Arrogance of Money, Still
you were going to apply for something—food stamps, for example,
or, to be timely, a mortgage modification.
Imagine saying to the person responsible, “I don’t really
have all the documentation proving my identity, my address,
my credit, or my income. It would have taken too long to gather
it all. But I signed it. I qualify. Trust me.”
The only question is how many buildings away the laughter
of the person you were taking to could be heard.
When I bought my house we spent dozens of hours tracking down
a mysterious supposedly unpaid doctor bill from our college
clinic on my partner’s credit card. We eventually begged someone
to accept the money; it was later returned to us, but in the
interim her credit record was clear.
(Granted, for a while there some mortgages were being offered
“no doc” or “low doc,” but those were generally part of the
whole fraudulent predatory lending scheme, and generally weren’t
mortgages you really would have wanted anyway.)
I figure you can tell where I’m going with this. While measly
individuals get kicked off of Medicaid for not crossing a
“t” or dotting an “i,” banks were hiring people with no more
qualifications than a willingness to risk carpel tunnel syndrome
to robosign foreclosure paperwork—hundreds of cases a day,
without doing any of the required review of the documents
and confirmation that the procedures had been followed.
The banks, of course, are calling it all a technicality—procedural
errors conducted by overeager managers trying to get things
moving. But really, all those homeowners actually haven’t
paid and are overdue to be kicked out, so no biggie. Give
us a few weeks and we’ll have it all straightened out.
Even if they were just being lazy, this would be inexcusable.
First, that excuse never works for people coming to those
same banks with problems arising because, say, they didn’t
have time in their busy lives to read the sneaky fine print
on their credit card bills. Second, it has led to errors—the
wrong people being foreclosed upon, etc. Not a large percentage,
it’s true, but there is a reason you’re supposed to go over
this paperwork. As Barry Ritholtz wrote on his Big Picture
blog, from a highly conservative and capitalist perspective,
this shakes the foundation of property rights in this country.
Want it to break up the foreclosure bottleneck? Hire more
people who know what they’re doing, have them do it right,
and suck it up.
But even that is a smoke screen. As has been well explained
by many (see Zach Carter on Huffington Post, Oct. 13, for
example), the reason they were trying to push these things
through without a thorough review of the documentation is
they don’t have the documentation. In a large number
of cases, they can’t prove that they have the right to foreclose
on these homes.
When the financial world got caught up in the frenzy of securitizing
crappy, fraudulent loans, slicing and dicing them, and representing
ticking time bombs as good investments, they set it up so
the paperwork didn’t move along with the ownership. They created
an online database to circumvent following local rules about
filing change-of-ownership paperwork. They created pass-through
entities that weren’t allowed to own anything. They hid the
original loan paperwork from the final investors because the
original loan paperwork was chock full of fraud. The robosigning
was just the latest step in covering that up.
The arrogance of those involved continues to be jaw-dropping.
And the worst part is, there’s no easy answer. It’s tempting
to call for a simple moratorium on foreclosures, and say the
banks have to pay the price for their risky behavior, even
if it means letting large numbers of people who weren’t paying
their questionable mortgages stay in their homes.
Unfortunately, a large number of buildings in foreclosure
are already vacant and deteriorated. Many were owned by speculators
in the first place. Halting the foreclosure process on those
buildings will keep them in legal limbo and prevent other
people (or nonprofits or local governments) from purchasing
them before they fall apart further, and they will continue
to drag down their surrounding neighborhoods, attracting criminal
activity along the way, as well as dampening housing market
recovery. Any response to this latest twist in the crisis
has to treat abandoned buildings differently from those still
occupied by people who care trying to fight for their homes.
But above all, it has to stop letting bankers treat themselves
as above the law.