The massive foreclosure fraud that will go (effectively) unpunished

One of the issues discussed in Glenn Greenwald’s excellent book With Liberty and Justice for Some is the fact that in the United States, financial elites can now get away with quite serious crimes. Unfortunately, the section of the book was a bit weak, without a clear explanation of the laws that have been broken. Thus, I’m very grateful for this summary of the foreclosure fraud issue (HT: Cory Doctorow):

Before any foreclosure can proceed, a lender must run through a checklist of specifics for the court to move forward…


Banks review these details to make sure there was not an administrative error. (Oops! We applied payments to wrong account!)

The banker who reviewed these files fills out and signs an affidavit, which is then notarized. It is the written equivalent of sworn testimony in court. Judges take affidavits extremely seriously. False affidavits bypass the entire fact-finding and legal process, and the result can be a miscarriage of justice. Anyone who lies on one commits perjury, a felony punishable by jail time.

At least, they used to get jail time.

Before the settlement, we learned that nearly every aspect of the robosigned documents was false. None of the details were ever reviewed. The signatures attesting to the review of the documents were fabricated — made by someone other than the person whose name was on the document. Neither person — the supposed signatory to the document nor the hired forger — ever validated the facts of each case. All of the safeguards put in place to make sure foreclosures were done correctly and legally were bypassed. Even the notary stamps were bogus — they were not real, and not signed by a notary to validate that the signer and the signature matched.

How did this happen? Instead of a careful review, people were hired to rubber-stamp hundreds of foreclosure documents an hour. Former burger flippers were paid $8 to $10 an hour to violate the law, file false affidavits and commit perjury. Some of the information was correct, but much of it was wrong — and none of it was verified for court purposes.

And now we have this grand settlement.


Most people who get caught committing crimes are punished. Commit a felony — if you run a bank — and your shareholders pay a monetary fine. Violating the law has merely become the banker’s cost of doing business.

Thus, the robosigning agreement has allowed the mass production of perjury. It has gone unrecognized and unpunished. It has made perjury a business expense, like travel or office furniture. The same reckless approach to giving loans to unqualified people was institutionalized, leading to another reckless approach to foreclosing homes.

  • unbound

    Yep. This is one of the real issues that doesn’t get any real traction with the public because they are too distracted about abortion and gay marriage.

    Executives used to be punished for things like explicit collusion too, but they can talk out in the public without fear of reprisal anymore (I remember the Verizon CEO talking a year ago or so about getting the iPhone for their network and trying to make a deal so that the iPhone wouldn’t go to any further networks…something that is clearly illegal). But the executives know full well that they are covered (industry insiders have been in the DOJ for over 30 years now covering their friends).

  • karmakin

    What do you do in such a case? Do you go after the poor folks who are just trying to earn a living and have no clue about what they’re doing? The executives probably have themselves covered that they’ve set down a “process” that is legal. That it isn’t always followed..oh well, it’s not on them.

    It’s not so much a DoJ problem as much as it is a Congressional problem. And Congressional problems are cultural/social problems. There’s really no framework in place to truly “punish” public corporations. That’s the problem. What do you did. Give them a fine and a slap on the wrist. That’s about as much as we can do.

    What should be done? Well, in egregious cases like this, shareholders and other stakeholders should be zeroed out, entirely. Sorry investor, you made a bad investment. You lose. Should have done your homework. That’s the law that needs to be passed. The biggest problem with Greenwald is that he doesn’t realize that something like that needs overwhelming public support which doesn’t really exist for it right now…

    Actually. Let me restate that. It probably HAS or could have a decent amount of public support. But Greenwald simply doesn’t realize the big problem with the Democratic party. He blames it on corruption, when in reality the problem is the focus on attracting the mythical “swing voter”, your upper-middle class individual who is working but still wants his retirement fund protected. That’s the guy they’re listening to.

    I think that claims of “corruption” are way overblown and way overused.

  • Bruce Gorton


    The biggest problem with the US is, the government is thoroughly negligent. That is what came out of the Sopa issue – your representatives aren’t doing their jobs.

    And the same can be seen in the Research Works Act, or any other law with bipartisan support really.

    Laws are being passed without regard to what they actually mean, and laws aren’t being enforced whenever the lawbreaker has the right connections.

    Ultimately the US has the government it voted for. This is the end result of decades of voting for the lesser of two evils, and slamming those who vote third party more than those who don’t vote at all.

  • la martina baratos

    I don’t know the answers. However I do agree with Uncle Ben increasing the money supply.

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