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Were big banks ‘stealing homes’?

By Jay MacDonald · Bankrate.com
Monday, December 19, 2011
Posted: 10 am ET

Forget for the time being all the Three Stooges document-fumbling surrounding the housing collapse. Set aside the obvious malfeasance of robosigning and rocket dockets.

The question on the table now is, were America's largest mortgage lenders stealing homes?

The recent lawsuit filed by Massachusetts Attorney General Martha Coakley against five of the nation's largest banks for deceptive foreclosure and loan modification practices essentially accuses them of doing exactly that.

Coakley accuses Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial of the following:

1. Engaging in unfair and deceptive foreclosure practices by conducting foreclosures when the defendants lacked the right to do so and misrepresenting to homeowners their roles as mortgagees or as the holders of the mortgages.

2. Engaging in false documentation practices to facilitate their foreclosure practices.

3. Deceiving homeowners in the course of servicing mortgage loans by misrepresenting to borrowers regarding its loan modification programs, acting deceptively in implementing loan modifications and deceiving borrowers regarding foreclosure proceedings.

"The layman's term for that is 'stealing homes,' says Firedoglake blogger David Dayen. "Coakley is accusing banks of stealing homes. They didn’t have the proper proof of ownership to take control of the homes in a foreclosure, and they did it anyway, by forging documents and committing fraud upon state courts."

Coakley's suit also includes the Mortgage Electronic Registration System, or MERS, the epicenter of its "false documentation practices" charge.

Massachusetts isn't the only state that has grown frustrated with the Obama administration's year-long attempt to negotiate a let's-move-forward settlement between the 50 states and the banks. Others, including California, Delaware, Nevada and New York, have distanced themselves from the talks, which appear headed toward an agreement that some AGs say amounts to a hand slap for the big banks.

But as the first to break from the pack, Coakley's suit reframes the debate from a snipe hunt for sundry robo-shenanigans by underlings to some serious charges leveled at top management.

The 50-state agreement under construction looks like it would grant the lenders immunity from prosecution in exchange for a settlement of $20 billion to $25 billion, to be used primarily for principal reduction and loan mods.

Coakley says she'll consider signing onto any forthcoming agreement based on its merits but has made clear she won't be party to any plan that includes broad liability release regarding MERS and other issues.

What's next? Will other states follow Coakley's lead?

Only time will tell.

But her bold break certainly throws into question the attraction of that (now) 49-state work-in-progress, and perhaps the wisdom of attempting to collectively bargain away a national disgrace.

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80 Comments
Arleine Demien
January 22, 2012 at 11:34 am

Heard peoplein IN remark: Evan though their mortgaged has never been delin thjough they've paid on their mortgages without evf having beren late, delinqurnt, whatever y want to call it - thre mortgage companies currently advetis all these lower refinance opportunities but takt the stance the

William Sanders
January 22, 2012 at 11:21 am

The big banks are the downfall of the economy right when we needed them the most, whoever thought a bank would charge $6.00 to cash a check from there own customer, they take every cent they can by using your own money, they all need to be FIRED, and Boycott Bank of America for once, I hated when they took over our loan from Countrywide I knew it was gonna be a problem with their unfair practices, the heck with Bank of America.

ridiculous
January 22, 2012 at 11:17 am

I have to respond to Oliver Street...the only freeloaders here are the banks. The banks were never "forced" as you put it to lend money to anyone. We have created a culture in this country of undereducated people when it comes to finances (this should be taught in schools as a basic life skill if you ask me, since most parents don't know where to start or won't-my parents refused to discuss anything financial with me growing up and I learned the hard way). The banks took complete advantage of people's lack of knowledge, creating extremely complex mortgage and investment products that did nothing but benefit them, while omitting vital information from, if not down right lying to, the consumer. They have incredible influence and power over your government because those same people who are obsolving them of their crimes benefitted trmendously from these schemes and scams. I do not completely obsolve people of their responsibility to use common sense when determining if they can afford to purchase a home, but when the bank pressures you with a slick sales pitch and convinces someone they can afford something they really can't-what do you expect? People trust the banks when they shouldn't.

Got robbed of home
January 22, 2012 at 10:40 am

JPMorgan Chase talked my wife into trying the 'trial' loan modification without me knowing. She signed thinking it would save a lot of money. Sent papers in and months went by. Chase kept asking for the same papers over and over. A year went by. Chase then begin foreclosure because during the trial modification we were paying less the original loan. Because we did not qualify for modification we were now in default.

Don't know where to go. May even break up the marriage.

Reivers
January 22, 2012 at 10:39 am

It is not possible for the administration to do what is necessary. I don't know the answer, I'm just trying to wrap my brain around this situation. "Too big to fail" is a warning of immediate peril. The comments on here from bank victims freak me. My daughter and son-in-law bought their first home from a bank (bank repo). It took them many tries because the banks would pull each property off the market as part of their manuvering. As you look at each piece of information it only goes one way: end of trust. The foundation, the engine of everything good today is the powerful economy. This is based on the ownership and safe exchange of property. (Not saying it's always fair - just that it drives commerce.) I'm so frustrated. The fundamentals are not too far off, it's just that we do not deal properly with law-breakers.

truth be known
January 22, 2012 at 9:32 am

Banks use to be small, friendly, and fair institutions. Then the big guy was taking over the little guy and they got greedy. Now they want all they can get. Now they have their sticky fingers in your pocket, trying to steal every penny they can get. Imagine, charging you for getting your own money via a method they came up with...run to your nearest Credit Union.

Oliver Street
January 22, 2012 at 7:19 am

1. The banks were forced to lend money to people who were not credit worthy.

2. In order to own a home, you either have to pay cash for it or mortgage payments. These people did not pay their mortgages.

3. In order to buy a government backed home, these people went through home ownership classes.

4. I'm sick to death of the freeloaders ... aren't you?

The Beat goes on….
January 22, 2012 at 6:22 am

I've washed my hands of the banking industry. Affordable home.com, and it's bail out help was and is a money making farce for the banks. A while back when I investigated this program, the lender that already held my mortgage wanted to charge 10k in closing costs, and extolled the benefit to me their customer. Isn't our tax money funding this program? I certainly understand administrative costs, but a $500 application fee plus 10k in closing. This makes PT Barnum look like a rank amateur....

Lynn Barry
January 22, 2012 at 5:38 am

We recently had a person from Wells Fargo who was our customer and came in spewing the F word repeatedly in a threatening manner. I'm sure if I walked into their company and started acting like that,they would have me thrown out. These company's and their representatives are all about money for themselves and nothing else.

Fed UP
January 22, 2012 at 2:11 am

I am fed up with the lies Wells Fargo told us regarding inherited properties. They gave us bad information and advised us to do things then denied that they would ever tell us to do them. Because we followed their advice, they later ended up attempting to foreclose on the two properties. We ended up having to pay their "lawyers" Tiffany and Bosco over $10,000 to manage the property for us while it was in the process of closing in a cash sale. They attempted to steal the house from under us and then stole the majority of the proceeds from the sale of the house. They lied about documentation that we repeatedly faxed and even threatened their own branch employees with job loss if they gave us information that we needed in order to make the loan current with them. I don't trust that mortgage company as far as I can throw them. A bunch of liars who take advantage of average working people who can't afford the big time lawyers to represent them.