Chain of Title: How Three Ordinary Americans Uncovered Wall Street's Great Foreclosure Fraud Hardcover – May 17, 2016
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A Kirkus Best Book of 2016
Chain of Title is a careful documentation of the mortgage fraud at the heart of the 2008 financial crisis. . . If you’re looking for a book to read over Labor Day weekend one that will that will get your heart pumping and your blood boiling and that will remind you why we’re in these fights add this one to your list.”
Senator Elizabeth Warren
Prepare to be surprised, and angry the homeowners' stories are emotional roller coasters. Dayen skillfully narrates a slow reveal and sprinkles in some lively metaphors.”
The New York Times Book Review
Enraging and enlightening.”
An inspiring, well-rendered, deeply reported, and often infuriating account.”
Kirkus Reviews (starred)
Hitchcockian... Meticulously researched, enthralling, and educational, this addition to the literature of the Great Recession calls out for its own big-screen adaptation.”
"Note: Dave Dayen's magnificent Chain of Title is essential to understanding how people became victims of the kind of rigged casino that made the Steve Mnuchins rich…”
"In the wake of the devastating 2008 financial crisis, David Dayen has become one of the nation’s most knowledgeable, astute and important voices in identifying the culprits and documenting the efforts to protect them. His new book is one of the most important yet written on the causes of that crisis, the abject failures of the political class to punish the wrongdoers, and the dangerous refusal on the part of the nation’s elite to safeguard against future and even worse meltdowns."
"This is the story, one of its characters tells us, of an unlikely ‘crime scene’: the real estate courts of Florida, where professional fraudsters greased the skids to kick people out of their houses in order to prop up Wall Street’s profits, while judges looked the other way. And, it is the story of a prairie fire—begun by ordinary Americans who brilliantly and courageously fought back when our leaders refused to do so. All in all, it is one of the best books about the law and American life that I ever have read."
Rick Perlstein, author of Nixonland and The Invisible Bridge
"Chain of Title is a sweeping work of investigative journalism that traces the arc of a criminally underreported story in America, the collapse of the rule of law in the home mortgage industry. By following three victims of illegal foreclosure practices, Dayen humanizes and brilliantly illuminates a vast scam unseen by the public because it’s been indecipherable to everyone but a few industrious housing lawyersas he shows, even judges don’t understand it. The nightmare scavenger-hunt pursued by homeowners like Lisa Epstein leads to a horror-ending: behind the dream of home ownership lies a lawless jungle, owned and operated by banks, where there are no rules to protect families and their property."
Matt Taibbi, author of The Divide
"David Dayen first wrote about foreclosures as a scruffy blogger and consistently beat almost every established financial reporter to the story. Now he has written the best history of that shameful period. The mortgage industry spent untold millions to spread the story they created from whole cloth after the crisis hit: families who lost their homes were mostly undeserving spendthrifts trying to shirk just debts. Chain of Title tells the real story and the real story should offend the sense of justice of every American with a conscience."
Former congressman Brad Miller (D-NC), original co-author of the section of the Dodd-Frank Act that created the Consumer Financial Protection Bureau
About the Author
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I have always considered myself a liberal Democrat, but one who spent her career lawyering for the US Department of Justice and had a healthy respect for the ultimate fairness of the judiciary and the rule of law. The evidence in this book of collusion, special interests, big money versus the little guy, and how we were all betrayed by the gutless White House and DOJ has opened my eyes and turned my head around. I am sickened by what I read here.
This history does feature some extraordinary individuals, three laypeople who set aside their lives to fight foreclosure fraud for years because it was the right thing to do. But ultimately, they got screwed like everyone else.by the powers that be, who were cleverly manipulated by some law firms and lawyers I already knew were doing the work of the devil.
I have met many people who lost their homes to foreclosure, and I have seen firsthand the psychological devastation that they experienced. Had I known then that the entities who foreclosed likely did not even have standing to do so, I could have tried to help, but I had no idea until reading this book.
I hope this work, the author's first, gets a lot of acclaim at book awards time, and that he keeps writing because his first effort is an A+ achievement.
David Dayen explores that question in Chain of Title, an expose of the criminal conduct that ran rampant during the fallout from what is so delicately referred to as the “housing bubble.” (The phrase sounds frivolous, doesn’t it?) With a focus a handful of activists, most of them based in the state of Florida — among the states hardest hit by the foreclosure crisis — Dayen uncovers the truth about the role of law enforcement officials and the Wall Street banks in forcing an estimated six million people out of their homes. It’s a grim and deeply unsettling story.
Wall Street vs. Main Street
Dayen centers his tale on the experiences of three remarkable individuals: “a cancer nurse, a car salesman, and an insurance fraud specialist,” all foreclosure victims and all living in Florida. Theirs is the story of courage in the face of implacable resistance by powerful forces completely out of their control. However, several other key figures emerge in the story, including several other activists, a handful of county registrars determined to fulfill their legal responsibilities, and two low-level attorneys in the Economic Crimes Unit of the Florida State Attorney General’s office. Ultimately, Chain of Title is the familiar tale of Main Street versus Wall Street — and, in the final analysis the result is familiar as well, with Wall Street emerging victorious. When cries for justice confront powerful economic interests, the outcome is almost always foreordained. Nonetheless, the three heroes in Chain of Title achieved something truly noteworthy: they exposed blatantly illegal activity by the big banks and collusion by federal, state, and local officials. Eventually, the media took notice. It’s due in substantial part to their efforts that we are aware today of the extent of the fraud in the foreclosure crisis.
What is “foreclosure fraud?”
