Richard Smith from NakedCapitalism: FDIC Joins the Robo Signing Club

15 Oct

Indy Mac has been one of the biggest offenders when it comes to trashy looan mods, adding costs to short sales for borrowers and general all around bad play – speaking from our own experience with borrowers across the country – and this particular robo signer – (see the link in the article for the deposition) is one we know of personally – so nice to see her come out in the open online.

What the FDIC has to say to defend their position in all of this will not impress us much – ’nuff said.

Not to be outdone, FDIC joins the robo-signing club, too

from naked capitalism by Richard Smith

It keeps getting better. From  Bloomberg, we have this tired-looking plaint

What were banking regulators doing while some of the biggest U.S. lenders routinely filed false foreclosure documents in local courthouses around the country?

…but, since that is Jonathan Weil speaking, there’s a twist:

In the case of IndyMac Federal Bank, it turns out the Federal Deposit Insurance Corp. was running the joint.

That’s right – while IndyMac was under FDIC “control”, bank officers were robo-signing affidavits:

The facts are there for anyone to see in the records of a circuit-court lawsuit against Israel and Neena Machado, a West Palm Beach, Florida, couple who last year beat back IndyMac’s attempts to foreclose on their home mortgage. They even won a judgment ordering IndyMac to pay $38,117 in legal fees.

IndyMac sued the Machados in November 2008, four months after the government closed its predecessor, Pasadena, California-based IndyMac Bank, which had $32 billion in assets when it was seized…

Among the sworn statements IndyMac filed with the court was a December 2008 affidavit by an IndyMac vice president, Erica Johnson-Seck, who said she had personal knowledge of the amount of money the Machados owed on the mortgage. That wasn’t true, she later testified in a deposition. To be fair, there’s every reason to believe the old IndyMac was engaged in this sort of conduct already, before it was shut down.

Do go and read the whole thing; it’s good for a hollow laugh or two, if your sense of humour runs that way.

It’s kind of obvious that this would have happened: fraud has been rampant, and FDIC has been stretched. But as an example of extreme regulatory capture it’s hard to improve on this. It horribly taints FDIC, and I should think it makes it even more difficult for the Government to intervene credibly in the foreclosure/title mess.


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