By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha)
The people in flight from the terror behind — strange things happen to them, some bitterly cruel and some so beautiful that the faith is refired forever.
– John Steinbeck, Grapes of Wrath.
I’m Jewish: my father is a Rabbi, my mother a prominent Jewish artist, but having been raised in the US it’s impossible to miss both the holiday and the meaning of Christmas.
As Christmas lights and Chanukah menorahs light up our dark winter nights it’s impossible not to look back over the prior few years, and contemplate the difference sunlight — in the form of the Internet shining information — has made in the US and around the world. Normally, I focus solely on data — hard facts — but it’s Christmas and Chanukah, holidays centered around people, change, and miracles.
About three years ago a local bankruptcy lawyer, head of a large firm, called asking if I’d take a software project creating a system to intake and analyze debtor information, to find mistakes or patterns of fraud. I wasn’t thrilled. I’d gone through a tough divorce, leading to the inevitable and all too familiar financial problems; the thought of programming a system to dig through piles of debt seemed depressing.
He was persistent, calling repeatedly like only a lawyer on a mission can, so I finally agreed to spend some time and at least do the analysis about the market and how the software would might work. I learned the basics of bankruptcy, met some clients, worked with the staff, and studied the software and systems in use.
One item persistently caught my eye; the foreclosure progress dockets, the items filed by the banks to win their case, often didn’t make sense.
I had a foreclosure of my own, filed by now-known fraudster David J. Stern, after Aurora Loan Services told me to stop paying my full-doc, 15% down-payment loan to qualify for a short-sale. I hadn’t paid it much attention; I bought that house with an ex-girlfriend in an area of town I didn’t especially like, and just wanted to be finished with it.
Even though they’d told me to, it was I who stopped paying so .. time to leave. I received two strong short-sale offers, both at or above generally accepted market value. Aurora eventually accepted both, but long after the deadlines on the offers ran and the home’s value had plunged considerably further.
I took the hint that Aurora had no interest in working in good faith. Their failure to mitigate my breach, that they’d induced anyway, was well documented.
I thought my own story was an anomaly. It wasn’t. In retrospect, it didn’t even rank at the top of the bad-faith-o-meter. Since then, person after person told the same nightmare stories.
Eventually I started to download court filings in bulk to look for patterns, and what I saw was atrocious. First one county, then another .. I now have dozens; tens of millions of pieces of electronic data detailing dreck that would make the most bank-friendly legal ethicist cringe.
Eventually, the “I” transformed into a “we,” as a small group of us here in South Florida started working with one another.
We looked at the list of over 50,000 bank “errors,” where banks at the end of the foreclosure told the court ex-parte (without informing the other side), that they’d made a small mistake, a typo on every piece of paperwork ever filed in the case; the typo was they’d typed the wrong bank name. Or maybe the wrong address, the wrong borrower .. even the wrong case. Oops.
We gagged at the list of “Guardians,” who stand in when a borrower is incapacitated, on active duty in the military, or deceased; robo-guardians. Guardians are hired by banks, and there are examples where mill lawyers, the lawyers that prosecute foreclosures, serve as guardians themselves. They take an oath to protect, say, soldiers or the estates of deceased retirees while their children were trying to figure out what was happening, while simultaneous working for the same banks in other cases, albeit at different law firms. We found that — surprise — lawyers who prosecute foreclosures don’t make very good foreclosure defense lawyers. It’s not uncommon they speed a foreclosure along even faster than if nobody had shown up on behalf of the borrower.
Then there are the judges.: the infamous Florida senior judges brought in to “rocket-docket” foreclosures — the rocketeers, if you will — aren’t even the worst. They’re retirees that stamp virtually anything; at least one arguably suffers from dementia. Arguably the worst is a young judge, a top-notch young lawyer who should have known better, who bragged about the courtroom innovation she’d pushed to the rest of the state, Florida infamous rocket-docket. [Digression: has anybody else noticed that terrible ideas always referred to as “great innovations,” whereas genuine innovations are “great ideas?”] Public records show she owns a substantial stock portfolio that reads like the list of plaintiffs on her daily calendar. As the robosigning scandal was unfolding she’s famously quoted telling a local reporter “I haven’t seen any widespread problems.”
We closed down crooked foreclosure processing companies, exposed crooked bankers, and now even identified a crooked (or at least grossly incompetent) senior US government official or two. We’ve watched them twist the law, the financial markets, and their own humanity into some unrecognizable nightmare form, and now and again helped shut one down. But it’s like a game of Angry Birds; after cracking how to destroy one set of bad guys you advance to a new screen that’s even tougher.
Bankers and their lawyers didn’t hesitate to label our rag-tag group as, well … crazy. But Lynn Szymoniak, Lisa Epstein, and Michael Redman, and Nye Lavelle, the earliest, aren’t only colleagues, but dear friends.
