Jun 2

By David Dayen – Vice

Six years ago, FBI agents in Jacksonville, Florida, wrote a memo to their bosses in Washington, DC, that could have unraveled the largest consumer fraud in American history. It went to the heart of the shady mortgage industry that precipitated the financial crisis, and the case promised to involve nearly every major bank in the country, honing in on the despicable practice of using bogus documents to illegally kick people out of their homes.

But despite impaneling a grand jury, calling in dozens of agents and forensic examiners, doing 75 interviews, issuing hundreds of subpoenas, and reviewing millions of documents, the criminal investigation resulted in just one conviction. And that convict—Lorraine Brown, CEO of the third-party company DocX that facilitated the fraud scheme—was sent to prison for duping the banks.

Thanks to a Freedom of Information Act request, VICE has obtained some 600 pages of documents from the Jacksonville FBI field office showing how agents conducted a sprawling investigation. (The Jacksonville case is also featured in my new book, Chain of Title.) The documents suggest the feds gained a detailed understanding of how and why the mortgage industry enlisted third-party companies to create false documents they presented to courts, as detailed in the 2012 National Mortgage Settlement, for which the big banks paid billions in civil fines. The banks’ conduct is described in the settlement documents as “unlawful,” and the Jacksonville FBI had it nailed almost two years earlier.

In these case files, you can see the seeds of an alternative history, one where dedicated law enforcement officials take on some of the country’s most powerful financial institutions with criminal prosecutions.

So why didn’t they?

“Given everything I see here, you’d have thought there would be many more convictions,” said Timothy Crino, a now-retired FBI forensic accountant who reviewed case file documents. “If I was the case agent, I would be devastated.” [read more]

May 31

By Brooke Niemeyer – Credit.com

During the Great Recession, many Americans lost their homes due to foreclosure. In fact, according to real estate data company RealtyTrac, there were 6,324,545 completed foreclosures from January 2006 to April 2016.

“It is a big number,” Daren Blomquist, Senior Vice President of RealtyTrac said in an email. “Normal would be around 250,000 bank repossessions per year. These last 10 years represented the biggest loss of home ownership and shifting of real estate wealth since the Great Depression.”

The Current Status of the Housing Market

The market has improved, but that doesn’t make it immune to foreclosures. (You can see the 10 states with the biggest foreclosure problems here.)

“The foreclosure crisis is largely behind us, although still certainly lingering in certain pockets,” Blomquist said. “Unfortunately, we are already seeing signs of another housing bubble in certain markets, so people should continue to be cautiously optimistic when it comes to the housing market.” [read more]

May 27

By Nancy Marshall-Genzer – Oregon Public Broadcasting

It was a long struggle. But finally, two months ago, 35-year-old Davin Anderson of Cleveland, Ohio, and his wife, Kristin, paid off their credit card balance, which at one point was as high as $8,000. The bank just kept raising their credit limit.

“It happened again and again and again,” Anderson said.

Finally, Anderson said, his wife asked the bank to lower their credit limit to $4,000.

“They balked and argued with us a little bit,” he said. “Just prying questions — you know, ‘Why?’”

Sounds like the easy credit we were all able to get before the financial crisis. And banks are pushing plastic to subprime consumers again, too.

But James Chessen, chief economist at the American Bankers Association, said the growth of credit cards is a good thing. He thinks it’s a sign of consumer confidence, driving a growing economy.

“Consumers are feeling better about their financial situation and are looking to buy that refrigerator and the couch that they may have put off before,” he said.

But banks haven’t completely opened the credit card spigot, according to Brian Riley, principal executive adviser with the business advisory firm CEB. He said you have to jump through a few more hoops now to get a card. The bank checks your income, for example.

Does that mean banks have learned from the financial crisis? [read more]

May 26

By Kristin Wong – LifeHacker.com

A recently signed bill allows debt collectors to use robocalls to contact consumers over federal debts. The FCC is trying to update those rules to make them less annoying, and they want your opinion.

You can check out the budget proposal that led to the change here. A small amendment to that bill gave debt collectors the authority to robocall consumers over mortgage debt, student loan debt, or any other federal debt. As Consumerist notes, the FCC is working on legislation to keep this from getting out of hand. They want to update the rules to prevent robocalls to friends and family members of debtors, for example. The FCC is seeking public comment on this issue until June 6th. [read more]

May 25

By Vanessa Herring – WBALTV.com

The money from the class-action lawsuit will be split among 1,589 people.

“What we asked the jury to do was to not just return the illegal money that was taken, but to also return the profits that were made from that money,” said Phillip Robinson, an attorney with the Consumer Law Center LLC.

Robinson said debt collection company LVNV Funding LLC re-invested the money collected from Maryland residents.

“The jury did the right thing and found for damages,” Robinson said.

Robinson said that in 2013, the Maryland Court of Special Appeals held that a judgment in favor of an unlicensed collection agency was void, but LVNV kept collecting up until last week.

“It filed thousands of lawsuits without the right to do so, and from those lawsuits, it garnished people,” Robinson said.

“We had one person testify that he works, makes $8.75 an hour, and he was being garnished for this debt, so his take-home pay every two weeks was reduced by $100, so he had $400 to take home,” said Scott Borison, an attorney with the Legg Law Firm LLP. [read more]

May 24

By David Dayen – The Intercept

EVERY DAY IN AMERICA, people continue to be kicked out of their homes based on false documents. The settlements over allegations of robosigning, faulty paperwork, and illegal mortgage servicing didn’t end the misconduct. And law enforcement, along with most judges and politicians, have looked away in the mistaken belief that they wrapped up a scandal that just goes on and on.

My new book, Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, is about three foreclosure victims who ended up doing more investigation of the corrupt U.S. mortgage industry than any state or federal law enforcement or regulatory official.

They exposed the mass production of false mortgage documents in courthouses and county records offices across the country.

It’s a work of history, depicting events that occurred from 2009 to 2012. But it’s a living history, and that’s one of the reasons I wrote the book.

Here at The Intercept, in the past 10 months, I’ve written about the New Jersey man who had precious family heirlooms robbed by Wells Fargo subcontractors when they illegally “trashed out” his foreclosed home. I’ve written about the use of false documents in Seattle and the unregistered business trusts operating in Montana. I’ve written about the Texas jury that awarded $5 million in one wrongful foreclosure case with fabricated and robosigned documents. I’ve written about the California Supreme Court enabling foreclosure victims to challenge phony documents in their cases. [read more]