Articles Posted in Mortgage Fraud

Prosecutors with the U.S. Justice Department are reportedly giving up their quest to take action against the co-founder of Countrywide Financial Corp. for his alleged role in doling out risky subprime mortgages that played a major role the national financial crisis. wallstreetbusinessman

Bloomberg reports federal prosecutors informed Mozilo via letter that it did not plan to take any further action against him, effectively ending more than 10 years scrutiny of the man whose lending practices were questionable at best. This lack of reckoning is also indicative of the government’s largely ineffective efforts to obtain accountability for those responsible for collapse of the U.S. housing market, which sparked the Great Recession.

Now 77, Mozilo has spent the last several years living in a 13,000-square-foot home, writing a memoir and investing in real estate. He has insisted neither he nor his firm’s lending practices had anything to do with why the market collapsed.  Continue reading

It’s been five years since widespread foreclosure fraud, sometimes referred to as the “robo-signing scandal,” was first revealed. You may recall, this was a type of fraud that involved banks and mortgage servicers colluding to produce false documentation of property ownership they did not actually have in order to obtain foreclosures on those properties. email

Countless homeowners lost their homes when these documents were presented as true and accurate before the courts.

There was a weak attempt at accountability for this mess that ultimately resulted in a $25 million National Mortgage Settlement among the five leading mortgage servicers. Although it never should have happened in the first place, that settlement should have been the end of it.  Continue reading

Sometimes, it pays to do the right thing.
The former Countrywide Financial Corp. executive who blew the whistle on Bank of America’s widespread mortgage fraud, resulting in an almost $17 billion settlement, was recently awarded $57 million in his qui tam lawsuit.

Edwin O’Donnell reportedly contacted the U.S. Attorney’s Office in Manhattan in advance of foreshadowed settlement deal with the banking giant to give the government greater leverage in its case. He alleged the company issued a series of toxic mortgages under a program known as the “High Speed Swim Lane,” also referred to as “HSSL” or “hustle.” Knowing the mortgages were likely to be defaulted on, the company then quickly sold them to the government-backed Fannie Mae and Freddie Mac.
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In May, Attorney General Eric Holder insisted that no bank – or bank executive – was too large or too powerful to be prosecuted if they engaged in criminal activity. No individual or company, he said, no matter how profitable, would be able to skirt the law.
However, the announcement of Holder’s resignation brings to light the fact that to date, no bank executive has been prosecuted in criminal court for the role played in the most cataclysmic financial disaster since the 1929 stock market crash and Great Depression.

Former bank regulator William Black, interviewed recently by Bill Moyers, offered extensive commentary on how the approach of prosecuting banks – as opposed to bankers – ensures that nothing will change. In fact, Black claims that no one could say with a straight face that prosecuting bankers would be a negative.
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The system of mortgage documentation in the U.S. housing industry remains broken.

Courts continue to unearth evidence that banks have been systematically committing fraud by fabricating critical pieces of documentation necessary to foreclose. And yet, since the $26 billion mortgage settlement agreement (the terms of which most of the banks haven’t totally adhered to either), no government agency has pursued sanctions against these firms. floridahouseandgarden.jpg

Our Miami foreclosure defense lawyers are familiar with countless examples of ongoing fraud going unchecked. Recently, a report by writer David Dayen pointed to a number of cases where proving wrongdoing would have been fairly straightforward. Among those:

A recent internal report generated by the U.S. Department of Justice concedes that the successes of the mortgage fraud crackdown efforts were grossly overstated,
Not only were the number of mortgage fraud cases egregiously low, the agency considered these matters to be of the lowest possible priority. In some jurisdictions, the report reveals, it wasn’t noted as a priority whatsoever. Our Miami foreclosure lawyers recognize this revelation as especially troubling, considering that it also emerges at the same time we find out Wells Fargo had created an internal guideline for its foreclosure lawyers on how to fabricate missing records, so that foreclosures wouldn’t be slowed.

These two points in conjunction give rise to the bigger question: Will banks continue to escape any prosecution or real accountability for their wrongs? A recent broadcast by Democracy Now! seems to indicate the answer is yes.
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In the six years since the housing market crash and subsequent financial crisis, the U.S. Department of Justice has been challenged on its response, which has largely lacked any significant criminal prosecution. balance.jpg

Our Miami foreclosure defense attorneys known that the DOJ’s retort to this has pretty much remained constant: We’re doing all we can. If there were criminal cases to be made, we would have made them. These cases are highly complex matters, and they take time. We’re working overtime on it.

However, a new audit by the department’s Office of the Inspector General appears to suggest otherwise, indicating that the agency is either unequipped or unwilling to take on complex financial crimes.
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Although many talking heads have espoused in recent years the theory that the housing market tanked because banks were forced to lend to borrowers who couldn’t afford it, the facts revealed in Lawrence E. Jaffe Pension Plan v. Household International Inc. should put that line of thinking to rest once and for all.
Although the case against the HSBC-acquired Household International Inc. was tried back in 2009, with the fraud reportedly occurring between 1997 and 2002, the court recently entered a judgment of $2.46 billion against the firm. It got little play amid the record-setting judgment against JP Morgan Chase for $13 billion for its extensive mortgage fraud activities.

As a recent Rolling Stone report lays out in detail, Household case is important because it reveals the extent to which financial institutions aggressively pursued borrowers who were not qualified. What’s more, our Miami foreclosure lawyers know that these companies did this not because the government was pressing them to do so, but rather because they made a lot of money doing it.
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Word that the government had reached a $13 billion settlement with financial giant JPMorgan Chase, for the role its acquired firm, Bear Stearns, played in the 2008 financial crisis, sent media pundits into a frenzy.
Rather than welcoming the idea that a large bank would be held accountable for actions that played a prominent role in leading millions of Americans to lose their homes and spiral into financial ruin, some television analysts were decrying the settlement as a “shakedown,” a “witch hunt,” a “scalping,” and even a “jihad.”

Our Miami foreclosure defense lawyers are appalled that those with such a prominent platform would suggest that the responsible thing to do would be to once again pass the buck. Thankfully, we aren’t the only ones who hold that belief.
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The subprime lending arm of Bank of America was found guilty by a jury of defrauding government-backed mortgage finance firms Fannie Mae and Freddie Mac, costing taxpayers billions of dollars.
The finding, following a four-week trial, means that Bank of America will almost certainly be compelled to pay a large civil penalty, as yet-to-be-determined by a federal judge. Our Miami foreclosure lawyers are hoping that whatever those sanctions are, they will translate to meaningful modifications or relief for homeowners either facing foreclosure or who were victimized by the mortgage fraud scheme.

The subprime mortgage program at the heart of the case was created by Countrywide before it was acquired by Bank of America in 2008. However, it continued beyond that point too, with BofA officials almost certainly aware of what was happening.
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