S2:E6 – Smoking Gun

The New Untouchables: The Pecora Files
Smoking Gun
August 15, 2021

 

[00:00:09.270] – Beth Jacobson [intro/music]

The loan officers were to target the ministers in the African-American churches and say that Wells Fargo is going to have a seminar there and invite your parishioners and anybody that either refinances or purchases, Wells Fargo would donate $350 to the church.

[00:00:28.750] – Lainey Hashorva [intro/music]

The bank will always say, “This call will be recorded for quality assurance purposes,” you know, but a couple of times I had said to the contact person, “I’m going to record our call as well.” And she’d say, “Then I’m not allowed to talk to you. I’m just not allowed to speak to you if you’re going to call.”

[00:00:52.950] – Eric Vaughan [intro/music]

In a world of elite criminals, only people of elite character can protect our system. This is The New Untouchables.

[00:01:04.480] – Steve Grumbine

So, folks, thank you so much for joining us again. This is season two of The New Untouchables: The Pecora Files. If you’ve been following us, if you aren’t moved to action by now, hopefully, this next panel will help you get there. Without further ado, Patrick, tell our audience who our guests are and bring us in.

[00:01:25.210] – Patrick Lovell

Well, Steve, I don’t know how you’re holding up, but I’m kind of emotionally distraught after all of the stories that we’ve had. And this next panel is going to be equally profound in blockbuster in a number of ways. Let me introduce you to two terrific women that I’ve had the great honor to come into contact with through this process. The first is Lainey Hashorva, and then Beth Jacobson. Lainey, I believe you’re coming to us from California, correct?

[00:01:53.110] – Lainey Hashorva

Correct.

[00:01:53.920] – Lovell

And Beth, you’re located in the D.C. area in Maryland?

[00:01:57.520] – Beth Jacobson

In Maryland. Correct.

[00:01:58.670] – Lovell

OK, I’m just going to provide kind of a brief overview here, and we’ll get the dialog going here. But, Steve, we’ve heard about this insanity in the courts, right? We’ve heard from our first section, African-American women that were targeted that wound up being in a police raid environment where they were forced out of their homes predicated on fighting foreclosures.

And suddenly they became a state threat. Right. And they had to be evicted. And none of these issues that we’ve heard throughout, it was like military operations that go into this situation and that’s backed up by courts that are hiding paperwork that we’ve heard about based on techniques of servicers and dual tracking and everything else.

Ultimately to find, like we just heard in the last episode, that, wait a second, none of these foreclosing parties even have the standing in court. They can’t prove it. But yet the courts are nodding and just going, “Hey, whatever. The system is the system. I’m going to give the nod to these financial titans and their representatives because they wouldn’t make this mistake.”

But we see over and over, not only do they make a mistake, they intentionally fabricated everything that went into this process to create this disaster that destroyed millions of lives. Now, in that context, we’re going to get even further detail about that. I think I’m going to start here with asking you, Lainey, because I’m familiar with your story and I’m familiar with your writings.

Your writings are fantastic. We’re going to be able to put that on the podcast. But give us an introduction to your story and what actually has happened to you and what you’ve learned along the way.

[00:03:30.420] – Hashorva

Well, it started out that I tried to refinance back in 2008 first, and I had just gotten a new job and everything and upfront money and stuff, but they kept saying, “We can’t verify your income,” which didn’t make sense to me because I showed them the contract for the job. I showed them the upfront payments, and then I showed them the paychecks that I was already getting for the job.

And I didn’t understand why they couldn’t verify. And then things started shifting where the economy started tanking and then I started applying for the Home Affordable Modification Program, the HAMP program that Obama put in place to assist homeowners to modify their mortgages. The servicers were supposed to modify qualified buyers, homeowners to keep them in their homes.

And I kept getting denied for crazy reasons, like reasons that didn’t even apply to my mortgage, like you failed to include your husband’s earnings, and I’ve never been married. And I kept getting that repeatedly or the fax wasn’t legible and I sent it in their FedEx pouch. And I kept thinking that I was losing my mind and I kept reapplying, reapplying.

You know, one time you didn’t put the number one in the top corner as to how many people in the house. So we have to kick it back and we start over. Then I would get underwriters that would go over my profit and loss statements for my small business, and they would say, “Well, no. We really need to put this in this category and this in this category. Oh. Now you don’t qualify.”

So they would like be hands-on. I was thinking they were helping me and they were actually throwing me out of the system. So I started feeling like I was losing my mind and . . . I was asking other people, but other people wouldn’t really talk about it, because it’s kind of embarrassing to talk about financial issues and financial matters and stuff, and it wasn’t that prevalent yet with other people started to go through these hardships as much.

And so this is like 2009. So I started thinking, “Well, I’m just going to keep reapplying. I’m just going to keep reapplying and I’m going to fill in every single T and dot every I.” And I still kept getting it kicked back. I still kept getting denied. And the servicing bank kept blaming it B of A owns your loan, but that wasn’t true, and I kept thinking, “well, how does a public bank or a national bank own a private mortgage?” So I kept thinking, “I’m just going to keep reapplying and fill out every single detail.”

And then I started feeling like I was literally losing my mind. So I built these networks on social media, on Facebook, and I started doing YouTube videos trying to make it sort of user-friendly for people to digest and understand as to what I was going through and to see if others were going through the same process or the same insanity. And then more and more people started to join my groups on Facebook.

One of them is called Fraud Closure Fighters. And I started thinking, “OK, I’ll build think tanks and I’ll keep reapplying and I’ll build my way of understanding what was happening on the responses that I was getting from the servicing bank, and I was dealing with Wells Fargo, as to seeing a pattern, if I could.” So I applied over 35 times over several years, actually, but I kept reapplying, and during that process, I got assistance through Keep Your Home California.

[00:06:50.280] – Lovell

Before you move on, I just have to pause for a second because I mean 35 times, 35 times. And the public record at that time, I mean. I almost went through the exact same thing in terms of just trying to scratch my head and try to figure out what the hell was going on with the system. And I remember nothing made sense. Right? I remember like, they told me, OK.

Wait a second. I’m talking to one set of people with the so-called servicer, which I had never heard of. Alright. I’m like, “Wait a second. Didn’t I sign my loan with Chase?” You know and I’m dealing with a servicer at that time, and yet none of the servicers would answer my questions. And so I get bounced around. And then they started saying things like, “Well, why don’t you stop paying your mortgage for  . . .

[00:07:29.720] – Hashorva

Exactly.

[00:07:29.720] – Lovell

. . .  and then you can reapply because that’s kind of where we’re at.” And I’m like, “Well, I don’t know anything about this, but I just went from, like, having a six-figure income to practically nothing in the collapse.” So I’m like, “Well, geez, that would help me out a lot. That’s great. I got this thing going again.” So then I find out later it wasn’t exactly that. I got set up in something. And then I’m like, “That’s what set in motion a TV series that we made called The Con.”

We went to the ends of the earth and back on season one to reveal what is the largest criminal conspiracy and cover-up in history. And yet there’s more. And so when you’re going through this, Lainey, and all of this stuff is happening, I’ve heard you say you thought you were going crazy twice. Give us a sense of the actual toll it was taking on you.

[00:08:15.800] – Hashorva

Well, because even friends were like, “Why would a big bank like that mess with you?” You know what I mean? Like friends were saying, “I think you’re a little nuts about this,” or even, “why this house? Why are you fighting for this house? Why don’t you just walk away and start over?” But I had equity in this house. This was my home. I bought . . . I put a lot of years and heart into this house.

But I kept thinking, “Why would a big giant bank mess with me?” But they did say, “Well, look, who are we going to help somebody who’s current on the mortgage or somebody who falls behind on their mortgage? Obviously, if you’re current on your payments, you don’t seem to like look like you need any help.

But if you’re, say, three, six months behind on your mortgage, then we’ll help you because then it looks like you have a legitimate hardship.” So [inaudible 00:09:01] I think, “Oh my God, who falls behind on their mortgage? Unless you’re just like,” and I was getting to that point because I was self-employed and I was also sick.

I was dealing with non-Hodgkin lymphoma. It was really, really hard, I was doing without everything else so that I could sustain the mortgage, and then when they said that, it kind of did make sense. OK, so, yeah, I guess I need to fall behind. Then if you’ll help me. That’ll make sense. So then I was still applying and still applying and then they were just throwing it back to me, throwing it back to me and denying that what I submitted was legitimate or that they wouldn’t understand because I was self-employed.

And I’m not a numbers person, but I was like, “But you guys are the bank. I’m doing everything you’re asking me – the profit and loss statement.” And I had also two other part-time jobs besides trying to run my business. And I was thinking, “But how come I’m approved by the state for hardship and funding and the bank won’t approve it for hardship and funding when they’re given the same numbers, you know as to Keep Your Home California and stuff like that?” And so I thought after a while, I’m just going to build my case on a pattern that I can help myself to understand in regard to the denials for modification.

