Foreclosure Fraud Scandal Heats Up
Soon, I’ll be up with a piece looking more closely at the foreclosure fraud scandal engulfing the country. But for those not following carefully, here’s a recap.
Last month, Ally Financial, formerly known as GMAC, suspended evictions in 23 states after revealing that employees had submitted faulty affidavits when foreclosing on some unknown number of homes. In those 23 states, the bank needs a judge’s approval to foreclose, and submits affidavits to get it. (Affidavits are sworn statements, so false ones constitute perjury or fraud.) This month, Bank of America and J.P. Morgan Chase also suspended evictions in these states after revelations about robo-signers — employees rubber-stamping thousands of foreclosure documents, without checking the information — and false evictions came to light.
Now, state governments are enacting moratoriums and politicians are castigating banks for failing to follow through on their legal work, forcing families out of their homes without following due process. This week, Rep. Nancy Pelosi (D-Calif.) and other Democrats wrote Attorney General Eric Holder, requesting that the Justice Department investigate the systemic problems.
The scandal has made clear that paperwork in the housing bust has proven just as shoddy as during the housing boom. The banks are just acting illegally. Check out this video of a woman who thought a burglar was breaking into her house. It was the bank, coming to change the locks. Even though she still lived there.