Category: Featured Articles Created: Wednesday, 11 December 2013 Written by Delaney Rohan

Corrupt banking and lending practices are tormenting homeowners in both states at rates unmatched elsewhere, but only one state's elected officials actually give a damn.

In recent weeks, CA Attorney General Kamala Harris began pressuring state lawmakers to pass a "Homeowner Bill of Rights." The move is not only a strong signal of caution for banks hoping move forward with their predatory foreclosing schemes, but makes resoundingly clear Harris's ongoing commitment to protect California's 2.2 million underwater homeowners from further injustices. 

According to the LA Times, the Homeowners Bill of Rights, which spans six pieces of legislation, would:

  • Prohibit "dual-track foreclosures that allow mortgage holders to simultaneously negotiate loan modifications to lower homeowners' interest payments while taking legal steps to foreclose on the same properties;"
  • Slap banks with a "$10,000 civil penalty for 'robo-signed' mortgage documents containing unverified information;"
  • Require banks to provide "a single point of contact for homeowners with their loan service providers;"
  • Enable local governments to "force banks and property owners to maintain blighted, foreclosed homes," give "renters more time to stay in foreclosed residences;"
  • Solicit "fees from banks to pay for enhanced law enforcement actions to defend homeowners;"
  • And – perhaps most importantly – form "a statewide grand jury to investigate alleged financial and real estate foreclosure crimes."

The bills are part of a much larger strategy to correct and punish the banking industry for willfully deceptive foreclosure practices – practices that drove the country into economic turmoil and continue to be used to illegally impoverish homeowners and unjustifiably enrich predatory banksters. In this regard, Harris has proven to be a fundamental ally for homeowners in their struggles to fight the banking and lending industry's systemic corruption.

When National Mortgage Settlement negotiations, which ended last month, appeared to be developing in favor of the banking industry, Harris threatened to derail the talks. Aware that her state's participation was fundamental, her office pushed hard for homeowners and borrowers. Because of her "insistence," the final settlement ensured Californians had the right to "go after the banks in civil court for criminal or fraudulent acts," according to the SF Gate.

Harris upholds her strategy with strong rhetoric. California, Harris has declared, is more than just the "epicenter" of the foreclosure crisis – it's the "crime scene." Such posturing is aimed at reassuring homeowners just as much as it is aimed at threatening the banking and lending industry. Indeed, Harris has repeatedly called on state, federal, and private sector officials to suspend foreclosures.

Her Office has rightfully targeted Fannie Mae and Freddie Mac, which own over 60 percent of the nation's mortgage claims. The lending giants refused to participate in the National Mortgage Settlement Agreement, thus dramatically increasingly the likelihood of that most of the nation's underwater homeowners will not be provided relief. In pressuring the companies, Harris argued that "California's underwater homeowners deserve a straight-forward analysis from FHFA of whether a program of principal reduction by Fannie Mae and Freddie Mac will provide significant assistance to struggling homeowners as well as save precious taxpayer dollars." And according to SF Gate, "Harris has already begun a joint investigation with Nevada's attorney general into criminal and civil foreclosure abuses by the banks."

Since taking office, Harris formed strategic alliances with AGs from other states whose residents bear the brunt of fraudulent foreclosures, including Cortez Masto of NV, Martha Coakley of MA, Bill Schuette of MI, Eric Schneiderman of NY, Beau Biden of DE, and Tom Horne of AZ. Without the courageous efforts of these officials, public and private debates surrounding the National Agreement would have undoubtedly favored the banks and their robo-signing cronies at loan processing firms. Though far from perfect and seriously underfunded, the Agreement importantly limits the banking industry's immunity from civil and criminal investigations, ensures underwater homeowners some ability to obtain principle reductions, and does not prevent state or federal investigators from prosecuting banks for future fraudulent lending practices.

But while public servants in most states disproportionately affected by the foreclosure crisis have worked tirelessly to punish banks and protect homeowners, others appear less serious. For example, officials from a number of states have indicated that funds made available from the National Agreement will be diverted to plugging budget deficits instead of being provided to homeowners and investigators.

To this entourage of neglectful state officials we can add FL AG Pam Bondi, who has not only failed to fulfill her duties in protecting Floridians – duties for which she was elected – but in fact does just the opposite.

FL is perhaps second only to CA in the number of foreclosure proceedings currently being worked through the judicial system. Nearly half of Florida mortgages are underwater, over one tenth are in foreclosure, and over 15,000 homes in Miami alone are currently foreclosed. Across the state, foreclosures are being processed with fraudulent documents – mortgage notes that have been 'robo-signed', signatures that have been forged, and notices that have been illegally serviced. As a result, homeowners from across the state are being denied due process, thousands of families are being forced into poverty (the child homeless rate in FL increased dramatically last year), property value stagnates at historic lows, and crafty solicitors are making a fortune profiting off of the insecurities of well-intentioned former and current homeowners. In short, Floridians badly need help – help that only government protections can provide.

So what is Pam Bondi doing about it?

Absolutely nothing. In fact, Bondi seems intent to work actively against homeowners. For example, after she was elected, she fired June Clarkson and Theresa Edwards, two FL Assistant Attorney Generals celebrated for digging up highly incriminating evidence of the scope of depth of the banking industry's use of fraudulent, illegal, and robo-signed documents. Although Bondi, amidst public outcry, eventually backed an investigation into the firings, she has proven equally less reassuring elsewhere.

Last spring, during National Mortgage Settlement negotiations, Bondi openly criticized requiring banks to reduce the principle debt owed on mortgages appraised before the crisis. In other words, Bondi fought against providing homeowners with relief.

Moreover, former high ranking officials in FL's Attorney General's office now work for organizations under investigation for their role in mortgage fraud. Last May, Deputy Attorney General Joe Jacquot left the Office to join Lender Processing Services, a notorious "robo-signing" organization under investigation by the very Office Jacquot left.

Elsewhere, Bondi and her colleagues have expressed hesitation and doubt over the possibility and likelihood of taking an even remotely aggressive approach when investigating offenses against homeowners. According to Richard Lawson, who heads FL AG's Economic Crimes Division, the Office of Attorney General would rather work to change the "culture" of the banking and lending industry than prosecute and litigate on behalf of struggling Floridians.

But if this industry has a "culture," it's a culture that involves contracts, loans, and filing paperwork with public institutions. It's a "culture" government by law, government administrations, and transparent certification processes. If we are ever going to change the "culture" of the banking and lending industry, a strategy that includes prosecutorial litigation, civil legal reform, and administrative reform is not just desirably – it's fundamental.

The clock is ticking. As of this week, the FL legislature is poised to pass SB1890, a bill that, to the detriment of potentially defrauded homeowners, aims to move foreclosure proceedings much more quickly than current law permits.

Thus, despite the fact that Californians and Floridians suffer from the same economic turmoil, that their insecurities are governed by the same fraudulent organizations, and that their situations are enclosed within the same web of corrupt and deceptive practices, they are indeed on opposite ends of the spectrum when it comes to the intensity of their experiences. In Florida, the lack of government protection and assistance will undoubtedly exacerbate the intensity of residents' suffering, and although Californians are by no means entirely protected from danger, Florida's elected and appointed officials appear to be predators.

Tags: Kamala Harris, National Mortgage Settlement Agreement, Pam Bondi, Foreclosure, Robo-Signing, Fraud