[00:10:15.640] – Lovell

Let’s take a break there for just a moment because I want to turn to Beth and Beth again, thank you. Thank you. Thank you for being a part of our broadcast, because I’ve dealt with some of the most important whistleblowers that exist, ok. Most of these people are at the highest levels of what we’d call the C Suite access. Right. So we’ve got Michael Winston. He was at Countrywide.

He knew exactly what was going on with one of the most notorious villains of the whole story, Angelo Mozilo. And ultimately what that leads into with Bank of America. And then we’ve got Richard Bowen. Richard Bowen is at the apex of Citigroup, chief underwriter for Citigroup. The guy’s responsible for $80 billion a year, and what he discovers were securities that were not meeting their reps and warranties. What happens?

He goes to management. Well, you know, I mean, he’s as high management as you get. He goes to the board. He goes to the CEO of Citigroup, the largest bank in the world, who happens to be Robert Rubin. Robert Rubin, of course, was the former Secretary of the Treasury under the Clinton administration. Before that, he’s the CEO for Goldman Sachs. And he comes back and he’s now the chairman of Citi.

And he’s telling all of these guys predicated on the law, Sarbanes-Oxley, and stuff that came out during the Bush administration, “You’re on notice. We’re selling lies.” And what happens to him? They purge him. Now, people who have seen The Con, they know that. Hopefully, gazillions of people all over the country are going to see that. But now, America, you’re about to talk to a woman who is . . . Where Richard Boone is up here saying fraudulent loans are on our books.

Beth Jacobson is literally the top salesperson as a mortgage underwriter at one of the largest institutions in the United States, and she discovers through her process and methodology. Beth, can you please give us some perspective on who you are and what you know?

[00:12:09.630] – Jacobson

Sure. I worked at Wells Fargo from 1998 to December of 2007, and I was hired by Wells Fargo, despite the fact I had absolutely no mortgage experience at all. I had purchased a house that was the extent of my mortgage experience. But I did have a legal background. I was a paralegal and had been doing that for about 10 years.

So I just applied the work ethic that I had as a paralegal as to reading the underwriting guidelines as to what I used to do when I used to read the statutes for the laws for state and federal cases. So within two years, I became the number one producing loan officer in the state of Maryland. By my third year, I was actually number one in the whole country with Wells Fargo. And again, this was all new to me. So I read the guidelines.

I submitted loans that complied with the guidelines. I, literally it’s not rocket science, and I just didn’t submit crap. Well, basically, what subprime loans are is the crap. So all the other loan officers that they were hiring out there that basically were flipping burgers two days before were getting hired, this was like around 2004 because of the investor appetite to purchase these non-prime, these subprime loans.

So what Wells Fargo’s goal was, how can we get more of these non-prime, subprime loans in the door? Wells Fargo also had a program that they use. It was courageous underwriting. So Wells Fargo coined the phrase courageous underwriting to give underwriters the ability to go ahead and make loans, despite the fact that the system may internally be saying this is not a good loan.

And so Wells Fargo is saying, “Be courageous underwriters. Let’s go for as many loans that we can.” Wells Fargo was divided between prime and subprime and the difference other than just the loans that were originated, was how they were underwritten. So the subprime loans were typically underwritten. They started out in South Carolina. And so the underwriters there actually got bonuses based on the amount of loans that were funded every month.

So as loan officers, we knew if you wait to the end of the month and you have kind of a loan that you know is difficult, there’s a problem with the loan, you just submit it at the last minute and the underwriters going to approve that loan because the underwriter wants their bonus. Now, on the prime side, there were no bonuses attached to production.

I mean, that was obviously frowned upon because there’s an incentive to put bad loans into the system if you have an underwriter who is going to get paid to put that loan through. Now, what I did blow the whistle on was what Wells Fargo was doing, which is reverse redlining. Redlining started 1920s, 1930s. Actually, it was FHA loans where they literally had a map, put a red line around it and said, “OK, these are all the white people and these are the people we’re going to give loans for.”

And so a lot of times it was physical separation, like a railroad track. So they would give loans to people on one side of the railroad track and the other side they wouldn’t because they were predominantly African-American communities. And so the federal government made the decision that they were only going to lend money into these white subdivisions. In addition to that, when the homeowners obtained one of these loans, they actually had to sign an agreement that they would never sell their house to a Black couple.

So that’s kind of the things that was still going on even up until 1968 when the Fair Housing Act was enacted. So what Wells Fargo did in the term reverse redlining is that instead Wells Fargo targeted the African-American communities and they did this through the churches. So I was present on phone calls where Wells Fargo management discussed how they would go into Baltimore City, and the loan officers were told, and they were very specific about it, that if you were a Black loan officer, you were to participate in this.

And if you’re a white loan officer, you were not because Wells Fargo’s whole theory was that people should sell to people that look like them. And so they actually came out and said that. And so the loan officers were to target the ministers in the African-American churches and say that Wells Fargo is going to have a seminar there and invite your parishioners and anybody that either refinances or purchases, Wells Fargo would donate $350 to the church.

That in itself is not illegal or anything that’s bad about that. You can donate money to a nonprofit. That’s not the problem. What the issue was is the only loan officer that showed up to these seminars were subprime loan officers. So if somebody had 800 credit score, they worked for the federal government and can show their income through a W-2, they should have been put into a prime loan. Instead, they were put into a subprime loan.

And all of this started to unravel around 2009, 2010, when Baltimore City actually sued Wells Fargo for reverse redlining. The judge said, “OK, we can see statistically that more African-Americans have lost their homes to foreclosure when Wells Fargo originated the loan, but we need to know why.” And that’s when I stepped in and said, “Hey, I can tell you exactly why.” So my affidavit is publicly available online where I lay out the reverse redlining and the other things that Wells Fargo did.

So it wasn’t just the reverse redlining. It was how Wells Fargo set up a way to put people into stated income loans because stated income loans were considered non-prime loans, and there was more – they called it meat on the bone- meaning more money in the loan. So loan officers would get paid, and the system is called basis points, which a lot of times you’ll hear talking about basis points in the financial industry.

So typically on a prime loan, a loan officer makes somewhere between 35 and 50 basis points. And so basis point is really a percentage. So let’s say a half a percent of the 50 basis points on a subprime loan, you could make over 300 basis points. So you could see how much more money was available in the subprime loans.

[00:18:09.040] – Lovell

We go to great lengths to show why that is. That’s what we call perverse incentives. And so, Steve, to remind you of where we are in the food chain. You’re down here at the broker level that has incredible incentives, right, to put people in the worst loans because of what we’ve mentioned a few times in this conversation – yield, spread, premium. OK. So people are going to be making a lot more money by putting people in the worst loans, even if they are qualified for the highest loans, right?

[00:18:34.810] – Jacobson

Correct.

[00:18:35.530] – Lovell

That’s one level of deception. Now, the question most people should be asking is, OK, well, wait a second. Where does deceptive acts and practices fit in in the statute? Well, it does, but was anybody enforcing that? No, because people are making a lot of money and people are getting houses, too.

So, you know, a lot of people maybe weren’t paying attention to the minutia, if you will, of these contracts, because a lot of people were running and gunning. But we could talk about that later. The point is that in this particular case, that what Beth is revealing to us, right, is a methodology by the company that is coming from the top down. Would that be an accurate assessment, Miss Jacobson?

[00:19:13.220] – Jacobson

Absolutely. Because Wells Fargo had aggressive sales goals. If you were in the subprime division, you had to close three subprime loans per month every quarter or you were fired. So if somebody walked in the door and you’re on the third month of that quarter, and you’ve only sold two subprime loans, it doesn’t matter if that person can walk in and show all their money, can show bank statements.

It doesn’t matter. You want to put them into a subprime loan, or you’re going to lose your job. On top of that, Wells Fargo had said as a company that they wanted the subprime loan division to pay for the fixed cost of the whole company. And so that was an aggressive goal. And so you have to look at it, you have the loan officer and there’s so many layers at Wells Fargo then.

So you have your branch manager. You had your area manager. You had your district manager, all these managers, everybody made money on the subprime loans. And so they put it into the quotas for the management. If you were to get your bonuses, and these bonuses were well over $100,000 on up, if you didn’t find enough subprime loans in your area, you wouldn’t get the bonus.

So it doesn’t matter whether or not the people needed a subprime loan. There are certain groups of people that probably need to be put into subprime loans if they had bankruptcies or had other issues, but not at the rate that people were being put into subprime loans. So Wells Fargo got called on that by the OCC (Office of the Comptroller of the Currency) saying, “Look, if you look at the percentage of borrowers that are being put into subprime loans versus prime loans, there should be more of a difference. So you should have less amount of people being put into subprime loans.”

So then Wells Fargo put together what they called The A Paper Filter. And so they touted it to the OCC. In fact, the OCC said, “Hey, look what Wells Fargo is doing. They have this A Paper Filter. So that that way there’s a filter process to make sure that if anybody gets a subprime loan, they should get a subprime loan.” So then what happened? The next day there was a phone call with all the managers from Wells Fargo to say, “OK, this is how we get around The A Paper Filter and this is how we still get people approved for subprime loans.”

