27 Responses to “Stern Foreclosure Factory: $260 Million in 2009 Revenues”
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As much as state attorneys general could be an effective force in acting for consumers and investors against banks, the fact that an attorney general has saddled up does not necessarily mean the effort is serious. At a minimum, it might just be a gambit to garner some good PR without seriously inconveniencing the perps; at worse, the action might be a pure Trojan horse.
Consider the curious conduct of one Bill McCollum, the lame duck attorney general of Florida. It appears that McCollum has been going after the foot soldiers in the foreclosure chicanery business (although some of them, like David Stern, head of the biggest foreclosure mill in the state, have earned a tidy fortune). His recent actions have targeted firms offering dubious foreclosure advice, and more recently, the foreclosure mills as well as a firm that may be best known for its real estate related document fabrication activities, Lender Processing Services, through its DocX subsidiary.
Now starting with these actors isn’t a bad thing at all; in fact, prosecutors often target low level criminals with the hope of getting them to turn evidence on the kingpins. And there is good reason to think McCollum has no interest in asking tough questions that will inconvenience bigger fry.
McCollum Is falling in with the banking industry party line. He appears to regard not disrupting the foreclosure process, a top priority of the financiers, as a worthy goal. Gee, isn’t preserving the rule of law and making sure no one is abused or defrauded the sort of thing his office is tasked to defend, not the functioning of markets or the bottom lines of banks? From the Wall Street Journal (hat tip reader f247):
“They’re training a lot of new people, and apparently now they are comfortable with the legality of their foreclosure process,” Mr. McCollum said in an interview. “The primary purpose of these meetings is talking about not having this stuff held back. It’s very important for us to not have a backlog of foreclosures. We already have a backlog. We don’t want it to get worse.”…
Mr. McCollum, Florida’s attorney general, said most errors in the foreclosure process have been “procedural,” adding that his top priority is to resolve the mess in a way that allows foreclosures to resume quickly….
The talks also centered on how to quickly get the foreclosure process moving again, according to the Florida attorney general’s office. Mr. McCollum described the meeting as more cooperative than combative.
Let’s look at the timeline:
August 10: McCollum announces investigation of foreclosure mills. McCollum also happens to be running for governor as a Republican and facing a tough opponent in the primaries. One must wonder whether this investigation was a Hail Mary pass to bolster his candidacy
August 24: Florida primary, McCollum loses to Rick Scott
September 3: McCollum asks if he can resume being a lobbyist once he leaves office. Per the St. Petersburg Times:
Barely a week after he lost the Republican primary for governor, Attorney General Bill McCollum sought legal advice on whether he can lobby the governor’s office and Cabinet — the very people he works with now — after he leaves office in January.
The answer: No.
He’ll have to wait two years before he can collect fees to represent private clients before the state government that has employed him the past four years… He asked the Commission on Ethics not to reveal his name as the person making the inquiry, but the agency did anyway….
McCollum’s Sept. 3 letter to the Commission on Ethics noted that state law and the Constitution already bar him from lobbying his current agency, the attorney general’s office, for two years after leaving office in January….
But because the attorney general also is a member of the Cabinet, McCollum asked “what entities” are also covered by the lobbying restriction.
The attorney general, as a Cabinet member, serves on a variety of boards overseeing the state pension fund, environmental, land use and other issues.
In its opinion, the ethics commission said: “One’s public service career and contacts developed in that capacity should not be used to enrich oneself at the expense of the public (and) the provision was intended to prevent influence peddling and the use of public office to create opportunities for personal profit through lobbying once an official leaves office.”….
McCollum, a lawyer who served for 20 years in Congress, listed a net worth of $1.3 million in 2009. He collects $82,000 annually as a congressional pension.
For several years after he left Congress, McCollum was a $400,000-a-year lobbyist for the Baker & Hostetler law firm.
It’s also worth noting that the biggest foreclosure mill targeted, the Daniel Stern law firm, has hired heavyweight Republicans to defend it. Per FireDogLake:
David Stern has already become fairly well-known to the media as a high-volume foreclosure servicer — a foreclosure mill. What’s not as well-known is that David Stern’s legal representation, Tew Cardenas, is rather important to Florida’s Republican Party. While Jeffrey Tew has donated only on a rather limited basis to candidates, Alberto Cardenas has donated more than $70,000 to candidates, incumbents and committees during the last two election cycles. . . .
Among Cardenas’ beneficiaries are Rep. Roy Blunt (MO-07) and Rep. John Mica (FL-07), who respectively sit on the House Energy and Commerce Committee (Blunt), House Permanent Subcommittee on Investigations (Blunt), and House Committee on Oversight and Government Reform (Mica), and the House Committee on Transportation and Infrastructure (Mica is the ranking member). His family members are likewise generous to Republicans and have donated more than $9000 over the last several years.
Unfortunately, this case study illustrates yet again the dangers of taking headlines at face value.
Surprise: Fox <b>News</b> signs Juan Williams to new $2 million deal <b>...</b>
Fox News Chief Executive Roger Ailes handed Williams a new three-year contract Thursday morning, in a deal that amounts to nearly $2 million, a considerable bump up from his previous salary, the Tribune Washington Bureau has learned. ...
Lindsay Lohan Photos & Pics | BREAKING <b>NEWS</b> - Lindsay Lohan Avoids <b>...</b>
Lindsay Lohan appeared before Judge Elden Fox at the Beverly Hills Courthouse this morning for her latest probation violation hearing, and it appears as though spending the last month at the Betty Ford Center helped convince the judge ...
