Skip to content

Foreclosure Crisis Isn’t Just Irregular Paperwork, It’s Massive Fraud

Foreclosure Crisis Isn’t Just Irregular Paperwork, It’s Massive Fraud

October 14, 2010 SVadmin Comments 4 comments

Administration officials have signaled that they are unwilling to support a nationwide  moratorium on foreclosures. In David Axelrod’s appearance on Face the Nation last weekend, referring to bad documentation he said “we are working closely with these institutions to make sure that they expedite the process of going back and reconstructing these and throwing out those that don’t work.”

To be sure, Axelrod expresses the usual preference of the Obama administration for Wall Street over Main Street — the bankers over the middle class.  But the Obama administration, in seeing the foreclosure crisis as a case of irregular, correctable paperwork,  is also  indulging in wishful thinking on a massive scale.

The following excerpt from a new book by Michael Hudson, “The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America — and Spawned a Global Crisis,” shows the depth of the foreclosure crisis that is only just beginning to unravel, a crisis spawned by a combination of deregulation and greed:

A few weeks after he started working at Ameriquest Mortgage, Mark Glover looked up from his cubicle and saw a coworker do something odd. The guy stood at his desk on the twenty-third floor of downtown Los Angeles’s Union Bank Building. He placed two sheets of paper against the window. Then he used the light streaming through the window to trace something from one piece of paper to another. Somebody’s signature.

Glover was new to the mortgage business. He was twenty-nine and hadn’t held a steady job in years. But he wasn’t stupid. He knew about financial sleight of hand—at that time, he had a check-fraud charge hanging over his head in the L.A. courthouse a few blocks away. Watching his coworker, Glover’s first thought was: How can I get away with that? As a loan officer at Ameriquest, Glover worked on commission. He knew the only way to earn the six-figure income Ameriquest had promised him was to come up with tricks for pushing deals through the mortgage-financing pipeline that began with Ameriquest and extended through Wall Street’s most respected investment houses.

…

Glover learned that his colleague’s art work wasn’t a matter of saving a borrower the hassle of coming in to supply a missed signature. The guy was forging borrowers’ signatures on government-required disclosure forms, the ones that were supposed to help consumers understand how much cash they’d be getting out of the loan and how much they’d be paying in interest and fees. Ameriquest’s deals were so overpriced and loaded with nasty surprises that getting customers to sign often required an elaborate web of psychological ploys, outright lies, and falsified papers. “Every closing that we had really was a bait and switch,” a loan officer who worked for Ameriquest in Tampa, Florida, recalled. ” ‘Cause you could never get them to the table if you were honest.” At companywide gatherings, Ameriquest’s managers and sales reps loosened up with free alcohol and swapped tips for fooling borrowers and cooking up phony paperwork. What if a customer insisted he wanted a fixed-rate loan, but you could make more money by selling him an adjustable-rate one? No problem. Many Ameriquest salespeople learned to position a few fixed-rate loan documents at the top of the stack of paperwork to be signed by the borrower. They buried the real documents—the ones indicating the loan had an adjustable rate that would rocket upward in two or three years—near the bottom of the pile. Then, after the borrower had flipped from signature line to signature line, scribbling his consent across the entire stack, and gone home, it was easy enough to peel the fixed-rate documents off the top and throw them in the trash.

At the downtown L.A. branch, some of Glover’s coworkers had a flair for creative documentation. They used scissors, tape, Wite-Out, and a photocopier to fabricate W-2s, the tax forms that indicate how much a wage earner makes each year. It was easy: Paste the name of a low-earning borrower onto a W-2 belonging to a higher-earning borrower and, like magic, a bad loan prospect suddenly looked much better. Workers in the branch equipped the office’s break room with all the tools they needed to manufacture and manipulate official documents. They dubbed it the “Art Department.”

Wishful thinking won’t make this crisis go away.

Print Friendly, PDF & Email

Blog, Economics

Post navigation

PREVIOUS
Lake Wildwood Panel Discussion on Propositions Sold Out
NEXT
Obama Coming to California to Campaign for Jerry Brown — Will He Oppose Prop 23?

Join Our Mailing List

4 thoughts on “Foreclosure Crisis Isn’t Just Irregular Paperwork, It’s Massive Fraud”

  1. Fred Smith says:
    October 14, 2010 at 11:56 am

    Nobody has brought up the distinct possibility that the loan servicers may well have bundled and sold each of these loans MORE THAN ONCE to differernt investors via the securitization process. THIS COULD BE THE REAL REASON THAT THERE IS NO DOCUMENTATION / PAPER TRAIL. The non-existent documentation and accounting is entirely consistent with this scenario. This means that the entire plan was a true Ponzi scheme in the worst sense. In other words, rather than selling the loan once to investors, as we have all naively been assuming, there is no reason to believe that they did not double-dip or quintuple-dip and sell the exact same loan to completely new buyers. THIS IS A LEVEL OF FRAUD THAT THE AMERICAN PUBLIC HAS NOT YET CONTEMPLATED.

  2. depelton says:
    October 14, 2010 at 5:13 pm

    Great comment, Fred. I hadn’t thought of that!

  3. Curtis L walker says:
    October 15, 2010 at 5:16 pm

    First…Very nice Blog!

    I am doing the loan modification thing and loan docs I was just presented clearly states, in the last of many “what if’s) lender has right to reconstruct “missing” paperwork and it will be accepted by the borrower.

    Sounds like butt covering to me.

  4. depelton says:
    October 15, 2010 at 6:20 pm

    Wow, Curtis, so new (or refinance) loan docs now include a possible way for the banks to reconstruct missing paperwork? That’s amazing!

