A New Jersey judge has accused the nation's top six mortgage servicers of rubber-stamping dubious foreclosure documents and has demanded that they "show cause" why all of their cases in the state should not be suspended, as reported by Bloomberg:
Bank of America Corp., JPMorgan Chase & Co. and four other mortgage lenders and loan servicers face a possible suspension of home foreclosures in New Jersey by Jan. 19 under a judge’s order.
The action, announced today by New Jersey Supreme Court Chief Justice Stuart Rabner, also covers Citigroup Inc.’s mortgage unit, Ally Financial Inc.’s GMAC mortgage unit, OneWest Bank and Wells Fargo & Co. The lenders were implicated in "robo-signing," the submission of hundreds or thousands of foreclosure claims that falsely swore to personal knowledge of their contents, Rabner said.
As the fraudulent practices of the mortgage servicing industry are exposed, the big banks are facing hundreds of billions in put-back claims by angry investors who lost funds in the scheme. It was reported over the weekend that a group of Nevada investors were awarded $5.1 million in damages in a case that exposed some of the tricks of the trade.
The size of the mortage-backed securities market is $9 trillion. However the larger credit derivatives market, which includes asset-backed securities for auto loans and credit cards, is estimated to be $26 trillion.
While little attention has been paid to the $915 billion in credit-card debt and its related trillions in derivatives, this may soon change. A former Chase Bank employee turned whistleblower has filed a devastating complaint against her former company. In a letter written to the SEC, Linda Almonte alleges that the bank routinely destroyed critical documents, mass-executed affidavits, and even sold mischaracterized accounts to third parties. The story was broken by Daily Finance:
Based upon first hand observation while an empolyee at Chase Bank and supported by a large volume of Documents in her possession and available for review by the SEC, Ms. Almonte's whistleblower SEC submission discloses and chronicles similar fraud and gross neglect on the part of Chase Bank as it relates to the litigation and collection process for delinquent credit card accounts. Ms. Almonte specifically discloses and blows the whistle on a variety of Chase Bank practices, including:
- Chase Bank sold to third party debt buyers hundreds of millions of dollars worth of credit card accounts. . .when in fact Chase Bank executives knew that many of those accounts had incorrect and overstated balances.
- As part of the sale of Judgement Accounts, Chase Bank executives knowingly mischaracterized delinquent accounts as already reduced to judgement, when in fact proof existed that no judgement existed or at the very least insufficient documentation existed to reach that conclusion.
- Chase Bank executives routinely destroyed information and communications from consumers rather than incorporate that information into the consumer's credit card file, including bankruptcy notices, powers of attorney, notice of cancellation of auto-pay, proof of payments and letters from debt settlement companies.
- Chase Bank executives mass-executed thousands of affidavits in support of Chase Banks collection efforts and those Chase Bank executives did not have personal knowledge of the facts set forth in the affidavits.
- When senior Chase Bank executives were made aware of these systemic problems, senior Chase Bank executives -- rather than remedy the problems -- immediately fired the whistleblower and attempted to cover up these problems.