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FORECLOSUREGATE

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Amid a snowballing foreclosure fraud crisis, President Obama blocked legislation on Thursday that critics say could have made it more difficult for homeowners to challenge foreclosure proceedings against them.

The bill, titled The Interstate Recognition of Notarizations Act of 2009, passed the Senate with unanimous consent and with no scrutiny by the DC media. In a maneuver known as a "pocket veto," President Obama indirectly vetoed the legislation by declining to sign the bill passed by Congress while legislators are on recess.

The swift passage and the President's subsequent veto of this bill come on the heels of an announcement that Wall Street banks are voluntarily suspending foreclosure proceedings in 23 states.

By most reports, it would appear that the voluntary suspension of foreclosures is underway to review simple, careless procedural errors. Errors which the conscientious banks are hastening to correct. Even Gretchen Morgenson in the New York Times characterizes the problem as "flawed paperwork."

But those errors go far deeper than mere sloppiness. They are concealing a massive fraud.

They cannot be corrected with legitimate paperwork, and that was the reason the servicers had to hire "foreclosure mills" to fabricate the documents.

These errors involve perjury and forgery -- fabricating documents that never existed and swearing to the accuracy of facts not known.

Karl Denninger at MarketTicker is calling it "Foreclosuregate."

Diana Ollick of CNBC calls it "the RoboSigning Scandal." On Monday, Ollick reported rumors that the government is planning a 90-day foreclosure moratorium to deal with the problem.

Three large mortgage issuers JPMorgan Chase, Bank of America and GMAC -- have voluntarily suspended thousands of foreclosures, and a number of calls have been made for investigations.

Ohio Attorney General Richard Cordray announced on Wednesday that he is filing suit against Ally Financial and GMAC for civil penalties up to $25,000 per violation for fraud in hundreds of foreclosure suits.

These problems cannot be swept under the rug as mere technicalities. They go to the heart of the securitization process itself. The snowball has just started to roll.

You Can't Recover What Doesn't Exist

Yves Smith of Naked Capitalism has uncovered a price list from a company called DocX that specializes in "document recovery solutions." DocX is the technology platform used by Lender Processing Services to manage a national network of foreclosure mills. The price list includes such things as "Create Missing Intervening Assignment," $35; "Cure Defective Assignment," $12.95; "Recreate Entire Collateral File," $95. Notes Smith:

"[C]reating . . . means fabricating documents out of whole cloth, and look at the extent of the offerings. The collateral file is ALL the documents the trustee (or the custodian as an agent of the trustee) needs to have pursuant to its obligations under the pooling and servicing agreement on behalf of the mortgage backed security holder. This means most importantly the original of the note (the borrower IOU), copies of the mortgage (the lien on the property), the securitization agreement, and title insurance."

How do you recreate the original note if you don't have it? And all for a flat fee, regardless of the particular facts or the supposed difficulty of digging them up.

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Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling WEB OF DEBT. In THE PUBLIC BANK SOLUTION, her latest book, she explores successful public banking models historically and (more...)
 

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Andy Gause just posted a good youtube video confir... by Ellen Brown on Saturday, Oct 9, 2010 at 5:10:30 PM
I hope the lenders FINALLY feel the PAIN - But why... by Jon Ross on Sunday, Oct 10, 2010 at 8:56:44 AM
Brown is absolutely right. The financial-media-ele... by R A Bows on Saturday, Oct 9, 2010 at 6:04:18 PM
Ellen's writing takes this muddy situation and mak... by Josh Mitteldorf on Saturday, Oct 9, 2010 at 8:10:44 PM
Many of us out here are slated to be foreclosed on... by Nancy Lewis on Sunday, Oct 10, 2010 at 7:28:59 AM
Call your local or state bar association. Almost a... by Miriam Callaghan on Sunday, Oct 10, 2010 at 10:50:34 AM
Call your local or state bar association. Almost a... by Miriam Callaghan on Sunday, Oct 10, 2010 at 10:56:11 AM
I have not read this article completely yet and ho... by Jon Ross on Sunday, Oct 10, 2010 at 8:46:48 AM
The actions of the open gangsterism just get bolde... by Mike Preston on Sunday, Oct 10, 2010 at 9:11:35 AM
More Bull sh*t. That is the long and short of it. ... by Vaikunthanath Kaviraj on Sunday, Oct 10, 2010 at 9:25:06 AM
of the problem and how it occured but what about a... by Archie on Sunday, Oct 10, 2010 at 11:31:42 AM
Hopefully, this article will only be a start of ma... by Paul Sheldon Foote on Sunday, Oct 10, 2010 at 12:05:54 PM
Hi, I've got a section called "foreclosurerelief" ... by Ellen Brown on Sunday, Oct 10, 2010 at 3:43:18 PM
Great title. I'll use that if I may -- thanks!... by Ellen Brown on Sunday, Oct 10, 2010 at 3:44:12 PM
Mz Brown's understanding far exceeds mine on this ... by Ray O. Sunshine on Sunday, Oct 10, 2010 at 1:01:43 PM
Ellen Brown's delightful exposition on this forecl... by William Wilson on Sunday, Oct 10, 2010 at 1:53:56 PM