Mortgage Liens On Our Lives

The home mortgage imbroglio resurfaced this week as news unfolded of what appears to be extensive fraud permeating the processing of foreclosure documents. In efforts to mitigate the damage caused by these reports, major institutions, including Bank of America, GMAC and JPMorgan Chase, have halted foreclosures, once again caught with their hand in the cookie jar.

The controversy centers on what is called “robo-signing,” a procedure whereby bank employees or third-party contractors make sworn statements as to the validity of the paperwork underlying a foreclosure. But even the documents that banks have been relying on to initiate foreclosure proceedings against homeowners are, well, unreliable, so foreclosure mills were enlisted to concoct them, cloaking lies with lies to protect the process. Before we adjure the state to fight for the little guy, however, we might survey the iniquitous scheme that allowed this mess to materialize.

The state’s outwardly inclusive furtherance of home ownership has had the predictable result of funneling property and resources to the patricians of the banking class. It was not to promote some hackneyed notion of “the American dream” that the state, acting through Fannie Mae and Freddie Mac, promoted home buying, but to enable financial institutions to prey on those who aspire to that dream.

Against this backdrop of escalating tension and anger at Washington, President Obama declined to approve a bill — the Interstate Recognition of Notarizations Act of 2010 — that would have required courts to recognize document verifications made in other states. As innocuous as the proposed law seems, arguably reflecting the need to diminish variation across state lines, its effect in practice would be to screen banks from culpability for passing dubious documents. As might have been expected, the House and Senate passed the bill both hastily and quietly, without so much as a suspicious look from the bootlickers in the Beltway media.

“[S]hortly before the Senate’s recess,” reports Reuters, “Judiciary Committee Chairman Patrick Leahy pressed to have the bill rushed through the special procedure, after Leahy ‘constituents’ called him and pressed for passage.” We often hear the Capitol’s moderate types keen over the specters of political gridlock and the lack of a combined effort between the parties, but the truth is that the political process is remarkably proficient in engineering results for the grandees of the parasitic class. So while Reuters reports the bill’s advance as “an unusual display of bipartisanship,” it is more accurately understood as a commonplace example of the unseemly state of affairs in government.

That sudden congressional passage of the bill comes in the wake of the evolving fraud story perhaps furnishes a clue as to the impetuses that motivate the legislature and the state at large. It is all but certain that, when the ferment around the story subsides even a bit, the President will sign the bill into law, saving the bankers from coming up with the legal instruments that would make an authentic case for foreclosure. Since the mortgage liens attached to the homes being foreclosed on were cleaved into securities — i.e., percentage pieces of ownership in special, tax-preferred trusts — even the financial institutions aren’t sure how to obtain the paper they need to institute proceedings.

The state, though, has no reservations about expediting the process, welcoming the terminal point in a project geared from its beginning toward transferring huge amounts of wealth and property into a handful of firms. The fundamental role of the state was therefore to distort the real property markets in a way that imposed the risk of defaults (witness the bailouts and taxpayer subsidies for Fannie and Freddie) on workers and producers, reserving the profits for the state-corporate establishment.

Those workers, the very same group of people who were ensnared in the state’s trap and who are now losing their homes, are compelled to continue drudging to buttress their rulers’ atrophic system. But, as is becoming apparent, this system, this arrangement through which the remorseless use of institutionalized aggression called “government” is rewarded, is increasingly unstable and unsustainable. It’s possible that, because of the continuing economic crisis, the miasma of deceit has begun to evaporate, exposing pieces of the truth and deteriorating the illusion that gives statism its life. We have reason to hope that the prediction of Anthony de Jasay might someday come to fruition, that “[p]eople will finally be stopped from claiming through politics what is denied them by economics.”

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