Then there are the lawyers who go to the mat for their clients and our cause, especially foreclosure defense lawyer Matt Weidner, and civil rights advocates Larry Schwartzol and Rachel Goodman of the national ACLU. Then lawyers who both fight but, almost more importantly, teach other lawyers how to: especially Max Gardner and April Charney.
Things began to really change when the journalists and publishers started catching on. Gretchen Morgenson has been at the forefront. Matt Taibbi called out the scam early, often, and using deliciously inappropriate language to describe atrociously inappropriate behavior. Abigail Field joined us later but jumped on board with a vengeance. On TV Scott Pelley and his producer, Dan Reutinck, brought the story to countless living rooms with moving pictures and stories. Then there’s my personal favorite, Yves Smith, my publisher who gave me a voice.
There are about five million American families living in their own homes — their children sleeping in their own beds — who wouldn’t otherwise be there but for this group. Their parents are terrified that any minute the Sherriff, or some thug hired by “The Bank,” will come to the door and they’ll be living in their cars. They should be scared; that threat is very real.
My father, the Rabbi, relayed a story to congregants at a Chanukah party. He taught that, at the core, Chanukah is a spiritual holiday, the holiday of miracles, when a small batch of ancient Israelite soldiers drove away the then mighty Greek army against all odds. Small, dedicated groups of can win when, at their core, they know that they’re fighting genuine evil.
Throwing children to the street, stealing dreams, and being enabled to do so because of massive government subsidies to the most culpable, the most reckless, the most conniving predators really is evil.
We’re living in a strange time, a polarizing time that brings out the very worst and the very best in humanity, that crosses political parties, blasts away nonsensical wedge issues, and gets to the core of what defines us as either human or inhuman. It’s like an alien invasion movie except that the aliens are people, the injuries are real, the bad guys don’t disappear after two hours. Oh yeah .. and the producers will never admit their involvement, even if the credits ever finally roll.
Maybe this year the country will come to its collective sense and where we’ll start to care about one another again, to treat one another like people rather than numbers, but I doubt it.
Gretchen Morgenson quoted Congressman Brad Miller, D-NC, it in an August 14, 2010 article. “I’ve seen the banks going from losing no fights to losing a few fights,” Morgenson quotes Miller. “What I’ve found is the more fights we pick, the more success we have.”
Morgenson then added her own thoughts, “Here’s to more fights then. Many more.”
Merry Christmas, Happy Chanukah, and to the hope that when the Christmas lights and the Menorah’s shine next year that the fights will be finished. Maybe it’s a dream; the polar opposite of the nightmare Brian Moynihan, Jamie Dimon, Timothy Geithner, and the rest have inflicted on the rest of us. But I see a day, not so far in the distant future, where our Christmas and Chanukah lights pierce a physical darkness, rather than a spiritual one that then will be nothing more than a bad memory.
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THANK YOU MICHAEL.
very well said Michael
Very well written post, Michael. Thank you for all your work and may the new year bring many more victorious battles.
Yes, a very nice post like a candle of hope lit in the midst of great darkness that only now may be finally lifting.
I particularly liked these moving observations…
“We’re living in a strange time, a polarizing time that brings out the very worst and the very best in humanity, that crosses political parties, blasts away nonsensical wedge issues, and gets to the core of what defines us as either human or inhuman. It’s like an alien invasion movie except that the aliens are people, the injuries are real, the bad guys don’t disappear after two hours. Oh yeah .. and the producers will never admit their involvement, even if the credits ever finally roll.”
“Maybe this year the country will come to its collective sense and where we’ll start to care about one another again, to treat one another like people rather than numbers, but I doubt it.”
—
Here’s a shortened audio version of a link I posted in a recent thread.
Rev. Pryor – How Long
Thank-you.
This time of year always provides a sense of hope.
Maybe, just maybe, this will be the year.
It’s a Wonderful Life
Do you mean that propaganda piece for fractional reserves and usury?
«There are about five million American families living in their own homes — their children sleeping in their own beds — who wouldn’t otherwise be there but for this group. Their parents are terrified that any minute the Sherriff, or some thug hired by “The Bank,” will come to the door and they’ll be living in their cars. They should be scared; that threat is very real.»
While the foreclosure fraud is widespread and callous, writing the above is quite awful and pernicious and calls into question the ethics of your arguments.
Because the petty leveraged speculators whom you describe as squatting in those buildings are not living in their own homes, they haven’t paid for them, and don’t want to pay for them. They were themselves in large part fraudsters who cheered on mortgage and securities fraud when it meant that they were benefiting from ever rising prices to screw those poorer than themselves.
