The More You Look, The More Bank Criminality You Find in Mortgage Land

"I hate giving such short shrift to two new mortgage stories today, but the news accountscontain a good deal of the critical information.
First is that the Associated Press reports that Guiford County, North Carolina register of deeds Joe O’Brien has found evidence of robosigning in his filed dating back to 1998. This is significant because:

Servicers did nothing on a one-off basis. If O’Brien found robosigned documents in his files that far back, it is certain there are other examples in other jurisdictions dating back that far.
It indicated the procedural abuses are much longer standing than virtually all commentators had assumed. I had thought it started with the 2002-3 refinancing boom, when servicers failed to staff up to meet big increases in volumes, which led to corners-cuttting in origination and eventually led to abuses in foreclosures. But this records search indicates the bad practices started much earlier and came to be applied over time on a more widespread basis.

The second sighting comes from American Banker’s Kate Berry, and provides additional confirmation of other reports that banks continue to engage in backdating of documents after having piously sworn to stop that sort of thing:

Several dozen documents reviewed by American Banker show that as recently as August some of the largest U.S. banks, including Bank of America Corp., Wells Fargo & Co., Ally Financial Inc., and OneWest Financial Inc., were essentially backdating paperwork necessary to support their right to foreclose.
Some of documents reviewed by American Banker included signatures by current bank employees claiming to represent lenders that no longer exist.
Many banks are missing the original papers from when they securitized the mortgages, in some cases as long ago as 2005 and 2006, according to plaintiffs’ lawyers. They and some industry members say the related mortgage assignments, showing transfers from one lender to another, should have been completed and filed with document custodians at the time of transfer.
“It’s one thing to not have the documents you’re supposed to have even though you told investors and the SEC you had them,” says Lynn E. Szymoniak, a plaintiff’s lawyer in West Palm Beach, Fla. “But they’re making up new documents.”
The banks argue that creating such documents is a routine business practice that simply “memorializes” actions that should have occurred years before. Some courts have endorsed that view, but others, such as the Massachusetts Supreme Judicial Court, have found that this amounts to a lack of sufficient evidence and renders foreclosures invalid.

It’s disturbing at this juncture that Felix Salmon more or less falls in with the bogus bank party line on “memorializing” (he finesses it by saying they need to do it “transparently”). I suggest he try talking to an attorney who is expert in securitizations and does not have opinion letter liability on this matter. The contracts that governed these deals were immutable and set forth in precise detail the steps various parties to the deal were required to perform. That included strict cutoff dates for getting the properly prepared notes and mortgages to the securitization trusts. Long-standing precedents for New York trusts (virtually all RMBS trusts are New York trust) call for delivery to the trust to be as perfect as possible. Since all securitization through at least the late 1990s did deliver all the notes and mortgages to the trusts as stipulated, there is no excuse for later changes in practice (as in if the parties wanted to simplify procedures for reasons of cost or convenience, they needed to change the governing agreements to reflect that)..."

at http://www.nakedcapitalism.com/2011/09/the-more-you-look-the-more-bank-criminality-you-find-in-mortgage-land.html