During the peak years of the housing crisis, from 2007 through 2010, bankers and their allies in the criminal justice system and the media were fond of speaking about “foreclosure fraud” — referring to homeowners who defrauded the banks in order to “live free” in homes they didn’t own. Undoubtedly, there were a few people who took advantage of the circumstances to avoid paying their mortgages and committed such offenses. In fact, however, the pattern of fraud conducted by the banks was far more pervasive, far more blatant, and far more serious. Those truly responsible for “foreclosure fraud” were bankers, their business partners, and their allies in the criminal justice system.
As Dayen reveals, the overwhelming majority of housing foreclosures carried out after the bubble burst were conducted illegally — and those charged with holding the bankers and their business partners responsible almost invariably looked the other way. Why? Why have no bankers gone to prison for what we all know was their criminal behavior in setting off the Great Depression? In Chain of Title, by examining the ensuing mortgage crisis, Dayen explains why. The responsibility for this travesty starts at the top, with Larry Summers and others in the Obama White House, possibly including the President himself. However, Attorney General Eric Holder and his aides were directly responsible for shutting down the investigations into what Dayen terms “the greatest consumer fraud scandal in history.” In a just world, in my opinion, Eric Holder would have been sent to prison for obstruction of justice. However, the original sin in this tragedy was committed by bankers and their counterparts in the “non-bank financial institutions” such as Countrywide, the nation’s largest subprime mortgage lender. And it is sadly ironic that while I drafted this post the financial columnist Gretchen Morgenson revealed that the Justice Department has informed Angelo Mozilo, Countrywide’s former CEO, that he is no longer under investigation. More than any other single individual, Mozilo was responsible for the foreclosure crisis. To compound the pain of this announcement, the New York Times ran a long, front-page story explaining how huge private equity funds, which face far less regulatory scrutiny than the banks, have bought up enormous numbers of distressed mortgages and are “repeating the mistakes that banks committed throughout the housing crisis.”
The human face of foreclosure fraud
Since I was never personally affected by the mortgage crisis, I paid only cursory attention as the story unfolded in the last decade. I remember reading about the “robo-signing” of mortgage papers, thinking this meant that the banks were using machines to sign the documents necessary for them to foreclose on their debtors. I was astonished to read the truth in Chain of Title. The “robo-signing” was carried out by law firms operating as document mills, some of them offshore, churning out a flood of fraudulent papers. Why? Because in their rush to rack up enormous profits the banks had failed to meet their legal obligations in documenting chain of title. Entry-level employees signed hundreds of documents every day, day after day, in what sometimes became a ludicrous parody of legal procedure. Chain of Title is full of jaw-dropping examples. Consider just this one to get the flavor of the problem:
American Home Mortgage Acceptance . . . does by these presents hereby grant, bargain, assign, transfer, convey, set over and deliver unto BOGUS ASSIGNEE FOR INTERVENING AS[SIGN]M[EN]TS, whose address is XXXXXXXXXXX, the following described mortgage.
This document was actually included verbatim in the papers submitted to justify tossing one family out of their home! And, in the course of just a few days, a handful of the activists identified in Chain of Title turned up 36 largely identical BOGUS ASSIGNEE examples in foreclosure proceedings around the country, including at least one in each of the eight states tested!
However, the injustice of foreclosure fraud went far, far beyond the use of bogus documents. As one Wall Street analyst and blogger explained,
. . . we end up with the wrong house being foreclosed upon, the wrong person being sued for a mortgage note, a bank without an interest in a mortgage note suing for foreclosure, and cases where more than one note holders [sic] are suing on the same property that is being foreclosed . . . The only way these errors could have occurred is if several people involved in the process committed criminal fraud. This is not a case of “Well, something slipped through the cracks.”
In many cases, “there were horror stories: banks breaking and entering into homes in the name of ‘property preservation,’ with one company even taking the ashes of a woman’s late husband; families making all their loan modification payments and still getting foreclosed; a woman who paid off her house and then got a default notice; sheriff’s deputies conducting an eviction and finding a dead body.” Dayen also cites one case in which a couple paid off their mortgage early, and another whose mortage payment was 14 cents short: both were foreclosed!
Why did all this happen?
Dayen explains in great detail the origins of the housing crisis and describes its unfolding, with tragic consequences for millions of Americans. But the essential facts are clear: Beginning in 1980 (before Ronald Reagan moved into the White House), Congress legislated “reforms” in the laws governing home mortgages in the interest of saving the troubled savings and loan industry, “effectively legalizing consumer abuse to aid a class of financial institutions.” Those changes in the law, greatly magnified by the actions of the Clinton Administration to weaken regulations over Wall Street even further, lay the groundwork for the banks to indulge in financial hocus-pocus and effectively build a massive Ponzi scheme: the securitization, derivatives, and subprime mortgage loans that precipitated the Great Recession and upended the world economy.
When the whole system began crashing down, millions of Americans were forced out of their homes because the banks were scrambling to protect their profits; they cut corners mercilessly, ignoring the law, good business practice, and simple ethics. Judges and other officials at the state and local level failed to clamp down on them because they were beholden to the banks or in thrall to right-wing ideology, because “finding the fraud got people fired,” because sometimes there were financial incentives to overlook the problems, or simply because they were lazy. And the state attorneys general and senior officials in the Department of Justice refused to stop the unfolding disaster, much less send senior bankers to prison, partly because they themselves had come from the financial industry or from law firms serving the banks, and partly because the stakes were so high. They feared that the American economy would go into a tailspin and possibly never recover if the big banks were brought to heel. That, at least, was the rationalization that led the Obama White House to turn a blind eye to all the illegal activity.
About the author
David Dayen is a contributing writer for Salon.com and a weekly columnist for The New Republic and The Fiscal Times. Chain of Title is his first book.
It took 3 ordinary Americans to alert the mainstream media to this fraud. And even then, the mainstream media was so asleep at the switch that nobody would believe this 3 ordinary Americans.