High Noon: Banks vs. The Law (Mortgage Foreclosures) – Part 1

In recent weeks a legal storm has begun to blow regarding mortgage foreclosures.  It seems that in the last decade, as banks and Wall Street rushed to push mortgages and borrowed money at any homeowner or wannabe homeowner who was breathing while simultaneously raising the money by pushing too-complex-to-understand Mortgage Backed Securities Trusts and bonds (MBS) on investors, the banks found it a bit inconvenient unprofitable to follow the detailed laws about recording mortgages and transferring notes.  Now, as homeowners have fallen behind in payments and the banks (through their mortgage servicer operations) have taken to foreclosing on properties in high volume.  Of course, there’s those nasty details about the notes not being recorded properly and the paper trail not being complete.  No problem for today’s super banks, though. They just lie.  That’s right, they’ve been caught, as in court testimony and TV interviews of their own mid-level managers.  Seems they sign and file affidavits claiming the “paper work is lost but don’t worry Mr. Judge, I know personally the facts of this case intimately and this is what they are”.  Except they sign these affidavits of “intimate knowledge” in high volume.  As in 10,000 per month or 1 every 1-2 minutes.  As Yves at Naked Capitalism recounts

Reader ella in comments provided a reminder:

An affidavit is a legal document which can substitute for live witness testimony in court. All testimony in court is governed by the rules of evidence or by statute. All testimony requires that the witness swears to tell the truth, is competent and has personal knowledge of the facts they are testifying about. An affidavit is no different, in most if not all jurisdictions; the affiant swears to tell the truth by being placed under oath by the notary, the affiant states in the affidavit that they were sworn, are competent and that they have personal knowledge of the facts in the affidavit. The notary attests to the oath of the affiant and that the affiant is who he claims to be.

If a witness lies in court or in an affidavit then they could be charged with perjury. Perjury is lying to the court.

The affidavit issue is being portrayed in the MSM at a paperwork problem. Lying to the court is not a paperwork problem. Attorneys are prohibited from making a material misrepresentation to the court of fact or law. Further, attorneys in most jurisdictions have an affirmative duty to report known perjury by their clients to the court.

The problem with the affidavits is perjury on behalf of the affiants and possibly the notaries depending on the notaries’ knowledge that the affiants had not reviewed the files, the promissory notes, the mortgages, or the records of default.

Further, you can reasonably argue that the entities pursuing foreclosure (banks or servicers) have perpetrated a fraud on the court by submitting perjured affidavits. If the attorneys representing the entities have knowledge of the fraud or are preparing questionable documents then they may also be involved and subject to penalties.

At the heart of any trial or hearing is the determination of the truth of the matter. It is the very purpose of the rules of evidence and what law and fact is presented to the court. If the affiants lied, as it appears, then the truth of whether they owned the note and held the mortgage and the borrower was in default is at issue. Courts, Attorneys General, and bar associations need to serious consider actions that will assure compliance with the rule of law.

This country cannot stand as a democracy if there is one set of law for the banks, corps, elites and another set of law for the rest of us. Perjury and fraud on the court is very serious matter. It is not a mere paperwork problem.

This doesn’t summarize all of the problems related to the growing foreclosure fraud crisis, but in my opinion, it’s one of the most significant.  These big banks have perpetrated, with intent and foreknowledge, fraud on our courts.  They have lied under oath.  They have perjured.  These are not “paperwork problems”.  These are crimes.  Not civil infractions. Not “misstatements”.  These are crimes.  Crimes that would see any individual put in jail.  The banks need to be held accountable. If not, then we do not have a viable legal system of “equal justice for all”.  If we don’t have that, we can’t have market capitalism.

More to come in future posts on this topic, because it is looming like a growing shadow over the economy.