And one of the reasons was a simple one. If you were going prime, even if you could show W-2s, pay stubs and you had really good credit, if you couldn’t show where the money was coming from on a purchase, then that would automatically kick it to subprime. And so the loan officer said, “Tell your borrower that they can’t prove their assets.” And then borrowers would ask questions like, “Why am I not going to show my assets if I really can?”

And so the response was, I mean, Wells Fargo told you everything how to respond to all of this. The response is, “If we take you subprime right now, we can close your loan probably in a week. If you want to go the prime way, it’s going to take you 45 days, and you’re going to lose that house that you want.” Because you have to remember, this is when the huge housing bubble and everything started happening.

So 2002 through about 2007 people in some areas, especially in the D.C. metropolitan area, there was actually a lottery to get a number to even be able to bid on a new construction home. So it was crazy. You had to get approved so Wells Fargo could approve it quickly through the subprime division.

And so that was one of the things that were told that said, “Look, it doesn’t matter if you got W-2s, we’ll take you stated income because we can get you funded three weeks faster than we can in prime. And don’t worry.  Get in your house. Everything get going and then in six months, you can refinance.” But wait, nobody told them about a two-year prepayment penalty, which in some cases could cost $20,000 to refinance out of that prepayment penalty.

[00:22:30.880] – Lovell

OK, let’s take a pause for just one second because I want to try to fill in some blanks for you, Steve. OK. So at this time, it’s a race to the bottom. All right. So, you know, from a policy perspective like we saw in The Con, right, you get rid of Glass-Steagall first. Then you end up getting with the Commodity Futures Modernization Act. So what does that mean in terms of Glass-Steagall?

Well, now you got the investment banks with the commercial banks and they’re loading up securities that they can sell derivatives on without any regulation. So to put it into perspective, I think it was 1998 when Mr. Greenberger from . . . Oh, boy, what am I? She’s the queen of all of this to try to stop it. Anyway, I’ll come back to her, but it was like somewhere in the vicinity of $13 trillion dollars was being gamed in the derivatives market.

By the time you get to 2007 in the housing market, we’re talking $600 trillion, OK, in global market trades on stuff that’s based on what Miss Jacobson is talking to us about. OK. We’re talking about sawdust securities. Why? Because they were incentivized. The management top down control fraud what Bill Black talked to us about from day one, which is feeding the kitty for the CEOs, quote “modern executive compensation.”

There’s not alignment right with the way things used to work under the old rules. The old rules used to be like, “Well, OK, if you’re going to be an investment firm and you’re going to go big on something risky like this, well, you’re going to have your bottom line tethered to it. And if the ship goes down, you’re going down with it.” But in this particular case, Beth is going to tell us what they end up doing with it.

But I need to revert back to Miss Jacobson, and, Lainey,  I apologize for not bringing you in just yet, but I will. But, Beth, this really brings the goods on this because we need everybody in Congress to hear this. We need everybody to know what they were telling their brokers to do to get people approved, how and why, and all of the different methodologies you actually were aware of, if you don’t mind.

[00:24:26.520] – Jacobson

Well, sure. One of the things that they did for the stated income program and just for clarification, I was a Wells Fargo employee. I wasn’t a broker. So this is what Wells Fargo was telling their own employees. I know the brokers were told something similar, but that’s not the division that I was in. So we would have meetings, management would call meetings to train loan officers on how to calculate a stated income loan.

So the first thing that you would do is see, OK, this is how much house they want to buy. Let’s say it’s $450,000. You kind of reverse engineer it. You reverse the number to say, “OK, if somebody wants to buy a $450,000 house with five percent down, meaning it’s a 95 percent loan to value, what income do we need?” And so then you come up with the income.

You don’t ask the homeowner what do they make. You reverse calculate to figure out what income is needed to afford the house that they want to buy. We call it the Wal-Mart greeter loan. And the reason that is, is you have somebody that’s making minimum wage at Wal-Mart. And so you need to show that they’re making $8,000 a month. OK, we know they work at Wal-Mart. So what do we do?

We go to various online searches to see what people make in various management positions at Wal-Mart. It was salary.com, I believe. That was a website that Wells Fargo told us to go to. So we would say, “OK, well, if you’re a district manager at Wal-Mart in this particular area, you’ll make $8,000 a month.” So we put on the application that they were district manager at Wal-Mart and they’ve worked there for the past five years.

So then the processor, he was kind of the assistant to the underwriters, we were trained and were told you call over to Wal-Mart and you verify that that person works there, but you do not ask what their job title is. And they were specifically told that: do not ask for the job title. And so that’s how you get a Wal-Mart greeter into close to a half-million-dollar house.

[00:26:15.490] – Lovell

OK, and I got to take this as a point of demarcation too, Steve, because we know that millions of viewers out there have seen The Big Short. OK.

[00:26:24.190] – Grumbine

Um-hum.

[00:26:24.190] – Lovell

The way they provide The Big Short analysis is, OK, here’s a bunch of strip dancers that are pulling one over on the brokers. What you just heard from Miss Jacobson is that management was figuring out what they needed to code to be able to get that loan approved. And that’s what they did for the borrower in many cases without the borrower even knowing that. Isn’t that correct?

[00:26:47.740] – Jacobson

Absolutely, the homeowner didn’t know that. In fact, management said because the debt-to-income ratio requirement was 55 percent, they said, “Look, you want to make the loan look good so make sure your debt-to-income ratio is around 38 percent.” And so they actually had training seminars on how to do this. I mean, it’s basic math, but there were some people that didn’t know how to do that.

For example, there was one guy in the area that I worked, we called him Joey. And it was a reference to “Friends” where he was a good-looking guy, but clueless. And so it was like, we have to dumb it down so Joey can understand how to reverse engineer a stated income loan. And so they were very clear about it. Nobody was hiding what they were doing.

[00:27:25.510] – Lovell

Wait a second. Let me put this in, too because Bill Black always tells us, Steve, that they hired burger flippers and people would make, what, $18, $20,000 a year at that time period, and then they get jobs as brokers, and they’d make that much money on a deal, honestly.

I mean, the incentive structure was incredible. Sorry to interrupt you, Beth, but please take us even further, because what we’re talking about is what is baked in to the securities that these institutions unloaded on the world, which we call illegal reps and warranties, which, by the way, is illegal.

[00:28:00.960] – Grumbine

It’s a crime!

[00:28:02.230] – Lovell

Ain’t it? Full bit every step of the way.

[00:28:05.290] – Jacobson

When Wells Fargo went back, there’s a form called a 45O6T which pulls somebody’s income. And so I believe I’m going to estimate, based on the information that I’ve seen, about 60 percent of Wells Fargo stated income loans were off by more than 30 percent of what was stated. And so they knew that. And here’s the other thing that . . .

[00:28:27.910] – Lovell

Federal Crisis Inquiry Commission put that number higher. But that’s an aside.

[00:28:31.930] – Jacobson

And actually, if you look at the settlement that Wells Fargo did about two years ago, there was like $2 billion, all that information’s in that settlement. So Wells Fargo basically admitted to all of that if you read the fine print of that settlement.

[00:28:43.990] – Lovell

OK, I’m not aware of that because most of these I thought were deferred prosecutions and the statement of facts didn’t correlate to what you’re talking about. So you’re saying Wells Fargo admitted publicly to everything you’re saying and that’s publicly available?

[00:28:55.390] – Jacobson

Not to everything I’m saying, but about the stated income loans. Yes, there’s Wells Fargo’s internal testing showed that 70 percent of the stated income mortgages had a greater than 20 percent variance between stated income and the borrower’s actual income, with the excess of fake income to real income averaging 65 percent.

[00:29:15.460] – Lovell

In some of the stuff that we learned from Ameriquest, for example, it got so bad as to people literally cutting and pasting W-2s in places they call the labs just to get this stuff approved posthaste. Are you familiar with any of that happening at Wells Fargo by chance?

[00:29:29.470] – Jacobson

I am. And that’s actually in my affidavit. There was a group in one of the offices that were literally cutting and pasting W-2s. I reported it to management, to my boss. My boss reported it up the chain and nothing ever happened. There was a lot of things at Wells Fargo where I reported things that I saw happening that weren’t right, such as cutting and pasting W-2s, but Wells Fargo’s attitude on this and other things was until somebody from the outside brings it in, we will handle it internally.

And by handling it internally the person that was doing this, there was specifically three people that I reported on, none of them got fired. None of them got reprimanded. In fact, one of them made it to qualify for one of the big sales trips, you know, where they had Jimmy Buffett, Aerosmith, and various people playing at that. So that’s how he was punished. He got rewarded to be able to go on a sales trip.

[00:30:19.390] – Lovell

Weren’t you one of the top producers, too? You probably . . .

[00:30:22.570] – Jacobson

Yes. I was one of the top producers, right, but I didn’t cut and paste W-2s.

[00:30:25.920] – Lovell

No, no. I’m not trying . . .

