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Thomas Cox, Lawyer Who Exposed Robo-Signing, Gets $100,000 Prize

Prizewinner Thomas Cox

This great statement on housing from Econ4 hits all the right notes, particularly the line “We oppose treating the nation’s housing as a bundle of assets to be sliced, diced, flipped, and bailed out in pursuit of inflated profits and bonuses.” This is really the original sin that caused the crisis. As a result of all that money to be made in securitization, banks enthusiastically wrote more and more loans to feed the machine. They realized at some point that the intensity of transfers would leave them exposed to local county recording costs, so they created MERS to save on those costs and put the transfer system outside oversight. Predictably, this led to sloppy transfers and actual violations of the securitization rules, which banks then covered up through foreclosure fraud. It all stems back to turning housing stock into assets.

Lots of people must be credited with getting to the bottom of this scam, but perhaps nobody is more responsible than Thomas Cox. He was the former bank lawyer – he specialized in foreclosures – who volunteered to help Pine Tree Legal Assistance in Maine, a nonprofit just starting up a foreclosure defense project. Cox ended up doing the now-famous deposition of Jeffrey Stephan, the GMAC robo-signer, that exposed this practice of having affidavits filled out by people with no underlying knowledge of the loan data. This was the string that, when pulled, showed the fraud and rot at the heart of the largest consumer market in the world.

Cox, it turns out, has finally gotten the recognition he deserved for his work on this. has presented him with the Purpose Prize, a $100,000 grant.

In September 2009 Cox took up the case of homeowner Nicolle Bradbury, whose home was being foreclosed upon by GMAC Mortgage, the nation’s fifth largest mortgage servicer at the time. (GMAC is now facing Chapter 11 bankruptcy.) The company’s “limited signing officer” admitted he had signed thousands of foreclosure affidavits in 23 states, including Bradbury’s, “without ever knowing if any of [the information] was true – he was only hired to sign the papers,” Cox says.

By exposing the practice, which soon became known as “robo-signing,” Cox blew the lid off systematic foreclosure fraud by not only GMAC, but some of the country’s biggest banks. As a result, GMAC suspended all foreclosure activity nationwide on September 18, 2010; JP Morgan/Chase, Citibank and PNC Bank soon did the same.

The impact on wronged homeowners was so immense that together 49 of the 50 state
attorneys general sued the five biggest mortgage servicers for their fraudulent foreclosure activities. In December 2011 Bradbury finally won her case against GMAC in the Maine Supreme Court. In February 2012 the servicers agreed to a $25 billion settlement to assist people who had either lost or were going to lose their homes to foreclosure, or who owed far more on their mortgages than their homes were worth. The settlement also imposed new loan-servicing standards.

I don’t have a whole lot of good things to say about the settlement. But there’s no question that it doesn’t happen without the diligence of people like Thomas Cox. He deserves this award for exposing the abuse of the legal system by Wall Street. The media-financial complex wants to defame people like Cox because they created a “foreclosure backlog,” always focused on the role of the lawyers rather than the role of the banks and servicers who created the mess in the first place. At least someone understands that those who stood up for the rule of law in this sorry period deserve to be recognized.

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David Dayen

David Dayen