BREAKING <b>NEWS</b>: No Jail For Lindsay Lohan - Judge Orders Her To <b>...</b>
http://link.brightcove.com/services/link/bcpid16157557001/bctid645210306001 Lindsay Lohan caught a major break on Friday when Judge Elden Fox chose not to send her to jail and ordered her to stay in rehab at the Betty Ford Center.
eric seiger eric seiger
27 Responses to “Stern Foreclosure Factory: $260 Million in 2009 Revenues”
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wunsacon Says:
October 21st, 2010 at 10:34 am
I suspect Shakespeare’s Henry VI said it best.
http://www.spectacle.org/797/finkel.html
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NoKidding Says:
October 21st, 2010 at 10:36 am
“The goal here was not to pursue prosecute foreclosures on behalf of a banking client; rather it was to crank out the assembly line factory to grab 100s of millions of dollars, legally or illegally, consequences be damned.”
Intuition tells me your assessment is correct, but nothing in the quoted bit of that story did.
We’re in a foreclosure boom and there’s work involved. Somebody has to do it.
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wunsacon Says:
October 21st, 2010 at 10:36 am
Er, “Dick The Butcher”…
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Mannwich Says:
October 21st, 2010 at 10:38 am
Oh, it’s 100%. In the grand scheme of things, he’s such a minor player and the perfect fall guy for Eric Holder.
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rktbrkr Says:
October 21st, 2010 at 10:42 am
There’s never just 1 rat, there were a handful of FL lawfirms like this, Stern was just the biggest rat. So does the florida court system throw out all the work done by Stern and similar firms? A couple hundred thousand do-overs?
http://wiki.answers.com/Q/Which_countries_have_no_extradition_treaties_with_the_United_States
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rktbrkr Says:
October 21st, 2010 at 10:47 am
In New York, attorneys already have an obligation to ensure that the documents they present to the court are valid, but New York Chief Judge Jonathan Lippman said having them sign something affirming that all papers got a proper review will hold them accountable like never before.
“We want to make sure that everyone is focusing like a laser on these particular types of proceedings,” he said. “It puts them on notice. That’s what this is all about. We all have to make doubly sure that we are doing what we should be doing in the first place.”
The rule requiring a signed affirmation applies to both new cases and the 78,000 foreclosure actions already under way in New York courts.
Lawyers handling pending foreclosure actions will probably need to go back to their clients and verify that all proper steps were followed, Lippman said. The form created by the court requires the lawyers to give the name of the bank employee who affirmed that the records were accurate and the date the conversation took place.
The president of the New York State Bar Association, Stephen Younger, issued a statement praising the new rule. “The chief judge has taken swift steps to address a nationwide problem in foreclosure actions,” he said.
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BennyProfane Says:
October 21st, 2010 at 10:49 am
I might even bet you that he doesn’t see any type of prosecution at all – maybe a nice, 5-10% deal, a la Mozilo, that the company can write off somehow offshore.
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rktbrkr Says:
October 21st, 2010 at 10:50 am
Start the music, it’s time for Musical Chairs!
BofA Sues FDIC Over Taylor Bean Mortgage Losses
Bank of America, the largest U.S. bank, has sued the Federal Deposit Insurance Corp over $1.75 billion of investor losses mainly from the 2009 collapses of a large regional bank and large mortgage lender.
The lawsuit concerns the FDIC’s role as receiver for the main banking unit of Alabama’s Colonial BancGroup, and the implosion of Taylor, Bean & Whitaker Mortgage, where federal prosecutors say a multi-billion dollar mortgage fraud took place. Bank of America is trustee for notes issued by Taylor Bean’s Ocala Funding unit.
SnIp
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RiskAverseAlert Says:
October 21st, 2010 at 10:59 am
I’ll take the under. This thing is so bad the President hasn’t even the clout to convince the Sheriff of his own Cook County that the recent voluntary foreclosure moratorium was the result of mere “technicalities.”
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Sechel Says:
October 21st, 2010 at 11:20 am
David Stern knew what he was doing(to a point). He appointed four of the seven directors. It’s made clear that shareholders should find it difficult if not impossible to take disciplinary action against him, not withstanding any fiduciary obligations they may have in this respect.
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AHodge Says:
October 21st, 2010 at 11:40 am
no shortables no options
i see it down abt 6% today
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JerseyCynic Says:
October 21st, 2010 at 11:48 am
it’s perfect Mannwich
I’m always most cynical when individual assholes are singled out to cover for industry wide corruption.
OH good!! now we don’t have to dig deeper and run the whole lot of f%$kers out of town!
what happens when the next shit storm hits ? — student loan debt has now surpassed credit card debt
I wonder how many of our big bailed out banks set up their own back door foreclosure mills YEARS ago when they were setting the stage for this round in the boom/bust cycle of real estate
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Sechel Says:
October 21st, 2010 at 11:49 am
http://www.law.com/jsp/article.jsp?id=1202473607711&Fla_Foreclosure_Firm_Undergoes_ShakeUp_as_Chairman_Vacates_Post
abandon ship!
Several top executives of Florida’s largest foreclosure processing company resigned and its chairman was replaced Tuesday, amid a national controversy over questionable foreclosure filings and investigations into possible wrongdoing by lenders, loan servicers and law firms.Plantation, Fla.-based DJSP Enterprises has been impacted by the temporary suspension of foreclosure filings by some of the nation’s largest lenders and some industry insiders are questioning the future of the business.
The company announced Tuesday that Chairman David Stern would step down, take the new title of president and remain the CEO. Stephen Bernstein will take over as chairman.
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DL Says:
October 21st, 2010 at 12:10 pm
I just want to know why the company is incorporated in the Virgin Islands.
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JerseyCynic Says:
October 21st, 2010 at 12:43 pm
oh what a fabulous story!!!