[00:30:27.970] – Jacobson

But I’m saying that’s what they did. I called out a specific person and said they were cutting and pasting a W-2 and nothing happened. And so that was the whole attitude with Wells Fargo. Until a third party outside of Wells Fargo comes in and says . . . It’s like if some borrower came and said, “Hey, they cut and pasted my W-2,” then that borrower would be reprimanded. But as long as they could keep getting away with it, they wouldn’t be.

[00:30:50.230] – Grumbine

If you could fog a mirror.

[00:30:52.540] – Jacobson

Exactly. Right. We have a case that I’m consulting with an attorney in D.C. where it’s a Wells Fargo originated loan and the homeowners did not know that their income was inflated. She was a schoolteacher. They put on the application, which is the 1003 that she was a principal and that she made $10,000 a month, which she didn’t do. And she testified in a deposition that she didn’t see any of this information before.

And if you’ve ever gone to closing, there’s a stack of paper and they just turn up the corner. Sign here, initial here, sign here. You don’t have time to read all of that. So right now, we just survived a motion for summary judgment. It was against Wells Fargo and they tried to get the whole thing dismissed. And the judge said, wait a minute, which is from all the previous speakers that you’ve had, that’s different because usually, the judges rule with the bank.

So this is like huge. The judge said, “Wait a minute, I believe what this homeowner’s telling me, that Wells Fargo inflated her income.” And the other thing that Wells Fargo did and all of the lenders were doing this wasn’t Wells Fargo. It was all the lenders until the Dodd-Frank Act came in in January 2014. There was no requirement for the ability of the borrower to repay the loan.

Now, that kind of sounds stupid. Well, of course, you want the borrower to be able to repay the loan. But what they did, it’s Wells Fargo, Bank of America, all of the mortgage companies were doing this, if you just qualified them at the initial rate, as soon as the rate adjusts, you’re not qualifying them at that rate. And why would you do that? Because these loans were sold prior to they even went to settlement. They were presold.

They already knew which package they were going to. The banks had no skin in the game. So the whole thing was to sell these as fast as they could. And somehow if you got caught and there was something with the loan, like you couldn’t prove something, they put it with what they call the scratch and dent pile. And then you got you sold it and you try to stick it in with a bunch of A paper loans that nobody would ever notice.

[00:32:43.230] – Lovell

All right. I want to give Lainey an opportunity to chime in here now on a personal experience. And we’ll come back to you in a moment, Miss Jacobson. So, Lainey, let’s try to recap a little bit of what we just heard. We just heard that one of the mammoth institutions of this country had baked in, engineered policies by management to deceptively engineer approvals to bake into a system that they would unleash on the world.

When you’re a homeowner, you’re somebody who’s in your house, you’re a woman living your life, you think that I got a loan and in my loan, I got some difficulty like millions of us were at that time. I’m going to try to remodify a mortgage to something I could afford. You probably, like you said earlier, I think you said you have two or three different jobs at this time period while you’re trying to remodify, which, by the way, the Obama administration pretty much laid out to the world that we’re going to modify these loans.

We’re going to stabilize the market. Meanwhile, they told us, by the way, that it was $750 billion dollars in Troubled Assets Relief Program going to backstop the banks. But in reality, the figure was $29 trillion. And I’m going to break down what Wells Fargo got a little bit. But Lainey, you said earlier that you felt like you were going crazy. You said it twice.

[00:34:02.710] – Hashorva

Um-hum.

[00:34:04.140] – Lovell

After hearing this kind of madness, how could you not be crazy? Take me through what happens next in your story.

[00:34:10.260] – Hashorva

Well, then after I started to have more and more people join the discussions and the think tank networks I was building up, I started seeing that I wasn’t the only crazy one, that it was happening to so many people across the country and attorneys and journalists and consumers and so many people joining the groups.

And then there was this other division of predators that were trying to modify you for fees. You know, there were all these other groups of people that were out to get the homeowners, too, that if you pay me $5,000 or $3,500, I’ll make sure that you’re qualified for a modification, which never happened also. And then you lost more money and then you were set back further.

[00:34:55.440] – Lovell

Everybody’s running to like pile on, right?

[00:34:57.520] – Hashorva

Everyone’s running a scam. And the consumer is always the . . .

[00:35:01.650] – Lovell

The ultimate target.

[00:35:03.030] – Hashorva

Yeah, because you’re already vulnerable. You’re already battling something so epic you can’t even conceive of, you know, one of the biggest banks in the world. And then I started realizing, too, it wasn’t just the bank I was dealing with or the patterns I was dealing with. It was every bank. It was US Bank and Bank of America. And I sort of think are they all having committee meetings?

Are they all having conferences together? How are they all doing the same exact protocol to all these homeowners across the country? And it was more than I could understand. And everyone was talking about the note. They don’t have the note, so they can’t enforce the debt, you know, the person entitled to enforce the debt. But I didn’t want to go down that rabbit hole, which most people were going down to fight their foreclosure.

I just was building my knowledge and understanding as to what was happening with the HAMP program and why I wasn’t being approved because I was relentless. I mean, to the point that it was detrimental to everything else in my life. If somebody asked me how I was, I could only say Wells Fargo. I had nothing else to talk about, nothing else I could think about. If I got something in the mail from them, I would just go to bed. I would just go lay down and get under the covers. I was in a constant state of rage and then depression.

[00:36:20.970] – Lovell

I’m sorry to interrupt you, but I was just saying I’ve got PTSD just listening to you.

[00:36:25.230] – Hashorva

Well, even driving by a branch. But yeah, it was just constant. And then you feel like, too. You vent to your family. You vent to your friends and they can’t understand it and they keep thinking, why are you just pursuing this so much? And then it became more than about the house. It became about my sanity. It became about right and wrong, it became about what was fair.

It became about my equity. I had a lot of equity. This is the only thing I owned of any value to anything in the whole planet. And I’m stubborn. I’m so stubborn. I mean, to my own detriment. But another friend even said, “Well, it seems like you think the world’s supposed to be fair. It seems like you think people are supposed to treat you fairly. That’s not how the world operates”.

And I said, “But you don’t lay down. You don’t lay down, I’m going out feet first then because I’m going to be constantly proving this and I’m going to just build my whole knowledge of understanding on what I know is wrong and what I know is right.”

[00:37:24.960] – Lovell

I’ve got to interrupt you on there, though, is that that was exactly where I was. But I knew that there was no way in hell I could do this by myself. In fact, I gave up quickly. I’m a total wuss, to be honest, compared to you.

[00:37:34.710] – Hashorva

Most people give the key.

[00:37:36.210] – Lovell

Yeah, well, to me, I do think about systems. Right. And I knew this didn’t make sense. I’m a business guy. I know how things are supposed to work, how they’re not supposed to work. I know deception when I see it. And I knew that there was something going on, but it was beyond my wildest Hollywood vivid imagination. That’s why we made The Con. But then I got all the C Suite guys. I got all the guys from the Justice Department and the FBI.

[00:37:58.780] – Hashorva

Right.

[00:37:58.780] – Lovell

And the SEC. I got the AGs. I got the only RICO conviction in the entire freaking country that got this right on a small level. And here we are talking to Beth Jacobson. And I’m going to bring this back to you again because there’s more, Beth. Because what you’ve just emulated is the basis of everything. This is the kernel that grew into a nuclear toxic shitstorm that destroyed the world. But the bad guys who engineered this whole thing top down . . .

[00:38:25.380] – Hashorva

They’re thriving.

[00:38:26.880] – Lovell

. . .top down, not only got away with it, they quadrupled the profit margins based on these incredible numbers that came from the Federal Reserve to backstop the global calamity that they created. Now, tell me, am I wrong when I say the CEOs, based on your knowledge firsthand, knew what was going on?

[00:38:45.870] – Jacobson

Oh, absolutely. They knew what was going on. But this is what I don’t get. Tim Sloan was the CEO, Wells Fargo. Michael Hide was the CEO, Wells Fargo, and another woman, Mary Coffin. They all testified to Congress and said Wells Fargo didn’t do stated subprime loans, and they did. Dick Kovacevich who was the CEO up until I think about 2006, actually stated the stated income loans are liars loans and we never did them, meaning we Wells Fargo.

And it’s like they did them all the time. I was in a meeting with Dick Kovacevich in San Francisco and it was a subprime meeting and he was sitting there. In fact, I didn’t know who he was. I asked somebody said, “Who’s that really old guy over there? I’ve never seen him before.” And they’re like, “That’s Dick Kovacevich, he’s the CEO of Wells Fargo.”

He was sitting there in the meeting when we were talking about that the subprime division was going to pay the fixed cost for the rest of Wells Fargo. He knew that. But he’s out there testifying to Congress, as are the subsequent CEOs that Wells Fargo didn’t do stated income loans, and nobody got in trouble. They all lied to Congress. So what?

