The Fresh Air Interview: Gretchen Morgenson - 'Untangling The Complex Foreclosure Mess' After the housing bust, banks hired many people to handle foreclosure paperwork -- and many mistakes were made. New York Times columnist Gretchen Morgenson explains what the paperwork mess means for the banking industry and the economy.
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Untangling The Complex Foreclosure Mess

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Untangling The Complex Foreclosure Mess

Untangling The Complex Foreclosure Mess

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This is FRESH AIR. I'm Terry Gross.

The mortgage foreclosure crisis isn't just a crisis for people who can't pay their mortgages. It's causing big problems for would-be homebuyers and for investors in mortgage-backed securities, and that may include you if you have money in a 401(k). Banks are now dealing with the fallout of the crisis they helped create.

Attorneys general in all 50 states are investigating improper foreclosure procedures, including sloppy documentation, questionable notarizations and robo-signings.

My guest, Gretchen Morgenson, is going to talk with us about how we got into this mess and why it has such far-reaching consequences. Morgenson is a financial reporter and columnist for The New York Times. She won a Pulitzer Prize in 2002 for her coverage of Wall Street.

Gretchen Morgenson, welcome back to FRESH AIR. So the foreclosure crisis is part of the continuing adventures of the toxic assets that we've been talking about, you and I, for a few years now.

(Soundbite of laughter)

Ms. GRETCHEN MORGENSON (The New York Times): I know.

GROSS: The toxic assets that helped create the housing bust and the financial meltdown. But this is part of the drama, just a little further down the line.

So let's just start by a little recap of what these toxic, securitized mortgages are, and then we'll take it from there.

Ms. MORGENSON: As you know, in the old days, Terry...

(Soundbite of laughter)

Ms. MORGENSON: ...the bank would make a loan to - usually to someone that they knew in town or at least for a property that they were familiar with in their town. This is the old George Bailey Building and Loan from the wonderful story "It's a Wonderful Life" that we look at every Christmas.

Okay, so that was the old business model of the banking-mortgage-lending business: Know your customer, know your property.

Well, that sort of went haywire in the mortgage boom that we just lived through, which really involved a dramatic increase in the securitization of mortgages, meaning that banks or originators would make loans to people across the country that they may never even meet at a closing, may not even be familiar with the property. It was part of this kind of urge to increase the rate of homeownership in the United States. There was a general belief that homeownership was a greater good for all people, regardless of economic ability to pay.

And so this was a sort of a part of a - almost a - well, it was a policy, really, in Washington, that we should increase homeownership across the country, so more money was available to lend to people. Also, the very rock-bottom interest rates that the Federal Reserve had dropped its prevailing rates down to, one percent, kept it there for a very long time, starting in 2003.

All of these things sort of conspired to create a huge gold rush in mortgage lending: way more money available than normal to way more people than would normally have been allowed to borrow to buy a home.

A lot of those loans...

GROSS: And then these mortgages were basically made into securities that investors could buy.

Ms. MORGENSON: That's right.

GROSS: So explain that part.

Ms. MORGENSON: Okay, the mortgages were pooled. Thousands of them would go into one security, like say 10,000 mortgages, from a variety of places. They were trying to achieve diversification in these pools so as to diminish the risks associated with them.

And so you would have varying economic ability to repay in the loans. You would have very high-grade loans, you would have subprime loans, you would have a variety of loans from different geographic areas. And so this would, you know, it was hoped, be put into a security that would perform well over time and, you know, where people would repay the mortgages. And at the end of the line, the owner of the securities, and there were many of them because they were sliced up into varying risk degrees, okay. But in case, the idea was that everyone pretty much would get repaid at the end of the line.

Well, what was happening that many people did not recognize was that the types of loans were poisonous, toxic as you describe them, made to people who could not repay them, carried interest rates that would ratchet up dramatically after a few years, thereby making certain that they couldn't be repaid. And these created the toxic assets that you're talking about.

