Five Questions with David Dayen about Foreclosure Fraud, Activism and Hope


David Dayen (dday to old-timers at Daily Kos) has been the most single most dogged journalist digging into the massive fraud perpetuated on American homeowners in the last decade, the fraud that almost brought down the global economy. In fact, he wrote the book on it—Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, winner of the Studs and Ida Terkel Prize (reviewed here). He is a contributing writer to The Intercept, and a weekly columnist for The Fiscal Times and The New Republic. He also writes for The American Prospect, Vice, The Huffington Post, and more. He lives in Los Angeles. Here I followed up with him about his reporting on the foreclosure fraud and the book for our five questions feature.

1. You wrote about it in the book, but can you tell us how you connected with Lisa, Michael, and Lynn, the people at the heart of your story?

So there’s a scene in the second half of the book where Lisa, Michael, and Lynn are invited to Washington to discuss the foreclosure fraud scandal (that’s the mass delivery of false documents in foreclosure cases by financial institutions who do not have the legal right to foreclose) with a bunch of activists, lawyers, writers, some political staffers. I think someone from the Financial Crisis Inquiry Commission was there. And I was asked to be there. At the time I was writing for Firedoglake and was just starting to wrap my head around this particular scandal.

I knew of Michael’s website but didn’t know him. And I don’t think I knew Lisa and Lynn at all at that time. But their stories stood out, because they were the only foreclosure victims in the room. They had something to bring to the crisis that none of us shared. So they became sources of mine. I’d read their websites and ask them questions. Years later, one of them, I think Lisa, told me that they were surprised I was interested in this and even though I was not in foreclosure. In their experience everybody fighting foreclosure fraud was personally affected. So their world was foreign to me and my world was foreign to them.

2. What led to your interest in the issue?

I was blogging at FDL, I was editing the news desk. And the portfolio of what I was to write about was “the news.” So, be it The Huffington Post or Talking Points Memo while sitting in your living room 3,000 miles away from Washington, or sitting in an office, I was still working my day job off and on at that time. (I edited television shows for many years.)

So I was always looking for those stories where I could add value, something to set me apart from other writers, something I could cover that wasn’t being covered. It still kind of amazes me that foreclosures could fall into that bucket. Over 9.3 million people were evicted in foreclosures or some other transaction that forced them to give up their homes from 2006 to 2014. This is the largest financial purchase that most people will ever make, the source of a large portion of their wealth, and the human drama associated with it is really incalculable. And yet the foreclosure crisis still remains on the fringes, on the business pages if anywhere.

What brought it home for me was a personal interaction. My wife and I have a friend who was very involved with the Obama campaign in 2008, he traveled to Nevada to knock on doors for him, was a major supporter. And one day, in the middle of an email conversation, he just came out with, “What I want to know is, why was President Obama’s plan to help those struggling with their mortgage written to favor the banks instead of the people?” At the time none of us knew that he was even having a problem with his mortgage. But I asked him to tell me his story, and it turns out it was a very familiar situation, he was trying to get a loan modification from his mortgage company (Citi Mortgage), and they approved him for a trial payment that was several hundred dollars a month lower. The trial payments were supposed to convert to permanent within three months, but Citi dithered and stalled for half a year, and then told him he was denied a permanent modification, and that he owed the difference between his trial payment and his original payment within 30 days or they would kick him out of his house.

This was very common, it turned out, a way for the banks to weaponize Obama’s modification program (called HAMP) and turn it into a predatory lending scheme. And I wrote that up and posted it at FDL (using an assumed name for my friend because he was still negotiating with Citi Mortgage). And I put out the call for more stories. Dozens of them came in, and the rest is history.

3) The book has been extremely well-received and well-reviewed. In fact, Sen. Elizabeth Warren raved about it: “If you’re looking for a book to read over Labor Day weekend—one that will that will get your heart pumping and your blood boiling and that will remind you why we’re in these fights—add this one to your list.” You’ve had numerous appearances talking about it around the country. What have you learned from that experience?

First of all, this is an ongoing nightmare. I wrote this book as sort of a work of history, to rescue something that had verged on going down the memory hole—that for all the excuses about how no high-ranking executives went to jail for the sins of the financial crisis because there were no good cases or what they did wasn’t illegal, there was an alternate history to be written, led by these three remarkable people who took it upon themselves to expose the greatest consumer fraud in American history while fighting their own punishing foreclosure cases. But in talking to people and getting feedback through email and social media, it reinforced what I already knew, that this is a living history. Every day in America, someone is thrown out of their home based on false documents, and both the political system and the justice system is thoroughly disinterested in changing that fact to arrive at a different outcome.

