TheDC OP-ED: One nation, under fraud

On September 23, the bank “foreclosed” on a Ft. Lauderdale house owned by Jason Grodensky. Phone calls and emails elicited no answers, and the problem was only resolved after Grodensky took the story to the media and received national attention. There should have been no way for Bank of America to take control of the property. Instead, Grodensky discovered that the title to that property had already been sold. The bank recovered the title at its own cost.

Other banks are keeping up. This week, Florida television station WFTV reported Nancy Jacobini’s story. JP Morgan’s lawyers had sent a contractor to change the locks on Jacobini’s doors in order to take control of the house. She actually happened to be sitting on a couch inside that house at the time, which means that she could have simply opened the door for the contractor in response to a simple knock—and it also means, according to Jacobini’s lawyer, that changing the locks was illegal, because the building was still legally occupied. Instead of a knock, Jacobini heard someone breaking through her front door, grabbed her phone, and hid in her bathroom, where she proceeded to call 911 to report what the law defines as breaking and entering. And here’s the kicker—not only was Jacobini occupying the house, but JP Morgan hadn’t even foreclosed. At every step along the way, the rule of law simply didn’t exist.

The implications of this foreclosure nightmare are enormous. In the rare cases like the Cordosos’, when the correct owner of a mortgage is the same bank which thinks it’s the correct owner, little is ultimately changed in terms of bank assets unless there’s a large disparity between the value of the properties. But a much more common occurrence is what recently forced Ally, formerly known as GMAC, to knock over the first domino by halting nearly all of its foreclosure activities, and what prompted the state of California to file a class-action lawsuit against foreclosing banks.

A man named Jeffrey Stephans testified on September 14th that he had signed off on affidavits which he didn’t actually examine. Those affidavits were used in thousands of Ally foreclosures, and the properties involved were subsequently bought and sold. The previous homeowners can now sue the banks that foreclosed, and the “they were underwater anyway” argument isn’t holding up in many states, where both civil and criminal penalties are being discussed. By admitting his actions, Stephans instantly invalidated all of the repossessions and sales that were based on those actions. And Stephans said his practices are common in the industry. They’re so common, in fact, that a term was developed to describe them: “robo-signing.” This is being performed at law firms that process thousands of documents a day, which have become known as “foreclosure mills.”

Tammie Lou Kapusta, a former paralegal for one of those mills, testified on September 22nd that she was instructed by the attorneys at the firm to officially notarize hundreds of documents a day with a notary stamp that she wasn’t legally allowed to use. When complaints started rolling in about stamp dates that didn’t match other dates within the documents, she and all of the other paralegals doing the same thing at the firm were instructed to make the date of the stamp match the other dates, no matter what day it actually was. The documents would then be signed with the name “Cheryl Samons” by three different people, only one of whom was actually named Cheryl Samons. Kapusta said she drew the line when she was instructed to use random Social Security numbers assigned to people who might not even exist in order to falsify documents regarding each hypothetical person’s military status.

At least she drew it somewhere. She told the court that others didn’t. Unless Kapusta, a paralegal, was looking to incriminate herself, and unless she somehow managed to file emails from Samons and documents from the firm as evidence, there are now countless fraudulent papers containing military-related claims which are making their way through the system, and the actual people attached to the Social Security numbers used have absolutely no idea they’re tied to legal documents that they’ve never laid their eyes upon.

Some local governments were even accidentally informed directly that an institution was committing fraud, but no one noticed for years. The public record of Florida’s Nassau County shows that American Home Mortgage Acceptance, Inc. filed forms which claimed that a mortgage had been sold to, astonishingly, “BOGUS ASMTS.” The same company filed papers with Fulton County, in Georgia, which claimed that a mortgage had been sold to “BOGUS ASSIGNEE,” a company apparently based out of the address “XXXXXXXXXX.” Wells Fargo filed papers with that same county which supposedly showed that a mortgage had been bought by “BOGUS.” (No word on whether or not Wells proceeded to take itself to court for this infraction.) Some documents contain names with signatures that don’t even match.