Did you see the 60 Minute story on the continued corruption within our banking system? It aired last night and we are surprised that no one commented on it this morning. Here is the abbreviated version. You’ll probably want to shower after reading this.
It seems as though the executives and managers of our courteous and ever resourceful banking industry have not learned any lessons from their illegal practices of just a few short years ago. In fact they seem impervious to any thought that they might be treading on thin ice.
You may recall that the banks were bailed out after taking part in unprofessional if not illegal business practices that nearly brought down the economy. Greedy and unethical loan officers duped unsuspecting borrowers into taking on bigger loans than they could afford. They convinced the uneducated borrowers that they could take on a bigger debt now and three to five years down the road, when the balloon payment was due, they could refinance the deal using the equity in their home that was guaranteed to accrue. Now we all know that we are responsible for our own actions and we know that many of these borrowers let greed and the desire to own a bigger piece of the pie sway their decisions. But who among us questions the busy savvy, ethics and good intentions of our banker? The problem here was that due to the overall failed economic conditions, when the balloon payment came due the properties had not generated the necessary equity to refinance the deal. Payments could not be made and in 2010 the previously helpful banks filed for foreclosure on over one million homes. An additional one million foreclosures are forecast for this year.
But there was a problem. It seems that in addition to duping the borrowers these same loan officers were as loose with their paper work as they were with their ethics. They did not properly document the sale. There are stories by the tens of thousands of loans being approved without credit checks or verification of employment. But what 60 Minutes unveiled was that in addition to these glaring errors the loan officers failed to properly execute tens millions of these sales thereby failing to legally document the bank’s ownership of the loans. Now as these same banks attempt to foreclose they are unable to produce the necessary documents providing proof that they own the loan on which they seek foreclosure. But wait, it gets better.
You might think this would pose a problem. Not so for our courteous and ever resourceful bankers. 60 minutes reports that these banks started “document mills”. They set up offices around the country where they paid individuals ten dollars an hour to forge signatures on hundreds of thousands of closing documents which provided the banks the necessary documentation needed to legally foreclose on the loans. You have probably surmised that these signatures would have to be notarized to be authenticated. No problem. The banks paid ten dollars per hour to notaries who knowingly notarized the forged signatures; all done under the assurances of the banks that it was on the up and up. Again, who questions their banker?
As these foreclosures began to fill the dockets of our legal system many beleaguered property owners noticed the dissimilarity between the signatures on the alleged closing documents and their own legitimate signature. They also noticed that many of the names used on these documents were alleged to hold a variety of positions. A woman named Linda Smith signed numerous papers as a bank vice president, bank loan officer and title company officer just to name a few. Linda Smith is none of these. Many property owners are suing the banks to halt foreclosure proceeding based on these fraudulent documents.
This is a scandal that has brought the American dream to its knees. This is a scandal that has destroyed the lives of millions of Americans and rocked the very foundation of our financial system. Yet all anyone seems interested in doing about it is protecting the banks. If you get caught with a joint in your pocket you go to jail. Screw millions out of their homes and destroy lives you go on with your day. Once again the rich and the powerful manage to game the system while the poor and the uneducated fall victim.
We send kudos to 60 minutes for shedding light on this story. Shame on the rest of the media and the government for looking the other way.