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October 2010
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Major lenders reveal massive mortgage fraud

The recent revelations of massive fraud in the processing of foreclosures by major banks demonstrate the urgent necessity for activists to press the demand for an immediate declaration of a two-year moratorium to halt all foreclosures and evictions in the U.S.

On Sept. 22 it was reported that GMAC announced it was suspending the evictions of homeowners in the 23 states governed by judicial foreclosures. This was followed by similar announcements by JPMorgan Chase and Bank of America.

The states affected by this suspension of foreclosure activity are Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.

The basis for these announcements was the uncovering of massive fraud by the banks in the processing of foreclosures. In states covered by judicial foreclosure — where the banks have to take borrowers to court to seize their homes — the lenders were filing motions for summary judgment to speed the process, accompanied by affidavits stating that the signers had personal knowledge that the loans were in fact owned by the bank and were in default.
Foreclosures & lost wealth

Mortgage delinquencies and foreclosures:

State foreclosure projections: 2010: 2.8 million

State foreclosure projections (2009-2012): 9 million

Total state foreclosure starts (Q1-2008 through Q1-2010): 4.9 million

Total state foreclosure sales (Q1-2008 through Q3-2009): 1.3 million

Total state foreclosure inventory (end Q1-2010): 2.1 million

Total state past due mortgages (end Q1-2010): 6.2 million

Annual change in foreclosure starts in the state (ending Q1-2010): -10 %

Change in state foreclosure starts (Q3-2006 to Q1-2010): 162 %
Lost wealth:

U.S. lost home equity wealth due to nearby foreclosures, 2009-2012: $1.9 trillion

Number of homes experiencing foreclosure-related decline: 91.5 million

Average loss per home affected: $20,288

Source: Center for Responsible Lending, August 2010

During legal depositions in several cases, it was revealed that the signers of the affidavits had, in fact, no personal knowledge of the facts being sworn to. They were working for foreclosure mills.

A Sept. 22 New York Times article noted that Jeffery Stephens, working on behalf of GMAC (now Ally Bank), was signing 10,000 affidavits a month over the past last five years despite not having reviewed the files to determine whether banks were entitled to enforce their liens.

The New York Times on Oct. 4 went even further, pointing out that many signatures on the affidavits appeared to be forged and the notarizations improper.

The foreclosure suspensions by GMAC, JPMorgan Chase and Bank of America were to give them time to clean up their acts. But the revelations of this massive fraud by some of the country’s largest financial institutions are symptomatic of the overall foreclosure crisis devastating the working class.

What can stop the crisis?

Virtually every government program announced to help homeowners with modifications is collapsing. The programs are based on the premise that the same banks that will not even take the time to properly carry out foreclosure activity, which is their primary concern, will treat borrowers who seek loan modifications in a fair manner.

The programs are all based on the borrower calling the lender to request the mandated modification. However, borrowers are stymied by the fact that the lenders either have no one to answer the call, or when they do, the banks routinely deny the modifications in violation of their agreements with the federal government to carry them out.

For example, on Aug. 20 the New York Times reported the collapse of President Barack Obama’s Making Home Affordable modification program. It said that of the 3 million households that were intended to benefit from the program, only one-sixth had actually had their loans modified. In July, some 96,000 individuals were denied permanent modifications, while only 17,000 were placed into new trial modifications, signaling the program’s demise.

In July, the state of Michigan announced it had received $184 million from the federal government for the Helping Hardest Hit Homeowners program, a program geared to keeping unemployed workers in their homes. While the funding for this program has increased to $500 million, the program has been a dismal failure thus far, with only 230 homeowners being helped out of the 30,000 that were expected to qualify.

According to an August report by the Center for Responsible Lending, the home equity wealth lost in the U.S. due to nearby foreclosures for 2009-2012 is projected to be $1.9 trillion. Nine million homes are expected to be lost to foreclosure during the same period.

The immediate necessity is for the federal government to declare a national two-year moratorium on all foreclosures and evictions. With the majority of home loans now either owned or backed up by the federal government through Fannie Mae, Freddie Mac or the Federal Housing Authority, President Obama has the authority to declare such a moratorium by executive order.

The time is ripe for housing activists to press this demand in light of the current revelations. Sign the online petition in support of a two-year moratorium at:

By Jerry Goldberg

Goldberg is an anti-foreclosure attorney and an organizer in the Moratorium NOW! Coalition to Stop Foreclosures, Evictions and Utility Shutoffs.

Articles copyright 1995-2010 Workers World. Verbatim copying and distribution of this entire article is permitted in any medium without royalty provided this notice is preserved.

Posted By: Ralph Roberts @ 1:14 am Comments (2)
Filed under: Bank of America,Foreclosure,GMAC,JPMorgan Chase & Co,Loan Modification


  1. Great stuff here!!! Am seeing people elsewhere get REAL worked up about not just the fact of fraud – this is bad enough. But the general tone from these folks that suggest D felonies are mere “procedural issues”. My husband is a policeman who has to work with banks from time to time relating to foreclosures…I shared this with him ( and it just made him sick to his stomach. These people need to learn!

    Comment by Fran D — October 22, 2010 @ 3:38 pm

  2. Hi to every one, the contents present at this site are really amazing for people experience, well, keep up the nice work fellows.

    Comment by Waterloo Dental Office — August 25, 2014 @ 4:09 am

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