Iowa AG Tom Miller at today's meeting

I mentioned previously this meeting between homeowners and the lead Attorney General in the 50-state investigation, Iowa’s Tom Miller. The activist groups who coordinated the meeting have reported back, and according to National People’s Action, Miller agreed to all of the terms they were seeking to resolve the foreclosure fraud crisis. Specifically, he agreed with the three-pronged approach of: loan modifications with principal reductions; compensation for foreclosure victims cheated out of their homes; and most important, criminal prosecutions for those who caused this hardship. This is from the NPA release:

“We will put people in jail,” Miller said, in response to questioning. “One of the main tools needs to be principal reductions, just like in the farm crisis in the 1980s…There should be some kind of compensation system for people who have been harmed…And the foreclosure process should stop while loan modifications begin. To have a race between foreclosures and modifications to see which happens first is insane.”

We don’t know who would be going to jail in this scenario, of course. Miller could be talking about Jeffrey Stephan and the other robo-signers whose names are attached to the fraudulent documents. They are the Lynndie Englands of this scandal. They were the dupes who did the work, not the bigwigs who designed and authorized the scheme. The AGs need to go up the ladder and take out the heads of these servicers; they’re the ones whose judgments are leading to the fraud.

Still, it is very refreshing – and unusual – to hear about criminal prosecutions in this context. I don’t think I’ve heard as strong a line as “we will put people in jail” from anyone in a position to do it since the discovery of foreclosure fraud. Too often the focus is on getting the banks to listen to reason, or preventing this from happening again. That just eliminates the rule of law as a governing concern in the United States. Crimes were committed – are still being committed – and law enforcement must enter the picture. That’s how you prevent an eternal recurrence of these crimes. So good for Tom Miller.

Overall, Miller met with 100 homeowners, foreclosure victims, and representatives from faith, community and labor groups today. Deacon Mike McCarthy, member of a faith group called Iowa Citizens for Community Improvement, said afterwards, “We are very pleased with how this meeting turned out and now our expectations are higher than ever.” The message was clear; you cannot make these promises and expect not to be watched. Other meetings with additional AGs have been scheduled for the future.

Afterwards, the participants protested in front of Wells Fargo Home Mortgage and a Bank of America branch in Des Moines. Other protests are scheduled by community groups this week in California and New York. You get a sense that at least some activists are taking matters into their own hands.

High expectations are often made to be diminished. But the potential certainly exists in the AG investigation for a strong settlement.

…More at Showdown in America.

David Dayen

David Dayen