I am not the least bit ashamed to admit, as longtime readers know, that I respect the hell out of a good crook.
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Thieves, burglars, con artists, grifters…I believe that they deserve the punishments they get if caught and convicted, but like many people (judging by the ratings and box office receipts) I admire a good heist. I'm not talking about people mugging old ladies and doing drive-bys.
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I'm talking about Great Train Robbery type stuff. The dude who stole the goddamn Mona Lisa. The Hitler Diaries. Those Brazilians who robbed a bank by digging a 260-foot tunnel into its underground vault while posing as a construction crew at the neighboring building. And despite how disgusting and symptomatic of the decay of our governing institutions it may be, I even have to admire the sheer balls required to pull off fraud on the scale of an Enron.
That said, I am unable to find any art in the lending/housing crisis of the past two-plus years. Rather than being the work of flashy con men with schemes that require as much luck as talent, the great mortgage ripoff is largely the work of sociopathic, overgrown fratboys with no morals (Even the crooks we tend to love on film live by some sort of code, even if only the norms of the underworld) and bloodless Russian and Chinese mathematicians programming the catastrophe as dispassionately as would do their taxes. It's just sad. From every possible angle. In a dream world in which the perpetrators would be arrested and held accountable for their actions we couldn't even fake an "I have to hand it to you, kid, that was one hell of a plan." It's as though we were robbed by a computer.
That's how I have felt since this all began.
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It was not until today that I paused to reconsider my position.
Matt Taibbi's latest, which is lengthy but mandatory reading, focuses on how eager our nation's courts are to help insolvent or federally bailed-out banks fuck homeowners with laughably fake documents standing in for long-ago lost paper trails. In it he briefly mentions a new example of kind of thievery indicative of a born thief – simple, brilliant, and requiring little more than enormous balls to pull it off.
First, a short aside. In my three years in the collection industry, I became well-acquainted with a little known profession called process serving. When someone is sued (for example) they must be served with legal documents that summon them to court and so on. I'll spare you the details, but generally speaking an individual must be served in person by a process server acting within the laws of his state and county. This means that people who can't be found – either by design or by the transient, off-the-grid nature of their lifestyle – cannot have a judgment made against them in court in most cases. Cops serve process (for a set fee) but, shockingly, do a half-assed job of it. Basically they knock on the door, and if no one answers they say the person can't be found.
This is where the private process servers come in. For a fee they can find just about anyone. They are similar to bounty hunters in their persistence and often checkered backgrounds (lots of ex-cops, disbarred attorneys, and so on). The important fact is that they are expensive and the individual who is being served is responsible for the fees. So, in my previous job I always told individuals with whom I spoke, "Look, you can accept this summons voluntarily, or we can have Jeff (our server) serve you. He will find you, and you'll owe us the $300-500 he costs." It wasn't a bluff. Jeff was ex-Special Forces, had a little drug problem, and could find Judge Crater if you paid him enough. Even though engaged in a soulless profession, I tried to be honest with people: trying to avoid service would just end up costing them more.
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Defendants must pay service fees even if they win the lawsuit; that will become important in a second.
Taibbi uncovered an ongoing scam in Florida – probably elsewhere, too – in which banks were making up attempts at process service to stick mortgage holders with a big bill they had to pay even if the bank's suit was unsuccessful. They were telling judges (and the courts were more than happy to buy it) "We tried to serve Joe Blow on ten occasions, and we just couldn't find him. Never home. He was really trying hard to hide from us, the bastard. Here's the bill for $1500." And none of it ever happened.
With all the robo-signing and whatnot, take note of what was happening here: our major lending institutions were using fake process servers to serve fake mortgage documents. That's…incredible. It is so absurd it circles back around to brilliance.
I have a deviant mind, experience with a seedy industry, and a pretty thorough understanding of how hard the law allows financial institutions to ream people who owe them money. Despite all of that, I never would have thought of this in a million years. The people at JP Morgan, Bank of America, et al who concocted this have truly impressive minds for larceny. They are born thieves. My first thought is that it's too bad they chose to waste such criminal brilliance on an industry as dull as finance. Or maybe they recognized their unique gifts at a young age and naturally gravitated toward the industry where they would be in high demand.
Da Moose says:
When you can pay for six women at one time there's no industry as dull as finance for sure.