….In a nod to his foreclosure work, according to the acquaintance, Mr. Stern mused about possibly naming the larger yacht Su Casa Es Mi Casa — “Your House Is My House.” But his wife and others cautioned against it, according to this acquaintance, and Mr. Stern named the boat “Misunderstood.” Mr. Stern denies that he considered the “Su Casa Es Mi Casa” name.
http://www.nytimes.com/2010/09/05/business/05house.html?_r=1&pagewanted=5**wunsacon
great link ! great piece
I see Mr. Wallace at the ethical spectacle has the same fears as I do about the impending student loan bailout
http://www.spectacle.org/1010/rags.html“Banks which lend these amounts of money for education are engaging in many cases in exactly the behavior of banks which loaned absurd amounts of money for real estate purchases by people who would never be able to repay it unless a miracle occurred. Such lending is doubly irresponsible, putting the bank at risk and ultimately forcing bail-outs with public money, but also encouraging individuals to engage in risky behavior. The spectacle of young people starting their adult lives as much as a quarter million dollars underwater is very disturbing. The role of government in sponsoring, encouraging and guaranteeing student loans also needs to be re-examined. A government role which made sense when people were graduating with $20,000 in debt looks entirely different when the number is ten times as much.”
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wally Says:
October 21st, 2010 at 12:54 pm
Since these guys – and there are a lot of them recently – end up keeping most of their gains they are business heroes in this country.
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Unsympathetic Says:
October 21st, 2010 at 1:10 pm
Barry, he will not be spending any time in jail.
He will, however, buy late-night TV infomercial time describing how you can get rich quick using his tried and true techniques.
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b_thunder Says:
October 21st, 2010 at 2:14 pm
My odds on David Stern’s future:
5% – he’ll pay at most 10% of his gains as a fine, and will lose law license for at most 3 years w/out admitting anything
25% – he’ll become a billionaire suing evil banks on behalf of foreclosed homeowners
20% – he’ll become a billionaire AND in 4 years will be elected the Governor of Florida
60% – he will be the next CFTC judge
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willid3 Says:
October 21st, 2010 at 3:17 pm
Yves smith has this take
t take a fair degree of skill to pen a journalistic story that hews to the appearance of objectivity yet is out to sell a point of view.The lead article in the Journal tonight, “Niche Lawyers Spawned Housing Fracas” telegraphs its bias in its headline: the foreclosure crisis is merely the creation of two bit lawyers who by implication don’t know what they are doing, and are pumping trivial issues up for their own enrichment, with the housing market as collateral damage.
Funny that anyone can think this spin is remotely true. The fact that solo practitioner lawyers could have such an impact on the system is not proof that they are miscreants, as the Journal implies. It is that the foundation of mortgage securitzations is rotten as a result of widespread abuses, first on the origination end, later in the foreclosure process. These small firm players are using the legal equivalent of toothpicks; the fact that their efforts have destablized the foundation of the residential mortgage backed securities market is tangible proof that they were imperiled to begin with.
Let’s parse some sections of the article, starting from the top:
The paperwork mess muddying home foreclosures erupted last month. But the legal strategy behind it traces to a lawyer’s gambit in 2006 that has helped keep one couple in their home six years beyond their last mortgage payment.
Not bad in the drive-by shooting category. The foreclosure crisis, which is the result of what increasingly appears to be a widespread failure to convey borrower promissory notes and related liens properly to the the securitization entity is reduced to a mere “paperwork mess”. So the idea that the shortcomings are serious is dismissed. Similarly, the efforts of various attorneys who have been chipping away as aspects of this problem are incorrectly lumped together, as if there was really only a single, simpleminded strategy, a mere “lawyer’s gambit” which by implication, was copied by other low life attorneys. And this effort was to keep a deadbeat borrower illegitimately housed.
Funny, this James Kowalski, the attorney behind this dastardly act, did what members of the bar normally do (at least if they are competent): they look for weaknesses in fact and law in the case presented by the other side. And part of the process involves, stunningly enough, depositions! Kowalski’s evil deed was that he was early, perhaps first, to find a robo signer, back in 2006.
But robo signers are an abuse of court process. You can’t have it one way, and say you believe in law and order and the sanctity of contract, and then say it’s just fine to abuse legal procedures if you are pretty sure you are right. Well you can’t unless you are the Journal, skilled in the art of defending plutocrats, no matter how much in the way of mental gymnastics that might require.
But this implicit focus on robo signers (which admittedly did bring the bigger issue of foreclosure abuses into the limelight) again is a convenient diversion, since the robo signer is far from the most serious problem now affecting the foreclosure process.
Back to the Journal’s account:
It was a first step in the growth of a legal sub-specialty called foreclosure defense that has sown confusion and turmoil in the housing market. Lawyers in the field now commonly use a technique more identified with corporate litigation: probing depositions, designed to uncover any lapses in judgment, flaws in a process or wrongdoing. In the 23 states where foreclosures entail a court hearing, the bank may be ordered to pay the homeowner’s legal bill if a lawyer can convince a judge that the bank has submitted false documents, such as affidavits saying employees personally reviewed the details of loans when they didn’t.
Huh? With all due respect, this is the first time I’ve heard of this “foreclosure defense” sub specialty. Please. These are consumer lawyers, and some of them have gotten good enough at fighting foreclosures that they do it full time. But “sub-speciality” implies a degree of fomalization and coordination of effort that isn’t there. Oh, and the Journal deems it to be bad form for mere consumer lawyers to use the techniques of decent trial lawyers (only corporations are supposed to have access to competent litigators, it seems).
But it gets even better. The Journal couldn’t be bothered letting facts get in the way of a tidy narrative. Kowalski weighed in in the comment section of the article:
Despite my best efforts to answer all of Mr. Whelan’s questions, the article contains a number of misstatements. First, Mr. and Mrs. Jackson did not face a foreclosure hearing after simply stopping payment – they paid the entire amount due per a statement sent to them by GMAC, and paid by certified check. GMAC mistakenly refused the check, alleging it was an NSF payment (not possible with certified funds), then placed the couple in foreclosure. I was simply trying to track the facts of the payment by deposing a witness who had sworn in court documents that she had reviewed the entire file and was familiar with the payment history, when, as it turned out, she was not only not familiar with the payment history, but the substance of her entire affidavit was false, including the allegation that the affidavit was sworn to in front of a notary. These were substantive questions I needed answers to – not an excuse for a delay. Further, the judge did not “throw out the case” – it is still pending, with GMAC still suing the Jacksons, years later.
