Banks responsible for the mortgage crisis sold the same mortgages to multiple buyers at the same time.

Monday, October 18, 2010

Mortgages Were Fraudulently Pledged to Multiple Buyers at the Same Time

Bank of America alleged in a court filing this June:

It appears as though many loans and other mortgage-related assets have been double and even triple-pledged to various constituencies.

Boa Answer to Freddie Objection in Re Taylor Bean & Whitaker Mortgage Corp.

April Charney - a consumer lawyer with Jacksonville Area Legal Aid - and CNBC's Dennis Kneale noted in February 2009 that courts have found that some mortgages have been sold again and again to different trusts, when they should have only been sold once.

Kneale explained that that is the reason that two different banks sometimes try to simultaneously foreclose on the same home:

Bloggers Note: In the video below, Dan Mitchell from the Cato Institute disburses disinformation. He begins by deflecting the discussion of bank culapility by accusing "groups like ACORN" (a poor people's advocacy group now defunct due to false accusations made against them on Fox News) of "practicing extortion." In response to reports that banks pledge mortgages multiple times to different buyers, he says "Banks make technical mistakes" (like they never commit fraud). But "If home owners get away with not paying their mortgages that would be a very bad message to send." (Classic blame the victim.)

And today, Chris Whalen told CNBC's Larry Kudlow that Bear Stearns will be exposed as having sold the same loan to different investors on numerous occasions:


(6:45 into video).

As I have repeatedly pointed out, the failure of the mortgage originators and banks to prepare and record proper documentation has led to an epidemic of fraud. The pledging of the same mortgage again and again to different trusts related to mortgage backed securities is just one result.

And as long-time foreclosure investigator Nye Lavalle writes:

On thousands of occasions I stated to regulators, CEOS, banks, Fannie and Freddie that the practices of the banks were that they were double and multi-pledging assets and pledging paid off and refinance notes to securitizations. This is something April, Max and I have discussed for years now. Now, they come and admit that each of my allegations were true Without analyzing the deal, as complex as they are, you WILL NEVER KNOW IF THE FORECLOSING PARTY HAS “ANY” RIGHT TO FORECLOSE!!!

The motives I identified for the “Blank Endorsements” and missing assignments and "pre-notarized" “Blank Assignments” and “Blank Allonges” that “were placed into the “custodial/collateral” files were to be able to:

Multi-pledge collateral (Notes) so as to cook the books ....

Update: Bank of America has sued the FDIC in connection with claims that:

Executives at Taylor Bean, Colonial and Platinum ... fraudulently schemed to "double- and triple-pledge mortgages and steal assets" to hide their faltering conditions as the housing market declined.

Bill Black is back ...pointing out that Obama has retained all of the nonfeasant, misfeasant, and malfeasant financial regulators appointed by Bush.

PAUL JAY, SENIOR EDITOR, TRNN: "...the way the [finance reform] bill is established, everything depends so much on regulators. And given how powerful Wall Street is in lobbying and appointing regulators, [with lax regulators] you wind up with very little in this bill. Am I reading it correctly?"

WILLIAM K. BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: "You end up with nothing. Indeed, you end up with, potentially, two very bad things. One, you end up with complacency. After all, everybody said this is going to prevent all future crises, so we don't have to worry about future crises. The second thing that you end up [with] is that there are actually provisions in the bill which make the world worse."
...
"But your question also raises the more fundamental point. If Obama and his economic team really wanted to regulate banks more intensively, well, you know, we're a long way into the administration at this point."
...
"Obama left in charge the absolutely disastrous leader who was supposed to regulate Fannie and Freddie, a guy who, by the way, had been a personal friend of Bush for 40 years..."
...
"[The Obama administration] left the worst regulator in the history of the Office of the Comptroller of Currency. This is a guy that not only didn't protect us from frauds; he ran a holy war against state regulators who tried to crack down on predatory lending—it's called 'preemption'."
...
"If the Obama administration really wanted to regulate, to protect us, it had ample authority under the existing laws, without any passage, to revolutionize the protection. And instead... they have [Lawrence] Summers and [Timothy] Geithner, who are lifelong opponents of effective regulation, running their economic policies."

JAY: "...Should people simply be demanding some kind of public alternative for credit and for financing?"

BLACK: "Yes, they should. But the broader logic also applies, and that was you've got to change the incentive structures. If you leave the private insurers in place, the incentive structure is inherently anti-public."
...
"So, yes, we have to change the fundamental incentive structures. And, again, this bill, the dominant fact about it is it doesn't even examine, much less attempt to fix, the perverse incentives that are causing not just this crisis [but also those in Britain, Spain, Greece, Latvia, and Iceland, who have] all had their own versions of this crisis, not driven by the US crisis, but driven by these perverse incentives that I've talked about and this belief that you didn't need to regulate or supervise."

Blogger's Note: This is Part 3 of the series begun in my previous post below.