[00:40:02.440] – Intermission

You are listening to The New Untouchables, a podcast brought to you by a collaboration of the creators of the docuseries The Con and Real Progressives, a nonprofit organization dedicated to teaching the masses about MMT or Modern Monetary Theory. Please help our efforts and become a monthly donor at PayPal or Patreon, like and follow our pages on Facebook and YouTube, and follow us on Periscope, Twitter, and Instagram.

[00:40:57.090] – Lovell

So let me give you another example of how that works, Steve, in The Con, if you may recall, from one of our heroes, Mr. Richard Bowen. So we went 10 years after the fact to the Library of Congress, to the National Archives, and we were able to because Dick Bowen knew exactly where to look in the files and think about this in terms of like a process. Right.

So if you go to the National Archives, you have to scroll through thousands of pages of documents where you got to know exactly what the case files are to know what you’re looking for. Right. Otherwise, you’re going to burn through your time. I think they give you two-hour time periods. Nothing can be electronic. You can’t take pictures. It’s all done manually. Right.

And so literally, we go into the National Archives and it was a miracle, really. I opened up one of the files that Mr. Bowen needed to look at, and I opened up to the actual date that the board of directors were meeting on the emails that Richard Bowen was sending to the board and they were all under Sarbanes-Oxley, OK, including incoming board chairman.

Like I said earlier, Robert Rubin, who is one of the kingpins of finance over the last 30, 40 years until he made away with $140 million as a result of all of this stuff. But the bottom line is the way that they maneuvered was that Bonnie Howard, who was, I think, the CEO at the time, basically when they got Dick Bowen’s emails. So they didn’t necessarily have to inform Robert Rubin before he was named chairman, which would have made him basically the linchpin of what Sarbanes-Oxley was all about.

So I’m using that as another primer to give you another parallel of what was taking place at Citi, which, by the way, made out with $3 trillion dollars as a result of them not getting nailed for all of these illegal reps and warranties that they unleashed on the world. And so, again, I need to remind the viewers that here’s Miss Jacobson, who’s inside the belly of the beast, telling you that the top management knew and then they lied to Congress.

Why would they lie to Congress? Well, based on my numbers, what I think I’m seeing, and this was produced by Better Markets, Wells Fargo is way down in terms of how much they got and compared to other agencies that they got over $200 billion in emergency bailouts at this time period to cover up for these lies that you’re talking about, Beth. So does crime pay in the United States?

[00:43:20.760] – Jacobson

Apparently so if you’re a banker, but you have to look at these bailouts. So the number you just quoted that Wells Fargo got in the bailout money, if you think about it, why did Wells Fargo get all that money? Because these loans were sold on the secondary market. They didn’t own these loans, but they got bailout money and so did the other originators that were now servicing the loans.

Like in Lainey’s situation, Wells Fargo was making more money to keep her in loan mod limbo, because I think the federal government at that time was paying $1,500 for any servicer that modified somebody into a HAMP loan, $1,500. The servicer, every time they touch the file, they send a letter, they have a phone call with Lainey, they were adding to their bill.

And so they’re not going to get paid on that until they foreclose. So, their ultimate goal is to foreclose and they probably make about $8,000. So if you can make $1,500 or  $8,000, what are you going to do? They’re going to make the $8,000. And then you multiply that over the hundreds of thousands of homeowners that were denied loan modification. And the way that HAMP was set up, is it it was an agreement between the Department of Treasury and the banks.

And so the homeowner, they were not a beneficiary under the HAMP agreement, so they couldn’t sue under HAMP. And HAMP was never enforced. You have to go to the Department of Treasury to get it enforced and they weren’t going to enforce that. The only case law that finally came out of there, and I think it started in California, was that if a borrower made all three of the trial period payments, and then the bank rescinded on that, then you could get them for violating contract law.

[00:44:54.060] – Lovell

Well, I’m glad to know that because I paid for 36 months on a so-called trial modification before they pulled the rug out from underneath me because they screwed up my paperwork with somebody in Ohio. At that point, I just threw in the towel just to kind of bring this full circle to go to where Lainey is because Lainey, this whole madness in terms of like the modifications and having to be relentless in this whole thing, how much of these pieces of the puzzle as a let’s call it pro se at that time because I don’t think you have a whole legal network behind you at this point, do you?

You’re fighting on your own with other people in your same thing and you’re learning. How much are you learning about all of the dimensions and the degrees of criminal activity? Let’s call it for what it is. Fraud is theft by deception, my friend. And so this criminal activity, how much did that juice you to make sure that you were going to find a way to win no matter what? And how did you do it?

[00:45:44.820] – Hashorva

Well, the thing is, too, that they would deny that they ever told you to fall behind. They would deny insistently that they never told anyone to default on the mortgage, but I took names. I took notes. In California, you’re not allowed to record phone calls, unfortunately, with people. The bank will always say, “This call will be recorded for quality assurance purposes.”

But a couple of times I had said to the contact person, “I’m going to record our call as well.” And she said, “Then I’m not allowed to talk to you. I’m just not allowed to speak to you if you’re going to record the call.” So I just kept notes. A couple of times, too, I cured the default. They told me you have to be behind in order to qualify for assistance. And then I cured the default because I was so afraid and I didn’t understand that they were always giving me conflicting information.

They’d say one thing on the phone and then contradict that in a letter. I would even get backdated letters from a year prior, like the document would say, April 2014, but the envelope would say April 2015. So I learned to keep all those documents and envelopes and it was literally The Twilight Zone. I just kept thinking there’s got to be a crack in the law. There’s going to be a way that I can penetrate. So the more I talk to other people.

And then I was also involved in a working group on LinkedIn with the head of the OCC at the time, Joseph A. Smith, who was appointed by Obama to implement metrics for the servicing banks. And I was one of the only consumers in that group. They were mostly attorneys and consumer advocates and things like that. So metrics were being implemented by what I was saying that I was going through.

But then I thought, I’m kind of helping the bank if I’m helping this guy because this guy was really not overseeing anything or making things right with the servicing banks. He was kind of giving them the information to sort of secure their system, which was set up to foam the runway for the banks and not implement the Home Affordable Modification Program to keep consumers in their homes.

[00:47:49.460] – Lovell

You just nailed something that we really need to emphasize, because Timothy Geithner himself said, and I believe he may have said it on 60 Minutes. Maybe I’m conflating that with another quote of his, but he said, “We’re going to foam the runway with homeowners.” And what you’re telling us is exactly what that meant. And then, of course, we have all of these trillions of dollars that came . .  Convey to us how frustrating is it, Lainey, for all of us, really?

[00:48:13.850] – Hashorva

[inaudible] People have taken their own lives. And I was trying to convey that to my family and my friends that it was so immense and you feel so pummeled, let alone by trying to make a living and pay your other bills and have any kind of life. My work was creative work and I had no capacity for creativity or creative thinking or output because I was so obsessed with survival and with the literal, primitive feeling of keeping shelter, keeping my home. But then I realized, too, they’re bastardizing the system.

They’re bastardizing the system that was set up to help the homeowners so that it would only help the banks. Like I said, it didn’t matter if it was Wells Fargo. It was also US Bank, B of A, Citibank, Chase. All of the banks were doing the same exact thing. And I think that they keep it shame-based so that often people don’t want to talk to each other about their financial hardships or about what they’re going through because they’re embarrassed or no one wants to talk to each other at a cocktail party that they’re losing their home.

But that’s what was happening. It was all I could talk about. And people would say, “Me, too. Me, too. Me, too.” You know, and I thought, this is too crazy that everywhere I go, everyone’s losing their homes and most people are just giving short sale keys. And there was no way I was going to give up. And so I became an activist and I started joining these networks.

I met Beth through the group that I created on Facebook, and then I connected to more and more people. And then journalists started joining my group and started asking me, “How do you think this is structured? How do you think it works?” And obviously, the fish rots from the head down. So they were asking, just like the sales quota scandals of eight is great and stuff like that.

They wanted to see, and I always wanted to see: How do you get normal, working people that are so-called otherwise decent people to be complicit in causing so much anguish to people? So many people were taking their own lives. The journalist from Reuters that came to my home from Washington, D.C., said my uncle took his own life for what you’re dealing with, and he only covered these issues with the bank to other journalists.

He had asked me questions and joined with the groups, but didn’t want to be public or known to be in the group. So they were just flies on the wall to monitor what people commiserated about and what people shared in terms of fraud and information.

[00:50:37.730] – Lovell

See, this is what’s so crucial to understand for the audience. Right. And I got to ask a compounded question and I need to direct it towards you, Beth, because Lainey baked in the question that all of the victims were asking is, how do you get normal or otherwise decent people potentially, and that’s a broad swath when we’re talking about people motivated by . . .

[00:50:56.200] – Hashorva

Worker bees. They’re worker bees.

[00:50:59.430] – Lovell

They’re motivated that you’re going to keep your job if you hit the quota. That’s how to proceed. I want to further that because there’s more to the story. But what I want the audience to understand here, and this is really the whole point of The New Untouchables, ok?

