Hats off to 60 Minutes and Scott Pelley for taking a nice look at the foreclosure scandal on Sunday.
Pelley shows the scale of the foreclosure problem first:
In the 1930s we had breadlines; venture out before dawn in America today and you’ll find mortgage lines. This past January in Los Angeles, 37,000 homeowners facing foreclosure showed up to an event to beg their bank for lower payments on their mortgage. Some people even slept on the sidewalk to get in line.
So many in the country are desperate now that they have to meet in convention centers coast to coast.
In February in Miami, 12,000 people showed up to a similar event. The line went down the block and doubled back twice.
Pelley tells the story of rampant mortgage servicing fraud through Lynn Szymoniak, an attorney who is battling her own foreclosure right now. Her bank couldn’t find the paperwork on her loan. Then it suddenly “found” them, after a year:
But what the bank may not have known is that Szymoniak is a lawyer and fraud investigator with a specialty in forged documents. She has trained FBI agents.
Oops.
Szymoniak looked at some 10,000 mortgages and found that one woman, called “Linda Green,” popped up repeatedly, supposedly as vice president for twenty different banks. Green worked for a company called DocX, which Pelley accurately calls a “sweatshop for forged mortgage documents.” The real Linda Green couldn’t keep up with all the signing, so they hired other “vice president Linda Green” stand-ins for ten bucks an hour.
Linda Green says she was named a bank vice president by Docx because her name was short and easy to spell.
The segment show clearly how this scandal is about blatant forgery and fraud. It’s clear these low-level workers don’t deserve to go to jail for the forgeries. The question is how far up the chain this goes.
As far as I can tell, there’s not much new here beyond putting faces on the robosigners. And this story could have been done months ago based on the excellent coverage by Naked Capitalism, the Washington Post, and 4ClosureFraud to name the ones that come to mind.
But a powerful segment like this on 60 Minutes, with its million of viewers, is on a different scale and video brings a different kind of power to the story. As Yves Smith of Naked Cap herself says:
The MSM is willing to cover practices that banks have been forced to admit they engage in and they claim to be cleaning up. This is helpful in terms of public outrage, as in validating the charges made on specialist blogs for blogs for more than two years, but is still far from the hot button issues now, such as servicer-driven fraud or chain of title problems.
In other words: Good work, 60 Minutes. But you’re not done yet.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.