CBS 60 Minutes: People paid $10/hr to sign other people's names on mortgage docs

[Garrette]

They were obviously very irresponsible. But that doesn't make it criminal.

I think TM is suggesting the equivalent of plea-bargaining, which requires only the fear of prosecution by the banks.

Evil Gubmint: This has been mishandled. Criminally mishandled. We've got work to do before we absolutely prove that you, Mr. Greedybanks, were directly involved, but believe me when I say we will do so. Oh, yes.

Mr. Greedybanks: You don't scare me, copper. I watch CSI.

Evil Gubmint: Fine. I'll just take this deal off the table, shall I? The deal in which we forego prosecution on condition that you do X which will, of course, hurt you quite a bit financially, though not as much as if we convict you individually and corporately.

Mr. Greedybanks: Alright. I'll do it, but I keep the penthouse and syndication rights.

Evil Gubmint: You and five other Greedybankers share one penthouse, and you get 5% of syndication; balance goes to shore up FDIC.

Mr. Greedybanks [sobbing now]: I give! I'll take the deal!

 

[TragicMonkey]

Except a few beheadings of top executives and middle managers would add a little emphasis to the lesson.

 

[Emperor_Gestahl]

I'd be interested to hear what the bank execs claim to have thought was going on in these forgery mills, and what red flags they may have had to conveniently overlook in order to go on thinking it.

 

[Stylesjl]

To be honest I actually like the 'Free House' idea. Just think of the kind of deterrence it would offer to banks if a screw up in the paperwork resulted in their property rights taken away and given to the person occupying the house. After all possession is nine-tenths of the law and if they can't demonstrate they actually own the property then by default whoever is occupying it should get it.

 

[PGH]

I'd be interested to hear what the bank execs claim to have thought was going on in these forgery mills, and what red flags they may have had to conveniently overlook in order to go on thinking it.

I would be VERY interested. Only because I enjoy watching well educated, powerful, connected people claim they have no idea about the workings of the large companies they make millions of dollars a year running.

I just wish people wouldn't believe them!

 

[Dancing David]

Now how can we blame this on excessive government oversight?

And the Community Reinvestment Act

 

[Travis]

If you contract with someone and make absolutely no effort to investigate how they are handling or processing those legal documents that had obvious marks of forgery all over them you can be prosecuted even if you didn't know for sure the contractor was conducting such massive forgery. Ignorance does not equal exoneration.

 

[Corsair 115]

It still staggers me to think that the United States, one of the most powerful nations in the world, let its financial system fall to such an utterly unbelievable chaotic state.

 

[Rolfe]

Me too. It's not that we haven't had our problems here too, but this mortgage thing is something else.

Rolfe.

 

[Travis]

There were some in the banking industry that tried in vain to stem this while it was happening. They were ignored or even pressured into quitting because the people at the top were making so much money for seemingly so little effort. You can read about it in the book A Colossal Failure of Common Sense. In it you read about an executive at Lehman Brothers who investigated the whole thing and realized it was a horrible pyramid scheme that would collapse. But the people at the top who he tried to warn had basically become delusional with success and thought they had entered some sort of new paradigm where they were untouchable and old rules no longer applied.

They were wrong and Lehman Brothers no longer exists.

 

[Emperor_Gestahl]

Matt Taibbi has been all over that sort of thing too, search him up if you want some well-written articles on the subject.

 

[Stylesjl]

Matt Taibbi has been all over that sort of thing too, search him up if you want some well-written articles on the subject.

You mean like this article?

 

[ddt]

Tell the banks that in exchange for not prosecuting their fraud in the matter of mortgages, the banks in question must relinquish all claim on those houses. All those involved get their houses back and don't owe anybody a dime for them. Any losses anywhere down the line due to resales, whatever will be made good by the banks. That would resolve the crisis, punish the banks for their misdeeds, and provide a suitable lesson to other banks not to do this sort of thing in the future.

But once a bank has gone to court with such forged paperwork, it has committed both forgery and perjury - so they should be prosecuted for that, I'd say. And on the other hand, as the bank can't prove there is a mortgage on the house, the home owner can just stop paying the mortgage altogether with impunity. So it's an AND-AND case rather than OR-OR.

And yes, I think the AG's should prosecute the board members of the banks involved and press for them to serve the jail time for the perjuries and forgeries consecutively.