GROSS: So attorneys general across the country have been investigating improper foreclosure practices. You went to one of the states that's being investigated, Florida. Florida is setting new records for foreclosures. And they set up a foreclosure-only court system staffed by retired judges. What are some of the things you saw about the court system that's been set up to deal with foreclosures in Florida?

Ms. MORGENSON: Well, I guess the biggest problem, Terry, that I saw there was that these judges view their job as a caseload effort to get rid of mortgage foreclosures. It's sort of like let's just get rid of the backlog here, whether or not we are paying close attention to the bank's paperwork and whether they do indeed have the right to foreclose.

So it's almost like a view that, geez, there's a mountain of foreclosures here. Let's just chip away at that mountain as fast as we can, you know, 30 seconds, one minute, five-minute hearings at which when people do try to point out that the bank may not have the right to foreclose, they're sort of overruled and, you know, take a hike, not my problem, moving on, we're moving on.

I mean, these judges have been given a benchmark of reducing the backlog by I think it was 62 percent within a year. So I mean, that's a hard number that they want to try to reach, and so how are you going to do that if there are real questions about mortgages. It leads you to think that what they're really basically doing is just rubber-stamping the bank's ability to foreclose, whether they really have the right to or not.

GROSS: Yeah, the chief judge for Florida's 9th Judicial Circuit said that during July of this year, 1,319 cases had been closed by three senior judges in two counties. So that's a lot of foreclosures for three judges in a month.

Ms. MORGENSON: Yeah, and it makes you wonder if they're really paying attention to the details. I just don't think that they could possibly understand every one of those cases in that amount of time.

So the question is, you know, are people's, you know, rights to really understanding who owns their mortgage or their note, are they being sort of railroaded?

GROSS: So what are some of the paperwork problems a judge would run into if a judge was truly investigating whether somebody was properly foreclosed on?

Ms. MORGENSON: I guess the way I would generalize most of these issues, Terry, is to say that there are legal documents signed by representatives of the servicers that say that the paperwork is not there, but we attest to the fact that the paperwork is accurate and that what we are saying is true, i.e., that we have the right to foreclose, that we represent the bank that does, in fact, you know, have the right to foreclose, that the transfers of mortgages were done properly, but we just can't find that material right now.

So these are things like lost note affidavits, where a representative of a servicer would say, you know, the note was transferred, then it got lost, and, you know, so here I am attesting to the fact that yes, Bank A has the right to foreclose, even though the note is nowhere to be found.

Then there are cases where you have very different signatures on certain legal documents, even those that are as important as specifying how much a troubled borrower owes to the lender. These are some of the fees involved, of course the late fees, the junk fees, the arrearages when you have stopped paying.

There are people who are signing these documents, which are obviously crucial because sometimes what you owe on your mortgage follows you around for many, many years if you don't pay it, and yet they're signed by people whose signatures, the same person, their signature looks completely different, cannot possibly be the same person, which suggests that, you know, who knows who is signing these things.

These are supposed to then be notarized. The notaries are often in a completely different part of the state from where the paperwork was signed.

They're supposed to be physically present to be able to ask questions of the person signing the document, such as: Are you, you know, competent? Are you aware? Do you know what you're signing? Are you attesting properly? Have you done the necessary work to understand that this is right, what you're signing?

So things like that, it was all about expedience. It was all about speed. Hurry, let's get these things done. Let's foreclose. And it's just a really sort of sad commentary on the way the business was approached.

But as you pointed out at the outset, this is exactly what the banks were doing when they were making the mortgages. So why are we surprised that on the other end of it they're doing it again?

GROSS: So these courts in Florida that you visited that were set up just to foreclose, I've read that they're just being, these courtrooms are basically in hallways?

Ms. MORGENSON: Yeah, they're not even courtrooms. I mean, they are in the halls of the courthouse because...

GROSS: Why is that?

