Mainstream media is reporting that the U.S. economy has recovered significantly since the crash of 2008. What no one is telling us about are the human casualties – still accruing across the country – as a result of the criminal actions of the big banks that crashed it.
The banks packaged the most expensive lie ever sold on Wall Street – mortgage backed securities, or MBS – with the consequence being millions of homes stolen through fraudulent foreclosure. The foreclosure crisis exposed once again America's two-tiered justice system, which forgets about the victims of fraud while leaving those who committed it unpunished.
Meanwhile, those same banks are continuing with business as usual and recording record-high profits, forcing the rest of us to ask: whatever happened to those individuals and institutions who were supposed to be in charge of regulating the banks and protecting the American people? For answers, Occupy.com caught up with one of those individuals, Eric Mains, a former bank regulator with the Federal Deposit Insurance Corporation (FDIC) who has seen the tables turned on him as well, as he fights his own case of foreclosure fraud.
Senka Huskic: How long were you working for the FDIC and, during that period, did you notice any irregularities on the part of the banks?
Eric Mains: I worked for the FDIC from August 2010 through March 2015. The banks I worked with were all "irregular" in terms of their being in the process of FDIC receivership because they were failing. I cannot discuss specific work I was involved with due to my FDIC confidentiality agreement, but in terms of true “large banks” there was only one instance where I was involved and aware of transactions that were questionable. How that situation was ultimately dealt with I do not know. I just heard rumors.
SH: One of the tabs on the FDIC's site, Consumer Assistance and Information, is described as: "Useful information to help you make informed decisions about your money and to protect yourself against financial scams and fraud." Why isn't such a big institution doing anything to shed light on the enormous fraud and do what it says – protect the American people?
EM: We all know the answer, even though no one wants to say it too loud. The system is largely gamed, broken, and corrupted by money, influence peddling and a revolving door that rewards those who "play ball." A perfect example is Lanny Breuer and Eric Holder, now sitting comfortably back at their pro-bank law firm Covington & Burling. I have said before and will say again: change can only be affected from the top down, and if those at the top are not held accountable, you will have no change. The lobbyists have DC wrapped up – the politicians hamstring the regulatory agencies [where] the top post chairs come from Wall Street firms, and appointees can still receive payments from Wall Street firms even after they "retire," as an incentive bonus to take government positions.
SH: You quit your job at FDIC to focus on your own foreclosure battle. How did you uncover fraud on your mortgage and what made you believe that you can win this?
EM: I discovered the fraud that was going on due to articles and books covering the subject, and with a large hat tip to bloggers such as Neil Garfield, who have been outspoken and courageous in pointing out the fraud. David Dayen, Matt Taibbi, Adam Levitin, Yves Smith and others have all been very vocal about the fraud that has gone on.
First, almost all the securitized loans that were part of the Real Estate Mortgage Investment Conduit (REMIC) Trusts involve fraud that has tainted them – from failing to properly fund the Trusts and have them purchase the notes, to failing to legally transfer the notes into them. Nobody wants to admit, recognize or legally try to fix the issues that exist because they see it as an inescapable pit of moral hazard and economic doom.
Unfortunately, a majority of courts in our country fail to enforce the laws as written because they either think the homeowner is trying to get out of his loan, presuming the loan must be valid and without fraud or defects, or they simply don’t care to spend the time and effort to dig further into the transaction. Lawsuits are expensive and cost time and money, with homeowners outgunned by the banks. Some courts have stepped up, but not enough. All court systems should all be applying 500+ years of property and contract law, hearsay rules and the statute of frauds equally. They are not.
What makes me think I can win? At some point the law of averages tells me I will run into a court that cares about due process rights. Until then I still hold my house, get to expose those committing fraud, and occasionally poke them in the media – if that's not winning, nothing is! In all seriousness, let’s define winning, too. First, you have to understand the game you are playing. The heads of large banks know the proceeding about the REMICs; the heads of regulatory agencies are aware to one degree or another, too. Everyone knows the ball trying to be hidden, and at some point it will be found – it’s just a matter of how long that takes. In this game, the longer you hide the ball and get away with it, the more the other side loses.
