There are calls in this election season for establishing a moratorium of some sort on home foreclosures, and a number of large banks have even voluntarily stopped, at least until after Election Day, on foreclosing on houses. That’s fine as far as it goes, but what about the millions of homes that have already been lost or stolen over the past several years?
Behind the talk of a legal moratorium on foreclosures, and the voluntary pause announced by some banks, lies the reality that many if not most of the mortgages in question are legally dubious. The homeowner getting a foreclosure notice frequently has no idea who the actual holder or holders of a mortgage may be, and banks that are trying to foreclose often themselves have no idea who actually holds title to the papers. This is because with the securitization of mortgages, they have been traded and re-traded, and often have even been diced up into pieces of mortgage-backed securities, so that the paper trail of ownership has been lost, perhaps irrevocably.
In some cases and some jurisdictions, federal bankruptcy courts have been tossing out foreclosure cases, saying that the foreclosing bank has no proof of ownership of the mortgage and thus cannot claim the property. It’s a little like the person who is caught speeding and shows up in court to contest the charge only to have it tossed out because the ticketing officer didn’t show up in court to make her or his case.
The truth is that there is nothing particularly virtuous about the moratorium that Bank of America and some other national banks have announced on foreclosures. They are probably only holding off because they know that they are in trouble for fraudulently signing and processing foreclosure documents claiming title to properties that they actually cannot prove they have any claim to. (It has even been suggested that the banks are temporarily halting foreclosures because they are afraid that the glut of foreclosed homes will depress the value of other properties which are in their mortgage portfolios, hurting their own balance sheets.)
But the real question is, why is nobody mentioning the over 9 million homes that have been foreclosed on already in this longest and deepest recession since the 1930s.
If it is the right thing to do to put a stop to foreclosures until banks can prove ownership, then it is equally right to reverse, or pay damages for all those foreclosures that already occurred–1.3 million in 2007, 2.3 million in 2008, 2.8 million in 2009 and 1.6 million in just the first six months of this year–where there was bank fraud in the signing of documents, or where there is simply no paper trail to prove the bank in question owns the mortgage. (A difficulty is that if a foreclosed property was later sold, reversing the transaction could mean displacing another family that made a good-faith purchase from the bank, meaning that a compensation payment to the wronged first owner would be a better option.)
If an individual committed the kind of fraud that the nation’s banks have been committing in order to steal someone’s assets, she or he would be convicted of fraud and locked up in jail, yet not one banker has been locked up yet for mortgage foreclosure fraud.
This wave of foreclosures is really Grand Theft Home on an unprecedented scale. The number of homes foreclosed in 2004 was 677,000, so if we take that number as being an average foreclosure rate for ordinary times, and subtract it from the figures for following years, and if we assume that the balance of foreclosures are the result of the bank-induced recession, we’re talking about six million homes that have been stolen by the banks. If each foreclosed home over the period 2005-July 2010 was worth an average of just $50,000–probably a very conservative figure–we’d be talking about the theft through fraud or economic malpractice of some $300 billion in the assets of ordinary citizen homeowners.
Actually, of course, the theft of assets from the public has been much greater, since every time a home is foreclosed in a neighborhood, the value of all the surrounding homes plunges, but that’s a story for another day.
Just in terms of outright bank fraud and home theft, we are talking about perhaps hundreds of billions of dollars worth of property that has been stolen through forged papers. We are also talking about the heartless destruction of millions of families, who have been torn from their homes.
So why are we only discussing foreclosure moratoriums now and going forward? Why are we not seeing aggressive federal action by the Justice Department seeking restoration of title or compensation to families who have already lost their homes through bank fraud? (As reported today in the Washington Post, 40 state attorneys general have joined together to file court challenges to the securitization of mortgages, but so far, this effort appears aimed primarily at requiring banks and mortgage companies, going forward, to comply with all legal requirements in foreclosing on properties, not at recovering stolen property. The focus of this effort is also not on prosecuting banks and bankers for perjury, though this would certainly be possible.)
Why is Congress not aggressively investigating this colossal theft?
It’s one thing to say that financial institutions like Bank of America, Wells Fargo, JP Morgan Chase and Citibank are too big to fail. It is another to say that even though they are criminal enterprises that have perpetrated an unprecedented fraud on the public, they are too big to prosecute and to punish. That sounds like the way the Italian government has generally treated the Cosa Nostra.
Enough pussyfooting around! It’s time to make the banks and the bankers pay for their crimes. If government is to have any purpose, it must be to protect the public against crime. Even libertarians agree with that concept. And we have been robbed blind by these banks.
The problem here is that we Americans have lost any sense of community. We don’t really care about the millions who have had their homes stolen by the banksters, as long as our own homes haven’t been stolen. We’re so self-involved that we don’t even recognize that it is in our own self-interest to protect others from foreclosure because if they lose their home, our neighborhood suffers. Even the people who are acting riled up–the Tea Party folks–are only concerned about their own taxes, not about their neighbors. There were stories during the 30s of people who rallied to block auctions abd save their neighbors’ homes and farms. No stories like that today. But at least we could demand political action from our so-called political leaders.
There’s an election coming up Nov. 2. If the US Department of Justice and the attorney general offices of the 50 states cannot or will not go after the banks to demand the restoration of stolen properties to their rightful owners, and will not act to put the criminal bankers who committed fraud behind bars the way they do to the poor schmucks who pass a bad check, and if the House and Senate won’t seriously investigate these crimes by the banks, they should all be thrown out of office, Republicans and Democrats alike, and to hell with the consequences.
We couldn’t end up with anything worse than a government that coddles criminals, which is what we have right now.