suggests securitization fraud will continue to spread, even after a major settlement between banks and states goes through. The article also reports that New York Attorney General Eric Schneiderman, once a main opponent of the settlement, is now considering joining. Not coincidentally, Schneiderman was just appointed by President Barack Obama to a task force created to investigate banks and fraud. The Obama administration has been pushing for the settlement.
The article goes on to look at the major problems with securitization and how foreclosure fraud benefits those selling securities because it covers up the lies created by false documents that are used to take away people’s homes. For investors, who are being promised big benefits, lying only becomes a problem if harm is done. If the foreclosure goes through, the harm is minimized. If the homeowner stays in the house and doesn’t pay because there’s a mix-up in documentation, the investors lose big money.
The basics of securitization is that sellers find investors and promise a profit. They take the money, pool it and buy mortgage loans. A trust is set up to receive payments from banks via homeowners and distribute payouts to investors. The banks are the trustee and oversee the trust.
But if there are problems with paperwork, including whether the trust actually owns the loans, the deal becomes moot. That’s where the fraud comes in. In cases where the trust couldn’t prove who owned the loans — after they were transferred several times in MERS but not in local clerk’s offices — officials turned to creating false documents or fabricating paperwork to be able to foreclose.
The issue comes back to Schneiderman, mainly, because many of the trusts are in New York, which would give him jurisdiction. Many are also in Delaware, where Attorney General Beau Biden is opposing the settlement.
The problem with the settlement is that it is far too premature. Many states have done little investigating and don’t know just how deep the problems are. Rather than holding banks accountable and looking into just how many problems they created with their lies — both for homeowners and investors — they are willing to drop it, give them immunity from lawsuits and take their money.
If the settlement is signed, there’s nothing that stops banks from continuing these injustices. Rather than fully discovering all the problems, these banks are going to be allowed to get away with it in the future. And the settlement will protect them from lawsuits. Perhaps a sharply divided Congress — that can’t seem to agree on anything — would be able to help.
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:
Force-Placed Insurance May Not Just Affect Banks Involved in Miami Foreclosures: February 3, 2012
Securitization Fail, What It Means If the Servicer Settlement Cures It & Why NY Can’t Sign, by Abigail Caplovitz Field, Reality Check