In St. Louis, I had a guy drive four hours from Chicago to tell me his story about experiencing fraud on his home and starting to work with a half-dozen lawyers to fight foreclosures in his city. In Philadelphia a woman told me she was about to be evicted in a week; the bank just got awarded summary judgment in her case. In Los Angeles a man told me he’d been in court over his home for almost a decade. And I’m pen pals with at least two dozen other homeowners keeping up the fight. It’s remarkable that these cases go on, that these people summon the inner courage to persevere against incredible odds. But Americans have this emotional connection to their homes and a resistance to injustice. They care enough to see things through, to not extinguish the fire burning inside them. Though the stories are horrible, they’re oddly life-affirming at the same time.

4. The book leaves us with kind of a frustrating ending—as admirable and important as the work these activists have done is, it’s still happening. What would it take to fix it, and do you think your book can help kick-start a reaction?


I try to be very clear with the people who ask me for advice. I’m not a lawyer and I cannot counsel them. But it’s very, very hard to win these cases. I didn’t set out to write a book that someone at the Justice Department would read and say “He’s right, we screwed up, let’s round up everyone on Wall Street.” It’s not going to happen.

I’d say two things—one looking backward, and one looking forward. One, I do think that people in high-ranking positions were shaken by the work they did, or rather didn’t do, in the face of this crisis. I have been told by people that the work of the activists, for which I was mostly a conduit, made a real difference. Someone who didn’t give me his name, but who told me he worked at a very high level on this issue, came up to me at an event and said that the $25 billion settlement we got over these practices, which was woefully inadequate, would have been much worse without my efforts. It’s not the first time I’ve heard that.

The other point is that this is a book that tells the story of a movement. And movements don’t always succeed. We hear about the great successful movements in history in our textbook, the civil rights movement and the gay rights movement, but lots and lots of smaller groups failed leading up to those victories. I say in the book that movements crash on the shore like waves, and each one gets a little bit closer to its destination. These three people didn’t have anything—no resources, no institutional knowledge, no history of activism. But they got on the Internet and built websites and collected knowledge and pushed this huge scandal into the public consciousness, if only for a brief moment. And without them, you don’t have Occupy Wall Street, and you don’t have the Elizabeth Warren wing of the party, and you don’t have the Bernie Sanders campaign. There’s a level of awareness about the financial industry now that didn’t exist in 2008, one that’s not going away. And Lisa, Michael, and Lynn helped to forge that.

5. What do Daily Kos readers need to know and do to help fight this ongoing battle?

Stay educated and involved! And recognize that the financialization of our economy, the power and hold that the banks retain, is about more than just foreclosures. Just after Labor Day we saw Wells Fargo fined for creating high sales targets that led its workers to forge documents and create millions of phony customer accounts. That’s not exactly what happened in the foreclosure fraud scandal but it’s a close cousin. And the real scandal there is not about consumer fraud actually—most of these accounts sat dormant, and only a few generated fees. It was securities fraud; Wells Fargo demanded high sales targets because they wanted to show robust growth to their shareholders and boost the stock. Incidentally, Wells Fargo’s CEO took $155 million in stock options from 2012 to 2015, giving him a real incentive to kick up the stock in whatever phantom way possible. That drive for short-term profits remains the biggest single source of recklessness among major banks, with consequences for consumers and investors and the broader economy. Dodd-Frank has not come close to wiping that away. And we need to be speaking out about how we can.


2 Responses

  1. Step one in all this is determining what the actual crime is.

    Bernie Madoff started out portrayed as a skilled investor. His business Model evolved to a point at the end when he admitted that he had not purchased a stock in thirteen years. The model he was selling was not as offered and sold. It is all that simple. Selling something that does not perform as sold advertised is in fact the crime. A prosecutor would call it a ” theft by deception scheme”.

    The GSE Business Model (FNMA) that hijacked the mortgage industry is the same thing times a million. The Model was advertised and sold to congress based on the representations and warranties inherent in the seller/servicer agreement which was supposed to protect all. Congress bet the US Treasury on the Model based on the very strict Guidelines (which by the way read much like the Ten Commandments that any critic would have difficulty challenging). Problem…………NO ONE was auditing for compliance with those very strict Guidelines and hence the implosion. The only significant audit of compliance we have seen have been lawsuits that have traded trillions of dollars of liabilities for pennies on the dollars (even though sometimes billions). A business Model that is “fatally flawed” and does not work as advertised and sold.

    At Wells Fargo their Cross-selling Model is the little sister to the Model they follow on their mortgage business.

    Congress CONTINUES to fuel the mortgage Model with the guarantee of their MBSs which in turn fuels the fraud in the theft by deception scheme…. The GSE Business Model….the mother of all fraudulent theft by deception schemes. Write your Congress people to pull the plug on the guarantee (perhaps Elizabeth Warren will help us) and next week we will all be better off.

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