Over the weekend, the AP reported that a Wells Fargo executive admitted back in May that he robo-signed up to 150 documents a day, yet that bank is still resisting halting foreclosures. A foreclosure case in Florida involving IndyMac/OneWest Bank was thrown out due to a robo-signer and lack of standing to foreclose. Saturday, Massachusetts Attorney General Martha Coakley took up the cause and announced her office would investigate “apparent failure of major creditors to follow state foreclosure law.”
The broadening scope of these problems shouldn’t be surprising. Officials at Fitch, a credit rating agency, recently noted that the processing “defects” are industrywide.
The breadth of these problems could initiate a Justice Department investigation or, for public companies like JPMorgan and Bank of America, a civil investigation by the Securities and Exchange Commission over the servicers’ disclosures to investors, according to Peter Henning, a securities law expert and blogger for The New York Times’ White Collar Watch.
So meanwhile, the mainstream news seems rather uninterested in this major news … no related stories on the online front pages today of the Los Angeles Times, CNN, New York Times, Yahoo! MSNBC or the Washington Post, although the NYTimes top most emailed article for a while today was the foreclosure crisis story that ran yesterday.
And interestingly, even in the foreclosure articles that are running in major outlets, I’ve noticed an odd fear is being raised again and again: that all this foreclosure trouble could cause problems for the housing market and economy to recover. This from the WSJ:
The most immediate effect of these legal battles and investigation is to prolong the foreclosure process, which could deepen the housing crisis entering its fourth year. “This growing mess in the foreclosure process just means that the day when the housing market recovers and economy returns to normal is farther away,” said Mark Zandi, chief economist at Moody’s Analytics. …
This seems like a veiled warning to me — in other words, don’t do this, don’t go there, if you want the economy to recover. Industry-wide fraud, then, is a nuisance? Thousands of people thrown out of their homes illegally by a financial steamroller machine … we should just shrug and move on? It’s more important to get the housing market and economy back to “normal?” The obvious point to me is that this “economy” we thought we had was entirely built on this kind of widespread rampant fraud. It’s not going “back to normal” folks.
In other news, banks are considering doling out their bonuses early … so they can take advantage of the tax-cuts for the super rich (average pay at Goldman Sachs is $500,000) — and I’m guessing get their cash before their firms feel the hit of the foreclosure mayhem likely heading their way.
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