Ms. MORGENSON: Well, because the other courtrooms are being used for, you know, other legal cases. You know, when the Supreme Court of Florida decided to call back retired judges to help reduce this backlog, it wasn't as though they were going to build a new courthouse for foreclosures in every, you know, district.

So these people have to sort of shoehorn themselves into the courthouses where they used to operate before they were retired. So you see them in hallways. I mean, it's really unbelievable.

GROSS: My guest is Gretchen Morgenson, a financial reporter and columnist for The New York Times. We'll talk more about the mortgage foreclosure crisis after a break. This is FRESH AIR.

(Soundbite of music)

GROSS: My guest is Gretchen Morgenson. She's a financial reporter and columnist for The New York Times. And we're talking about the foreclosure crisis, what led to it and what its repercussions are.

So another questionable part of this foreclosure process is the lawyers who represent the banks. Some of them have been accused of questionable practices. And one of them is a lawyer in Florida, where you've reported from, named David Stern. His firm filed 70,382 foreclosures last year. What has his operation been accused of?

Ms. MORGENSON: Well, lawyers who are representing troubled borrowers who have been foreclosed upon by the David J. Stern firm have taken depositions of some of his employees, and they are hair-raising, the practices that this firm conducted.

For instance, a person who was sort of the go-to person for signing a lot of these documents that we were talking about where, you know, you're attesting to the fact that a note was lost, a promissory note was lost or that you're attesting to the fact that the borrower owes $439,000.28, those documents have to be signed by apparently this one woman. And she would sign 1,000 documents a day - 500 in the morning, 500 in the afternoon - according to this deposition. And when she would get tired, which she would, other people would sign her name.

GROSS: That means she can't possibly be reading the documents, let alone investigating their validity if she's signing so many in a day.

Ms. MORGENSON: Correct, and also when she allows other people to sign her name, that's improper, obviously. So that was just one thing that some of these depositions have come out with. It's really all about this expedience effort, and that's sort of what I think the true - goes to the heart of it now.

The David J. Stern firm is only one of many of these firms, which we call foreclosure mills because they really do not take the care that's necessary. And the reason for that, Terry, is that they are rewarded for speed by the banks.

If they get a foreclosure within a certain, you know, period of time, then they get paid more, and if they don't have the foreclosure finished in a certain amount of time, then they get either a lower payout, or even in some cases they get admonished because they're not making the grade.

GROSS: And in terms of making money, David Stern apparently did a really good job of that. He and his wife in recent years bought nearly $60 million in real estate, mostly in Florida.

Ms. MORGENSON: Yes, and several boats, beautiful cars, et cetera. You know, it's a very lucrative business if you are on the other side of the troubled borrower.

GROSS: So Fannie Mae is now very critical of some of the David J. Stern firm practices. What did Fannie Mae do in response?

Ms. MORGENSON: Fannie Mae stopped giving cases to the Stern firm. I think that they are questioning the practices of the firm, obviously. And having seen these depositions - which of course are employees talking under oath, it's not like they're just, you know, chatting at the bar, so it's not something that we can question - they're really being very forthright and truthful, I'm sure, since they're under oath.

So Fannie Mae said no more cases for David J. Stern. But as I pointed out, he's only one of many foreclosure mills across the country.

GROSS: So, you know, you've talked about the law firms that conducted the robo-signings because they get money. Like, the more foreclosures they handle, the more money they get from the banks. The banks have an interest in getting rid of mortgages as soon as they foreclose on them. They want to sell those mortgages to somebody else. Why?

Ms. MORGENSON: When they're originated, the banks want to get rid of the mortgages so that they can make another loan. How the machinery worked during the mania, Terry, was this: I'm an originator. Let's say I'm Countrywide or any other bank, IndyMac, many, many, many of them. I have X amount of dollars to loan to people. I get fees when I make those loans, and if I can sell those loans to a buyer down the line, then I get the money back again to make another loan.