But how is this mess even possible? How does an American notary public work? Over here, notaries public have a bit more powerful position, and they damn sure keep a copy of each document too - and you can ask them a copy for a modest fee.

 

[Matthew Best]

You mean like this article?

Wow. That was awesome, thanks.

 

[TragicMonkey]

But once a bank has gone to court with such forged paperwork, it has committed both forgery and perjury - so they should be prosecuted for that, I'd say.

Oh, it's worse than that. By indulging in these shady business practices, some banks have committed economic terrorism. Perhaps there's something about that in the Patriot Act. Perhaps some bank managers and executives should be debriefed in secure locations to make certain they aren't part of a plot against America. Perhaps eight or nine years of enhanced interrogation will yield the answers our national security so desperately needs.

 

[epeeist]

The principled difficulty I have is that all too often in situations like this, it seems like:

Higher-ups (corporate management, military, bureaucratic, politicians, etc.) insist that their subordinates do things with insufficient resources (time/money/personnel/etc.).

If those personnel say they can't do it they get fired/not promoted/whatever.

So they "cut corners", and sometimes break the law (this, illegal dumping, etc.), to do it with fewer resources.

Then, when they get caught, the subordinates may get convicted, the corporation may pay a fine, but nothing happens to the higher-ups who created the incentives to break the law and didn't want to know the details. So I don't disagree with punishing the subordinates per se, it just seems unjust that they are the only ones punished.

To create incentives for higher-ups to insist that their subordinates follow the law, I think you have to either (1) punish the higher-ups; or (2) impose such serious consequences such as inability to foreclose on mortgages (the homeowner gets the house free and clear) and/or much higher, massive fines on corporations so that it no longer becomes viable (from a game-theory expected return given the chances of being caught) for a corporation's personnel to "not ask questions" about how something is being done.

I object to (1) above on principle (criminal punishment seems unfair) so think that (2) is the fairest compromise.

Also, when the law has clear requirements for what has to be done to prove a debt, businesses should be held to that standard. Individuals are held to the letter of the law, the fine print of their mortgages/credit card agreements/other contracts and that's fair, but ONLY if the converse is true also.

 

[JoelKatz]

I don't know, it sounds to me like it might be criminal. If you're making claims based on fraudulent legal documents, and are in a position that you ought to know the claims are fraudulent...I hope it comes to trial, and everyone who signed off on all of this gets in severe trouble.

It is definitely criminal to foreclose on someone's house when you know you do not have the right to do so. If you want to argue they might not have known they didn't have the right to do so, which I think is absurd, I don't think you can avoid this: It is absolutely, mind-bogglingly obvious that it is criminal to discover that you foreclosed on a home without the legal right to do so and respond by paying people $10/hour to sign affirmations that they have personal knowledge that your firm possessed those documents and that they personally searched diligently for the documents and could not locate them without them ever knowing anything about those documents or looking for anything anywhere. And there is no question that it is criminal for a notary to notarize signatures they know were made without the knowledge of the person purported to have signed them.

 

[Psi Baba]

But how is this mess even possible? How does an American notary public work? Over here, notaries public have a bit more powerful position, and they damn sure keep a copy of each document too - and you can ask them a copy for a modest fee.

Notaries in America don't have the same kind of power that some types of European notaries have. We don't keep copies of documents, for example. One of the most common notarial acts is that of ensuring that the signer of a document is who they say they are. You certainly cannot notarize in absentia--the signer must be present. Notaries must be bonded and are strongly advised to have insurance. The persons who notarized those mortgage documents are as liable as the banks and can be sued. Fake seals might have been used which would present a whole different set of problems, but I'll bet that these companies who hired those "signers" probably got people certified as notaries and had them stamping documents. And more than likely they didn't purchase insurance for those people. Losing their notary license will be the least of their problems.

 

[JoelKatz]

I'm pretty sure you have to pass an exam to be a notary. I'm pretty sure one of the questions on the aforementioned exam is "Should you notarize something if you have no idea whether the signature you are notarizing was actually made by the person whose name was signed or know for a fact that it was not?". And I'm pretty sure the correct answer to that question is either "No." or "Hell no!".

 

[Cayvmann]

Agreed, so long as it includes the $10/hour yahoos who thought it was okay to sign someone else's name and "notarize" them.

I've no sympathy for the big fish or the little fish in this scheme.

What's more likely to happen is the big fish will turn state's evidence on the small fish and get off scott free, much like how drug king pins get off by turning in lower level guys... I love our justice system, so much