U.S. Mortgage-Fraud Totally Out Of Control

Four years after the (first) U.S. housing-bubble burst, the epidemic of U.S. mortgage-fraud continues to intensify. With respect to the U.S. “regulators” who are supposed to prevent such crime, as we all know, those so-called regulators are thoroughly corrupt, and hopelessly brain-dead. Certainly a “Consumer Protection” department within the U.S. financial sector would help to eliminate such fraud – which is why the even more brain-dead Republican Party has vowed to “kill” this entity if negligent U.S. voters are foolish enough to give it control over Congress in the upcoming election.

A flurry of news items demonstrates that this epidemic has gotten so out of control that Wall Street banks are literally acting like there are no laws, at all. Shortly after a preliminary report that Ally Financial (the “mortgage unit” of GMAC) had suspended foreclosures in 23 U.S. states due to defective/fraudulent foreclosure procedures, two other news items emerged on this fraud-factory.

First there was the report that Ally had been previously sanctioned in 2006 for exactly the same defective/fraudulent mortgage procedures. It doesn't take a suspicious mind to conclude that Ally never stopped those fraudulent practices. This conclusion is reinforced by another news item from the same day: that Ally had secretly warned Freddie Mac weeks earlier of its fraudulent/defective practices.

Specifically, Ally (and other U.S. fraud –factories like JP Morgan) have been foreclosing on properties without determining if they even hold legal title to these properties. There is a simpler term for this practice: Wall Street banks are using the foreclosure process to steal homes which don't belong to them.

Also published on the same day was a report that Bank of America was trying to steal homes that didn't belong to it, either. One anecdote reported that BoA tried to foreclose on a Florida property which did not have any mortgage (i.e. title was held free-and-clear by the homeowner).

Another anecdote announced that BoA had done the same thing to a Texas homeowner who also held clear title. BoA even had the power cut-off to this property (while the homeowner was away), and when the homeowner returned to his home, he was greeted by the stench of 70 pounds of fish rotting in his freezer.

A third anecdote stated that BoA had attempted to foreclose on a Pennsylvania home – even though the homeowner was completely up-to-date on payments. To bully the homeowner further, BoA not only shut-off all her utilities, but also stole her pet parrot. There was no information as to whether BoA had requested “ransom” for the parrot…

One day later, an article in the Miami Herald provided some aggregate data, for those interested in “the big picture”. U.S. mortgage-fraud resulted in more than $1 trillion in losses just between 2005 and 2007. To put that gigantic number into perspective, it exceeds the GDP of most of the world's nations. Given that reported cases of U.S. mortgage-fraud are still increasing every year, obviously the losses on U.S. mortgage-fraud since 2007 would have greatly exceeded that previous (astronomical) number.

What was the response of the U.S. government to this unprecedented, white-collar crime-wave? The Bush regime got rid of most of the law enforcement officials who are supposed to investigate such crimes.

The result of this Republican favor for its Wall Street masters? There have been only 40% as many convictions of this white-collar fraud as during Wall Street's last crime-wave in the 1980's and 1990's – despite the fact that this crime-wave is (much) more than ten times larger. In other words, a white-collar criminal committing mortgage-fraud today is less than 5% as likely to be imprisoned for his crimes compared to 15-20 years earlier.