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I thought I covered that in my first post, the press release-drumming up business thing to make a quick buck.

There is an index number for a filing but didn’t say where it was filed. Maybe in its infancy yet.

In the meantime an update has been added to the original press release...for what it is worth:

UPDATE-JAN 31, 2012- Hawaii did it, Nevada did it and now other states are doing it. Seeing the devastating effect on the state economy and the ensuing effects on the nation’s economy and the world finance, State Attorney generals are taking matters into their own hands, and pressing the points that hurt. The Banks don’t like it because it undermined their narrative. This year, 2012, is the year when most of the truth will come out and it will blow your mind to find out just how pernicious and pervasive this false, faked, securitization has been.

The number of foreclosures has plummeted in those states that have put up a fight. Why? Not because they were banned but because those states that require proof of authority to foreclose, proof of the accounting and the proof of settlement or the ability to mediate, have all but eliminated foreclosures. Now the question is how do we correct the corruption of the the title registries, get people restored to their homes and force the pretenders to compensate victims of fraud, forgery, and outright theft.

Catherine Cortez Masto has mastered the basics of securitization and she, like Beau Biden in Delaware, Schneiderman in New York, Coakley in Maine and others don’t like what they see — corroboration of some of the worst nightmares of conspiracy theorists.

It won’t be long before the investigations get traction and start picking up steam. Indictments will follow but not for a few months, at least.

You will hear words from these prosecutors that you never thought you would hear about the banks conduct, the transfer of wealth through theft, and the commission of crimes too numerous to list here. As the momentum picks up, you will see thousands convicted, jailed, defrocked from their law license, notary license, appraisal license, title license and even the license to do business in the states where they thought they had a lock on the whole thing. People are wide awake right now and when Americans awaken, things happen fast.

Here are some of the more important questions and my comments that were posed in a recently released letter to Thomas J. Perrelli at the U.S. Department of Justice and Shaun Donovan as secretary of the U.S. Department of Housing and Urban Development. It would be a good idea to take out those template discovery forms you have for clients and start your revisions. Stop assuming that anything the Banks said was true and start assuming the everything they said was false — including the losses they claimed to get the bailouts.

What origination conduct did the federal agencies not release? [That’s not my question, it is Masto’s question. This is a direct frontal assault on the complicity of the Federal government in the mortgage mess. Inherently it addresses the issue of whether the origination process violated law, rules or regulations and whether there is a valid lien on most properties that were financed with investor money.]
The State release refers to “…brother and sister corporations…” Please provide some clarity as to this particular phrase as used in the state release. [Masto is not going to be papered over by vague wording that could mean anything. She wants to know what went on. Where did the money go, and who were the parties involved?]
The State release contains a provision that prevents the State AG’s and banking regulators from seeking to invalidate past assignments or foreclosures. Does this prevent States from effectively challenging future foreclosure actions that are based upon faulty prior assignments? [Masto nails it on the head. First of all this is AMNESTY for the Banks who committed crimes and want the government to ratify the crime since the government was complicit in allowing, creating and promoting the crime. It does nothing to clear up the title problems that currently exist or that will exist if the faulty assignments contain not only forgeries but fabrications of the truth of the transactions inherently referred to within the instruments.]
Paraphrasing Masto, when will the results of existing investigations be made public — or do you want us to take your word for it that there are or are not weapons of mass financial destruction still hidden in the pile?
Paraphrasing Masto, how will we be able toe enforce the new servicing standards or are we taking the word of the Banks and servicers who lied to us consistently up until this point in time?
Paraphrasing Masto, how and when will consumers get relief if they were victims of fraud, chicanery and theft?
Under what circumstances will the Monitor be able to access servicers source documents, i.e., the documents that form the underlying basis for the work papers? [Of course Masto knows that she will never see the source documents because they would contradict everything the Banks and servicers have said up until this point, one of many reasons she will not participate in the multi-state settlement.]
What kind of data will the monitor be able to demand regarding the allocation and performance of servicers’ modification/other consumer relief? What compliance or enforcement provisions address the Monitor’s and States’ ability to enforce the consumer relief provisions? Before the claim of securitization of mortgage debt that never in fact was completed, there were simple formulas to determine whether the workout was good or bad for the lender. Now the servicers are using excuses like “everyone will do it” if they accept modifications, even though the proposed modifications i results in proceeds that are much higher than the results of foreclosure. So the real question is whether the consideration of modifications requires (a) authority and (b) no discretion if the proposed modification exceeds x% of fair market value of the collateral. If accepted, this change would have eliminated 2/3 of all the past foreclosures and 90% of the future ones.
Please explain the assumptions on which the settlement value chart relies. It describes a maximum expected benefit; what is the minimum expected benefit? Can we get a range of values for each state.? [And what data exists showing the true liability for false, fraudulent, fabricated loans and foreclosures to compare with the settlement?]
Paraphrasing Masto, how do these detailed formulas actually work in real life? What will be the effect on blighted areas and how can we as AG’s determine what risk is associated with acceptance of an agreement in which the probability of millions more foreclosures will take place under false pretenses, only to become abandoned property?

