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Big Banks, Illegal Foreclosures & the Wealth Gap

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Wealth of Blacks/Hispanics devastated by decreased home ownership

By Adeeba Folami

The foreclosure crisis currently sweeping America is a prime example of how banks and mortgage lenders have profited off the backs of millions of homeowners whose houses have been foreclosed upon, in many cases illegally.

Last fall, several major banks were found utilizing the illegal practice of "robo-signing" which involves falsifying signatures on documents in order to keep pace with the massive amount of foreclosure filings taking place. The fraudulent practice is one the banks made use of for several years. The scandal brought to light that many lenders and banks resorted to fraud because they lacked legal ownership of the homes they sought to repossess. This a result of years of securitization in which investment bankers pooled mortgages together and then sold them to profit-seeking investors as "mortgage backed securities" on Wall Street.

According to foreclosure defense advocate Sherron L. Lewis, one of the first acts a homeowner should consider once a lender files for foreclosure is to research and find out if there is evidence their loan was sold. "If a loan is securitized and sold, that loan doesn't exist anymore as it existed before because it's bundled with other loans and sold as certificates to investors," he explained. "You can't undo that. It's like making apple juice. You can make apple juice out of an apple but you can't make an apple out of apple juice."

As investigation of banking practices continues, it is becoming clearer that thousands of investors, who cannot be identified or tracked individually, became rightful owners of multiple mortgages yet the proper and legal transfer of ownership to them never took place. Neither they nor the foreclosing banks have the ability to prove in court their "standing," or legal right to foreclose. Yet courts all over the country continue approving these same lending institutions' foreclosure filings.

"You never have the right party in interest in front of the court attempting to foreclose which is why these judges never make the lender prove who they are, because the judges know they can't," Mr. Lewis said. "As a result, foreclosures are being rubber stamped in unprecedented numbers."

AGs seek to settle with banks but some crack down on housing advocates

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Adeeba Folami is an award winning freelance journalist from Denver, Colorado. Her articles have appeared in the Denver Weekly News, African American Voice, Afro American Newspapers, Atlanta Daily World, Atlanta Voice, Birmingham Times, Dallas (more...)
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