A new chapter in the Florida foreclosure mess has opened, as real estate scammers are renting out homes that are to be foreclosed, by posing as the home’s owner. In this case, a pair of cops were arrested for the scheme. This is possible, because it takes years to foreclose a home, thanks to the criminal activity of the banks themselves.

People who are caught up in the fraudulent foreclosure system, where the banks gave loans to people that they knew couldn’t afford them, so that those people could buy homes that were selling for far more than they were worth. The banks then paid appraisers to overstate the homes’ value, and sold the loans off to investors before the first payment was due by calling them mortgage backed securities. The securities were rated as top notch investments by ratings firms, even though they were subprime loans. They created a company called “MERS” to aid in obscuring the fraud by taking mortgage transfers out of the public record and hiding them in a maze of private files.

The homebuyers soon defaulted, crashing the economy, and the entire deck of cards collapsed. The banks moved to foreclose, but had destroyed the paperwork. A savvy lawyer working in Jacksonville discovered the lack of notes and mortgages, and people began fighting the foreclosures. The banks responded by “creating” and forging paperwork. Banks were reportedly calling this the “art department.”

They got caught, and lost quite a bit of money. In February of 2012, several banks came to a settlement with the federal government, where the banks paid $25 billion for wrongfully foreclosing on people’s homes. The agreement settles state and federal investigations finding that the country‚Äôs five largest
mortgage servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct.  Both of these practices violate the law. Federal and state governments received the lion’s share of the money, and only $1.5 billion went to reimburse the people whose homes were stolen through this fraud. The politicians are bought and paid for. Of course, the homeowners are still able to pursue their own court actions.

This had the effect of slowing the foreclosure process, because in many cases, the banks cannot prove that the homeowner owes them any money. So now the other scammers move in: people are posing as the homeowner of vacant homes (sometimes the banks themselves), and are renting them out and pocketing the money. It is an added slap in the face that some of the criminals doing this are also the very police that are supposed to prevent that sort of thing.