Monday, March 14, 2011

Anonymous Mortgage Fraud allegations

As the vortex of news media intensifies on the looming nuclear disaster in Japan, let's take a moment to look on the results from the first data dump from Anonymous last night.

Anonymous claimed that they had emails and documents which proved "fraud" had been committed by Bank of America employees in the US foreclosure scandal.

This revelation was coming a day after the SEC prepares to let Lehman executives walk for their illegal actions in the Repo 105 Fraud.

As the information provided by Anonymous was analysed, what emerged was an ugly story wherein a whistleblower is accusing Bank of America with executing a large scale Force Place insurance scheme with the cooperation of the mortgage servicers.

The charge made in this Anonymous release is that Bank of America, through its wholly-owned subsidiary and the help of cooperating servicers, engaged in a mortgage borrower abuse called “force placed insurance”.

This is not legal.

In 2003, famed subprime servicer lawbreaker Fairbanks signed a consent decree with the FTC and HUD over abuses that included forced placed insurance. The industry is well aware that this sort of thing is not permissible.

This is basically a scheme to fatten servicer margins. If this leak is accurate, the servicers at a minimum cooperated. If they got kickbacks (they will call them commissions) they are culpable and thus liable.

Servicers lose tons of money on portfolios with a high level of delinquencies and defaults. The example of Fairbanks, a standalone servicer whose subprime portfolio got in trouble in 2002, is that servicers who are losing money start abusing customers and investors to restore profits. Fairbanks charged customers for force placed insurance and as part of its consent decree, paid large fines and fired its CEO (who was also fined).

Logically... if these allegations are true... a similar fate should befall Bank of America.

It makes the efforts by those in power to sweep the whole Fraudclosure Affair under the carpet to protect the banking cabal immensely more difficult.



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