The Banksters don’t seem to have a very strong hand…

This is a neat story.  Anyone can research, and find out something, and change the lives of many:

How Two Civilian Sleuths Brought Foreclosure Problems to Light
Thursday 14 October 2010

by: Tony Pugh  |  McClatchy Newspapers

Palm Beach, Forida – More than a year before lenders, law firms and document companies began owning up to widespread paperwork problems with their foreclosure filings, Lisa Epstein and Michael Redman already knew that something was wrong – very wrong.

Redman, a former online automobile consultant, got his first taste of the problem in early 2008, when he tried to help a relative who was facing foreclosure.

As he tried to determine which of three or four supposed lenders held the note, Redman, 35, realized that not only did he not know the answer, neither did any of the companies that were asking for payment.

The Banksters don’t seem to have a very strong hand…

4 thoughts on “The Banksters don’t seem to have a very strong hand…

  1. An interesting question is when do stories finally achieve the traction necessary to capture the notice of the media? This story, but with a different cast of characters, is in excess of six years old. The only reason I remember it is due to my Schadenfreude.

    What I also remember about the story, was the then insignificant reference to the securitization of mortgages. The bank attempting to foreclose could not prove that the mortgagee owed the money due to the pooling and segmentation of the mortgages. So I got a good laugh at the incompetence of the bankers. At the time, I was unaware that this securitization would eventually mushroom into a major financial crises.

    The lesson of securitzed mortgages is that at a certain point, these so-called assets degenerate into a fictional construct much like a ponzi scheme. Unfortunately, the bankers believe that these financial instruments are innovative and contributed to the economy. In reality, the financial industry’s innovation was stripping the value of the mortgage as a debt instrument through innumerable transaction fees. The collapse of the housing bubble demonstrated that these financial instruments ended up being quite destructive to the economy.

    Now that the story has made it into the mass media and captured the public’s attention, maybe will have some real regulatory reform. At least I hope so.

    1. Steve:

      Thanks for the comment. If you have any links or references that are 6 years old I’d love to see them.

      I think it is interesting how certain things get play in media and others don’t. I don’t attribute it to some nefarious conspiracy, other than the conspiracy of laziness that causes people not to question the information that is being so very filtered, and manufactured into a consent.

      This is the oldest article that I’d seen, covered in my post “The Unsecured Country (rule of law edition)” Friday, 16 November 2007:

      Foreclosures Hit a Snag for Lenders


      Published: November 15, 2007

      A federal judge in Ohio has ruled against a longstanding foreclosure practice, potentially creating an obstacle for lenders trying to reclaim properties from troubled borrowers.

      A federal judge in Ohio has ruled against a longstanding foreclosure practice, potentially creating an obstacle for lenders trying to reclaim properties from troubled borrowers and raising questions about the legal standing of investors in mortgage securities pools.

      The plaintiff’s argument that “‘Judge, you just don’t understand how things work,’” the judge wrote, “reveals a condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process.”

      Link to eee_eff post:

      Link to article in NY Times:

  2. Could not find the article, so no proof. In 2004 I was unaware of the eventual devastation that the securitization of home mortgages would create.

    In searching, I did run across a couple of interesting articles done in 2004 before the mortgage crises blew-up.

    One “Limiting Abuse and Opportunism by Mortgage Servicers”. Though this article does briefly mention disorganized record keeping it does not get into the issue of the loan servicer failing to provide the actual mortgage documents to the court in a foreclosure action.

    “Predatory Lending What Does Wall Street Have to Do With It”, at least alludes to the current problem, that the investors seldom look at the appraisal and loan documents. Pages 724-725 raise the concept that the borrowers could raise the issue of “holder of due course” and the need for due diligence by the loan servicer.

    1. Thanks, Steve, It is so frustrating when you read something on the net and then can’t find it again. That was a big part of why I started this blog!

      It is out there somewhere…

      In any case John Robb covered this in his wonderful blog Global Guerillas:


      In any case, the collateral was never actually transferred properly. So, the loans that were sold to investors became simple contracts:

      * You agree to pay a certain amount every month (principal + interest) until the loan is paid off.

      Note that there’s nothing more to this loan. No collateral. No foreclosure for non-payment.


      Thing is, this isn’t a paperwork error. It’s gross negligence, on the bank’s part, that materially altered the relationship between you and the new owner of the loan. Once the collateral was removed from the loan, it can’t be reattached. Your home’s title can’t be attached to a loan willy nilly and without your consent. To do otherwise is theft, and that’s exactly what every lawyer from here to Timbuktu will be arguing.

      Of course, that’s not going stop the banks from trying to “fix” this. They’ve already tried fraudulently manufacturing paperwork via fake, backdated signitures to claim the title was properly sent to the reserve. They got found out and foreclosures were stopped across the country. Expect similar behavior in Congress and in the press.

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