Wells Fargo says it improperly foreclosed on more borrowers than originally estimated

Wells Fargo & Co. acknowledged Tuesday that it failed to offer mortgage modifications to hundreds more borrowers than were due them and that many ultimately lost their homes because of the error.

Now, in a regulatory filing released Tuesday, the bank said it improperly denied modifications to 870 borrowers — nearly 40% more than first thought — and that 545 of those borrowers later lost their homes.

The major banks involved in the mortgage scams were incentivized to not approve loan mods. Each time there was a default, there were default insurance and liquidity credits that these banks could claim.

Taking homes to the brink of foreclosure was a better deal. After collecting fees, credits, insurances, many of these banks would sell the notes (which they did not hold legally), they would sell to foreclosure mills which were attorney groups that would scoop up free equity in houses because they bought the homes for pennies on the dollar and didn;t have to pay until the foreclosures were complete.

Foreclosure was a far better process for disposing of clouded title properties by banks, lenders, loan sharks wanting to ‘launder’ title so that they would never need to show they were the actual noteholders.

Where were the real notes? They were locked up into trusts and offloaded via Special Purpose Vehicles to hide debt Enron style.

What the scammers did was to join in what is known as private label MBS securities made possible by the repeal of Glass-Steagall signed into repeal by Bill Clinton. This allowed scammers to partner with crooked lenders, many of whom were populated by dubious persons that were involved in the S&L crisis of the early 1990s; the same people.

What they would do is to issue a security for ‘seasoning’ meaning bought and sold multiple times over a year by members of the financial institutions. Once the seasoning was complete, the securities would be rated and would be sold, not once, but many times, many buyers, buyers who were not aware there were other buyers buying the same paper.

What did these securities look like? They were pooling and service agreements and a ‘list of assets’ which was a spreadsheet of many thousands of names, home addresses, assessed values.

A single security could be worth about half a billion. A 3% commission would be in the range of $15 million. Doing about 2 or 3 or more such securities sales made some scammers extremely rich.

The scammers couldn’t lend money to homebuyers because they didn’t have any money. So they took their security draft spreadsheets and filled it with fictitious names, addresses, and values. Once they had a sale transaction commitment, in order to get real homebuyers they dispatched liar lenders, mortgage brokers across the country and the world, and they backfilled and backdated real names into the fictitious list. Many of these mortgage brokers were scammers from the S&L crisis, many of them were convicted felons.

Finding real homebuyers became problematic. Janitors were stuffed into 5 bedroom homes, maids were approved to buy luxury condos, etc. The scam was run and the scammers cashed out, took their ill-gotten gains offshore via a Delaware corporation and hid all the assets in secret accounts.

It was the biggest heist in US history and it’s not over yet.

Getting to the bottom of it all is impeded because it is white collar crime with a hypertechnical lexicon to wade through. Besides, it was so easy to blame the 60 million + homeowners that got pushed into this financial meth. Blame the addicts, not the pushers.

See the film ‘The Big Short’ to gain a sense of the massive, massive corruption that went on.

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