Last week I told you about “The Coming Curse of Zombie Foreclosures.”
I described how folks – who thought they were foreclosed on – are suddenly finding out they are actually still on the hook for mortgage payments, taxes, and all kinds of maintenance on abandoned homes.
What I didn’t tell you is that the nation’s largest mortgage-issuing bank – and the most profitable bank in 2013 – may have been bitten itself by the very zombie foreclosures it breeds.
The New York Post’s Catherine Curan dropped that bombshell last Wednesday when she was the first to report that bankruptcy attorney Linda Tirelli had unearthed a Wells Fargo “how-to” document that instructs bank attorneys essentially how to commit fraud.
Tirelli filed the 150-page manual in New York’s notoriously no-nonsense and hard-charging Southern District court on behalf of a homeowner in bankruptcy.
The “step-by-step procedure” document instructs Wells Fargo employees how to create (as in just make up out of thin air) an “endorsement” or an “allonge” to prove Wells Fargo is a homeowner’s creditor and therefore has a right to foreclose on the underlying property.
An endorsement is something a lender signs over to a new lender who is taking over the loan or mortgage. An allonge is a string of endorsements attached to a note (mortgage or loan) showing the actual chain of endorsements.
What’s explosive is that this Wells Fargo Foreclosure Attorney Procedures Manual – created November 9, 2011 – “appears to provide step-by-step instructions for a Wells Fargo Home Mortgage ‘Default Docs Team’ and foreclosure attorneys if a blank endorsement is in a file and the attorney wants that note executed,” according to the New York Post.
“In addition, the manual outlines steps for attorneys and the Default Docs Team to create allonges, endorsements to a note on a separate sheet of paper when there is no room left at the bottom of the note.”
Step 3 under the header “Allonge” on page 17 reads: “WFHM Default Docs Team: If file was ordered and received, review to determine what entities the attorney needs the note endorsement to reflect,” says Curan.
What’s sickening and incendiary for Wells is that the how-to-commit-fraud document was last updated in February 2012, which not coincidentally was the same month and year that the nation’s top mortgage lending banks and servicers agreed to a $25 billion settlement for “robo-signing” foreclosure documents to get homeowners out of their homes.
Now it appears that robots aren’t to blame, but lawyers and bank employees committing fraud based on Wells’ how-to manual.
Of course, most of us figured robo-signers weren’t really automaton robots.
But this is big news on account that this document has now been unearthed, brought into the light, and filed in court.
The Southern District of New York is a place a lot of prosecutors who aspire to the governorship of New York – or even the presidency of the United States – seek to make a name for themselves.
Personally, I’m hoping someone over there is repulsed by the zombies and goes after Wells with the intention of burying them on criminal charges.
Like I said, I’m hoping.
I realize the chances of a big bank being brought down for its criminal behavior is somewhere between slim and none.
But hope springs eternal. And spring is just around the corner, or maybe the next corner…