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It comes as no surprise to those involved in the Wall Street quagmire. Lies on top of lies, all aimed at causing foreclosures despite clear indications that the foreclosing parties (a) have no right or interest in foreclosing (b) have a conflict of interest with the real parties in interest (investors who actually put up the money and will suffer any loss) and (c) are intentionally interfering in the relationship between the borrower and the actual lenders, thus preventing modification and causing tens of thousands of Zombie foreclosures.
The letter from Benjamin Lawsky from the New York State Department of Financial Services exposes the underbelly of the largest scale fraud in human history. It starts with relatively simple issues like the delay in prosecuting foreclosures for which most judges have blamed borrowers — which is ridiculous. The borrowers are never in control of the narrative or pace of any case. The simple fact is that even after a foreclosure action is filed by some stranger to the transaction, the case will languish without any action by the foreclosing party. Why?
The reason is simple. The more they press contested foreclosures the greater the risk they will lose. If they start losing more people will defend. So it just makes sense to get as many uncontested foreclosures through as possible until the real facts come out. Once a case is decided and a final judgment of foreclosure is entered and the property is “sold” at auction to a pretender “creditor” in a credit bid, the harder it is to undo the damage.
But that begs the question of why would they lose? If you clear away all the disinformation out there, the only reason for the delays are that the foreclosers know that if they really had to show the entire chain of transactions from the very beginning to the very end, there would be numerous breaks that would make no sense and could not be explained except to say that the parties involved were acting with fraudulent intent. This is what has given rise to tens of billions of dollars in litigation expense that could be ended — if the notes, mortgages and defaults were real — in a flash.
I remember the day when as a lawyer for the bank, I lost uncontested foreclosures because I failed to have the proper paperwork, in order, and thus proving that the lender was foreclosing and was entitled to do so. Now borrowers are fighting tooth and nail to get judges to apply the same level of scrutiny that existed before the era of securitization; undoubtedly this is because neither judges nor the lawyers representing clients actually understand the securitization scheme well enough to apply existing law and dismiss, strike or otherwise dispose of wrongful foreclosures.
Ocwen’s stock is going down because the likelihood is that between stockholder’s derivative actions, third party actions, and attacks from borrowers and regulatory authorities it will probably end up going out of business. The potential liabilities of Ocwen are an order of magnitude higher than anyone has reported thus far simply because of the “satisfactions” or “releases” of mortgage that were signed, and the money that was received to pay off mortgages.
Its participation in wrongful foreclosures while presenting huge possibilities for loss, are but a fraction of the true liabilities that are on the table. And the same is true for all the other actors in the securitization scheme that turns out to be fictitious. Ocwen and these other actors are obviously potentially liable to all parties in the false securitization scheme. But still the application of these facts to justice in the court system is elusive.
Then you have the interesting administrative finding that Ocwen charges three times its normal rate for auctions involving securitization claims — no doubt justified by its knowledge that the auctions are based upon false and fraudulent premises.
While the Federal government is obviously complicit in the cover-up, the ability to obscure the real facts is losing strength. Eventually, the liabilities of the mega banks will overtake them and their cohorts and throwing Ocwen under the bus is not going to take the heat off. And the game of propping up insolvent banks and servicers at the expense of consumers is most probably going to fail. And then we will find out whether any company is to big to fail or too big to jail.
Filed under: foreclosure |