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Feeding frenzy

by Brian Clarey

When a group of sharks — called a “shiver,” incidentally — enters into a feeding frenzy, the individual predators become so possessed by the act of consumption that they’ll bite on anything that moves, even if it is not food.

A frenzy is as apt a way as any to describe how US lenders took over properties on the tsunami of foreclosures that has swept the nation these last two years.

They called them “robo-signers,” those quick-handed employees of mortgage companies like JP Morgan Chase, Bank of America, Ally and Wells Fargo each able to process the paperwork for perhaps 10,000 foreclosures a month — a capable one might be expected to foreclose on 200 before lunch.

But in their haste, thousands of improper foreclosures seem to have gotten caught up in the feast. Discrepancies in dates, mismatched signatures and accusations of willful negligence surfaced in initial investigations.

BofA, JP Morgan and Ally have halted foreclosure proceedings to review their procedures — Wells Fargo, as of press time, has not. Meanwhile, a slew of state and US officials have ordered suspensions and called for investigations. NC Attorney General Roy Cooper issued an inquiry to 15 lenders in the state, looking for instances of possible fraud that would have unjustly removed people from their homes.

This should come as a surprise to exactly no one — at least, no one familiar with the ways of predation. Lending institutions, like sharks, were designed to consume. And all too often, regular Americans end up looking like food.

But we’ve trained ourselves to question the timing of big news stories like these. As it turns out, this revelation comes just as President Obama was due to sign the Interstate Recognition of Notarizations Act, new legislation passed quietly and quickly by the Senate with “unanimous consent” which would actually make it easier for banks to foreclose on distressed homeowners.

As they say, “Neve3r let a good crisis go to waste.” But as the scandal deepens, recourse for those who have been wrongfully foreclosed upon remains unclear. Possibly flawed foreclosures still in the pipeline will get due examination in the next 60 to 90 days. But the number of homes that may have already changed hands illegally has yet to emerge.

Some of these homes have already been resold to buyers who have claims to ownership as well, resulting in muddy scenarios that will likely result in cash payouts when the lawsuits start to hit. This could take years to unravel. This is fertile ground for civil action, against which the offending banks will have little defense.

More troubling for the banks is the possibility of criminal charges, which are being contemplated or pursued by state attorneys general all across the country. Fraud carries hefty, five-figure fines for each instance; it could all add up pretty quickly.

That’s one difference between sharks and lenders: Lenders can be held accountable for their crimes. Ideally, anyway.

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