Mortgage servicing fraud--Black farmers say: “We told you so”

For years, through countless foreclosures, congressional testimony and media interviews, black farmers have claimed there is something rotten in the loan servicing industry, particularly with the Farm Service Administration. They filed a class action lawsuit over the issue, only to have their claims derailed by lawyers and insiders. For all of the attention the so-called “Black Farmer Settlement” received from angry white farmers and the media, it was never all it was cracked up to be.

To date, as many of you are well aware, tens of thousands of black farmers with proven cases of loan servicing discrimination, criminal conspiracy and have lost their farms, right on the courthouse lawn, to the same people and institutions who conspired against them in the first place. Black farmers applied for loans and their applications were:
Destroyed, ignored, delayed, or dismissed.

Thousands of black farmers have been purposely driven out of business by the same federal loan bureaucracy, which was alleged created to help family farmers survive. The conflicts of interest were and remain huge: federal loan personnel making money and receiving bonuses for rushing farmers through bankruptcy, the same farmers they, by law, are chartered to help. Thousands of farmers have proof of collusion between federal farm loan bureaucrats, local bankers, real estate agencies, judges and deed clerks, but most of them have been denied their day in court, shouted down as liars, deadbeats and lunatics.

As the stench of corruption has finally blown up and can no longer be contained, we find that the thieves, who are stealing farmland, have counterparts throughout the mortgage banking and real estate industry. Judges in Ohio are leading the way in setting precedent on the issue of fraudulent loan servicing, property documentation and deed possession.

In several instances, Ohio judges have ruled that a bank cannot foreclose on property without the proper paperwork, encumbered deed, etc. The judge pushed the envelope in favor of property owners’ rights, by denying foreclosure on 11 properties seized by a German bank. And this is an irony, indeed, considering the latest foreclosure, sale and auction of a black family’s farm, where family members say they have proof that the loan was paid off 8 years ago.

The question is: will federal judges use this precedent and now rule in favor of thousands of black and white farm families whose land was seized and sold illegally, based on bogus debt and dubious documents? Now, farmers in the nation’s heartland are facing another threat, from still another foreign bank.

In what may become a showdown between American populism and Australian corporatism,
… privately held Great Western Bancorporation has just been bought by the National Australia Bank for $798 million. Great Western, chartered in 1907, is a successful byproduct of American populism. The NAB is a successful byproduct of Australian corporatism. (counterpunch.org)

This basically means that more than $2.6 billion dollars in loans are now in the hands of an Australian bank. According to the counterpunch article, the National Australian Bank is a complex entity, with net equity just under A$30 billion and is the largest of the 4 deposit taking banks in Australia. According to the article, “A relative giant is taking over a minnow.” (ibid)

However, that mighty minnow controls a lot of farm loan capital in the United States, making the nation’s farm belt extremely vulnerable to the loan policies of a foreign financial entity. That entity, according to Counterpunch,
…is a complex beast. The profit mass indicates that the bank must be doing something right. But the bank has its thick dark side. The NAB has been a persistent exemplar of managerial incompetence and malpractice. Do GWB management and customers know what is in store? (Ibid)

The writers argue that NAB and the American farm finance industry may not be a good fit, given the history of the organization. They point to several problematic NAB decisions, including the purchase of a now-defunct American mortgage processor:

In 1997, NAB bought a US mortgage processor called HomeSide. The presumption was that HomeSide's technology would provide a common platform across the bank's global operations and savings in home mortgage offerings. NAB was finessed by its vendor, as goodwill constituted 65% of the $1.7 billion purchase price. HomeSide was an early securitizor. But the model was both complex and fragile, and the value of the 'mortgage servicing rights' package underpinning block securitization varied dramatically with interest rate changes, supposed to be offset by sophisticated hedging. Losses escalated in the early 2000s. HomeSide operated from Florida (on the highest salaries in the entire company) without internal risk management procedures and without oversight from Australia. Homeside was eventually sold by late 2002, with NAB running up over A$3.6 billion in losses. Curiously, the financial brokers that took NAB into this fiasco, Keefe, Bruyette & Woods, are the advisors on the current takeover of GWB. (Ibid)

The company has been accused of a variety of questionable tactics, including: failure to check on actual ownership of busses in a A$44 million loan, nearly A$30 million dollars in employee loan fraud in Australia, and in Ireland:
A six year investigation by the Irish regulatory authority brought down a condemnatory report in July 2004. The authority's Director noted 'the report is deeply disturbing in revealing the extent to which illegality and bad practice was tolerated (and to some extent encouraged) within the organisation between 1988 and 1998'. Tax evasion was then widespread in Irish banks, but the NIB had institutionalized shonky procedures. (Ibid)

The financial health of nation’s Farmbelt is a national security issue. For a major component of farm financing in the Farmbelt to come under the control of a foreign entity with an alleged history of “institutionalized shonky procedures” should raise the alarm nationwide.

The nation’s farmers continue to endure fraudulent farm loan servicing, land theft, theft by document deception, and illegal land taking. Now that the loan servicing frauds are mainstream, and some courts are siding with loan servicing fraud victims, maybe things will change.

And, black farmers, they’ll be shouting, “We told you so” from the rafters.