Since the foreclosure fraud scandal — in which banks were caught allowing “robo-signers” to approve potentially fraudulent foreclosure forms — first hit the national airwaves, Wall Street banks have been trying to downplay the extent of the problem, claiming that it only has to do with paperwork mistakes and not a compete disregard for due process and property rights. Wells Fargo and Citigroup both refused to implement foreclosure moratoriums despite their associations with robo-signers, and Bank of America and Ally Financial have both lifted their respective moratoriums.
Epitomizing the banks’ attempt to turn this into a story about mistaken paperwork — and not one about improperly throwing people out of their homes — Bank of America has come forth with an admission that it made “some mistakes” in its foreclosure process, but insists that they are “relatively minor”:
Some of the defects seem relatively minor, according to the bank, and bank officials said they haven’t uncovered any evidence of wrongful foreclosures. There was an address missing one of five digits, misspellings of borrowers’ names, a transposition of a first and last name and a missing signature on one document “underlying” an affidavit, a bank spokesman said. But the bank uncovered these mistakes while preparing less than 1% of the first foreclosure files that it intends to resubmit to the courts in 23 states.
Of course, BofA places the emphasis on innocent sounding mistakes like misspelling a homeowner’s name, and not on far more harmful instances, such as when it foreclosed on a homeowner who didn’t have a mortgage at all. Or when it locked a homeowner who was current on her mortgage payments out of her home, shutting off her utilities and stealing her pet parrot. If the banks are respecting due process, someone who literally does not have a mortgage should never receive a foreclosure notice.
But the banks’ problems also extend beyond those associated with homeowners. BofA, for instance, has been caught selling the same mortgage to multiple investors. As David Dayen put it, “the banks would knowingly put garbage into the mortgage pools and trot it out to the investors while misrepresenting the product. Now, we’re learning, there was a whole new angle – some of the loans showed up in multiple pools.”
This mess, which is entirely of the banks’ own making, extends far beyond some misspellings and empty lines on a form. The entire foundation on which the banks built their foreclosure machines encouraged fraud and speed, without regard for the rights of borrowers. And BofA appears to have learned no lessons, considering that it flew through verifications of its frozen foreclosures at breakneck speed — reviewing about 10,000 per day — after spending months dragging its feet when getting borrowers into sustainable loan modifications.