It is the whole point of The Con. I found out that we the people, unfortunately, had to take it upon ourselves and put it on our shoulders to do the freaking work of the FBI, the DOJ, the SEC, and all of the AGs around the country . . .

[00:51:28.480] – Hashorva

And be a lawyer, too.

[00:51:30.100] – Lovell

And be a lawyer and everything else and to do the investigation that the country failed to do because it’s utterly corrupt. OK? Now, I hate to say those things because I couldn’t say that 10 years ago because I used to believe in the system. Right? I used to believe in the integrity that no good people can’t be complicit in a massive conspiracy of crime that would make me out to be an asshole. Right?

That’s Alex Jones, man. That’s all these freak shows that are all over the freaking Internet. That’s Jimmy Dore, my friend, responding to whatever in the 24- hour echo chamber. You know what we did? We went on a nine-year freaking journey where we went to the greatest minds in this country. The criminologist Bill Black, who is an American hero put 30,000 criminal referrals in the pipeline during the S&L crisis.

He could have single-handedly handled this whole thing by himself because, as he puts it, as Beth is showing us, this is the easiest crime in history to prevent if you know what’s going on and you look. We heard over and over and over, how do you get a loan that’s worth $40,000 one year to $150,000 the next year? That doesn’t make sense. What about the appraisal? Who’s the underwriter who’s approving this and so on and so forth? Right?

[00:52:41.230] – Jacobson

Well, one thing I just wanted to say when you mentioned appraisal is most people don’t realize that Wells Fargo own their own appraisal company. Bank of America own their own appraisal company. So when I was at Wells Fargo and if it was a purchase, you had to send it to a specific appraiser that did appraisals for that specific subdivision.

And some that were in the Maryland area, new home constructions were increasing $10,000 a month in value. That’s not sustainable. Obviously, that’s leading up to a housing bubble. And so these appraisers knew that if the loan officer said, “Hey, we need this house, even if it’s on a refinance to come in at $300,000 so they can get 80 percent loan to value,” the appraiser would artificially inflate it to be able to do that, or else they would not get another appraisal when the loan officers would complain.

[00:53:29.440] – Lovell

In The Con, we went to a conference in San Antonio where like 90 percent of the people were forced to play ball with the lenders otherwise they wouldn’t get any jobs.

[00:53:37.810] – Hashorva

Or blackball.

[00:53:39.250] – Lovell

Or they’d be blackballed. So, again, Steve, you’re looking at this composite, right? You have the top legal minds in the country, some of the best executives – Richard Bowen and Michael Winston. Winston is like three degrees of genius. Right? And he just said, “This is incredible.”

And he goes to stop it and he gets flushed out of the system. Here we are seeing the same thing over and over and over. And somebody like Lainey is telling you from the bottom or I don’t want to say the bottom. I’m sorry but in just a regular person dealing . . .

[00:54:06.940] – Hashorva

From the grassroots level.

[00:54:09.730] – Lovell

Grassroots level. You went insane because of all the deception, right?

[00:54:13.230] – Jacobson

But see, the crazy thing was with these loan modifications, I was just telling you earlier how we would steer people into subprime loans. I at one time closed a loan in 48 hours. So the whole loan modification process was exactly the same as the origination process. And I didn’t work there. I left Wells Fargo December 2007, so I was not there at the time that HAMP got rolled out.

However, I’ve been assisting homeowners since 2009 even got a congressional award for assisting homeowners facing foreclosure. And that’s why I got so frustrated. Like I know what the underwriting guidelines are. I know what the HAMP guidelines are. If you submit a HAMP application with everything that you need – [inaudible] to send your letters to the bank statement, whatever, but you get everything and you get what’s called the full package, they can have that completely underwritten and done in seven days.

So what they did in Lainey’s situation and the other situation is they would do it by piecemeal. So she would send in an application. They’re like, OK, look, we have our pay stubs. Let’s check this back in 30 days. They’re going to look in 30 days. Oh, look. Now, her bank statements are 30 days old, so we’re going to tell her she needs updated bank statements. So then she sends in the bank statements. Oh, look, now her pay stub is old. Oh, look her hardship letter is old.

And it’s like or the 4506T. It’s like, come on. It’s the 4506T for that tax year. It should be good for 12 months. So that’s what they purposely did. So again, I wasn’t working there, but I witnessed it from the other side. I helped hundreds and hundreds of homeowners obtain loan modifications. I testified in court and then one thing when I testified in court, I come there with my calculator and I run the numbers.

And the best response I want from a judge is to say to the lawyer for the bank, “How come she says that this loan modification works and your client says it doesn’t? Explain that to me.” And so I’m just a numbers person. So if you look at the numbers, I would say 99 percent of the people that are denied for a loan modification, they were not denied because they couldn’t afford the modified payment.

They were denied because there was a missing pay stub; the 4506T did not have the right box checked. It was all due to missing paperwork and not due because they did not qualify for the loan modification. But the homeowner doesn’t understand why they got denied.

[00:56:19.200] – Lovell

Well, and the absurdity of that is just go forth with, Steve, because in the run-up to this whole madness, they approved everybody no matter what. Right? And then ultimately we get the systemic theft. I got to direct this towards you because right now the Supreme Court is listening to a case based on presumption of fraud on the market in Goldman v Arkansas Teacher’s Pension Union and the Pipefitters and Plumbers Association of America on a class action lawsuit where the court is not listening to these facts.

They’re not listening to the fact that what you just said, Miss Jacobson, that they lied, stole, and cheated their way to approving every single loan, as well as document fabrication in many cases because they were incentivized to do so that was laid down by the damn management because of these incentives to ultimately railroad everybody.

And oh, yeah, by the way, Goldman Sachs shorted this stuff to the tune of well, I can tell you that John Paulson, who hand-picked the mortgages, which are the type of mortgage you’re talking about, that were baked into all their shorts and abacus and everything else that railroaded the Arkansas Teachers Union.

I mean, the most vulnerable among Americans are the ones who got destroyed based on this predation. Did they get modified like you just told us, Miss Jacobson? Many times they didn’t. They had to reach a threshold after this madness of getting into a loan. And they were all working like Lainey, two, three jobs to come up with . . .

[00:57:40.710] – Jacobson

If those people did get modified, they often added like a $200,000 balloon payment due at the end of the term of the modification, which didn’t have any kind of math to it so that you could eventually get foreclosed on in 20 years or ten years, whatever the mod was. But they were out on this balloon payment. They couldn’t even account for.

[00:57:58.980] – Lovell

Which is the same stuff that they did in the run-up, too, and the scope of the negative amortization and

[00:58:02.830] – Jacobson

Right.

[00:58:02.830] – Lovell

. . . .blah blah. There’s like 15 ways to Sunday that you can make this stuff happen. Beth, just to the jury of the American people: How absurd is it that the Supreme Court of the United States is literally listening to this case involving what some people used to call Government Sachs? Right? This isn’t hyperbole. It’s because they have so many relationships with people at the DOJ or within Treasury or whatever the case is.

And they can just look over here, let’s not look at the facts. And by the way, Steve, this is the other thing we’ve learned in this whole mission, that this was all baked in the system to begin with, because back in early 1994, you remember when Bill Black told us that, “Oh, wait a second. You’ve got to get rid of the class actions.”

Right? You can’t have class actions. That was the idea. So get rid of the discovery. You remember that? And actually, Clinton tried to veto that, but the Republican Congress got it through. So you can’t get discovery in these cases. Then they got rid of what Bill Black’s framing has always been, deregulation, desupervision, and decriminalization.

So therefore, you know, ultimately without regulation, you have this madness, right? Desupervision, of course, when you have the perverse incentives, you’re going to weaponize and agonize and nuclearize this pipeline of deception. And then you can short it every which way to Sunday and everybody’s in on it and the financial system and government protecting it.

But the consumer, the citizen is basically being led to slaughter and then desupervision, decriminalization. Then ultimately you don’t get the facts. You don’t go to the DOJ with a RICO conviction, because if this isn’t RICO, what else is? Because at every single level it was organized.

What Miss Jacobson is explaining to us and we’ve got the evidence all the way through for the largest criminal conspiracy and cover-up in history. I hate to continue to beat that path, but I just need the viewers to understand, especially those that care about economics, Steve, the numbers that we’re dealing with. This whole thing was whitewashed based on getting the money from the Fed to backstop it all.

[00:59:53.790] – Grumbine

Well, I’m glad you said that because I want to jump in there. The neoliberal framework that we’re living in right now has eliminated public spending from the equation. Public spending that occurs is usually on the military or it’s on some sort of bank bailout or it’s on some other thing that has nothing to do with you and I.

We fought just for some pandemic payments, if you think about it. OK, so ultimately, the way the federal government’s creation of money process ensues is to maintain the system as is; to keep the people in power as is; and to keep the people on the bottom to constantly be the chattel that keeps the system flowing. OK. So what you’ve done here is you’ve demonstrated clearly that the Fed backstops the operations,

[01:00:42.630] – Lovell

Criminal behavior.