It's, you know, it's like any business. You get a warehouse line of credit, it's called, from your bank if you're in the steel business, if you're in the widget business, you know, it's what you have to make your product. All right, in this case, it was investors willing to buy the mortgages, which meant that I, as Countrywide or any other lender, could then go back to the well and make another loan and make more fees.

So it was that kind of a process that was involved, and then the investor would be the one who wanted the stream of income from the loan that represented the monthly payments, monthly mortgage payments that you make.

GROSS: Is the kind of robo-signings that you saw in Florida typical in other states, too?

Ms. MORGENSON: Absolutely. These practices were nationwide. They were conducted by companies that have, you know, operations in many, many different courts.

GROSS: So people who have been foreclosed on, many of them have a right to question whether they were legitimately foreclosed on, since there are so many paperwork questions. Do they have any recourse if they think that the procedure was not handled in a legitimate way?

Ms. MORGENSON: Well, first of all, Terry, let me just say at the outset that, you know, there are critics out there who say that these people just want to have a free house, that they're just gumming up the system to get a free house. And that really is not what most of these people want. I think that what most of these troubled borrowers would like is some sort of a modification of their loan that really makes sense for them.

You know, in the time between the mania and now, we have many, many people who are upside-down in their mortgages, meaning that they owe more on their property than the property is worth, and so they're carrying mortgages that are, you know, vastly higher than the property, which is an uneconomic prospect for many people. And, you know, so we have to take that into account, as well.

But what their recourse is, is - and why it's important, is this: If the wrong people are foreclosing, if a bank that does not have the right to foreclose forecloses on you and then takes the property and then sells it to someone else, who's to say that in two years, five years, whatever, another bank comes along to the buyer of your home and says wait a minute, I'm the rightful owner of that house, you should never have been able to buy it from Bank A. It's my property.

And there you are in a fix because you thought the title was clear. You thought you actually could buy the property. The bank who sold it to you was wrong.

So, you see, it's not just about gumming up the system, slowing down the process, giving troubled borrowers free homes. It's about making sure that the rightful party is doing the foreclosing so that they are then the rightful party who can do with the property what they please, which is possibly sell it to someone else.

GROSS: So are you saying that people who are buying homes now have a right to be a little scared that sometime down the future a bank might challenge their legitimate ownership of the home?

Ms. MORGENSON: Well, you've seen title companies, title insurance companies, saying that they won't, you know, guarantee titles in certain of these states. So I think yes. The question is there, and it's a good question.

So just once again, it is not about giving people free homes. It is about the rule of law and who has the right to foreclose, and if they do, please produce the evidence, and then we can move on. And then we can sell the property rightfully.

And, you know, if you are not the right party foreclosing, then it just creates a problem that lives on and on.

GROSS: My guest, Gretchen Morgenson, will be back in the second half of the show. She's a financial reporter and columnist for The New York Times. I'm Terry Gross, and this is FRESH AIR.

(Soundbite of music)

GROSS: This is FRESH AIR. I'm Terry Gross, back with New York Times financial reporter and columnist Gretchen Morgenson. She won a Pulitzer Prize in 2002 for her reporting on Wall Street. We're talking about the mortgage foreclosure crisis and its far-reaching consequences. Earlier, she described foreclosure mills - law firms that foreclose quickly without producing adequate documentation; and robo-signing - legal representatives who sign off on hundreds of foreclosures a day without verifying or even reading what they're signing.

Well, looking a view years down the line, considering the foreclosure mills, considering all the robo-signings that have put foreclosures into play without really examining what was behind the foreclosure, do you think we're going to see a lot of problems in the next couple of years resulting from these robo-signings?

Ms. MORGENSON: You know, the people who were foreclosed upon wrongfully probably don't have the wherewithal, don't have the money to bring lawsuits against these people. I mean, you know, they were - probably 99.9 percent of them were in default on their mortgages. They were unable to pay. They then would've had to leave the house. So it's not clear that they will necessarily go back and try to sue to get their house back. The fact is they were in a toxic loan, they were in a loan that they could not afford, for whatever reason, whether it was because the interest rate was punitive after a few years, or whether it was because they lost their job, had a hospital emergency or because they just bought too much house and couldn't actually afford it.