The tobacco industry played this game beautifully for years: deny cigarettes can cause cancer, deny the facts. Everyone knows the game and the issues, but can they prove it in a court of law? It was all part of the equation. Big banks are playing the exact same game – no difference, just bigger stakes. What brought the game to a close for Big Tobacco was media attention. Whistleblowers and landmark lawsuits drew that attention. Make no mistake about it, the banks are afraid of one thing: that a major media outlet blasts the story, forcing the government to do something about the issue. Major court battle “wins” help too, and people like Elizabeth Warren help. But the question is how fast can we get the media and public on board? Ever ask yourself why not one major media outlet has recently run a story about the REMICs? Why not one has said, “Hey, the forgery and robosigning is still going on!” The advertising revenue from banks, threats of lawsuits, influence peddling, etc., have wrapped up the media too, it seems, as I'm sure the banks wanted it.
SH: In your case, you chose the path of rescinding your mortgage. Could you explain why you think this is the way to go and how far along in the process you are with this?
EM: It is the only way to go right now, and I would highly advocate that those in a foreclosure situation get those rescission notices out the door – before Congress does something to pre-empt your rights [that] the Supreme Court just upheld in Jesinoski v. Countrywide Home Loans, Inc. The right to rescind under the Truth In Lending Act (TILA) gives consumers the right to rescind a "loan" transaction that likely violated the statute of frauds. TILA is strict in its interpretation, as lawmakers meant it to be. They knew consumers would be outgunned by large banks and simply wanted to level the playing field for consumers.
The banks' lawyers will argue that people have three days to rescind, or three years in some cases, [or that] the loan does not qualify under TILA, etc. TILA clearly says the rescission date is predicated on when the loan was consummated. If the bank has not responded in the 20 days in court as TILA requires, their arguments appear to be annulled. If they really believed an effective transaction was consummated – that all parties to the loan were disclosed, that there was a meeting of the minds and consideration given – why didn't they show up and argue this in 20 days? Maybe they didn't because if they tried to do this, the court would find the transaction violated the statute of frauds. If the transaction itself was ineffective, it [become] unenforceable, TILA rescission or not. The consumer wins either way – which is the exact purpose of TILA.
SH: What are your thoughts on multiple mortgage fraud settlements between banks and our government? How can the government that is supposed to work for people sign these agreements and sweep the banks’ fraud under the rug?
EM: For the most part they lacked teeth, ignored, or were meant to seem like they accomplished something when they did not do a whole lot – and were a photo op for the agencies while letting the banks off easy. If they were actually enforced as written, like most laws on the books, they would be effective. Without anyone enforcing them, not so effective.
SH: What do you think is the main reason the American people are being sacrificed in order to cover up the enormous mortgage fraud?
EM: Because they can be. Besides courageous consumers who can afford to fight back, the general public is allowing this to happen. People have to be enraged enough to file lawsuits, file FOIA requests, write newspapers, write A.G's, put people on the spot, and make those in positions to affect change very uncomfortable. Frederick Douglass from 150 years ago put it best: "Power concedes nothing without a demand. It never did and it never will. Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them."
SH: Over the years, I have talked to many people who were fighting their foreclosure. Majority of them experience lack of understanding and support from their family and friends. How are people around you reacting to your foreclosure fight? Are they supportive?
EM: An occasional "Go team," and avoidance of the subject – get used to that. People have been brought up to think their FICO score is the new goal their life is meant to achieve, and all bank-involved debt comes with a presumption no fraud was involved or that it may be invalid. The public presumption is if you don't pay a "loan," you must be wrong – not the large banks who are so helpful in robosigning documents, manipulating foreign currency markets, laundering drug money for cartels, etc.
SH: Every day we're reading about new fines imposed on the banks for their mortgage fraud, and yet they continue with their old ways and these fines are just part of business as usual. Millions of Americans lost their homes, their life savings, their way of life. What do you think needs to change so that something like this never happens again?
EM: It will inevitably happen again as long as the current system exists as it exists. It’s greed and human nature at the root of the problem, and those at the top are compromised. There are more than enough laws – they just need to be enforced. There is no magic bullet, but the surest way is to separate our politicians and regulators from the purses of those they regulate.