Servicing a mortgage that's in default is expensive. So banks left the work to people barely trained and undereducated — cheap — who were directed to lie in thousands of fraudulent foreclosure documents. Bankers must believe the law is for everyone else.
Peter Ticktin has had a front-row seat to this "industrywide scheme to defraud homeowners." The Deerfield Beach attorney is defending about 3,000 families in danger of losing their homes. He has been trying to sound the alarm about the corruption in the foreclosure process, but no one would listen.
"It's like I told you that the president of the United States hired a bunch of plumbers to break into Democratic National Committee headquarters. You'd say I was crazy," Ticktin explains.
But sometimes things this big are also true.
Ticktin claims that the mortgage service divisions of some of the nation's biggest banks, including Bank of America and JP Morgan Chase, have engaged in the "wholesale manufacture of perjured affidavits." The evidence, he says, are the stacks of depositions of robo-signers — bank and loan service employees who signed affidavits by the hundreds and thousands without reviewing the file. He's got 150 so far.
The fraud these banks perpetrated on the courts, Ticktin says, is like a legitimate business that's "extorting protection money on the side." The banks used lackeys to perform their illegal functions — including former hair stylists and assembly line workers — people whose jobs depended upon them falsely swearing to knowledge they didn't have, over and over again.
Let's take Xee Moua, a Wells Fargo employee in South Carolina who dropped out of college after six months and had jobs in customer service before joining the document execution department of Wells Fargo in 2007.
In a deposition taken earlier this year, Moua said her bank title is "Work Director," and a big part of her job is to sign between 300 and 500 foreclosure-related affidavits per day. She said the only parts of the affidavits she verified were that her name and title were correct.
In foreclosing on the Palm Beach County home of John Stipek, Moua swore in court papers that she had examined "all books, records and documents" kept by Wells Fargo concerning Stipek's loan. She hadn't.
She was asked whether she even knew what books, records and documents the statement pertained to. She had no idea.
Moua also swore that she had "personal knowledge" of the sums of money Stipek owed Wells Fargo. She didn't.
The whole thing was a fraud. And just for added comic value, Moua was listed as "Vice President of Loan Documentation" in the affidavit, which she says is a title the company doles out to people who spend their days signing affidavits.
One more thing this scandal demonstrates is that loan servicers, contrary to their claims, are not working with homeowners toward reasonable loan modifications. They are just churning out foreclosures as fast as possible. No wonder desperate homeowners give up and walk away.
Until now, overwhelmed state court judges haven't paid enough attention to the paperwork issues raised by defense lawyers. You can't really blame them. The courts rely on the veracity of lawyers who come before them. And who could predict how widespread and deliberate the fraud was? But now that they know, judges will have to look behind every document.
What else should happen? Certainly, criminal charges for the higher ups who acceded to fraud or directed it. But beyond that, no way should the banks get to say "our bad" and refile fraud-free documents, as if this was a minor lapse in supervision.
The banks should forfeit the loans. They committed these lies in order to move foreclosures on the cheap. Let's make it a very expensive decision. It's the only thing they seem to understand.
If the extent of the problem is as small as the banks are claiming, they'll hardly feel it. On the other hand, if the fraud is as massive as Ticktin suggests, it is going to hurt. But hey, this is how it works in court. If some little-guy litigant did something dishonestly, he'd lose. If he filed false documents, he'd lose.
The big banks need to lose, too.