For those people, I don't think that they're going to go back and try to sue these institutions. But I think that the investors who bought these loans in these pools are in a position to certainly try to get some recoveries for the losses that they've absorbed because of these practices.

GROSS: Now, what problems have the investors ended up with - the investors in these mortgage-backed securities?

Ms. MORGENSON: Well, for instance, it is a sort of tried and true fact that if you foreclose on a person - a borrower - that if you take the property back and then have to resell it, it's a long process, it's an expensive process. The fact is that foreclosures usually involve a severe loss to the investor who owns the underlying property. Okay, here's a question: if the lender - in this case the servicer - had been willing to revise the mortgage for that troubled borrower so that they would have maybe a lower payment, have maybe a lower principal amount to pay, they could've stayed in the home and the recovery would have been far greater; or, put another way, the loss would have been far smaller to the investor. So there are just many questions like these about what could have been done and what should have been done while these people were rubber-stamping this paperwork and forcing people out of their homes.

The question remains: could there have been a better process where they could have been given a better, less poisonous, less toxic loan, keep them in the house, the house continues to have someone in it, continues to pay the taxes, continues to pay the homeowners association dues, etc., you know, instead of a hulking empty house, you know, the taxes aren't being paid. It is a blight on a neighborhood when you have foreclosures like these. So I think that the investors who end up taking the losses on these properties really have some severe and serious questions to ask the servicers who were, you know, in such a hurry to foreclose.

GROSS: So are major investors threatening to sue, and if so, who would they sue?

Ms. MORGENSON: Major investors are threatening to sue. Well, the biggest servicers are the biggest institutions - Bank of America, which bought Countrywide's loan servicing when they bought that company. You know, these are big institutions - Citigroup, JPMorgan Chase, you know, obviously very wealthy companies. So those would be the people that they would want to be talking to about, you know, making them whole or at least giving them something to cover some of their losses. Many, many, many losses have been made - as you know, Terry, have been absorbed by investors in these securities.

GROSS: So who are the, like who are the typical major investors that would have the juice to actually sue the big banks?

Ms. MORGENSON: Mutual fund companies, pension funds. If you own a 401(k) that owns bonds, fixed income 401(k), then you might own some of these mortgages. I mean these are mortgages - they are vast spread out throughout the system. Many, many people own them. We're not just talking about well-heeled investors, we're talking about everyday investors with 401(k)s. They certainly are investors in mortgages. So we're talking about a wide array of investors.

GROSS: So the investors are contending that the banks didn't vet the documents in the loan pools - that they really didn't know what was in there.

Ms. MORGENSON: Didn't vet the documents in the loan pools, didn't pay close attention to, you know, the required paperwork, maybe didn't actually make the kinds of loans that were promised in the prospectus for the security that they purchased. Many of those securities had basic assurances that we are putting into this pool loans that are of high quality, that are geographically diversified, where the people with FICA scores of, you know, 700 or higher, this kind of thing, and if it is found that the loans in these pools were vastly different from the characteristics that were described in the prospectuses, then investors may have a right to recovery.

GROSS: Would that be unprecedented, if mutual funds and pension funds started suing banks?

Ms. MORGENSON: It should not be unprecedented, Terry, because they have a fiduciary duty to you and me and the people whose money they run to make sure it is overseen properly.

GROSS: Okay. So is this the position that we're in, that our taxpayer money went to bail out banks and now the institutions that have our 401(k)s are going to sue those banks?

(Soundbite of laughter)

GROSS: Is that where we are?