I, and most of my fellow consumer attorneys who are members of the National Association of Consumer Advocates, do not raise these issues for delay – we raise them because we all have cases (this is the bulk of my foreclosure defense practice) where all or part of the foreclosure is purely the fault of the servicer or mill law firm – from homeowners whose payments were misrouted by the servicer, to servicers who simply changed the address of the property and then force-placed flood insurance, to servicers who ignore insurance plans the borrowers paid for (all examples from my cases) to servicers who refuse to even accept HAMP-type loan modification documents – all are substantive, real problems that were not the fault of the borrowers. The deposition was, in the Jackson case, merely an effort to get at the truth of the reversed payment – instead, GMAC admitted to wholesale manufacture of court documents, then promised to fix the practice, then continued that practice unabated for 4 more years.
Most of what we have uncovered are criminal violations – false testimony under oath, notary fraud, etc. These problems will continue until the attorneys general who have formed a task force recognize and confront the significant criminal violations, and will continue unless we have real reform of the servicing practices that emphasize speed over the truth.
Not a single one of my clients wants (or deserves) a free house. What they want (and deserve) is for their voices to be heard, and, for better or worse, consumer lawyers are the only ones capable of achieving this at the moment.
Oh, and it would have been nice if Mr. Whelan had taken the time to spell my name correctly throughout the article.
Yves here. Servicer abuses that result in foreclosures are simply not getting the media attention they deserve. The prevailing perception, and the party line from the banks, is that the borrowers are all deadbeats and therefore any efforts to aid them are simply an abuse of court processes.
But servicers are modern judges, juries, and to the extent they can railroad foreclosures through, executioners. When a payment arrives after the due date (and servicers have been found to hold checks to render payments late), under RESPA and the bank’s agreement with the borrower, the bank is supposed to apply payments to principal and interest first, then any late fees. But if you incur a late fee, they instead apply the payment to that first, which makes your regular monthly payment come up short. So then you get an insufficiency fee.
Servicers don’t send detailed monthly statements like credit card companies, telling you how your payments were applied. This process of misapplication of payment and failure to notify borrowers when fees have been incurred guarantees that the charges will balloon. It isn’t until months have passed and the extra balance become large, say $2000 or more, that the homeowner realizes they are under water according to their servicer, even though they have made all their regular payments. Many lack the extra money to clear out all these largely bogus fees; other have tried fighting, only to find the servicer won’t budge, and they rack up more charges, which forces them either to capitulate or lose their home.
Nevertheless, the Journal runs the party line that nothing is wrong with the foreclosure machinery, when the intense pushback suggests otherwise, and brandishes the usual financial services industry threat: hurt us, and it will hurt you even more:
“There is a movement afoot by [state attorneys general] and private lawyers to use technical problems to avoid foreclosures where the borrower is in default and the foreclosure is in all respects substantively appropriate. These are lawyers where the best job they can do for their clients is to keep them in their houses without paying the mortgage,” said Andrew L. Sandler, a Washington securities lawyer who represents banks and firms that service mortgages.
Mr. Sandler added: “The class-action lawyers are swarming around this issue right now, because they perceive that it can result in significant fees for them. But they’re not well-founded cases, and the banks will vigorously contest any class action around these issues.”
The big risk to banks and the housing market, indeed, is that more homeowners and lawyers come to see such cases as attractive to fight.
It’s certainly fair to say some legal actions are based on weak theories; we dissed the widely touted investor suit against Countrywide on mortgage putbacks yesterday, and have selectively argued against other legal theories. But some of these cases are based on careful study of real abuses and are attacking improper, potentially fraudulent actions. This is one of the few checks we have left on misuse of power, but the powers that be want the public to see these legal challenges as a threat to their financial security and accept compromises, just as we have been forced to accept diminished civil liberties and ever more intrusive surveillance in the name of personal security.
One encouraging sign: I didn’t take a careful tally, but despite the Journal’s heavy spin on this story, its comment section seemed to be running at only a 50% acceptance of its position. The more the banks try to press the merits of their case on dubious evidence, the more the public is coming to realize they are not to be believed.
Topics: Banana republic, Banking industry, Credit markets, Legal, Media watch, Politics, Real estate, Social values
they aren’t all dead beats. some got their the new fangled way. the servicer did it
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not-affiliated-with-Wall Street Says:
October 21st, 2010 at 3:39 pm
I wish you wouldn’t throw in that stuff about the graybar hotel. It’s a depressing reminder that these kinds of people never go to jail. They just get richer.
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beaufou Says:
October 21st, 2010 at 5:12 pm
JCynic.
I would suggest a name for Diamond Dave’s new boat: my ass is grass.People are talking, he is going down.
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Mannwich Says:
October 21st, 2010 at 6:27 pm
@willid3: Do we really need any MORE proof that the WSJ is in the back pocket of the elites? I guess we do, since they keep reaffirming that every day with their absurdly slanted screeds.
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Mark E Hoffer Says:
October 21st, 2010 at 8:52 pm
I don’t knoe about all y’all, though, there’s something about ‘limited hangout’ that I’d be looking into..
http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=limited+hang-out
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Mark E Hoffer Says:
October 21st, 2010 at 8:54 pm
and, this, ‘knoe’, was a key-stroke off, as in ‘know’..
Gracias~! QWERTY!
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willid3 Says:
October 21st, 2010 at 9:33 pm
Mannwich Says:
October 21st, 2010 at 6:27 pm@willid3: Do we really need any MORE proof that the WSJ is in the back pocket of the elites? I guess we do, since they keep reaffirming that every day with their absurdly slanted screeds.
nope.
they just want to make sure we know.
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dsawy Says:
October 22nd, 2010 at 3:28 am
What is the statute of limitations on what he has done? That’s the biggest question I have before taking an over/under on this.
