US Mortgage Fraud

Here is Barry Ritholtz in his The Big Picture blog making it very clear that the banks have shown contempt for the law in their handling of mortgages and the rules for foreclosure:

Even 60 Minutes seems to be sugarcoating the motivation for fraudclosure:

“Banks so poorly handled documentation on millions of mortgages that many today cannot prove that they own the homes they want to foreclose on. The resulting rash of lawsuits from people seeking to save their homes has one of the government’s top banking regulators worried that the torrent of litigation will delay the real estate market’s recovery.”

Understand this precisely: This was not a case of slipshod handling, of sloppy paperwork, or bad management. This was a willful decision to break the law in order to save expenses and be more profitable.

Follow the money: MERS to subprime lending to automated underwriting to securitization to robosigning to fraudclosure — its ALWAYS been about saving a few bucks regardless of the consequences.

The good thing about this Sunday’s 60 Minutes piece (which I have not seen yet) is that it will apply more popular pressure to the State AGs for some legal action on Fraudclosure.

But they are missing the bigger picture here: Reckless disregard for property rights and the rule of law. And exactly where are all of my Libertarian friends on this . . . ?

There are so many stories of "foreclosure" on people who don't hav a mortgage or who have already paid off their house or are completely current on their payments. All because of sloppy paperwork. But what Ritholtz is pointing out is something worse: when the banks "securitized" the loans into the half billion dollar of MBSs and CDOs, they simply failed to do the proper legal paperwork. Why? To cut costs! They were busy packaging up risk and selling it to "suckers" they figured these suckers were ripe for being stuck with the legal mess of a process that ignored the requirements of the law. These are the same banks that got a trillion dollar bailout by the US taxpayer so they could continue to pay their exorbitant "bonuses" and quickly become profitable again so they could once again suck blood out of the US economy. Success!