The financial crisis has spawned hundreds of criminal prosecutions for alleged fraud. Yet so far, defendants have been mostly minor players such as real-estate agents, mortgage brokers, borrowers and a few low-level bank employees. No senior executives at large financial institutions face criminal charges. That’s in stark contrast to prosecutions during the savings and loan scandal two decades ago, when the government’s strategy targeted and snagged some of banking’s most powerful players. The approach back then succeeded in sending scores of S&L executives to prison, as well as junk-bond king Michael Milken and business tycoon Charles Keating Jr.

One explanation for the difference may be that key bank regulators – who did the detective work during the S&L crisis and sent more than 1,000 criminal referrals to prosecutors – ( CLICK FOR FULL VIDEO OF THIS PROSECUTOR) have this time left reporting fraud up to the banks themselves. This is similar to the Florida Attorney General’s Office when investigating Florida Default Group, Erin Cullaro, the investigator once worked there, and still did part-time work for the firm, WITH THE WRITTEN PERMISSION OF THE ATTORNEY GENERAL.

Besides the absence of criminal referrals, other excuses for the lack of major prosecutions may include a skittishness among prosecutors about filing cases they could have trouble winning, and a severe decline in investigative resources. The FBI dramatically shifted resources away from white-collar crime after the 2001 terrorist attacks. The strategy of leaving it to banks to ferret out all the fraud. Institutions will not make criminal referrals against the people who control the institutions. The system that tracks Suspicious Activity Reports, or SARs, detected a dramatic increase in mortgage fraud starting in 2003, when reports of mortgage fraud nearly doubled within a year from 5,400 to 9,500. By 2007, the number had exploded to 53,000. During those same years, many mortgage lenders dramatically lowered their lending standards. Banks often required no proof of income. Borrowers could even get loans without be able to repay them. The system that tracks Suspicious Activity Reports, or SARs, detected a dramatic increase in mortgage fraud starting in 2003, when reports of mortgage fraud nearly doubled within a year from 5,400 to 9,500. By 2007, the number had exploded to 53,000. During those same years, many mortgage lenders dramatically lowered their lending standards. Banks often required no proof of income. Borrowers could even get loans without be able to repay them. Lending executives may have encouraged the making of bad loans, but they generally did not personally approve the loans. They didn’t send emails telling the troops to make fraudulent loans instead they paid big commissions to loan offers who made risky loans. Then the executives were able to reap huge bonuses for making the company look so profitable. the administration may have been more focused on saving failing banks – and an entire financial system – than in prosecuting bank executives. Giving billions in bailout dollars to executives who encouraged fraudulent practices not only could complicate a case, it could prove embarrassing.

The timing was perfect, less cops around, your only accomplice was the government that bailed you out, the criminal is the investigator, and the big fish merely give up the small fish, that in all likelihood, aren’t even in business anymore.

HENCE- THE PERFECT CRIME — BUT NOT ANYMORE

But the foreclosure crisis is not only a few million personal tragedies. It is a few million crime scenes.

What is behind these suits? Simple: Crime by mortgage servicers and their contractors. And this is more than just the crime of these foreclosures themselves — it’s the residual tail end of a housing bubble based on fraud. The reason these bank servicers must now routinely employ notaries using false documentation is because they never established a clear chain of the property title upfront.

The attitude during the go-go days of the housing bubble was “here today, gone tomorrow,” as Joe Nocera and Bethany McLean make clear in their book “All the Devils Are Here.” This was a refinement of the financial deal makers’ code, “IBG-YBG,” meaning “I’ll be gone, you’ll be gone,” described by Jonathan Knee in “The Accidental Investment Banker.”

In this environment, why bother getting your paperwork in order when the goal is to put someone into a predatory loan, reap fees and disappear tomorrow?

Now that these homes are in foreclosure, however, the lack of paperwork is a serious problem. And, since no one has yet been held accountable for the fraud perpetrated during the housing bubble, the business model of financial institutions is often still predatory.