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Hot Links: Social Media Guru The Reformed Broker Says:
October 22nd, 2010 at 7:19 am
How to pimp hard amidst the ruins of Foreclosure Florida. (TBP)
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As much as state attorneys general could be an effective force in acting for consumers and investors against banks, the fact that an attorney general has saddled up does not necessarily mean the effort is serious. At a minimum, it might just be a gambit to garner some good PR without seriously inconveniencing the perps; at worse, the action might be a pure Trojan horse.
Consider the curious conduct of one Bill McCollum, the lame duck attorney general of Florida. It appears that McCollum has been going after the foot soldiers in the foreclosure chicanery business (although some of them, like David Stern, head of the biggest foreclosure mill in the state, have earned a tidy fortune). His recent actions have targeted firms offering dubious foreclosure advice, and more recently, the foreclosure mills as well as a firm that may be best known for its real estate related document fabrication activities, Lender Processing Services, through its DocX subsidiary.
Now starting with these actors isn’t a bad thing at all; in fact, prosecutors often target low level criminals with the hope of getting them to turn evidence on the kingpins. And there is good reason to think McCollum has no interest in asking tough questions that will inconvenience bigger fry.
McCollum Is falling in with the banking industry party line. He appears to regard not disrupting the foreclosure process, a top priority of the financiers, as a worthy goal. Gee, isn’t preserving the rule of law and making sure no one is abused or defrauded the sort of thing his office is tasked to defend, not the functioning of markets or the bottom lines of banks? From the Wall Street Journal (hat tip reader f247):
“They’re training a lot of new people, and apparently now they are comfortable with the legality of their foreclosure process,” Mr. McCollum said in an interview. “The primary purpose of these meetings is talking about not having this stuff held back. It’s very important for us to not have a backlog of foreclosures. We already have a backlog. We don’t want it to get worse.”…
Mr. McCollum, Florida’s attorney general, said most errors in the foreclosure process have been “procedural,” adding that his top priority is to resolve the mess in a way that allows foreclosures to resume quickly….
The talks also centered on how to quickly get the foreclosure process moving again, according to the Florida attorney general’s office. Mr. McCollum described the meeting as more cooperative than combative.
Let’s look at the timeline:
August 10: McCollum announces investigation of foreclosure mills. McCollum also happens to be running for governor as a Republican and facing a tough opponent in the primaries. One must wonder whether this investigation was a Hail Mary pass to bolster his candidacy
August 24: Florida primary, McCollum loses to Rick Scott
September 3: McCollum asks if he can resume being a lobbyist once he leaves office. Per the St. Petersburg Times:
Barely a week after he lost the Republican primary for governor, Attorney General Bill McCollum sought legal advice on whether he can lobby the governor’s office and Cabinet — the very people he works with now — after he leaves office in January.
The answer: No.
He’ll have to wait two years before he can collect fees to represent private clients before the state government that has employed him the past four years… He asked the Commission on Ethics not to reveal his name as the person making the inquiry, but the agency did anyway….
McCollum’s Sept. 3 letter to the Commission on Ethics noted that state law and the Constitution already bar him from lobbying his current agency, the attorney general’s office, for two years after leaving office in January….
But because the attorney general also is a member of the Cabinet, McCollum asked “what entities” are also covered by the lobbying restriction.
The attorney general, as a Cabinet member, serves on a variety of boards overseeing the state pension fund, environmental, land use and other issues.
In its opinion, the ethics commission said: “One’s public service career and contacts developed in that capacity should not be used to enrich oneself at the expense of the public (and) the provision was intended to prevent influence peddling and the use of public office to create opportunities for personal profit through lobbying once an official leaves office.”….
McCollum, a lawyer who served for 20 years in Congress, listed a net worth of $1.3 million in 2009. He collects $82,000 annually as a congressional pension.
For several years after he left Congress, McCollum was a $400,000-a-year lobbyist for the Baker & Hostetler law firm.
It’s also worth noting that the biggest foreclosure mill targeted, the Daniel Stern law firm, has hired heavyweight Republicans to defend it. Per FireDogLake:
David Stern has already become fairly well-known to the media as a high-volume foreclosure servicer — a foreclosure mill. What’s not as well-known is that David Stern’s legal representation, Tew Cardenas, is rather important to Florida’s Republican Party. While Jeffrey Tew has donated only on a rather limited basis to candidates, Alberto Cardenas has donated more than $70,000 to candidates, incumbents and committees during the last two election cycles. . . .
Among Cardenas’ beneficiaries are Rep. Roy Blunt (MO-07) and Rep. John Mica (FL-07), who respectively sit on the House Energy and Commerce Committee (Blunt), House Permanent Subcommittee on Investigations (Blunt), and House Committee on Oversight and Government Reform (Mica), and the House Committee on Transportation and Infrastructure (Mica is the ranking member). His family members are likewise generous to Republicans and have donated more than $9000 over the last several years.
Unfortunately, this case study illustrates yet again the dangers of taking headlines at face value.
Surprise: Fox <b>News</b> signs Juan Williams to new $2 million deal <b>...</b>
Fox News Chief Executive Roger Ailes handed Williams a new three-year contract Thursday morning, in a deal that amounts to nearly $2 million, a considerable bump up from his previous salary, the Tribune Washington Bureau has learned. ...
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Lindsay Lohan appeared before Judge Elden Fox at the Beverly Hills Courthouse this morning for her latest probation violation hearing, and it appears as though spending the last month at the Betty Ford Center helped convince the judge ...
BREAKING <b>NEWS</b>: No Jail For Lindsay Lohan - Judge Orders Her To <b>...</b>
http://link.brightcove.com/services/link/bcpid16157557001/bctid645210306001 Lindsay Lohan caught a major break on Friday when Judge Elden Fox chose not to send her to jail and ordered her to stay in rehab at the Betty Ford Center.
eric seiger eric seiger
wunsacon Says:
October 21st, 2010 at 10:34 am
I suspect Shakespeare’s Henry VI said it best.
http://www.spectacle.org/797/finkel.html
NoKidding Says:
October 21st, 2010 at 10:36 am
“The goal here was not to pursue prosecute foreclosures on behalf of a banking client; rather it was to crank out the assembly line factory to grab 100s of millions of dollars, legally or illegally, consequences be damned.”
