Will the Real Deadbeats Please Stand Up?

David Dayen at Firedoglake’s take on the bank deflection of blame for intentional fraud, crime, greed, and gross negligence to place it squarely and solely on the “deadbeat homeowners”:

I want to again stress that this is downright illegal and incredibly damaging to the rule of law. The improper affidavits were the tip of the iceberg, but even if they weren’t, the chain of so-called clerical errors that would get a servicer to foreclose on a home that didn’t even have a mortgage would involve so much fraud at so many stages that it makes a mockery of the notion of private property altogether. The smug cheerleaders who want to make this about borrowers and not criminal fraud really make me sick to my stomach.

It’s actually a bit sickening to hear defaulted borrowers describing the misdeeds of banks as “mortgage fraud.” What some banks have done might well be fraud—but the fact of that fraud doesn’t erase the other fact that the borrower agreed to make payments or face the penalty of losing her home.

Actually, it does erase that fact. That’s how the law works. In the individual case that John Carney cites, the borrower claims that CitiMortgage is trying to foreclose upon her without owning the mortgage. That would mean that Citi has no legal right to evict this woman from her home, period. She didn’t force Citi to sell her mortgage to Fannie Mae, and then use the faulty MERS system to cloud the title. I don’t have the right to foreclose on the woman’s house either, but under Carney’s logic, I might as well try, since what matters is that she didn’t keep up with her payments. The fact that some bank is going around taking possession of homes they don’t own should scare the living daylights out of people, even pretend financial reporters like Carney.

By the way, these same banks knew about this criminality for years, fostered it, and ignored the consequences. Sounds a lot like those “deadbeats” Carney is so fond of castigating for knowing the risks when they signed the papers on the mortgage. Banks knew them too.

As an aside, I don’t know if Carney’s actually talked to anyone who’s fallen behind on mortgage payments in this economy, but classifying them as “deadbeats” just seriously mischaracterizes them. Almost everyone I’ve talked to with a mortgage problem either lost their job, saw their hours and salary cut, or found their home deeply underwater through the accident of buying at the wrong time. In almost all of those cases, they were simply less responsible for their situation than the bank trying to foreclose on them with false documents. And every single one of these people are willing to pay to stay in their homes – they’ve spent months or sometimes years going through the nightmare that is the loan modification process, and frequently had it chew them up and spit them out, with the banks gouging them and then forcing them to choose between a balloon payment with tacked-on fees or eviction. Whether they just got overwhelmed by the mass of troubled borrowers, fell subject to constant tweaking by the Treasury Department that disabled their efforts or screwed their customers as a matter of policy, the results were the same


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