ForeclosureBacked by a 20-page memo of constituents' horror tales, Representative Zoe Lofgren (D-Calif.), House Speaker Nancy Pelosi (D-Calif.) and the rest of California's Democratic delegation have asked the Department of Justice, the Federal Reserve and the Office of the Comptroller of the Currency (OCC) -- that is, law enforcement and the two big bank regulators -- to investigate whether the banks have broken the law in "their handling of mortgage delinquencies, mortgage modifications and foreclosures."

Coming on the heels of the so-called robo-signer mortgage document fraud scandal, the letter suggests "systemic problems exist in the ways many financial institutions have dealt with homeowners." It then flatly states the "excuses we have heard from financial institutions are simply not credible three years into this crisis."

Interestingly, the memo with the examples of constituents' nightmares suggests the Representatives believe the banks could be acting in bad faith; fully 18 of the 20 pages of problems are under the title "Communication Issues or Bad Faith Dealings with Bank."

The OCC Calls for a "Self-Assessment"

So what does the letter mean, beyond politics? Members of Congress aren't shy about asking for investigations, and their requests aren't always answered. After all, Justice and the OCC are Executive Branch agencies, and the Fed is independent. As of now, all Justice will say is "we will review the letter," and the Fed gave essentially the same no comment: "We will be responding to the letter." Neither institution gave a timeframe for its response.

Instead of commenting on the Representatives' letter, the OCC said it didn't wait to be asked to take action on the robo-signing scandal. Press Officer Dean Debuck said after the story broke several days ago, the agency responded:
We have directed the seven largest national bank servicers to do an assessment of their foreclosure management process, including file review, affidavit processing and signatures to ensure that the process is fully compliant with all applicable state law. We are maintaining close contact to ensure the self-assessments are completed in a comprehensive and timely manner. We will require that each bank report to us the findings of the internal assessment including detail on any deficiencies and any harm to customers. As self-assessments are completed, we will conduct follow-up reviews to validate the adequacy of the self-assessment and corrective actions taken.

The seven servicers referred to are Bank of America (BAC), Citibank (C), JPMorgan Chase (JPM), HSBC (HBC), PNC (PNC), Wells Fargo (WFC) and U.S. Bank (USB). Ally Bank isn't within the OCC's jurisdiction because it isn't a national bank. The OCC expects the self-assessment process to take a matter of weeks. While the agency deserves credit for being proactive, the significance of its move will be known only when it becomes apparent how rigorous its scrutiny of the banks' "self-assessments" is. It's hard to imagine the banks doing a really thorough job here.

Given the scale of the economic/real estate market/foreclosure crisis the U.S. is in, the bank problems revealed in the robo-signer scandal and the fact that 31 Representatives -- including the Speaker of the House and powerful committee chairs -- made the request, it seems impossible that Justice and the Fed won't investigate. Luckily for troubled homeowners, the state attorneys general aren't waiting. Several have already launched investigations, including most recently Texas, according to Bloomberg.

Merely "Procedural Errors"?

One of the must frustrating parts of the robo-signer story so far is the way in which that banks suggest the problem is technical, that the documents are essentially truthful and resolving the problem will take only a few weeks. For example, Bloomberg's piece includes Ally Bank's characterization of the issue as "procedural errors." And it has this quote from JPMorgan Chase: "We believe the accuracy of the factual loan information contained in the affidavits was not affected by whether or not the signer had personal knowledge of the precise details. . . . The affidavits were prepared by appropriate personnel with knowledge of the relevant facts."

What that statement says to me is: "We believe the laws and rules that apply to every other litigant don't apply to us. We can place efficiency in carrying out our foreclosure program above pesky technicalities like making sure we don't lie to courts."

Justice, the state attorneys general and judges across the nation had better not let the banks' spin stand. Even if every robo-signed document were true -- and they're not all true -- the robo-signers and the banks employing them have systematically created and submitted to courts hundreds of thousands of sworn documents that aren't accurate. The U.S. justice system just can't look the other way at that.