Intuition tells me your assessment is correct, but nothing in the quoted bit of that story did.
We’re in a foreclosure boom and there’s work involved. Somebody has to do it.
wunsacon Says:
October 21st, 2010 at 10:36 am
Er, “Dick The Butcher”…
Mannwich Says:
October 21st, 2010 at 10:38 am
Oh, it’s 100%. In the grand scheme of things, he’s such a minor player and the perfect fall guy for Eric Holder.
rktbrkr Says:
October 21st, 2010 at 10:42 am
There’s never just 1 rat, there were a handful of FL lawfirms like this, Stern was just the biggest rat. So does the florida court system throw out all the work done by Stern and similar firms? A couple hundred thousand do-overs?
http://wiki.answers.com/Q/Which_countries_have_no_extradition_treaties_with_the_United_States
rktbrkr Says:
October 21st, 2010 at 10:47 am
In New York, attorneys already have an obligation to ensure that the documents they present to the court are valid, but New York Chief Judge Jonathan Lippman said having them sign something affirming that all papers got a proper review will hold them accountable like never before.
“We want to make sure that everyone is focusing like a laser on these particular types of proceedings,” he said. “It puts them on notice. That’s what this is all about. We all have to make doubly sure that we are doing what we should be doing in the first place.”
The rule requiring a signed affirmation applies to both new cases and the 78,000 foreclosure actions already under way in New York courts.
Lawyers handling pending foreclosure actions will probably need to go back to their clients and verify that all proper steps were followed, Lippman said. The form created by the court requires the lawyers to give the name of the bank employee who affirmed that the records were accurate and the date the conversation took place.
The president of the New York State Bar Association, Stephen Younger, issued a statement praising the new rule. “The chief judge has taken swift steps to address a nationwide problem in foreclosure actions,” he said.
BennyProfane Says:
October 21st, 2010 at 10:49 am
I might even bet you that he doesn’t see any type of prosecution at all – maybe a nice, 5-10% deal, a la Mozilo, that the company can write off somehow offshore.
rktbrkr Says:
October 21st, 2010 at 10:50 am
Start the music, it’s time for Musical Chairs!
BofA Sues FDIC Over Taylor Bean Mortgage Losses
Bank of America, the largest U.S. bank, has sued the Federal Deposit Insurance Corp over $1.75 billion of investor losses mainly from the 2009 collapses of a large regional bank and large mortgage lender.
The lawsuit concerns the FDIC’s role as receiver for the main banking unit of Alabama’s Colonial BancGroup, and the implosion of Taylor, Bean & Whitaker Mortgage, where federal prosecutors say a multi-billion dollar mortgage fraud took place. Bank of America is trustee for notes issued by Taylor Bean’s Ocala Funding unit.
SnIp
RiskAverseAlert Says:
October 21st, 2010 at 10:59 am
I’ll take the under. This thing is so bad the President hasn’t even the clout to convince the Sheriff of his own Cook County that the recent voluntary foreclosure moratorium was the result of mere “technicalities.”
Sechel Says:
October 21st, 2010 at 11:20 am
David Stern knew what he was doing(to a point). He appointed four of the seven directors. It’s made clear that shareholders should find it difficult if not impossible to take disciplinary action against him, not withstanding any fiduciary obligations they may have in this respect.
AHodge Says:
October 21st, 2010 at 11:40 am
no shortables no options
i see it down abt 6% today
JerseyCynic Says:
October 21st, 2010 at 11:48 am
it’s perfect Mannwich
I’m always most cynical when individual assholes are singled out to cover for industry wide corruption.
OH good!! now we don’t have to dig deeper and run the whole lot of f%$kers out of town!
what happens when the next shit storm hits ? — student loan debt has now surpassed credit card debt
I wonder how many of our big bailed out banks set up their own back door foreclosure mills YEARS ago when they were setting the stage for this round in the boom/bust cycle of real estate
Sechel Says:
October 21st, 2010 at 11:49 am
http://www.law.com/jsp/article.jsp?id=1202473607711&Fla_Foreclosure_Firm_Undergoes_ShakeUp_as_Chairman_Vacates_Post
abandon ship!
Several top executives of Florida’s largest foreclosure processing company resigned and its chairman was replaced Tuesday, amid a national controversy over questionable foreclosure filings and investigations into possible wrongdoing by lenders, loan servicers and law firms.
Plantation, Fla.-based DJSP Enterprises has been impacted by the temporary suspension of foreclosure filings by some of the nation’s largest lenders and some industry insiders are questioning the future of the business.
The company announced Tuesday that Chairman David Stern would step down, take the new title of president and remain the CEO. Stephen Bernstein will take over as chairman.
DL Says:
October 21st, 2010 at 12:10 pm
I just want to know why the company is incorporated in the Virgin Islands.
JerseyCynic Says:
October 21st, 2010 at 12:43 pm
oh what a fabulous story!!!
