One of the great “mysteries” of the post financial crisis era is why obvious criminality has not been prosecuted. We have been told it is more complex than it appears; that the securitization process has made determining exactly who was harmed complicated; that this complexity makes convincing a jury a crapshoot.
All of these arguments fail to withstand even cursory scrutiny when it comes to foreclosure fraud. The Robo-signing, document fabrication and mass perjury were fish in a barrel for even a newbie prosecutor. Why did the government fail to go after the perpetrators of mass fraud?
An Inspector General’s report released this week by the Justice Department raises that exact question.
A quick reminder: The high speed assembly line production of subprime mortgages led to a series of errors in the securitization of these mortgages. This was facilitated by an extra-legal entity names MERS (they facilitated the securitization process with very sketchy behavior worthy of a column itself). The pressure to push these mortgages rapidly along led to lots of avoidable errors: Missing mortgage notes, bad or outdated information, error-riddled underwriting. Who actually owned the underlying note often was unknown.
As these poorly assembled sub-prime mortgage began to collapse, banks were faced with an expensive legal issue: How to process a massive number of foreclosures. Rather than perform this in a prudent and legal manner, some banks made the decision to take inexpensive – and illegal – shortcuts. They hired firms like the now defunct DOX to fabricate documents for court. DOX even published a list of docs they were for willing to artificially manufacture for trial. This “DOX perjury price list” was one of many factors that eventually led to its demise. continues here