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The Case of the Disappearing Arizona Foreclosure Fraud Bill

One reason why I believe state courts will have a much better chance to deal with foreclosure fraud than any lawmaker can be easily seen in this Matt Taibbi article about how Iowa Attorney General Tom Miller has suddenly received more campaign contributions from the finance sector than in his entire long political history. He’s literally raised 88 times as much from the finance, insurance and real estate sector (FIRE) than from what he raised from them over the last decade.

This foreclosure issue is a monstrous story that is somehow escaping national headlines; essentially, all of the largest banks in the country have been engaged in an ongoing fraud and tax evasion scheme that among other things has resulted in many hundreds of billions in investor losses, and hundreds of thousands of improper foreclosures […] If the banks had to pay what they actually owed – from the registration taxes/fees they avoided by using the electronic registry system MERS to the money taken from investors in toxic mortgage-backed securities to the fees and payments stolen from homeowners via predatory loan practices and illegal foreclosures – they would probably all go out of business. That’s how much money is at stake here: the very future of financial giants like Bank of America and Citi and JP Morgan Chase is hanging to a very significant degree on the decisions of politicians like Miller.

Hence the sudden avalanche of money sent Miller’s way. The numbers are laughable. In 2006, out -of-state donors gave Miller’s campaign $10,508. For the 2010 cycle, that number was $497,357.

(Note the David Boies appearance in that article as well, he’s suddenly become a major Miller donor right at the time that his law firm is defending Goldman Sachs.)

And here’s another example. Back in February, the Arizona State Senate passed a sweeping anti-foreclosure fraud bill, shepherded by Michele Reagan, a Republican who was sued by her mortgage servicer after trying to find out who owned her note. The main piece of the bill would have mandated a thorough chain of title to be presented at every foreclosure action in the state. And so naturally, the Arizona House of Representatives deep-sixed it.

I called an Arizona foreclosure defense attorney, Don Loeb, who lives in Phoenix, and who had suggested that we meet for dinner during my stay in the Valley of the Sun, and while I had him on the phone, I asked him about the status of Senator Reagan’s bill, as I had been unable to find anything about its status online. In fact, when I had searched for information on-line, S.B. 1259 seemed to be about something about firefighters… I was sure I was doing something wrong.

What I heard Don say, however, made no sense to me whatsoever and it simply wasn’t sinking in for the first minute or two… Don said S.B. 1259 was gone, replaced by something having to do with firefighting… he said I needed to speak with Beth Findsen to get the details.

I hung up feeling kind of numb, to be honest. How could such a thing have happened? I went back to Google to search for anything describing what had transpired… to absolutely no avail. There was not a single news story on S.B. 1259’s demise… nothing written by a journalist… nothing even on the state senate’s Website.

Basically, the House gutted the bill and amended it, which involves scooping the entire content of the bill out and replacing it with something different. The banksters didn’t want the bill passed, so they made sure it didn’t.

That’s representative democracy in the 21st century. The justice system isn’t a whole lot better, but at least it offers a fighting chance in select cases.

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David Dayen

David Dayen