….In a nod to his foreclosure work, according to the acquaintance, Mr. Stern mused about possibly naming the larger yacht Su Casa Es Mi Casa — “Your House Is My House.” But his wife and others cautioned against it, according to this acquaintance, and Mr. Stern named the boat “Misunderstood.” Mr. Stern denies that he considered the “Su Casa Es Mi Casa” name.
http://www.nytimes.com/2010/09/05/business/05house.html?_r=1&pagewanted=5
**wunsacon
great link ! great piece
I see Mr. Wallace at the ethical spectacle has the same fears as I do about the impending student loan bailout
http://www.spectacle.org/1010/rags.html
“Banks which lend these amounts of money for education are engaging in many cases in exactly the behavior of banks which loaned absurd amounts of money for real estate purchases by people who would never be able to repay it unless a miracle occurred. Such lending is doubly irresponsible, putting the bank at risk and ultimately forcing bail-outs with public money, but also encouraging individuals to engage in risky behavior. The spectacle of young people starting their adult lives as much as a quarter million dollars underwater is very disturbing. The role of government in sponsoring, encouraging and guaranteeing student loans also needs to be re-examined. A government role which made sense when people were graduating with $20,000 in debt looks entirely different when the number is ten times as much.”
wally Says:
October 21st, 2010 at 12:54 pm
Since these guys – and there are a lot of them recently – end up keeping most of their gains they are business heroes in this country.
Unsympathetic Says:
October 21st, 2010 at 1:10 pm
Barry, he will not be spending any time in jail.
He will, however, buy late-night TV infomercial time describing how you can get rich quick using his tried and true techniques.
b_thunder Says:
October 21st, 2010 at 2:14 pm
My odds on David Stern’s future:
5% – he’ll pay at most 10% of his gains as a fine, and will lose law license for at most 3 years w/out admitting anything
25% – he’ll become a billionaire suing evil banks on behalf of foreclosed homeowners
20% – he’ll become a billionaire AND in 4 years will be elected the Governor of Florida
60% – he will be the next CFTC judge
willid3 Says:
October 21st, 2010 at 3:17 pm
Yves smith has this take
t take a fair degree of skill to pen a journalistic story that hews to the appearance of objectivity yet is out to sell a point of view.
The lead article in the Journal tonight, “Niche Lawyers Spawned Housing Fracas” telegraphs its bias in its headline: the foreclosure crisis is merely the creation of two bit lawyers who by implication don’t know what they are doing, and are pumping trivial issues up for their own enrichment, with the housing market as collateral damage.
Funny that anyone can think this spin is remotely true. The fact that solo practitioner lawyers could have such an impact on the system is not proof that they are miscreants, as the Journal implies. It is that the foundation of mortgage securitzations is rotten as a result of widespread abuses, first on the origination end, later in the foreclosure process. These small firm players are using the legal equivalent of toothpicks; the fact that their efforts have destablized the foundation of the residential mortgage backed securities market is tangible proof that they were imperiled to begin with.
Let’s parse some sections of the article, starting from the top:
The paperwork mess muddying home foreclosures erupted last month. But the legal strategy behind it traces to a lawyer’s gambit in 2006 that has helped keep one couple in their home six years beyond their last mortgage payment.
Not bad in the drive-by shooting category. The foreclosure crisis, which is the result of what increasingly appears to be a widespread failure to convey borrower promissory notes and related liens properly to the the securitization entity is reduced to a mere “paperwork mess”. So the idea that the shortcomings are serious is dismissed. Similarly, the efforts of various attorneys who have been chipping away as aspects of this problem are incorrectly lumped together, as if there was really only a single, simpleminded strategy, a mere “lawyer’s gambit” which by implication, was copied by other low life attorneys. And this effort was to keep a deadbeat borrower illegitimately housed.
Funny, this James Kowalski, the attorney behind this dastardly act, did what members of the bar normally do (at least if they are competent): they look for weaknesses in fact and law in the case presented by the other side. And part of the process involves, stunningly enough, depositions! Kowalski’s evil deed was that he was early, perhaps first, to find a robo signer, back in 2006.
But robo signers are an abuse of court process. You can’t have it one way, and say you believe in law and order and the sanctity of contract, and then say it’s just fine to abuse legal procedures if you are pretty sure you are right. Well you can’t unless you are the Journal, skilled in the art of defending plutocrats, no matter how much in the way of mental gymnastics that might require.
But this implicit focus on robo signers (which admittedly did bring the bigger issue of foreclosure abuses into the limelight) again is a convenient diversion, since the robo signer is far from the most serious problem now affecting the foreclosure process.
Back to the Journal’s account:
It was a first step in the growth of a legal sub-specialty called foreclosure defense that has sown confusion and turmoil in the housing market. Lawyers in the field now commonly use a technique more identified with corporate litigation: probing depositions, designed to uncover any lapses in judgment, flaws in a process or wrongdoing. In the 23 states where foreclosures entail a court hearing, the bank may be ordered to pay the homeowner’s legal bill if a lawyer can convince a judge that the bank has submitted false documents, such as affidavits saying employees personally reviewed the details of loans when they didn’t.
Huh? With all due respect, this is the first time I’ve heard of this “foreclosure defense” sub specialty. Please. These are consumer lawyers, and some of them have gotten good enough at fighting foreclosures that they do it full time. But “sub-speciality” implies a degree of fomalization and coordination of effort that isn’t there. Oh, and the Journal deems it to be bad form for mere consumer lawyers to use the techniques of decent trial lawyers (only corporations are supposed to have access to competent litigators, it seems).
But it gets even better. The Journal couldn’t be bothered letting facts get in the way of a tidy narrative. Kowalski weighed in in the comment section of the article:
Despite my best efforts to answer all of Mr. Whelan’s questions, the article contains a number of misstatements. First, Mr. and Mrs. Jackson did not face a foreclosure hearing after simply stopping payment – they paid the entire amount due per a statement sent to them by GMAC, and paid by certified check. GMAC mistakenly refused the check, alleging it was an NSF payment (not possible with certified funds), then placed the couple in foreclosure. I was simply trying to track the facts of the payment by deposing a witness who had sworn in court documents that she had reviewed the entire file and was familiar with the payment history, when, as it turned out, she was not only not familiar with the payment history, but the substance of her entire affidavit was false, including the allegation that the affidavit was sworn to in front of a notary. These were substantive questions I needed answers to – not an excuse for a delay. Further, the judge did not “throw out the case” – it is still pending, with GMAC still suing the Jacksons, years later.
