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Fraud R’ Us — Why Now?
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Fraud R’ Us

Shannon Behnken of the Tampa Tribune has the latest from the Florida Attorney General’s investigation – Witness: Foreclosure firm owner gave gifts for altering documents

The office released transcripts of two interviews it conducted for its investigation into the law offices of David J. Stern. The sworn statements were from Kelly Scott, a former employee of Stern’s and Mary R. Cordova, a former employee of G&Z, a process server used by Stern’s office. The women’s testimonies appear to back up that of former Stern’s employee Tammie Lou Kapusta, whose statement was released last week. The three statements paint a picture of a secret system designed to speed up the foreclosure process. Attorneys and staff members forged signatures, changed dates, passed around notary stamps, the women say in interviews with attorney general’s staff.

This is not a “technical problem with the paperwork”, this is criminal fraud. The entire process was operated this way.

The banks have no idea where the paperwork is, because filing paperwork was an overhead cost, so they skipped it. They didn’t file changes with county clerks, because it was an overhead cost, so they skipped it, despite charging a fee at closing to do it.

This is a civil investigation, so criminal charges won’t directly follow, but the fact that it is a civil proceeding gives the public immediate access to the information.


1 Badtux { 10.20.10 at 2:20 am }

The biggest issue here is that the titles are clouded. Most of the people foreclosed upon were underwater and don’t have any actionable tort damages, but now the question is, who owned the mortgage at the time of foreclosure, and did that entity get the money they were supposed to get from the foreclosure sale?

Anybody who bought a short sale or a foreclosure within the past two years basically is SOL, because their title has a big red scarlet “F” (for Fraud) on it because nobody knows if the mortgage liens on those titles were really discharged. You can be two years down the road, decide you want to sell your home, and find out you can’t sell it unless you pay *another* person money that you don’t owe because they have a lien on the house and the lien wasn’t satisfied when you paid the bank that fraudulently foreclosed upon the home because that bank didn’t actually own the mortgage on the house.

This is a mess, and it’s one that a posturing and quick fixes aren’t going to fix anytime soon. At least out here in deed-in-trust civil foreclosure land we don’t have the lien issue you people back east have — our titles are unclouded, because the title trust company had clear ownership of the title (our titles are held in trust when under mortgage, rather than having a mortgage lien placed upon them, and the mortgage-owner’s recourse if they didn’t get paid off before the title was released to the new owner is against the title company, not against the new owner of the home). On the other hand, if the whole title trust system collapses because of this, we’re pretty FUBAR too, because we simply aren’t set up for the sort of mortgage system that you folks back East have, we don’t have the courthouse staff nor the judges to handle judicial foreclosures if the civil trust system collapses…

– Badtux the Law Penguin

2 Bryan { 10.20.10 at 10:10 am }

There have already been cases of two banks foreclosing on the same property over the same mortgage, both claiming to hold the note,

Basically, no property mortgaged this century in Florida can be assumed to have a clear title, and therefore is too risky to buy. The title insurance companies in Florida may just shut down because of the risk.

The only way out would be for courts to refuse to recognize liens that aren’t registered at the county courthouse, and give the banks some period to register, IOW treat property titles like motor vehicle titles.

Whatever is done, it will take time and a lot of money to square things away to get the real estate market back on track. There is going to be no housing market to pull the nation out of the recession until this is fixed, even if there were some demand.