Truthout: Foreclosuregate Explained: Big Banks on the Brink

[Generic Other]

"This was an industry wide scheme designed to defraud homeowners," Florida attorney Peter Ticktin told The Associated Press.

Ohio Attorney General Richard Cordray filed a lawsuit against lender GMAC in October that aims to stop sales of all repossessed homes foreclosed with robo-signed documents and to reverse judgments on those foreclosed homes that have not yet been sold. In addition, the suit seeks damages for homeowners and a $25,000 fine for every fraudulently filed court document.

In Kentucky, Heather McKeever filed a class action lawsuit against GMAC on behalf of homeowners there alleging the giant lender, a recipient of $16 billion in federal bailout money, violated the RICO Act. "This is organized crime by people in suits but it is still organized crime," she said.

If other states file similar lawsuits like those in Ohio, Kentucky and Mississippi, it could mean billions of dollars in damages and fines, criminal perjury prosecutions of "robo-signers" and disbarment for the lawyers who filed the fraudulent papers. Some analysts say the potential liability of major banks is so large, another financial crisis is a real possibility.

http://www.truth-out.org/foreclosuregate-explained-big-banks-brink64621

[qb]

1. GMAC thwarted at least 2 reasonable attempts at a short sale on my previous home.

bastards. I hope they are forced to pay big time.

[laughingliberal]

2. K & R nt

[deaniac21]

3. Most aptly named organization in the world.

[JuniperLea]

4. ""This was an industry wide scheme designed to defraud homeowners,"

"This was an industry wide scheme designed to defraud homeowners," Florida attorney Peter Ticktin told The Associated Press.

Sounds like a conspiracy to me!

No shit, Sherlock! Some of us grabbed that clue when Bush stood up there and told American that everyone could own a home with the new fangled loan deals he was so proudly unveiling. How many of us asked... so, what happens five years down the road when those mortgage rates readjust? We were told to lay off the conspiracy theories... right.

[DCKit]

5. For those of U.S. who have been waiting for the other shoe to drop.... n/t

[EFerrari]

6. They defrauded people coming and going, first with predatory lending

then with predatory loan servicing. Very efficient.

[ljm2002]

7. Yes they did...

...and I believe that many of these subprime mortgages violated the inherent principle of good faith that is a part of contract law (emphasis mine in the citations below):

http://www.expertlaw.com/library/business/contract_law.html

Good Faith

It is implicit within all contracts that the parties are acting in good faith. For example, if the seller of a "mustang" knows that the buyer thinks he is purchasing a car, but secretly intends to sell the buyer a horse, the seller is not acting in good faith and the contract will not be enforceable.

http://www.lawteacher.net/contract-law/essays/good-faith-contract-essay.php

The notion of good faith

The notion of good faith undoubtedly pervades English law, but there is no single recognised doctrine of general application. The law is generally ready to strike against instances of bad faith: for example where lies are told in pre-contractual negotiations and where the weak are exploited or pressurised the application of concepts of contract law will make such contracts void or voidable.

http://www.bowne.com/securitiesconnect/details.asp?storyID=1900

Necessity's child. To mitigate the result in Smith v. Van Gorkom (1985), Delaware enacted General Corporation Law Section 102(b)(7), thereby permitting a corporation to avoid monetary liability for its directors' breach of the duty of care. Plaintiffs in factually appealing cases, writes corporate law attorney and professor Mark Loewenstein, then began urging courts to analyze directors' actions under the duty of good faith. This concept—derived from contract theory but applied to the corporate fiduciary context—is useful from a plaintiff/shareholder's standpoint: like the duty of loyalty, it cannot be waived. In In re Caremark International Inc. Derivative Litigation (1996), the chancery court remarked that a board's abdication of its responsibility to stay informed (in Caremark, by failing to adopt any kind of information reporting system) would demonstrate a lack of good faith.