Monkey Business says:
Frankly, this doesn't surprise me. I've been privy to a few corporate fraud proceedings, and even in the cases where the fraud was so blatantly obvious that anyone with two brain cells to rub together could have put it together, the response from the rank and file that enabled it is almost always universal: "I was just doing my job."
Moreover, the article's position that the major banks are committing what amounts to a systemic level of fraud doesn't surprise me either. Everyone I know in Finance would sell their family and soul if it meant they could make more money. They're as close to sociopaths as I've ever seen.
Obviously, not all of these homeowners are blameless. But the vast majority have been thoroughly screwed by a system that deems them guilty, even if they can prove conclusively that they're innocent.
Ineffective government. Absurdly powerful and wealthy ruling class. Kangaroo courts. Someone please explain to me how the United States isn't a banana republic?
Technogeek says:
The US escapes banana republic status only by the piddling semantic distinction of being run for the benefit of banks rather than fruit companies.
John says:
And the real kicker? As all this goes on, we are reminded constantly of how the banks are *victims* in the whole matter.
What is happening right now in the United States is no different from what has happened, time and time again, in most other nations that have moved into the modern age. The key difference is that, in America, there has not been and probably will never be the mass uprising and revolt of the common man that has happened in most other nations to put a relative end to it, because the ruling class of America has managed to convince a substantial portion of the underclass that, one day, they too will be part of the ruling class — so best not to start holding the ruling class accountable for their evil, lest it one day come back to haunt you.
We have become, in large part, an evil nation, controlled by evil people, ruling over good people with the promise that they may one day share in the evil.
daphne says:
In addition to absurd and brilliant, I find it loathsome and unworthy of admiration on any level.
Forgetful Man says:
Hat tip for workin' in a mention of Judge Crater.
From an ex-patriot american living abroad and not shedding one tear for the mortgage he walked away from.
Misterben says:
For the last few days, I've been handing out copies of this Taibbi article to friends and family like it was a Chick tract and I was a 15-year-old Baptist kid on a street corner.
I'd like to mention here the same thing that I've told everyone I know: I've been working in and around the mortgage and real estate industries for almost 14 years now, and the activities Taibbi has been reporting are only the tip of the iceberg. I'm sure he's just being careful about only asserting what he can prove, but take it from me, there's a lot more to this story and it just gets worse. Mortgage brokers, banks, title companies, underwriters, local courts, county officials, and Wall Street: they all knew (more or less) what was going on, and they all went along with it.
Elder Futhark says:
I think it is entirely within the cruel and unusual clause of the 8th amendment, for certain grotesque and bizarre punishments be meted out in context of the true barbarity of white collar crime. 21st century tech provides appropriate measures: surgical disfigurement, to both the body and specific areas of the brain, for just one example. Humiliation through mutilation is, in many ways, far worse than death, which probably is the minimum requirement for such things. And since corporations are now considered people, I'm sure I can think of several versions of mutilation at the group and individual level that would be great fun.
Jonathan says:
As usual, Matt Taibbi is a revalation. However, I was just reading the the Boston Globe yesterday that Massachusetts is one of 37 states that don't require a court hearing on foreclosures. I can't even imagine the sloppy paperwork going on in states like mine. So I'm not sure outrage over rubberstamps by ex-judges is worth it.
Here's the story: http://goo.gl/cXbbR
displaced Capitalist says:
Daphne said:
QFT.
Anyway, here's my story: I spent 3 years working in collection too (for the bad-guys, of course, because they're the only ones who can afford to pay a wage–even if it's barely a living wage.) Service requirements vary from state to state, so in Massachusetts for example, a letter posted on the door of the last known address is sufficient to put the defendant on "notice" of the suit.
You can imagine where this went. In the three years I was with these crooks we got judgments on 99% of the suits we filed. Then once we filed supplementary process (the part where you use the court's authority to take people's money from them by force/imprisonment) we HAD to find the Defendants because it was the only way to take their money. So then we shelled out the cash to have a constable (not a government official, just someone who gets a license to arrest people on a Capias– a civil Arrest Warrant) to bring them into the courts in handcuffs. Then, upon placing them before a judge they would testify under oath that this was the first they ever heard that they were being sued. I imagine they were usually telling the truth (it's hard to lie when you've been handcuffed for the first time in your life.)
