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Georgia Foreclosure Fraud Story Emblematic of Lack of Accountability, Crushing Consequences

The financial fraud task force can file civil suits for the next 10 years, and they still won’t understand how this will not satisfy homeowners who had everything they’ve ever worked for taken away from them, and who see no complementary losses on the side of those who caused this tragedy in their lives.

This is about a month old, but it was updated last week, and the scarred lives of foreclosure fraud victims resonates regardless of date.

“It makes mafia’s organized crime look like fifth-grade math,” said Patrick Powell of Cumming.

Powell said he became a victim of massive foreclosure fraud when he attempted to modify the loan on his Forsyth County home. He said the bank told him not to make his mortgage payments while it worked out the loan modification, then lost his 60-page modification application six times […]

Powell was about to lose his home when he saw a 60 Minutes report in 2011 that blew the lid off the industry’s big secret.

The report revealed banks used phony documents to push people out of their homes. The documents were apparently created because banks lost the original documents when Wall Street bundled mortgages into trusts and sold them to investors.

Bank attorneys and foreclosure firms forged the documents, called assignment of mortgage, which sometimes contained incorrect information about the true owner of the mortgage. The signers that provided signatures of bank vice presidents and notaries were called robosigners.

60 Minutes exposed one prolific robosigner named Linda Green.

“I saw that and I said ‘Linda Green!’ I pulled out my assignment and it’s Linda Green,” said Powell, who thought courts would quickly toss out the case since the bank was trying to foreclose using fraudulent documents.

The rest is familiar. The judge refused to allow Powell to consider the fraudulent assignments in his foreclosure case, and in fact reacted with anger when Powell tried to explain it in court. The response of the judges in Georgia resemble reactions around the country. And really only a handful of anti-foreclosure activists and some registers of deeds have clued into this massive fraud. The woman responsible for mortgage transfers in this area of Fulton County, Georgia, said she’s basically not responsible for authenticating the documents she receives into her office.

The biggest issue here is that the foreclosure fraud settlement was supposed to wipe the slate clean, with immunity given on past assignment fraud along with a promise to change the behavior. The dirty secret is that it hasn’t changed. Registers of deeds paying attention, like John O’Brien in Massachusetts, still routinely receive faulty or fabricated assignments.

Sam Olens, the Attorney General of Georgia, justified this by saying that, once July 1 of next year hits, the banks will truly, really not engage in foreclosure fraud, because the state passed a law empowering district attorneys to prosecute the matter criminally. This is a frequent refrain, and it assumes that false documents submitted to a court were somehow legal at one time, which should be news to everyone. Here was Olens’ response:

“Look. It’s more complicated than that,” Olens said. “When you’re dealing with the foreclosure process most of the time the documents weren’t being changed in the state.”

But Powell’s assignment was signed in Georgia along with untold thousands of others inside an office in Alpharetta.

Local news, paradoxically, has done most of the best journalism on foreclosure fraud. They actually get public officials on the record on their evasions and unwillingness to prosecute. And they listen to the stories of the people whose lives have been shattered by fraud and abuse.

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David Dayen

David Dayen