Ed. Note: ColorLines editorial director Kai Wright is the Alfred Knobler Fellow of The Nation Institute. This essay appears in the Nov. 8 issue of The Nation magazine.
A year and a half ago, I sat in the office of Jim Kowalski, a prosecutor turned defense attorney in Jacksonville, Florida, listening to him describe a crime that was, by then, known to anyone who'd dealt with the foreclosure process. Kowalski worked with a small cadre of local attorneys trying to slow the area's onslaught of foreclosures. In the aggregate, they were monstrously outmatched by banks with subcontractors of subcontractors dedicated to removing families from homes quickly. But on a case-by-case basis, they stole the advantage because they knew the mortgage industry's secret: it had buckled under the weight of its own corruption. All you had to do was force the banks' empty hand, and you could keep a client in her home.
The biggest tell came over listservs that connected legal aid outfits and small private practices overwhelmed by the sudden demand for foreclosure defenses. As lawyers like Kowalski compared notes on the three big banks whose servicing arms controlled nearly half the mortgage market, they noticed case after case of irregularities. Once they forced the servicers into court, the pattern became clear: everybody involved in the securities process had cut so many corners in pursuit of record profits, had operated with such disregard for the many steps that ensure a safe and sound mortgage market, that they couldn't even show who owned the debt.
In April 2008 Kowalski deposed a Citibank residential lending employee, Tamara Price, whose name had recurred on foreclosures. Price described a system for creating bogus mortgage assignments that was baldly deceptive, all the way down to the fake "vice president" title with which Price signed her name. The case was exceptional only in that Price was on record. Already, scattered judges had reached their wits' end with the legal corner-cutting and were throwing out foreclosures. Lawyers in the trenches clung hopefully to the trend; most national advocates quietly said it would never prompt the sort of federal leadership that the foreclosure crisis demands. More than two years and millions of foreclosures later, a deposition similar to Price's--from a GMAC employee who admits to "robo-signing" 10,000 sworn documents a month--has revealed the fraud to the whole country.