    I’d be inclined to strike out that portion of the contract before signing!

    When we were landlords some years ago, renting out the house we now live in, and we were refinancing, I stayed up til 2 AM the night/morning before the signing ceremony at the title company … just to read every damn word in the stack of papers (even though I understood only about 1/2). Among the 1/2 I did understand, I found a clause canceling our right of rescission because we were refinancing a rental rather than an owner-occupied residence. We refused to sign the contract with that provision, so in the end we were able to cross it out before signing.

    Times have greatly changed.

Leave a Reply Cancel reply

Your email address will not be published.

CLICK IMAGE BELOW TO WRITE ONLINE LETTER OPPOSING THE MINE

DONATE TO THE FOOD BANK OF NEVADA COUNTY

(CLICK IMAGE)

DONATE TO NEVADA COUNTY RELIEF FUND (click image below)

Subscribe to Sierra Voices Journal

Jack Kornfield: A Steady Heart in Time of Corona Virus (Part I)

Erika Lewis, Shaye Cohn, Craig Flory – Got A Mind To Ramble

“Everlasting Arms”

Tara Brach: A Steady Heart in Time of Corona Virus (Part II)

Recent Posts

  • More Evidence That The West Sabotaged Peace In Ukraine
  • Rain and Heat, Fire and Snow
  • Nuclear Fusion Won’t Save the Climate
  • If You Laughed at the Doomsday Clock Update, You Should Find This Hilarious
  • California’s next flood could destroy one of its most diverse cities. Will lawmakers try to save it?

Recent Comments

  • If You Laughed at the Doomsday Clock Update, You Should Find This Hilarious on The Grim Poetry of Science
  • In Praise of Warriors, and Criticism of War on Celebrated to Death: Memorial Day Is Killing Us
  • Why Should I Believe This Guy When He Complains About Diversity and Immigrants and the Fight to Prevent Climate Change? on IN PRAISE OF WARRIORS, NOT WAR
  • Why Isn’t Biden on the Phone with Putin? on Reinforcing Failure in Ukraine
  • car reviews on Obama Says He Never Campaigned for the Public Option

Archives

  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • November 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • July 2018
  • June 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • March 2017
  • February 2017
  • January 2017
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • December 2015
  • June 2015
  • May 2015
  • April 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • January 2014
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • September 2009
  • August 2009

Categories

  • Abortion
  • Afghan Trap
  • Afghanistan
  • Aging
  • American Empire
  • Anti-Depressant
  • Anti-Semitism
  • Arms Sales
  • Articles
  • Atlas Obscura
  • Authoritarianism
  • Black Lives
  • Black Lives Matter
  • Blog
  • Buddhism
  • Budget
  • Buskers
  • California
  • Capitalism
  • Carbon Offsets
  • Cartoon
  • China
  • Climate Change
  • Compassion
  • Constitution
  • Corona Virus
  • Corruption
  • Cosmology
  • Coup
  • COVID-19
  • Dams
  • De-Dollarization
  • Democracy
  • Democrats
  • Depression
  • Disenfranchisement
  • Douglas Macgregor
  • Drought
  • Economics
  • Education
  • Election Fraud
  • Electoral College
  • Empire
  • Environment
  • Extinction
  • Farming
  • Fascism
  • Filibuster
  • Fire!
  • Flood Control
  • Floods
  • Food Insecurity
  • Foreign Policy
  • Forest Ecology
  • Forest Management
  • Fracking
  • Freedom of the Press
  • Gardening
  • Gender
  • Genocide
  • GOP
  • Great Movies
  • Grist
  • Groundwater
  • Halloween
  • Health Care
  • High Country News
  • History
  • Humor
  • Hunger
  • Idaho-Maryland Mine
  • Ignorance
  • Immigration
  • Indigenous Peoples' Day
  • Insects
  • Iran
  • Israel
  • Labor
  • Lobbying
  • Local
  • Lunar Influence
  • Marijuana
  • Masks
  • Medical Care
  • Men
  • Men's Issues
  • Mental Health
  • Middle Class
  • Military Industrial Complex
  • Mining
  • MMT
  • Modern Monetary Theory
  • Moral Obligations
  • Music
  • Native Americans
  • NATO
  • Neocons
  • Neoliberalism
  • New Cold War
  • Nuclear Fusion
  • Nuclear War
  • Nuclear Winter
  • Nutrition
  • Oligarchy
  • Palestine
  • Pandemic
  • Parenting
  • Peace
  • Pharmaceuticals
  • Physics
  • Poetry
  • Police
  • Politics
  • Populism
  • Press
  • Propaganda
  • Race
  • Religion
  • Republican Derangement
  • Reviews
  • Revolution
  • Right-wing terrorism
  • Rights of Nature
  • Rise Gold
  • Rivers
  • Roe v. Wade
  • Romance
  • Russia
  • Russiagate
  • Science
  • Scott Ritter
  • Slavery
  • Sleep
  • Smoke Inhalation
  • Spineless
  • Student Debt
  • Summer
  • Supreme Court
  • Technology
  • The Hartmann Report
  • Trump Virus
  • Tuba Skinny
  • Tyranny
  • Ukraine
  • Uncategorized
  • Unipolar vs. Multipolar
  • Vaccine Refusal
  • Vaccine Safety
  • Voting
  • War
  • War on Government
  • Water
  • Watersheds
  • Wells
  • Wildfires
  • Winter
  • Women's Issues
  • Work
  • Yemen

Meta

  • Log in
  • Entries feed
  • Comments feed
  • WordPress.org
© 2023   All Rights Reserved.