Bank of america

Banking Scandals and Mortgage Servicing Fraud

One of the first major banking scandals that came to press after the 2008 economic housing crash was the “robo-signing” scandal of 2010.  In October of 2010 press releases were issued alleging that the biggest banking institutions in the United States – Bank of America, Wells Fargo, Chase and Citibank – were falsifying documents used to foreclose on homes and properties across the country.  This bombshell was met with a foreclosure moratorium in most states – and the foreclosure machine came to a screeching halt.  The terms “robo-signers” or “robo-signing” were coined by consumer advocates to describe the robotic process of large banking institutions that reportedly foreclosed on properties where the note had been paid in full, foreclosed on the wrong property, or submitted false or fabricated documentation in a foreclosure action to obtain a court order allowing foreclosure to proceed.

Perhaps the most famous or notable revelation in this scandal was the deposition testimony given by Jeffrey Stevens of GMAC.  This deposition revealed that he signed thousands or tens of thousands of documents without verifying the facts contained therein, and affidavits were signed in one place and notarized in another place.  It was also revealed that these “robo-signers” signed on behalf of multiple entities and sometimes didn’t even know – or check – if they were in fact empowered to sign for the entity listed on the document they were signing.

bank scandals

(Dramatization)

This break in the facade of the mortgage and foreclosure industry opened the door to scrutiny of the industry and in October 2010 then Ohio Attorney General Richard Cordray filed the first action of its kind against Ally Financial regarding mortgage servicing abuses.  By the end of October 49 states followed suit and caused a cosmic reckoning across the lending and mortgage servicing industry.  After months of investigation, on Feb. 9, 2012 the National Mortgage Settlement was announced.  The Settlement, dubbed “NMS”, required servicers to provide $26 billion to distressed homeowners, and to the states and the federal government.  Pursuant to the Settlement, banks were required to comply with 305 new rules and regulations regarding mortgage servicing, which were, in part, intended to curb these banking scandals.  John A. Smith, Jr. of the NC Commissioner of Banks was appointed as the Monitor of the mortgage settlement.  Under his leadership, he created the Office of Mortgage Settlement Oversight.  This agency was charged with ensuring that the funds from the settlement went to the distressed homeowners and state and federal agencies designated to provide homeowner relief.

Occupy Wall Street

In September 2011 the Occupy Wall Street movement set up camp in New York City – protesting Wall Street greed, calling for an equal playing field, and demanding consumer focused transparency in financial transactions, and an end to banking scandals.  This movement spread across the country and even around the globe.  By the end of 2011, authorities had cleared most of the encampments out of major US cities and the movement lost steam by early 2012.  However, the movement made its mark on the public consciousness and was described by Harvard scholar Cornell West as a “democratic awakening”. (The Washington Post)  Supporters of the movement predict a resurgence of the movement by the end of 2014.

In 2011, a SC white-collar fraud specialist named Lynn Szymoniak filed a lawsuit in US District Court in both North and South Carolina, on behalf of the federal government, seventeen states and three cities.  The suit named twenty-eight banks, mortgage servicers and document processing companies, including the “big four” – Bank of America, Wells Fargo, Chase and Citi.  Szymoniak, who fell into foreclosure herself in 2009 conducted massive research into her own mortgage documents and found fraud in several instances.  After reviewing and examining thousands of documents, she pieced together the entire scheme.  Your mortgage documents are fake!, by David Dayden, Salon, Aug. 12, 2013.    The lawsuit attacked the mortgage securitization process at its roots.  Specifically, it alleged that the notes, as well as mortgage assignments were “never delivered to the mortgage-backed securities trusts” and that the trustees lied to the SEC and investors about this sloppy process.  As a result of the failure of the notes being properly transferred to and held by the trusts, “the trusts could not establish ownership of the loan when they went to foreclose, forcing the production of a stream of false documents, signed by “robo-signers”.”  In this suit it was found that many documents were forged, having shown one signer having eight (8) distinctly different signatures.  All of this was done in an effort by the banks and servicers to establish standing and proof of being holder of the note, which the banks otherwise could not prove.  The federal government intervened in the case and settled part of it at the beginning of 2012, extracting $1 billion from the five biggest banks in the suit (Bank of America, Wells Fargo, JP Morgan Chase, Citi and GMAC/Ally Bank).  Szymoniak herself took home over $18 million.  The case remained sealed until August of 2013.  She can now go to trial against the rest of the named defendants in the case, including HSBC, the Bank of New York Mellon, Deutsche Bank and US Bank.  A mind-blowing realization from the case is that “tens of millions of home mortgages worth trillions of dollars have no legitimate underlying owner that can establish the right to foreclose.”

Unfortunately for consumer advocates, Ms. Szymoniak was implicated and accused of fraud and breach of fiduciary duty when it came to light that in fact, a client Ignacio Damian Figueroa actually did all of the work.  And according to Martin Andleman, (of acclaimed consumer website www.mandlemanmatters.com ) she lied and took Figueroa’s research which resulted in an $18 mil windfall for her.  Andleman exposed this dark side of Szymoniak’s famous case and was roasted by foreclosure defense advocates for tarnishing Szymoniak’s reputation.  Whistleblower Lynn Szymoniak, Accused Shyster, by Richard Zombeck, Huffington Post Business, Oct. 3. 2013.

If you would like to speak to a North Carolina Attorney to discuss a mortgage fraud issue, contact us at 828-285-8888.  If you are behind on your mortgage or anticipate being behind, act now to preserve your rights and fill out our Online Foreclosure Defense Questionnaire.

Bank of America foreclosure fraud exposed by former employees

Over the weekend, on June 14, 2013, several sources including ProPublica and Huffington Post released stories on the most recent instance of Bank of America foreclosure fraud.  Former employees of the “too big to fail” bank have testified in a Massachusetts court case that Bank of America routinely defrauded distressed homeowners and abused the foreclosure process to increase bank […]

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Bank of America Settlement Highlights Wrongdoing in North Carolina Foreclosure Cases

Bank of America Settlement Highlights Wrongdoing in North Carolina Foreclosure Cases. Further proof of the banking industry’s incompetence came this week when Bank of America agreed to pay $8.5 billion to settle claims from investors burned by fraudulent mortgage securities, CNN reports. Our Asheville Foreclosure Lawyers work with clients every day whose lives have been […]

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