After all, the government is prosecuting Roger Clemens and Barry Bonds for allegedly lying about their steroid use. But in the banks' case, there's no "allegedly" about it. The documents swear what they swear, were submitted to courts as proof in cases, and now, on a mass scale, have been acknowledged to be at least partly false.

If investigations -- and, yes, prosecutions -- don't flow from the robo-signer scandal, it can only be an example of the "scope-severity paradox," in which crimes with a few victims are taken more seriously than a mass atrocity, the phenomenon that led Josef Stalin to say "one death is a tragedy; one million a statistic."

Elementary Mistakes

And again, the spin that the problematic documents are merely technical issues and haven't caused any problems in foreclosure cases is particularly ludicrous when you consider how many foreclosures are being derailed for nondocument issues. For example, the Miami Herald Tribune reported that in a single day, Florida judge "Hang-em High Harry" Rapkin dismissed 61 foreclosure actions for elementary errors. Among the mistakes: Banks' attorneys filed motions to win cases that had been dismissed or previously won. In some cases, attorneys didn't show up at all for the hearing. That's not a confidence-inspiring performance.

And the document problem is very widespread. The chief judge of one of Florida's judicial districts, Lee E. Haworth, found that 20% of the foreclosures filed in that district had "deficient" documents, the The New York Times reported. The Times piece also included three examples of bad documents submitted in foreclosures that had jeopardized the foreclosures.

So come on Justice and the Fed, join the OCC in taking action. Get the truth out -- and prosecute those who deserve it.

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July 24 2013 at 1:10 PM Report abuse rate up rate down Reply
aileen.la

Can you tell me who was the signer?

March 11 2012 at 3:11 AM Report abuse rate up rate down Reply
Edwardfmagic

I just won a case in district court in Maryland against Capital One for alleged credit card debit. The documents submitted to the court were noterized. Just one major problem, the person that signed the affidavid appeared not to exist and the notary that was employed by capital one and lived about 160 miles from the alleged signer. Capital one refused to produce the employee that allegely signed document;even with a court odered supenna. Moral= never sue a Records Manager that has better records than the credit card company and can spot perjury.

October 10 2010 at 7:02 PM Report abuse rate up rate down Reply
1 reply to Edwardfmagic's comment
aileen.la

Can you tell me who was the affidavit signer?

March 11 2012 at 3:11 AM Report abuse rate up rate down Reply
Raymond R. Shelt

Re: The letter from the mortgage bankers to our Gov... This letter is just another attempt to scam the American Public and conn our polititions into creating another late nite passing of a bill to give a blanket protection for all the fraud committed by the well to do connected fat cats. In the beggining: If the judges had only given the homeowners a chance to go to trial the truth about Foreclosuregate (the decades Greatest American Scamm) would have been stopped in the very early days. The truth would have come out a long time ago. The Florida bar should be ashamed of themselves for not stepping in and stoping the potential violations by the duly appointed. They need to do a better job of policing the forclosure mills who hired the companies that forged all the documents and they should also condem all the judges who put families on the street via the summary judgements. This fiasco in the foreclosuregate scandal has only gotten deeper and deeper because many Judges all across the country were acting like collectors for the lenders and servicers. Judges never gave the homeowner a fair chance to prove their case in court, many judges took it very personal and just said pay your dam bills and get the hell out of my court room. I am however very proud of some judges who always did the right thing but many hate the poor who are struggling with debt and they hate them tying up their courtrooms. Just look at some of the recorded foreclosure cases in Florida and you will see for yourself how they are treating the attorneys and the homeowners. Summary judgments disrespect for defence attornies and clients and utter rudness is common in some court rooms. Rocket dockets and retired judges are the rule of the day in Florida and that may prove to be against the law. Some judges have treated lawyers defending homeowners like idiots and banned most the truth from the court room with their old world summary judgments. Who will eventually pay for the judges mistakes when all the homes sold to new buyers are given back due to fraud? Thats right not the judges who took homes its the tax payers. Talk to any defence attorney and you will see how the some judges took so many homes and put families on the street. Many attorneys say serious violations of ethics and rules of law may have been broken but most wont say it publicly because they fear they might lose their licence's. I always believed as a child that all judges were here to protect the American family from fraud and abuse by the big guys but sadly I came to find out that I was very wrong. The real Hero's are the Good judges protecting Homeowners, the hard working defence attornies like april charney, Matt Weidner, Mike Wayslic and many others like Ice legal. Keep up the good work people you will be rewarded. Read more: Foreclosure mess continues to deepen in S. Fla. - South Florida Business Journal

