Homeowners Offered New Tool in Battling Fraudulent Banks

By Angela Martin of Portland, Oregon. Angela is the director of Economic Fairness Oregon.

Big banks are kicking families out of their homes – and in thousands of cases, they don’t have the legal right to do so. Even the banks are finally taking note of their failures, with many putting a temporary halt to foreclosures in recent weeks. But it’s going to take more than a voluntary moratorium to fix this mess. A thoughtful and smart analysis of the mortgage mess by Nobel laureate Paul Krugman maps out the deep-rooted bank mismanagement that led us here.

Everyone who owns a home should be armed with the knowledge of who holds their mortgage note. The note is the IOU - essentially the borrower’s promise to pay. It’s a negotiable instrument like a check, which can be signed over to others. Why is this so important? Banks buy up mortgages, then turn around and sell them, leading to banks getting tripped up by their own dealings – meaning crucial paperwork often gets lost in the shuffle of sliced and diced mortgages. In some cases, homes have been foreclosed upon by more than one bank. In one case, Bank of America tried to take the home of a man who hadn’t even taken out a mortgage. There are many other mistakes and injustices that occur when there is no note. As the note outlines allowable late fees and other penalty charges, there is well-documented evidence of extra fees being tacked onto mortgages in default. Even small differences in the amount owed can prevent a short sale or modification from being approved. Extra fees can also eat into any equity the homeowner may still have - money that could help them transition into an affordable rental.

This kind of gross bank incompetence along with the economic meltdown of the past few years has taught us Wall Street can’t be trusted to police itself. It’s yet another example of the financial industry’s refusal to play by the rules – bank executives are padding their pockets at the expense of the American homeowner. Learn more about how big banks are bypassing the laws here. As part of a nationwide effort to reverse this trend, there’s a new resource that makes the process of requesting a mortgage note - the only legal proof of a mortgage debt - as simple as just a few clicks of a mouse. Through the Where’s the Note website, homeowners answer a few questions, then a fax is sent to their bank asking for a copy of the original mortgage note.

Court documents show employees at several top financial institutions have admitted to illegally signing thousands of foreclosure filings. These workers fraudulently sent tens of thousands of homeowners into foreclosure each month – earning them the dubious title of "robo-signers" - many of these workers had little to no training, hired hastily by banks swamped by the mortgage meltdown. As a result, homeowners with legitimate claims about wrongful foreclosure, major accounting errors or wrongful denial of HAMP loan modification were ignored. Big bank executives collecting record paychecks claim the illegal documents are a result of “sloppy paperwork” or a “technicality” – but this isn’t a matter of failing to dot an i or cross a t; these are bank agents who knowingly signing documents to illegally kick Americans out of their homes. Make sure you know who you owe. Demanding to see a copy of your mortgage note is your legal right – exercise it easily today. This is a step all homeowners can take today.

Oct. 19, 2010 Posted in guest column.