Economists and others have consistently been warning that the housing crisis (and cascading effects on the rest of the “economic recovery”) is far from over. In particular, L. Randall Wray at Huffington Post has done a series of articles on the fraud involved in the foreclosures. Without the proper paperwork and desiring to take back the property, banks have resorted to systematic fraud to create the needed documents. This dirty little secret of the “economic recovery” was exposed on last night’s 60 Minutes:
I imagine that the 60 Minutes story will come as a shock to most people. Now I will confess, my father is an economist, so I was aware that banks were attempting to foreclose without legal documentation; however, I was not aware of the extent to which they were resorting – outright counterfeit. Exposing this at Bank of America, Economists William Black and Randall Wray began their series by arguing,
that the FDIC should place Bank of America in receivership and the federal banking agencies should impose a moratorium on foreclosures until the mortgage servicers correct their systems, which currently often rely on massive fraud and perjury. There can be no assurance that foreclosures are lawful until the banks actually find the mortgage “wet ink” notes signed by debtors to prove they are the true beneficial owner of the mortgage debts, which is required to seize property.
Furthermore, Wray explains:
First, many or most foreclosures that are taking place are illegal because those doing the foreclosing do not have legal standing. And, second, the practices that created the foreclosure problems also mean that the mortgage backed securities are actually unsecured debt. That means banks must take them back, so they are toast. It all comes back to MERS’s business model: it destroyed the chain of title. Much of the rest of the fraud and scandal we are witnessing follows on from that…
What the 60 Minutes segment and Wray’s articles expose quite clearly the ongoing deception by the financial sector and the subsequent suffering of families continues. As a moral theologian, I have to agree with Wray and Black – without assurances of proper legal documentation and regulation to ensure that – the foreclosures must stop. If the setup was to destroy the chain of title – shouldn’t those who created and benefited from this unethical and deceptive system suffer the consequences? If the bank cannot LEGALLY prove they own the mortgage, then, in my humble opinion, they should not be able to take back the house.