October 09 2010 at 6:09 PM Report abuse rate up rate down Reply
dstockw200

I guess most of you people haven't heard about the TARP being reduced from over 700 Billion to 29 Billion...Remember this is what you got sooo upset about and now there is no mention of this....Regardless how you feel about bailing out Banks etc, it had to be done, period...or we would have had 40% Unemployment and the second Great Depression...You people realize it took several years to get to where we are today and it's not gonna take 2 years to clean this mess...Obama is on the right track but you spoiled clowns just like to continue your spewing of hate and lies.....so sad! By the way if you people hate bailing out the banks then why are you for more De-regulation??? This confuses me so....Just a bunch of Hypocrites!

October 08 2010 at 1:14 AM Report abuse +1 rate up rate down Reply
ha6ai

I agree: this is yellow (far-lefty) journalism. The problem is not "robo-signing". Anyone who defaults on their mortgage deserves to be tossed out of the houses they no longer own. It is outrageous that deadbeats who intentionally stop paying their mortgages are stealing free rent from the rightful owners of the houses. Democrats created this financial crisis. They forced banks to loan to minorities and others who did not earn enough to buy houses, and exempted Fannie and Freddie from being audited, and aided and abetted in the outrageous corruption there. They pushed the "sub-prime" and "liar" loans. And now Pelosi has complaints? What a joke.

October 07 2010 at 2:04 AM Report abuse rate up rate down Reply
1 reply to ha6ai's comment
dstockw200

ha6ai---Demorcrats created this financial cirsis?? You are watching too much fixed news!

October 08 2010 at 1:07 AM Report abuse +1 rate up rate down Reply
Michael

Amazing that people take out ARM and they do not understand what a ARM is. Most of these homes went for 400,000 or more and the people that bought these homes and most of these people had to be edcuated people. So please I do not want to hear that they did not know what a ARM or a interested rate mortgage is. Dam I live of a 1600 month penson and my wife makes 25,000 and we pay our mortgage on time and we get **** people break the rules and get everything. I am tired of playing by the rules while others get away with murder

October 07 2010 at 1:33 AM Report abuse rate up rate down Reply
1 reply to Michael's comment
dstockw200

Michael--I guess you also agree with that man's house and animals burning down as well....What does this say about most of you people?.... Jesus said love thy neighbor not let them burn!

October 08 2010 at 1:09 AM Report abuse +1 rate up rate down Reply
Doug And Lena Sc

this is yellow journalism, how many companies sign pay checks by computer, based records prepared by computers and lower levl staff members, there are no allegations that any affidavit was incorrect

October 06 2010 at 10:54 PM Report abuse rate up rate down Reply
ultraz2

The citizens told Congress and the Senate,absolutely NO TAXPAYER BAILOUT MONEY TO THE FAILED DEADBEAT TARP BANKS. The Congress and Senate said to the US citizens GO TO HELL your bailing the deadbeat banks out.---You the citizens hold one HUGE card which you can play and send a message to Congress and to the US Senate and to the bailed out TARP BANKS. --------------------------------------------------------------------------------------------------------------------------------------And that message is that you choose not to do business of any kind with these TARP banks, or any store that chooses to have these banks sponsor their credit cards. Without your customer support any bank will fold.The government may have taken your money without your permission and or support and may have given it to the TARP BANKS, BUT the government CANNOT force you to do business with the TARP BANKS. SO Stop bitching and play your card or bend over.

October 06 2010 at 8:26 PM Report abuse -1 rate up rate down Reply
zattico

had the government NOT caused this problem there would Not be a problem. the government is NOT good at solving the problems they cause they just make a bad situation even worse and so it goes

October 06 2010 at 7:23 PM Report abuse +1 rate up rate down Reply