Banks Finally Get Academic Nod from at Least One Person

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EDITOR’S NOTES: It was only a matter of time before the Banks found someone – anyone – to say something in favor of the banks. And so they did: Todd J. Zywicki, Professor of Law at George Mason University School  of Law. Lest this thing get somebody’s shirt in a knot, allow me to comment:

1. The University was originally established as part of the University of Virginia in the 1950’s and became its own University in 1972.
2. He graduated law school in 1988 and has been a legitimate academic teaching at a variety of schools. He does have some ties with the Koch brothers so there is an issue of a political agenda.
3. My first comment is that this is the best that the Banking industry could do to counteract the statements, facts and opinions of years of writing by myself and other people who are experts in securitization of debt, the mortgage process, the foreclosure process and litigation. Notably lacking from his resume is any work involving securitization, property law, civil rights or any work on any of the Amendments relating to the Bill of Rights. I can’t find anything ever written by him as a treatise or even an article. There probably are some, but I couldn’t find any.
4. My first issue is the title he chose for his op-ed piece — “It’s Time to Finalize the Robo-signing Settlement.” He is dead wrong and intentionally misleading anyone who reads his article by using that title. This term robo-signing is being used to disguise the creation of pure fabricated documents and having them executed by surrogates who were forging the signatures of other people, all without the slightest knowledge of what was contained in the documents, and who were instructed to pretend that they were officers or authorized signors for companies they had never heard of — which was notarized by using the stamp of a notary in a far away place using again a forged signature for the notary with an attestation clause that “certifies” the authority of the person signing. All of this, in addition to the obvious perjury in foreclosure actions where sworn affidavits or testimony was elicited from people whose name was not even the name of the person proffered by counsel. My quick answer then is that it WILL be time to end the matter when a full investigation is complete, the persons who committed crimes are brought to justice, and the persons who committed civil wrongs pay for it. 
5. Zywicki suggests that a settlement would bring about an end to uncertainty to the marketplace thus allowing, I presume, the market to recover. I do not agree that a settlement is a good idea just to bring certainty to the marketplace, if it means that injustice is brought to the doorsteps, literally, of tens of millions of households and hundreds of millions of pensioners and other people whose funds were used to fund the so-called securitized loans that were never securitized, transferred or sold. As for bringing certainty to the marketplace, it would do just the opposite. The professor is ignoring thousands of cases that were already settled only to come back and bite the title insurer, previous owner, previous lender, title agent, realtor and homeowners in the chain. A settlement of the issue of forgery and fabrication does NOTHING to correct the horrendous title mess created by the practices of the pretenders when they originated the loans and when they supposedly foreclosed on property using not faulty, but fraudulent paperwork. If he has any children, I wonder what he would say if he found out that one of his children forged his name to a note excusing the child from doing homework for the next month on account of having a rare blood disease. I can just picture how tolerant he would be when the child said that he should forget it because otherwise it will raise tensions in the house. 
6. Zywicki brings up the hypothetical upkeep of the house. We already studied that and he obviously didn’t. The houses occupied by the homeowners are well-maintained whereas the ones owned by the banks are not maintained at all without enforcement. He states the reverse by suggesting that the homeowner has no incentive to maintain the house. Why not? And why do the homeowners maintain the house when it is the bank in “REO property” that is constantly avoiding its responsibilities of maintenance and payment of association dues. The homeowners maintain the house because they consider it their house and they are right. Bare legal title procured through fraudulent means in a deal where the forecloser had not one dime invested in funding the loan or purchasing the obligation is where the incentive to maintain the house is lacking.
7. Then Zywicki turns his attention to money, about which I will meet him anywhere at any time. He suggests that allowing the homeowner to stay there bars someone from occupying the house who would pay. Pay who? If the real creditors were involved they would have long ago settled with the homeowners on terms far more favorable than foreclosure to the investors’ advantage. He is instead speaking up for the Banks who deceived the investors, deceived the borrowers and deceived the courts. I do believe that everyone has a right to counsel no matter how grievous the crime, but if that is the best he can do, the defendant may well appeal successfully on the basis of lack of competent counsel. Now he wants them to be able to keep their ill-gotten gains to the detriment of taxpayers who, so far, have ponied up $16 trillion to “bailout” the banks from what appears to be a loss (to the investors, not the banks) of $2-$3 trillion). So if the real parties in interest were present the homeowner would be paying some amount reflecting the actual balance of the loan, which is far less than the amount taken from the investors by those on whose behalf Zywicki speaks. But his “Clients” do not want the investors paid. They want to screw the investors to the wall and force them to accept pennies on the dollar while the Banks collect what is left of the advance of dollars by investors for loans that were never funded, thus accounting for the large bonuses his clients took asserting that the difference was trading profits. I differ. I call that theft. Let’s leave it to a jury to decide. Forget the settlement.
8. Next, Zywicki brings up the windfall argument. OK, he is right. The way the Banks are playing this, by not giving proper information to the investors and lying to the borrowers, somebody is going to get a home free of encumbrances and free from the threat of foreclosure. But the homeowner may still owe money to whomever actually was the source of funds from which the funding of his mortgage was taken. And the homeowner has money invested in the home even if there was no down payment because of the expenses of upkeep and  whatever payments were made until the loan reset to more than the borrowers’ annual income thus guaranteeing failure of the loan based upon property values that his clients’ trumped up to the tune of more than 100% mark-up from actual fair market value, and in which they received huge profits and fees for playing this game. So the question, if he wants to put it this way, is who gets the house — the person who was duped into moving into and furnishing the house or a complete stranger to the transaction that has invested not one dime into the funding of the mortgage nor in the purchase of the obligation? Zywicki seems to think it is better to give the house to the thief. I disagree. Let’s leave that to a jury also. Forget the settlement.
9. Zywicki then turns a phrase with a “Selective windfall” splitting those who are not paying from those who are still paying. It appears he is saying that even though the same crimes were committed on both sets of victims, the ones who haven’t yet realized they were shot, should not be allowed to look and see if they are bleeding. When the time comes for them to want to sell their homes or even refinance it they will discover they have incurable title defects, and then they too will be in litigation, refusing to pay any sum monthly or otherwise until there is a full and fair accounting of what the creditor received directly or indirectly by those who purportedly represent the investor.
10. Zywicki glosses over the issue of correction of the principal due, ignoring the money received to settle or pay off the creditor, the money received by agents of the investor who didn’t bother to report the receipt, and the appraisal fraud that started this entire affair. He suggests that nobody is injured when a home is taken from its rightful owner by a party who has no right to the home, the loan or anything else connected with the transaction. I disagree. Let a jury decide. Forget the settlement. 
11. Zywicki goes over the top when he says there are no victims. These financial service giants took down the entire economy and the world with it. OK, they didn’t create a mass extinction event, so we are alive to argue about it, but there is hardly more damage that could have been wrought than by these thieves and their efforts to cover it up with forgery, fabrication and fraud. I think a jury would agree. Forget the settlement.

hmmmm. Now that I think of it, it seems unlikely that a learned man like Zywicki could have fallen into all the traps outlined above. Perhaps someone else wrote his article. Perhaps he signed it without looking at the terms. Or maybe he never signed it at all, leaving that to some $10 per hour clerk to stamp his signature purloined from an infinite reservoir of stamps and signatures at LPS. I wonder how he’d feel if he learned that was what happened to his reputation. No damage? No victim? No problem?

Tags: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND
Posted in bubble, Corruption, Eviction, securities fraud |