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Here's an abridgment of the first part of a new article by Ellen Brown writing at

Wall Street banks are voluntarily suspending foreclosure proceedings in 23 states.

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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.

However, 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 in the first place. These errors involve perjury and forgery -- fabricating documents that never existed and swearing to the accuracy of "facts" that were fiction.

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.

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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 and there have been thousands of violations -- 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. And this snowball has just started to roll.

Consider the incriminating 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.

"Create" here means fabricate documents out of whole cloth. And look at the extent of the offerings: The collateral file is ALL the documents the trustee needs to have pursuant to its obligations under the pooling and servicing agreement on behalf of the mortgage-backed security holder. This refers the original of the note (the borrower IOU), copies of the mortgage (the lien on the property), the securitization agreement, and title insurance.

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But how do you legally recreate the original note if you don't have it? And all this illegal fabrication of documents for one flat fee!

Understand the broader implication of this: Understand that all of the mortgages in question were "securitized" -- turned into Mortgage Backed Securities (MBSs) and were then fraudulently sold off to investors. MBSs are typically pooled through a type of "special purpose vehicle" called a Real Estate Mortgage Investment Conduit or "REMIC," which has strict requirements defined under the US Internal Revenue Code (the Tax Reform Act of 1986). The REMIC holds the mortgages in trust, and issues securities representing an undivided interest in them.

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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)

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