I, and most of my fellow consumer attorneys who are members of the National Association of Consumer Advocates, do not raise these issues for delay – we raise them because we all have cases (this is the bulk of my foreclosure defense practice) where all or part of the foreclosure is purely the fault of the servicer or mill law firm – from homeowners whose payments were misrouted by the servicer, to servicers who simply changed the address of the property and then force-placed flood insurance, to servicers who ignore insurance plans the borrowers paid for (all examples from my cases) to servicers who refuse to even accept HAMP-type loan modification documents – all are substantive, real problems that were not the fault of the borrowers. The deposition was, in the Jackson case, merely an effort to get at the truth of the reversed payment – instead, GMAC admitted to wholesale manufacture of court documents, then promised to fix the practice, then continued that practice unabated for 4 more years.
Most of what we have uncovered are criminal violations – false testimony under oath, notary fraud, etc. These problems will continue until the attorneys general who have formed a task force recognize and confront the significant criminal violations, and will continue unless we have real reform of the servicing practices that emphasize speed over the truth.
Not a single one of my clients wants (or deserves) a free house. What they want (and deserve) is for their voices to be heard, and, for better or worse, consumer lawyers are the only ones capable of achieving this at the moment.
Oh, and it would have been nice if Mr. Whelan had taken the time to spell my name correctly throughout the article.
Yves here. Servicer abuses that result in foreclosures are simply not getting the media attention they deserve. The prevailing perception, and the party line from the banks, is that the borrowers are all deadbeats and therefore any efforts to aid them are simply an abuse of court processes.
But servicers are modern judges, juries, and to the extent they can railroad foreclosures through, executioners. When a payment arrives after the due date (and servicers have been found to hold checks to render payments late), under RESPA and the bank’s agreement with the borrower, the bank is supposed to apply payments to principal and interest first, then any late fees. But if you incur a late fee, they instead apply the payment to that first, which makes your regular monthly payment come up short. So then you get an insufficiency fee.
Servicers don’t send detailed monthly statements like credit card companies, telling you how your payments were applied. This process of misapplication of payment and failure to notify borrowers when fees have been incurred guarantees that the charges will balloon. It isn’t until months have passed and the extra balance become large, say $2000 or more, that the homeowner realizes they are under water according to their servicer, even though they have made all their regular payments. Many lack the extra money to clear out all these largely bogus fees; other have tried fighting, only to find the servicer won’t budge, and they rack up more charges, which forces them either to capitulate or lose their home.
Nevertheless, the Journal runs the party line that nothing is wrong with the foreclosure machinery, when the intense pushback suggests otherwise, and brandishes the usual financial services industry threat: hurt us, and it will hurt you even more:
“There is a movement afoot by [state attorneys general] and private lawyers to use technical problems to avoid foreclosures where the borrower is in default and the foreclosure is in all respects substantively appropriate. These are lawyers where the best job they can do for their clients is to keep them in their houses without paying the mortgage,” said Andrew L. Sandler, a Washington securities lawyer who represents banks and firms that service mortgages.
Mr. Sandler added: “The class-action lawyers are swarming around this issue right now, because they perceive that it can result in significant fees for them. But they’re not well-founded cases, and the banks will vigorously contest any class action around these issues.”
The big risk to banks and the housing market, indeed, is that more homeowners and lawyers come to see such cases as attractive to fight.
It’s certainly fair to say some legal actions are based on weak theories; we dissed the widely touted investor suit against Countrywide on mortgage putbacks yesterday, and have selectively argued against other legal theories. But some of these cases are based on careful study of real abuses and are attacking improper, potentially fraudulent actions. This is one of the few checks we have left on misuse of power, but the powers that be want the public to see these legal challenges as a threat to their financial security and accept compromises, just as we have been forced to accept diminished civil liberties and ever more intrusive surveillance in the name of personal security.
One encouraging sign: I didn’t take a careful tally, but despite the Journal’s heavy spin on this story, its comment section seemed to be running at only a 50% acceptance of its position. The more the banks try to press the merits of their case on dubious evidence, the more the public is coming to realize they are not to be believed.
Topics: Banana republic, Banking industry, Credit markets, Legal, Media watch, Politics, Real estate, Social values
they aren’t all dead beats. some got their the new fangled way. the servicer did it
not-affiliated-with-Wall Street Says:
October 21st, 2010 at 3:39 pm
I wish you wouldn’t throw in that stuff about the graybar hotel. It’s a depressing reminder that these kinds of people never go to jail. They just get richer.
beaufou Says:
October 21st, 2010 at 5:12 pm
JCynic.
I would suggest a name for Diamond Dave’s new boat: my ass is grass.
People are talking, he is going down.
Mannwich Says:
October 21st, 2010 at 6:27 pm
@willid3: Do we really need any MORE proof that the WSJ is in the back pocket of the elites? I guess we do, since they keep reaffirming that every day with their absurdly slanted screeds.
Mark E Hoffer Says:
October 21st, 2010 at 8:52 pm
I don’t knoe about all y’all, though, there’s something about ‘limited hangout’ that I’d be looking into..
http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=limited+hang-out
Mark E Hoffer Says:
October 21st, 2010 at 8:54 pm
and, this, ‘knoe’, was a key-stroke off, as in ‘know’..
Gracias~! QWERTY!
willid3 Says:
October 21st, 2010 at 9:33 pm
Mannwich Says:
October 21st, 2010 at 6:27 pm
@willid3: Do we really need any MORE proof that the WSJ is in the back pocket of the elites? I guess we do, since they keep reaffirming that every day with their absurdly slanted screeds.
nope.
they just want to make sure we know.
dsawy Says:
October 22nd, 2010 at 3:28 am
What is the statute of limitations on what he has done? That’s the biggest question I have before taking an over/under on this.
Hot Links: Social Media Guru The Reformed Broker Says:
October 22nd, 2010 at 7:19 am
How to pimp hard amidst the ruins of Foreclosure Florida. (TBP)