Friday, October 22, 2010

Foreclosure Gate Ignored in 2007, Ignored Now

In 2007 on our radio show, we focused on a Federal judge's decision in Ohio to throw out mortgage foreclosures, because the documents could not establish who actually owned the mortgages.  We continued to report into 2008 how this decision had spread to other Federal judges and Ohio State judges and then to other Rustbelt states.  We brought Judge Boyko's decision and the spreading use of the due process approach to the personal attention of Illinois Attorney General Lisa Madigan, although we have never seen any action from her office.  While there is a joint investigation by all fifty (50) state attorney generals and the District of Columbia, we are already seeing the lame duck attorney general of Florida running to the corner of the mortgage companies and servicers.

Mike Konczal has brought attention again to Judge Boyko's 2007 decision that sparked a localized judicial revolt which was not supported by the U. S. Department of Justice.  The Administration sees no substantial problems and has expressed confidence the banks and mortgage servicers can deal with the problems themselves.  Just as the major media ignored Judge Boyko's decision in 2007 and the regional judicial revolt as the Department of Justice opposed the application of due process confirmed by Judge Boyko, the current Administration and leaders of both political parties want the attention of the public to go away even if it means the destruction of the Constitutional right of due process and legitimization of fraud by big banks and mortgage servicers if enforcement of law threatens large financial institutions and the housing market, which is damaged and limping from the burst housing bubble caused by insufficiently regulated mortgage lenders and banks as well as a Federal Reserve Bank which could not recognize a leverage bubble over several years acerbated by low interest rates.

Yves Smith has captured the see nothing, do nothing strategy of the current Administration and its failure to seek regulatory review and the protection of the public welfare through rigorous application of law.  Simon Johnson also inquires why the Financial Stability Oversight Council is not directly involved and hot and heavy on this issue.  To me, this is also a perfect issue and a perfect case for the Consumer Financial Protection Agency being formed at the Federal Reserve.

Already the PR and lobbyists hordes are trying to spin the mortgage mess as minor inconsequential paperwork problems easily corrected as the major banks which are at risk for approximately $80 billion as a possible result of the foreclosure gate fraud have determined within two-and-a-half weeks that it is not a problem and foreclosures should resume.  Blame is being cast against attorneys who are aggressively defending their clients in foreclosure, while the attorneys and servicers who have robo-signing mills are portrayed as overworked soldiers in the fight against dead beat home owners who are not paying their mortgages.  In the 19th Century as the result of the Civil War the Homestead Act lead to an economic social revolution in the ability of a head of a family to own a home for their family.  In the 18th Century, "life, liberty, and the pursuit of happiness" was a well known philosophical argument that men had the God given inalienable right  to provide food, clothing, and shelter for their families.  In the 21st Century, we are seeing the destruction of the middle class, a huge surge since the 1960's to currently obscene levels in wage/earnings and wealth inequality compounded by very profitably rewarded financial industry overly risky speculation and derivative securitzation, and the suppression of the Constitutional right of due process under the law.  If the current Administration will not support and defend due process under the law there is No Hope.  It is time for this legal morass to stop and the financial institutions made to obey the law.  Financial "stability" at the expense of a free republican democracy and a return to a modern benevolent serfdom is not acceptable.

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