No, Actually, It's the Whole Financial Industry That's Been Lying

The tide is turning. The shakeup ongoing from recent court cases that have uncovered the extended fraud in the foreclosure industry has given long-battered homeowners newfound power and resolve. On Wednesday, the Home Defenders League launched in California to help homeowners keep their homes and to call on Gov. Schwarzenegger to halt foreclosures in California.

Today, fed up homeowners throughout the state of California are coming together to announce the formation of the Home Defenders League. Californians are defending our homes from the greed and fraud of Wall Street and the Big Banks. We will not give up our homes without a fight!

The court findings also turn upside down widespread assumptions about the financial industry itself and homeowners caught up in the foreclosure mess.

Courts and the general public have been operating under several major assumptions that peek through when I read court cases or have conversations with everyday people:

1. Homeowners in foreclosure have done something “wrong.” This judgment shows up in assumptions such as “they bought a house they couldn’t afford,” or they are “irresponsible with money” because they can’t keep up with the payments. There’s often a corresponding judgment that goes something like “they should have known better.”;
2. These powerful institutions know what they’re doing and are trained to follow the law, so the assumption is they do follow the law;
3. The homeowner protesting the foreclosure doesn’t know what he or she is doing, compared with experienced institutions;
4. The homeowner is bringing suit to get a free ride; and
5. The big doozy belief: No one should live in a house “for free,” — if they can’t pay, they should be evicted.

Did you notice how all those assumptions are against the homeowner?

The truth of the matter, as is becoming more and more clear, is almost exactly the opposite of those assumptions:

1. Homeowners in foreclosure often wind up there because they are contesting the mortgages themselves — an unethical industry defrauded many homeowners by misrepresenting the mortgages they were getting into, spurred on by financial incentives to sell sub-prime and other crazy loan schemes.
2. The industry has institutionalized fraud, using foreclosure mills and document mills to backdate and manufacture documents to their specs. They know what they’re doing alright and it clearly is to circumvent record-keeping laws and defraud homeowners of their homes, many of which were sold to them with misrepresented mortgages;
3. Homeowners and their attorneys have been raising the issue of the industry’s fraudulent documentation for years, and, what do you know, they’re right;
4. The goal of many homeowners is simply to arrive at an appropriate and fair mortgage;
5. The super-profitable, high-rolling casino gambling these financial institutions have been doing with mortgage-backed securities and the other fancy financial “instruments” may have stripped any traceable chain of title away from millions of properties. That means these institutions claiming to be the owner of the title — and collecting your mortgage money in the meantime — may NOT legally own these homes. If there is no note to be found, the home is owned, then, by no one but the homeowner. As Ellen Brown says, “hordes of victims of predatory lending could end up owning their homes free and clear while the financial industry could end up skewered on its own sword.”

Kudos to those homeowners who have persisted in standing up to this machine — the general public owes you an apology for its incorrect judgments as well as gratitude for pushing long enough to uncover the truth. The collective momentum has finally exposed, as Rep. Alan Grayson put it in his hard-hitting video last week. the “factory of fraud.”