Underwater Homeowners Aren’t to Blame for their Miami Foreclosure

It’s no secret that banks and their fraudulent practices, predatory sub-prime loans and extensive unethical actions are at the heart of the current foreclosure crisis and recession. underwater.jpg

That is, it’s not a secret anymore.

But our Miami foreclosure attorneys know it was only a handful of years ago that a newly-minted fraud investigator for Countrywide (since acquired by Bank of America) had no idea when she launched an investigation into complaints of mortgage fraud that the problem would be so pervasive. This was before the bubble burst, and when she tried to bring the truth to the surface, she was fired.

The Department of Labor has since ruled that the company illegally fired her for engaging in protected action as a whistleblower.

All of this is not surprising – and it’s not especially new either, as the Labor Department’s ruling came last year. What’s interesting, though, are her public assertions in a recent exclusive interview with AlterNet that homeowners who signed home loans they could not afford aren’t actually to blame for the fact that their homes are now underwater.

This is noteworthy because the banks have created this dialogue that implicates homeowners as being equally implicit in the crisis. What this former investigator, Eileen Foster, has come out to say is that the way that this systematic fraud was structured, there was no way homeowners could have foreseen the risks. In some cases, she says, homeowners weren’t even aware of key details – because those documents were forged by the banks.

This is important for anyone currently facing a foreclosure in Miami. People often feel that the situation they find themselves in is their own fault, and therefore, they simply ride the tide and allow their home to be taken, their credit destroyed.

However, the reality is that if your initial loan contained fraudulent documentation of which you weren’t even aware, you may have other avenues of recourse, particularly given the recent $26 billion settlement reached by five major banks and attorneys general in 49 states.

Foster, who now believes her position was essentially a front to make it appear as if the bank was investing in eliminating fraud, says it wasn’t long before she began to notice wide-spread fraud and forgery. Unlike most cases of fraud, in which concealment is a core characteristic, she says Countrywide salespeople, bankers and executives didn’t even attempt to hide their actions.

In some branches, she says, it was typical for salespeople to snip a homeowner’s signature off one document, tape it to another and then photocopy it to make it appear original. So homeowners were “signing” documents they had never actually seen. In other cases, she said there were even computer programs that made such forgery automated. In one example, she notes how banks were able to use a program to toy with a person’s income level in order to make the numbers work so they could sell the loan – regardless of what the person actually made. In other cases, fraudulent documents were pin-balled back-and-forth between agents so that they could make the documents appear however they needed to in terms of assets and income in order to get loan approval. She says all this was often done without the knowledge of the potential homeowner.

The goal, she says, was for the banks to sell as many loans as possible – regardless of the legalities, or the potential consequences to the buyer.

If you have been the victim of mortgage fraud, we can 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.

Additional Resources:
Countrywide whistleblower reveals rampant mortgage fraud part of ‘everyday business’, By Sarah Jaffe, Alternet, The Raw Story

More Blog Entries:
Miami Foreclosure Tougher for Seniors, July 19, 2012, Miami Foreclosure Lawyer Blog