The victims of the foreclosure frauds are not the often despicable “get-rich-quick” squatters occupying them, but the real owners of those homes, usually the owners of MBSes, who have been screwed equally and usually jointly by the squatters and the banks who aided and abetted them, and that are now turning on them to avoid the MBSes reverting to them.
Using compassionate and even tearful language to describe the very mild consequences mortgagees occasionally suffer after cheering on without shame endless capital gains speculation to damage the living of those poorer than themselves for their own benefit is revolting.
Petty, judgmental, and ignorant.
The New York Fed, in a recently released report, has found that the bubble was driven by speculators, all right, speculators who bought multiple homes and intended to flip them. They aren’t people who bought for their own use. And if you read The Two Income Trap (published in 2003!), you’d know that the decline of school quality and the rise of two income families mean that families were effectively competing for housing in good school districts, and to have their children in safe neighborhoods. As the book documents, having both parents working made families more, not less, vulnerable to shocks like job losses.
Where have you been post crisis? Do you think high unemployment, job sharing, benefits cuts, and other forms of reduced pay dropped from the sky? They are the direct result of the crisis, which was visited on hapless individuals.
To put a human face to this debacle one should read Alex Kotlowitz’s 2009 NY Times article “All Boarded Up” which documents the post-bubble plight of the City of Cleveland, and its long-suffering residents: http://tinyurl.com/dgx5ez
I also encourage people to read Doug Noland’s retrospective on Financial Arbitrage Capitalism at http://www.prudentbear.com to see how we arrived at this sorry state of affairs.
Certainly there’s enough blame to go around, but the impetus for what happened clearly came from above. The petty specs and amateur flippers were simply taking their cue from Wall St. As above, so below.
ebear
Thank you for mentioning Cleveland. Foreclosure fraud made a big impact here long before it hit sunbelt boom-towns like Las Vegas, Phoenix, and Orlando.
One thing very few journalists and pundits address is the utter destruction of formerly stable neighborhoods where many residents had paid off their mortgages and never indulged in a home equity bomb prior to the “crisis”–or since. The value of our largest investment has been decimated. As more and more houses around us become vacant and are vandalized, crime rises, so in addition to becoming poorer, we are less safe.
My sincere thanks to Michael Olenick and those like him who are working to bring the fraudsters to justice, and to Yves Smith and those like her who help to spread the word.
I’d like to provide another perspective on ‘flipping’ as that activity has been assigned a big part of the problem, seemingly as another scape goat IMO.
My husband and I were ‘flippers’ long before the frenzy developed and got out close to the peak realizing that the market had become irrational.
Also, flipping is hard work and my husband suffered ruptured disks.
The majority of our projects involved acquiring distressed property that was not conventionally financeable and productively returning it to the mainstream market in functional condition. Sometimes it was lucrative, sometimes it was a huge amount of work and RISK for low/modest returns.
Although we have semi retired, we follow the activities of others. Nowadays, flipping often invovles buying from auctions with cash, the buyer has only the bare minimum warranty for title and condition (caveat emptor)in an unstable market where the neighborhood price can hit an ‘air pocket’ with other foreclosure/short sale comps that suddenly bring your projected resale price down.
I can’t speak to the activities of big investment groups that buy up lots of houses etc, but I do object to the notion that ‘flippers’ with a broad brush created the bubble.
‘Personal responsibility’ is oft cited by those who wish to deflect focus that this crisis was anything other than a ‘top down’ phenominon.
However if I were Queen, I would require financial education from the beginning right along with learning to read. What could be more important in making one’s way in the world?
That lack of financial education seems almost by design to me, much easier to trap people.
I know something about how the mortgage industry operated at the retail level during the frenzy too.
Uneducated borrowers were told what the could afford way more that what is prudent and herded into closings confronted with a blizzard of mortgage papers, the basic terms (like how much more the adjustable rate payment would rise) often very different than what had been told them.
I have witness mortgage broker claiming to clients that if the payments get to be too much, they can just refinance and pull money out in a few years after the house has appreciated some more.
If pressed for advice, I urge anyone in escrow to get all documents emailed in advance, don’t show up to the closing cold. Ask questions on anything not understood, don’t be afraid to look stupid.
Did you recieve your Good Faith Estimate and Truth In Lending STatement-written disclosures with the basic terms and costs of the loan clearly identified? Many never got any of these disclosures.
Yes, there is personal responsiblilty but from my experience ‘on the ground’ at the retail level and also from reading and studying this site etc., the population was very little more than fodder to fuel the gargantuan appetite for mortgages to be rebundled and sold worldwide with misrepresented quality.
In particular I would like to remember all those true victims who have lost their jobs because of the post-housing-bubble dip, or because their jobs have been offshored to countries where living standards are better because living costs, among them rent and house prices are lower.
