The dates aren't the only thing screwy about the new documents submitted by Bank of New York. Having failed in its earlier attempt to claim that it actually had the mortgage note, the bank now tries an all-of-the-above tactic. "Plaintiff owns and holds the note," it claims, "or is a person entitled to enforce the note."
Now, one might think that after a bank makes multiple attempts to push phony documents through a courtroom, a judge might be pissed off enough to simply rule against that plaintiff for good. As I witnessed in court, the defense never gets more than one chance to screw up. But the banks get to keep filing their foreclosures over and over again, no matter how atrocious and deceitful their paperwork is.
The dirty secret of the rocket docket
The whole system is set up to enable lenders to commit fraud over and over again, until they figure out a way to reduce the stink enough so some judge like Soud can sign off on the scam. "If the court finds for the defendant, the plaintiffs just re-file," says a local attorney. "The only way for the caseload to get reduced is to give it to the plaintiff. The entire process is designed with that result in mind."
Now all of this -- the obviously cooked-up documents, the magically appearing stamp and the rest of it -- may just seem to some like nothing more than sloppy paperwork. After all, what does it matter if the bank has lost a few forms or mixed up the dates? The homeowners still owe what they owe, and the deadbeats have no right to keep living in a house they haven't paid for.
But what's going on at the Jacksonville rocket docket, and in foreclosure courts all across the country, has nothing to do with sloppiness. You see, all this phony paperwork was actually an essential part of the mortgage bubble, an integral element of what has enabled the nation's biggest lenders to pass off all that subprime lead as AAA gold.
In the old days, when you took out a mortgage, it was probably through a local bank or a credit union, and whoever gave you your loan held on to it for life. If you lost your job or got too sick to work and suddenly had trouble making your payments, you could call a human being and work things out. It was in the banker's interest, as well as yours, to make a modified payment schedule. From his point of view, it was better that you pay something than nothing at all.
But that all changed about a decade ago, thanks to the invention of new financial instruments that magically turned all these mortgages (including the toxic junk) into high-grade investments. Now when you took out a mortgage, your original lender -- which might well have been a big mortgage mill like Countrywide or New Century -- immediately sold off your loan to big banks like Deutsche and Goldman and JP Morgan. The banks then dumped hundreds or thousands of home loans at a time into tax-exempt real estate trusts, where the loans were diced up into securities, examined and "graded" by corrupt ratings agencies who were in on the scam, and sold off to big pension funds and other institutional suckers.
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