Fortunately 60% of the judges in Massachusetts have progressivist leanings so generally the judgments were overturned and a trial date was set (assuming the person had the wherewithal to contest the allegations.)
If I could afford it I would march down to my local district court today and start representing the 20-50 people there getting their civil rights trampled right now as I type. Ugh, now I'm depressed.
displaced Capitalist says:
Oh and I should mention that the affidavits filed by credit card companies were just as fraudulent as the affidavits filed by mortgage companies. Although the corporate slug claims to have reviewed all the documents, they're really nothing more than a rubber stamp. Of all the cases where a Defendant challenged the validity of the Affidavit, probably 90% of the time I received instructions from the creditor to drop the suit.
Kulkuri says:
The icing on the cake is that most of these banks can't even prove they own the mortgages because the have passed thru so many hands electronically via a system called MERS. They don't have the actual paperwork!! Some states are starting to go after the banks for not paying fees every time there was a transfer , which was one of the reasons for using this system.
Da Moose says:
What all of this ultimately points to is an extreme imbalance in wealth and power. Some will say that this is obvious but it does need to be stated and here's why: Because our federal masters are in bed with the financial elite, one might initially argue that, to make things more fair, the states must pick up the regulatory slack. However, the states are afraid to do this because they fear that if they do try to stand up to the NY banks, these banks and their subsidiaries may threaten to either stop doing business in that state or force the feds to lower state subsidies to that state. So, the states just take it in the ass as they have been for quite some time. This imbalance of power between the state level and the federal level is extreme. It is extreme because the tax code has been constructed, intentionally or not, since WW II to make the states dependent upon federal largess. This must stop if we want the US to remain politically contiguous long into this century. So, the only way we are going to fix this imbalance is to fix the tax code. Until this fix occurs, the states will continue to be railroaded by the federal government. The great irony here is that this is where liberal complicity comes into play. Many liberals fail to understand that by promoting federal power over state power they unwittingly contribute to this imbalance of wealth that they supposedly abhor. It is for this reason that federal liberals need to become state’s rights liberals. Of course, if liberals have no interest in fixing this situation by empowering the states, then they should start to prepare for significant political instability at the federal level because no social or political system, no matter how apathetic the populace may be, can withstand this type of imbalance without experiencing severe tests that may equal a constitutional crisis at some point rather soon.
Prudence says:
It is nothing short of a fucking travesty that this is even legal- in the UK, the onus is on the banks to prove that they've tried all options before they can kick you out of your home. It ain't a perfect system, but at least they try to make the banks toe the line.
eau says:
I dunno, Da Moose. I fail to see how empowering corrupt state governments will make any significant difference. It seems what you need over there is some (pause for snide giggling) effective regulation of your financial institutions.
eau says:
Federal regulation, that is.
Bugboy says:
What about the gazillions of homeowners with mortgages that certainly have legal questions about the ownership of their homes since their mortgage holder sold off the loan to some financial instrument?
It's already been admitted that title insurance companies are no more above board than the finance industry. Are these are just time bombs waiting to go off?: so you want to sell your house? SURPRISE! The bank can't find your paperwork saying you own it in the first place!
Origuy says:
By the way, there used to be a process server outfit in San Jose called the Attilla the Hun School of Charm.
AR says:
There's more to it that I think you overlooked:
By not actually completing service, the foreclosee doesn't show up in court to defend himself, and the judge rocket dockets the foreclosure in seconds. The foreclosure mills get a bonus for uncontested foreclosures (speed).
Second, the servicers game the system as a 'countercyclical diversification strategy'. They make more money on defaulted loans, so they purposely force people into default by waiting to post their payments late, then crediting themselves first for the late fees in subsequent months, which automatically makes the payments deficient, warranting another late fee, etc. By the time the borrower realizes what's happened, he's often too far in arrears to get current, because the servicers then tack on more bogus fees, such as checking on the property, or force-placed insurance (from which they get a kick-back), even if the borrower already has insurance.
Padding the sewer service fees is one type of fee foreclosure mills use to pad the amount of money the servicers rip off of the investors (not the borrowers). At the foreclosure sale the servicers rake payment for all of their bogus fees off the top before remitting the proceeds to the investors.
[I linked here from Rortybomb]
Quibids says:
Useful stuff, but the theme don't display correctly on my Powerbook…maybe you need to verify that out. Thanks, anyway.