All those poor families who have seen increases in their sales or other non-income taxes or cuts in essential safety net and social insurance services because of massive tax avoidance by speculators who got capital gains for so long on low tax or no tax capital gains, and who relentlessly voted to keep down property taxes, especially on the most expensive properties.
To the pensioners and life assurance purchasers who will see decreased because their pensions have been “invested” in very risky MBSes fueled by co-fraud by both petty real estate speculators «American families living in their own homes» and mortgage vendors, who have been voting massively for low, low interest rates to drive their speculative highly leveraged property investments higher.
All those who in other words who have suffered for 30 years of endless “F*ck YOU! I got mine” policies voted for enthusiastically by MAKE MONEY FAST shysters who now squat in other people’s homes and use the widespread fraud of banksters to try and shield themselves from the consequences of their shortsighted selfish greed.
You should realize that banking victimizes everyone – savers, borrowers, investors and ultimately the banks themselves.
And there is no need to throw anyone out into the street. Heck, it’s only money that is needed – mere electronic accounting entries. So:
1) Let’s abolish the counterfeiting and
2) bailout the entire population equally with new fiat.
Or we can face an increasingly bitter and divided nation and world.
You’re right: systemic change is essential. But how to counteract the power of the banksters? Do you agree with some of Ellen Brown’s proposals to create publicly owned municipal and state banks as an interim step?
In order to establish that there is a “squatter” taking possession of someone else’s house, that particular someone else must prove its interest. If that someone else bought a really dumb MBS which did not prove it even was a MBS by providing evidence of any or all titles, and other documents, then that someone else should really be careful next time. Because the entire securitization industry is still unregulated and unrepentant. The only thing you can do now is sue the investment brokers.
You need to read Tom Ferguson’s The Golden Rule and Morgenson/Rosners’ Reckless Endangerment and then we might have a more productive discussion. You accuse ordinary citizens of voting in mortgage subsidies. They didn’t.
Elections in America have close to NOTHING to do with popular opinion (there would be no effort underway to cut Social Security, for instance, if this were the case. Oh, and I hate to tell you, who wins is very much a function of how telegenic they are and not what they stand for). Per Ferguson, who has meticulously documented campaign finance over decades, it has to do with investing, as in moneyed special interests buy the policies they want. Reckless Endangerment documents the rise of what I call the mortgage industrial complex, how Big Finance, mortgage brokers, and homebuilders allied and sold “affordable housing” to both parties (with a special slant on lower income bennies for the Dems).
Michael — Thank you. From your lips to G-d’s ears.
And guess who is behind the whole scam – none other than our Attorney General Eric Holder.
“The bank is something more than men, I tell you. It’s the monster. Men made it, but they can’t control it.”
Feeling Grapes of Wrath-y this morning.
Happy Holidays Michael! It is a gift to have a Light like you bringing light to other human beings’ lives. There is a darkness penetrating many souls presently and it is a welcome read to know you and others are fighting the good fight. Thank you for all you do and the light you bring to others’ lives.
Happy Holidays Yves! Thank you for shedding your Light onto the ones who would otherwise “fall off the radar” and into the darkness, swallowed by lies. Bless you.
Micheal,
It was you and Lisa that helped me find the documents in Washington state to fuel the investigation.
I will be forever grateful to find you two.
Thank you. Merry Christmas, Happy Chanukah! May we all find that light to help us lead others to the truth.
Karen Pooley
Excellent article. You cannot reason with fixed minds, I have discovered. Also you cannot teach ethics to the unethical.
There are good human beings around…the light in the darkness. Martin Andelman and Shawn Matthews are two I can name who will help all they can. They recognize we are all in this together. I can only hang in there and keep jousting with the banks. I will never ever give up without a fight..and it has been a rough go…since 2008
Without any help from our government,a few courageous folks are trying to make a difference. The courts appear to be our last resort and they do not seem to have a very good track record as a whole. If our judicial system does not start coming forward on behalf of citizens I do not know what the future will hold for this country.
…And 2012 is a new year.
Thank you, Michael, for what you’re doing.
Happy Holidays, Yves and thanks so much to you and those you inspire for your service benefiting us all!
With sincere wishes for your long life with vigorous health and every success!
It might be worth remembering that what we’re celebrating at this time of year is the birth of the man whose one and only act of aggression was throwing the money changers out of the temple…
Good post.
“and to the hope that when the Christmas lights and the Menorah’s shine next year that the fights will be finished. Maybe it’s a dream; the polar opposite of the nightmare Brian Moynihan, Jamie Dimon, Timothy Geithner, and the rest have inflicted on the rest of us.”
Add to that list of the rest -Barack Obama,Ben Bernanke, and members of Congress who go along with the current brand of anarchy perpetrated by the thugs housed inside the bodies of the vampire squids.