[01:00:44.160] – Grumbine

. . . but specifically, though kings of industry represents the big names over here. It does not represent the little people. If you flip that script around and bailed everybody out that had an underwater mortgage, wiped it out, made a clean debt forgiveness jubilee, then what happens? Those payments would still have gone to whoever owned those things if it was legitimate. Right?

So the fact of the matter is this particular setup starts with two things because it doesn’t just happen in housing. It happens in a lot of different ways. And we see it in student debt. We see it in a whole bunch of new debt instruments that they use to ensnare us in. And what happens is the federal government stops spending on the people.

Pushes us into Wall Street’s arms, and then Wall Street runs its schemes. And it happens over and over again. So this recipe for fraud and all the other things that you’ve heard from Bill Black and all of our wonderful guests, this all starts with a lack of understanding how the system itself works irregardless of which fraud mechanism they’re using.

It starts up here. The fact is we convince everyone that the government’s broke, that it can’t afford to help people, that it can’t do anything right. Then we convince people the Federal Reserve is a private bank so that instead of us understanding that Congress itself could take care of this. “Oh, no, it’s this private thing over there.” And so, once again, hands off.

We can’t do anything about it. Every step along the way, they make it appear like the government is feckless and unable to do anything about it as they strip away the deregulation to the point that you made. And then you start going through that recipe that you laid out. But it starts before you ever get there by making the government seem inept, broke, unable to pay its bills.

[01:02:33.400] – Lovell

Look, let’s flip that for just this one second. Right. In the old days, the idea is supply and demand. You’ve got a job. You build your credit. You’re creditworthy. You’ve got longevity. You come down with a down payment to buy a house, to build a family. Yeah, you’re a consumer, but you’re also a citizen. There’s laws to protect folks.

But the idea is that you grow in time and effort. You build the family. You send them to college, whatever. The value of that home grows over time. And the machine makes a lot of sense. Right. But in this particular case, 40 years of neoliberalism, like you call it, we’re going to get into the ideology of the whole thing. We shot down the middle class.

We basically got rid of the Golden Fleece manufacturing. And to be able to develop that situation and we’ve financialized the world in which we live in, but which a lot of people are kind of aware of that. And they also know that the system’s corrupt and the bad guys get away with it. But what they don’t understand is who did what, when, and how and who covered it up until now.

And so we have regular people telling you their horror stories. But now, Beth Jacobson, I’m going to send it to you because we’re going to have to finish up this conversation. And then I want to give it to Lainey for some final thoughts to just really bring us home, Lainey, in terms of the emotional problems. But first to you, Miss Jacobson. Again, you’ve seen a lot of the stuff in between.

It’s beyond most people’s capacity to think that our system that we believe in could seriously operate with such illegal perverse incentives. And then that would ultimately incentivize and the bad guys got away with it. That is so un-American. And my question to you is: What do our viewers have to come to grips with to understand that this whole thing was designed?

[01:04:08.830] – Jacobson

Part of what I do is train attorneys across the country in foreclosure defense, and the first thing I say to them is you cannot defend a homeowner in foreclosure unless you understand that the banks will lie, they will cheat, and they will submit fraudulent documents into the court because that’s the way that they’re set up.

That’s how they keep winning with these documents, fraudulent documents, and they set the borrower up for failure from day one. And the frustrating part is, is I can look at somebody whose loan was originated in 2006 and I can see that they were put into a predatory loan, and maybe they’re African-American. And so there’s other issues.

African-Americans are 70 percent more likely to be foreclosed on than white Americans. And you see all of this happening and you get to the court and the court is like, “Well, the statute of limitations is blown on that. You can’t bring that up. All we’re concerned about is that the homeowner didn’t make their payments.” Right?

And so I see my job as when I testify as an expert to say, “OK, but they submitted an application for HAMP 35 times. If you look at the numbers, they do qualify,” is to try to get a level playing field because there is not one. When you walk into a court, assuming that’s even a judicial state. Most states are not judicial foreclosure states.

You’re walking in there with the judge predisposed to rule for the bank. And the other thing that I want to state is we’re not talking about old news. With everything that happened with the pandemic and the CARES Act, the CARES Act allowed forbearances on federally backed loans, that’s only about 50 percent of the loans that are on the market.

That means the other 50 percent of the loans that are out there, there were no protections unless there were some individual state protections. The Office of Government Accountability check on many of these servicers and they found that 90 percent of the servicers had incorrect information regarding FHA loans on their websites. The rate of delinquencies on FHA loans is now at a greater level than what it was during the Great Recession.

And so people are talking about, “Oh, we’re not going to have the same issue with foreclosures like we had in 2009 all the way up to 2015, 16, 17.” I think we are going to have issues with foreclosure. The laws haven’t changed. The servicers are still doing the same thing. The servicers are lying. And I’ll go back to our good friend Wells Fargo here.

Fannie Mae came out and said, “If you were delinquent prior to covid, you still qualify for forbearance, but you could only get a loan modification if Fannie Mae made an exception.” Wells Fargo is telling all the borrowers that it’s a hard no. You cannot get a loan modification if you are delinquent prior to covid. That’s not true. So that’s the first lie that they’re starting out with. So there’s going to be issues with all these homeowners.

And remember, only 50 percent are protected under the CARES Act that went into these forbearance programs where some of them are six months forbearance. Guess what? Month seven you owe all six months, plus the seventh month, all in one lump sum. And if you don’t do that, you’re going back into foreclosure. So we’ve not learned anything from what I can see.

The servicers feel more emboldened to do whatever they want because they’re winning. They’re going to do the whole thing that they did to Lainey. They’re going to drag it along for one or two years so they can make a lot more money when they foreclose. They’re going to get their golden egg at that point. And when there’s a foreclosure, the first person that gets paid, it’s the servicer, it’s the trustee/ attorneys, and then it’s the investor.

And so the servicer has a vested interest in foreclosing, but they want to drag it out as long as possible so they can start making more money and they make more money in servicing the loans than they do on loan origination.

[01:07:40.780] – Lovell

This has got to stop because they don’t have the frigging standing to foreclose in most of these cases, or they’ll document fraud, all the rest of it. They’re not being held to account. There’s no enforcement. We have the National Mortgage Settlement where they laid all this stuff out in the statement of facts, and then there was no enforcement after the fact.

And so it goes on and on and on. And we’ve been on this call, Steve, for quite a while. But I’ve got to turn it over to Lainey for some final thoughts here. Beth, is there anything that I’m missing that we need to contextualize based on the evidence that you have in terms of the formulation of the lying, stealing, and deceiving, in terms of documentation and all of the other craziness that’s involved with putting criminal activities into the securities?

[01:08:19.630] – Jacobson

There’s just so much out there. I mean, literally, I could have another two hours to go over all of that. The one thing I want to say to homeowners is most homeowners are right. They know that something was done wrong. The issue is they can’t pinpoint it.

[01:08:32.530] – Grumbine

Right.

[01:08:32.890] – Jacobson

And so you need to go to somebody that’s an expert in the field, find out what was done wrong in the loan because there’s so many people that I’ve helped. And I’ve been doing this since 2009. It’s usually the first statement they say is, “Thank God. I thought I was crazy. I knew something was wrong, but I didn’t know what it was.”

[01:08:48.940] – Lovell

Lainey, let’s take it full circle to your experience. After all this horrible marathon of the pain and the suffering and everything that you’ve gone full circle and there’s more, but we’re not going to talk for another 10 hours. Just please get it out.

[01:09:03.460] – Hashorva

In terms of reframing it for myself too, to not want to die or get sick again. I was thinking that this level of stress was going to make me get sick again, and that was the last thing I wanted. I didn’t want to die for this house or this battle. So I tried to reframe it for myself. I called it warrior training and I just thought, I’m just not going to give up.

I’m going to join forces with other people that know how to fight professionally, I guess, activists that professionally fight. And I’m going to learn from them. And I was elevated by them. There’s a group in Los Angeles, I lived in Los Angeles for 38 years, called ACCE, Alliance of Californians for Community Empowerment. And I joined forces with them and they would elevate me.

And then my activism brought further harassment from the bank because I was so vocal and I was so relentless. I did 21 YouTube videos and I got locked in the bank because we brought our protest actions to disturb and disrupt business. So when we would do that, I would get a call from the bank and it would try to discuss with me what it is I wanted to do.

And I kept bringing back the point of I was qualified for assistance and all I wanted was to keep my home. I think that you just have to bring the fight directly to the bully and you don’t back down and you disrupt business. You harm the brand, but you got to know how to do that. And the only way you can do that is to align yourself with others.

And in the networks that I joined, I was amazed at the choreography across the nation from Washington, D.C., Chicago, New York, Los Angeles, in people that are grassroots organizations that would come together and coordinate these activist movements against these banks who not only are harming people in foreclosure but in terms of the NRA and the private prison industry and the Dakota Access Pipeline, all these activities that the banks are invested in.

