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.