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Matt Taibbi Investigates Florida's Foreclosure 'Rocket Dockets'

The Huffington Post   First Posted: 11/11/10 03:56 PM ET Updated: 05/25/11 07:10 PM ET

Even as foreclosures across the nation are tainted by accusations of fraud, mortgage companies and foreclosure judges favor expediency over accuracy as they relentlessly kick homeowners out onto the street, says Rolling Stone's Matt Taibbi, in a lengthy new investigation.

"[I]n America, it's far more shameful to owe money than it is to steal it," Taibbi, who famously called Goldman Sachs a "great vampire squid wrapped around the face of humanity," writes.

In the years leading up to the financial crisis, banks extended home loans and then sold them to other companies that packaged them into complicated securities, which in turn were sold to investors. Now, as the legitimacy of the documents proving who actually owns the mortgages has been called into question, some big banks have temporarily halted certain foreclosure proceedings -- and mortgage companies face a Federal criminal investigation. (Bank of America, for its part, faces a Federal racketeering lawsuit over its allegedly shoddy foreclosure paperwork.)

In his latest piece, Taibbi argues that the mortgage mess isn't merely a matter of botched paperwork. Rather, it's the result of fraud on all levels of the mortgage industry.

The heart of Taibbi's piece is an account of an hour he spent watching a Florida judge speed through a series of foreclosure cases -- the "rocket docket," as it's known.

He describes the type of fraud that, he says, pervades the system. In one case, Bank of New York Mellon, which was trying to foreclosure on a home, apparently fabricated the existence of the mortgage note, the document that proves a bank is owed debt. Here's Taibbi:

"The bank, in other words, tried to claim on paper, in court, that it both lost the note and had it, at the same time. Moreover, it claimed that it had included a copy of the note in the file, which it did -- the only problem being that the note (a) was not properly endorsed, and (b) was payable not to Bank of New York but to someone else, a company called Novastar."

The Florida judge, Taibbi says, is biased in favor of the mortgage companies:

"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 witness in court all morning, 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.

[...]

"Just minutes before, I had watched what happens when defendants don't show up in court: kerchunk! The judge more or less automatically rules for the plaintiffs when the homeowner is a no-show. But when the plaintiff doesn't show, the judge is suddenly all mercy and forgiveness...

Read the whole story here.

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