And I was flown to Des Moines and I brought my case directly to the CEO in front of 500 shareholders because I had a proxy ticket that was given to me through these groups that I joined forces with. And I was coached and I was prepared and press was there. And I told them what they were doing to me and what they were doing to so many other homeowners.

I spoke on behalf of so many homeowners across the country and that I could show systemic patterns in what I’ve learned as a layperson in my own battle. And I wasn’t a person that was upside down in terms of the equity of my home, because a lot of people like that got modified. I had a lot of equity in my home, which is why I couldn’t walk away and I didn’t want to walk away or lose that because it was my future.

[01:11:47.160] – Jacobson

I just found out recently from Wells Fargo, they had internal guidelines that said if the borrower had equity in their home, they would not do a loan modification. They wanted to sell the house. And I kept saying, show me where that is in the HAMP guidelines. And of course, they can’t. So that just shows you how insidious this was. You had equity and I heard that. But until I got that from somebody at Wells Fargo just within the past six months . . .

[01:12:14.520] – Hashorva

Especially in Los Angeles, where the inventory was very small and the rent and the housing market is so incredibly high, I bought my house 20 years ago and I got in on $217,000 for this sweet little 50s cottage-style house that it was worth $750,000 last year. So I wasn’t going to walk away from that. It was the only thing that I had. I was going to start pushing a cart down Ventura Boulevard?

I mean, I wasn’t going to walk away from that. And I kept saying, I don’t understand. I’m doing everything right. And again and again and again I’m doing everything right. And I qualify. And Beth was going to be my expert witness. And she could attest to the fact that I qualify years and years and years ago. But it came to the point where it wasn’t even about the house anymore to me. It was like a knife fight for my soul. That’s what it felt like to me.

[01:13:04.110] – Lovell

I really appreciate you saying that because that’s what it is. It’s a knife fight for your soul and you’re doing the dance with the devil. The way I framed it from the beginning was, because I’m in the film business also, obviously. And I framed it with two films that inspired me back in the 90s when Kevin Spacey’s character in The Usual Suspects, when he said the greatest trick devil ever played was to convince the world he didn’t exist.

And I channeled my inner Ezekiel Rawlins from Devil in a Blue Dress and I said, “I got tired of them pissing on my head, telling me it’s rain.” And here we are, Steve, this many years later, citizens, right? I’m a citizen of the United States of America and I do believe in liberty and justice. And I’ll say this in closing. You know what this whole thing taught me guys?

It taught me what the Pledge of Allegiance should read. I’m going to quote it for you. This is the Pledge of Allegiance to me. “I pledge of Allegiance to the flag of the corrupt and perverse states of America, and to the financial system for which they serve; one nation in the dark by way of deception, with liberty and justice for those that stole it.”

[01:14:01.570] – Hashorva

Um-hum.

[01:14:01.570] – Lovell

Put that on the door of your house because, Steve, you’ve learned a lot, man. Tell me what world we live in. What does somebody like AOC, Bernie Sanders, Elizabeth Warren, who know all of this stuff, I don’t know about AOC, but Bernie certainly does.

Elizabeth certainly does. After everything you’ve been in the trenches on since 2016, do you have a different sense of what we’re dealing with, or is it the same thing now that you’ve heard all of the testimony of the people that are in the trenches?

[01:14:26.610] – Grumbine

Oh, no. I went through the HAMP process myself, and I promise you that I still live in constant PTSD and with this CARES thing, we had to go into forbearance. And I’m terrified of what that means coming out on the other side through PennyMac.

[01:14:41.580] – Lovell

Those housing values right now are through the roof.

[01:14:44.550] – Hashorva

Right. And PennyMac, it’s all like three card monte, rebranding, name change too. The evisceration of the middle class. It’s going to be just rich and poor. There’s going to be no more middle class because the only way to gain wealth in this country is to own something.

[01:15:00.060] – Grumbine

You know, I have a lot to say on that, and I’ll say it on a different show . . .

[01:15:04.080] – Hashorva

Right.

[01:15:04.080] – Grumbine

. . . but fair enough. We are in the wake-up call. This is an alarm clock. We’ve been sleeping, dreaming, thinking, all these glorious things. Oh, look, you know, mission accomplished. We won. We’re the best. Exceptionalism. We are literally being robbed. And if you think about The Matrix, how they used human beings as batteries. . .

[01:15:24.570] – Hashorva

Um-hum.

[01:15:24.570] – Grumbine

We are basically just batteries for this machine and nothing more.

[01:15:29.520] – Hashorva

They need victims and suckers to keep the money machine, the money laundering going.

[01:15:34.320] – Lovell

And there’s only one way that happens, Steve, if that’s the central bank, lets it happen without our judiciary coming down on it. And that’s the Department of Justice and that’s investigation which . . .

[01:15:43.500] – Grumbine

Congress

[01:15:44.640] – Lovell

. . . which brings us full circle . . . well that’s on both sides.

[01:15:46.890] – Hashorva

Well, even Obama, you know.

[01:15:49.260] – Lovell

but Pecora, that’s the whole point of Pecora and the Hellhound of Wall Street. They did the investigation. They outed this to the American people. Our government didn’t do that effectively. They did have the FCIC, but media didn’t understand it or was in on it. I still haven’t figured that one out.

But thanks to your efforts, Steve, you’re letting the people speak to the people that need to hear it the most. And I hope we can wake them up. This isn’t woke as in all of the other things that happen in cancel culture. I’d like to cancel corruption. Can we cancel corruption?

[01:16:18.370] – Hashorva

And it’s also how much do they need? What does it harm anyone if we can all just live? We’re not wanting to live large. They wanted to hang that on homeowners. Oh, they’re buying boats, or they’re buying second houses, or they’re doing all the stuff.

Everyone just wants to live their life and have a healthy family, you know what I mean? Or maybe have something to leave their family. I don’t have a family. I forgot to have children, but it’s like people just want to live their lives, you know what I mean?

[01:16:44.070] – Grumbine

They’re banking on every one of us being an embarrassed future millionaire, but we’re just going to keep quiet because we want to win the casino of buying the one house that ends up tripling in value, selling it off. And it’s that lie, that fake American dream that so many red, white and blue flag-wavers sold.

[01:17:02.590] – Jacobson

Like Trump.

[01:17:03.460] – Hashorva

And Trumpers.  Talk about a fake billionaire.

[01:17:07.630] – Lovell

Yeah. Do you have any idea what percentage of people that stormed the capital went through the same thing that we all did?

[01:17:13.450] – Grumbine

A lot.

[01:17:14.380] – Lovell

Their experience is the same thing that everybody else has. I mean, look, the bottom line is this doesn’t distinguish on your race or ethnicity, your religious persuasion, even, quite frankly, like we learned today, your status in society. I mean, literally, everybody who got caught on the downside of this machine got destroyed.

[01:17:32.470] – Hashorva

Money has no country either. Those banks like Deutsche Bank, Deutsche is like in everybody’s mortgage. So those people have no loyalty to America. The people that are governing are not governing or implementing [inaudible 01:17:44] them.

[01:17:44.500] – Jacobson

You also have to look at who bought a ton of these securitized loans. It was China. China owns a ton of these.

[01:17:51.310] – Lovell

Same with Russia. I just read recently, guys, and I highly recommend to the audience out there to check out “Wall Street on Parade,” which is done by Russ and Pam Martens. They revealed the other day and this was such a huge blast for me that it was the stock market right now, as of Friday, I believe, was worth $47 trillion.

And that’s apparently north of the GDPs of Germany, Japan, the United States, and China. So the stock market is worth more than the GDPs of the biggest economies in the world? OK. This imbalance is . . . And how does that happen? Everything we’re talking about. So they won. They’re going to continue to win until everybody is speaking the same language and hopefully we’ll be able to trigger them into some action.

[01:18:31.720] – Grumbine

Thank you both for joining us. This was absolutely amazing. Sadly, I’ve got that weird pang inside me saying, “Oh, God, the tsunami is coming,” and I’m terrified.

[01:18:44.080] – Hashorva

And how can the people defend themselves with this pandemic?

[01:18:47.320] – Grumbine

Yes.

[01:18:47.980] – Hashorva

I can’t even work or pay the rent or pay the mortgage. And now the banks are going to have no excuse and free reign, you know.

[01:18:56.200] – Grumbine

You got it. Well, with that, Patrick, thank you so much for bringing these guests together. And both Lainey and Beth, thank you so much for joining us.

[01:19:05.200] – Jacobson

Thank you.

[01:19:06.770] – Hashorva

Thank you.

[01:19:08.360] – Grumbine

This is Steve Grumbine, Patrick Lovell. This is your New Untouchables: The Pecora Files. Keep watching, folks. We got more to come. Have a great day, everybody. We’re out of here

[01:19:23.290] – Ending credits

The New Untouchables is produced by Andy Kennedy descriptive writing by Rose Ann Rabiola Miele and promotional artwork by Cristina of Paradigms and Revolutions Design Group. The New Untouchables is publicly funded by our Real Progressives Patreon account. If you would like to donate to The New Untouchables, please visit patreon.com/realprogressives.