This fraud is now coming back to haunt our courts — for example, in the falsified foreclosure paperwork required to cover up the corner-cutting of the subprime lenders and the banks that funded them.

The banks themselves have confessed to breaking the law. The Veterans Affairs Committee held a hearing early this year when JPMorgan was found to be illegally foreclosing on 18 U.S. military families — a violation of the Servicemember Civil Relief Act.

This law bans foreclosing on active duty troops. Knowingly violating the ban carries up to one year in prison for each count. JPMorgan apologized for its violations, because for banks, being sorry when caught is what really counts. The families were compensated by JPMorgan financially, but no one at the bank got jail time or had to plead guilty.

Bank regulators have now found that up to 5,000 military families may have been foreclosed on illegally, as The Financial Times reported last month. Yet the Justice Department settled with Bank of America for alleged violations of the service member act. BofA, like JPMorgan, doesn’t have to admit to wrongdoing — but it says it is very sorry anyway.

“The SCRA is not some obscure legal technicality,” said Rep. Brad Miller (D-N.C.), who wrote the law, “that might just have escaped the attention of mortgage servicers. Those servicers are all affiliates of the biggest banks. … Servicing mortgages is all they do, and they really don’t have that many laws to keep up with. They have got to have known what the law required and consciously decided that they could just ignore it, the same way they apparently decided it was OK to file false affidavits in legal proceedings.”

President Barack Obama has argued, as recently as last Sunday on “60 Minutes,” that what happened on Wall Street wasn’t criminal. “Some of the most damaging behavior on Wall Street,” the president told Steve Kroft, “in some cases, some of the least ethical behavior on Wall Street, wasn’t illegal. That’s exactly why we had to change the laws.”

Obama is wrong. Fraud was illegal before the crisis; it’s illegal now. The Servicemember Civil Relief Act was signed in 2003. So it was already on the books. During the savings and loan crisis, the George H.W. Bush administration sent about 3,000 white-collar criminals to jail. This administration has yet to send one.

And it is for lack of trying. Attorney General Eric Holder and his network of U.S. attorneys haven’t brought one criminal suit on illegal military foreclosures or foreclosure fraud. There have been enough books and investigations revealing rampant criminality in the housing bubble and now in foreclosure crisis. Yet Holder’s DOJ is still settling with banks to let them off the hook for illegal foreclosures on active duty troops.

The administration is now attempting to quash state-level officials by fiercely lobbying for a 50-state settlement to paper over the foreclosure fraud scandal. Obama may talk about his fealty to the “99 percent,” but his administration is engaged in an aggressive coverup of bank crimes.

The administration’s response to Coakley’s suit is perhaps the most revealing, for the Massachusetts case against the banks was particularly sweeping.

The banks’ press release response has largely been “we’re disappointed” boilerplate, and only the taxpayer-owned lender Ally Financial (formerly GMAC) pushed back hard. The company declared that it plans to cease all mortgage lending in Massachusetts.

Coakley’s response was simply that this is proof that Ally is not interested in following the laws regarding rules of evidence. In other words: good riddance.

After this dispute, Rep. Barney Frank (D-Mass.) and Coakley called for congressional hearings into Ally’s behavior.

Ally’s action is an attempt at what is known as a capital strike — a threat by financial interests that they will cease financing critical social activities unless their legal demands are met.

Gretchen Morgensen and Josh Rosner detail a similar case in “Reckless Endangerment,” their history of the housing bubble. In 2003, before the bubble, Georgia lawmakers noticed that mortgage lending was riddled with fraud and predation. So the Legislature passed a law clamping down on fraud with a state consumer protection law.

The response was devastating — Standard & Poor’s declared it would no longer rate mortgage-backed securities with loans originated in Georgia. The agency made enormous profits by rating subprime mortgages, so a predatory lending law may well have proved a threat to this profit stream. The state quickly reversed the law for fear that there would be no more housing finance in the state.

Other states and localities took notice — and we saw what happened next.

The housing bubble, in other words, was not just due to tragic herding behavior. It also involved the financial sector’s aggressive responses to democratic attempts to rein in creditor abuses. Now Ally, a bank 74 percent owned by taxpayers and controlled by the administration, is continuing this abusive trend.

Turning our markets into playpens for predatory behavior didn’t happen overnight, and it will not be fixed overnight. But until we have public servants strongly focused on justice for all, we can expect the crime spree to go on. After all, what we’re all learning is that, at least for large banks, crime pays.

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