Ms. MORGENSON: That's where we are. But it's not as dopey as it sounds. I mean, which would you prefer, that we let the banks get away with this practice both at the outset when they made the loans and then at the back end when they're foreclosing on the loans? I mean, throughout this process what I hear most from people who email me and telephone me and write me letters is, where is the accountability? Where is the accountability for this mess? Nobody has gone to jail. Nobody has, you know, stepped forward and said, you know, with the exception of a couple of really kind of like whispered mea culpas - you know, there's no accountability here. We have thrown money at these banks and we are now seeing what their practices are and our hair is standing up on end because the practices are so dubious. There has to be accountability. Trillions of dollars have been lost. Is no one going to pay for that?

GROSS: Okay. So say investors sue the banks and investors win and banks owe the investors a lot of money. What position does that leave the banks, those too-big-to-fail banks in?

Ms. MORGENSON: You see, part of the problem, Terry, it obviously leaves them in a less sound financial position, depending upon, you know, whether the investors win, how much they win, etc. The problem I think stems from the fact that people were not forced to face the music early on. I mean when we were throwing money at these banks back in 2008, it was, you know, our - everybody's hair was on fire. You know, it was, we had to do this, the system was teetering, it was absolutely in peril, we were - the world was going to come to an end if we didn't bail out these banks. And so, you know, $700 billion and, you know, a variety of different systems that the Federal Reserve put in to help the banks, the banking system, the financial system, and it did right itself, it did not go off the cliff.

But the point is that now these banks understand that they are going to be helped, that if they can cry systemic risk, help us, that they will be rescued. And so it's almost as though there is no limit to the bad behavior that they can perform because they are so systemically important, quote-unquote, that they will always be bailed out. So we have sent this very, very, I think, disasters message that these large institutions will be bailed out no matter what because they are systemically important.

We should have cut them down to size. Dodd/Frank should've had a far more of a focus on reducing the size of these institutions, and in fact they did nothing about too-big-to-fail.

GROSS: My guest is Gretchen Morgenson, a financial reporter and columnist for the New York Times.

We'll talk more about the mortgage foreclosure crisis after a break.

This is FRESH AIR.

(Soundbite of music)

My guest is Gretchen Morgenson. She's a financial reporter and columnist for the New York Times. And we're talking about the foreclosure crisis, what caused it and what the repercussions are.

So meanwhile, Angelo Mozilo, the former CEO of Countrywide, which was one of the biggest subprime lenders, just made a settlement in a civil case against him. What were the charges against him? What was the settlement?

Ms. MORGENSON: This is a case that grew out of his selling of major portions of his stock in Countrywide. The government, the FCC, Securities and Exchange Commission, was bringing the case against him and two of his managerial colleagues, and they maintained that Mr. Mozilo internally was expressing doubt, severe anger about the kinds of loans Countrywide was making, fear that it was going to be harmful, end up hurting the company financially, and yet on the outside to the world at large, whether it was in interviews on CNBC or to reporters or to investors at conferences, he was telling them everything was fine, the company was making only the best possible loans and that there were no problems.

So at the time that he was making these upbeat statements, he was also selling stock in Countrywide, and then when the whole thing collapsed, the government went back and looked at these statements, looked at his stock sales and said, hmm, we think that you might have actually known that there were more problems than you were expressing publicly. You were, in fact, selling stock, perhaps to reflect those worries, and we call that insider trading and we're going to sue you, and that's what they did.

GROSS: And the settlement was he pays - what is it - over 65 million?

Ms. MORGENSON: Well, unfortunately, he does not pay over 65 million. It was 67.5 million, actually. This is the world we live in. Bank of America is paying $20 million of his penalties...

GROSS: Bank of America bought Countrywide.

Ms. MORGENSON: Bank of America bought Countrywide. They are paying $20 million of...

GROSS: Because he has an indemnification clause in his contract.

Ms. MORGENSON: Correct.

GROSS: Yeah.

Ms. MORGENSON: Correct. It's unclear. Maybe there is an insurance policy, directors and officers liability policy that pays more. So he personally is not paying $67.5 million.

GROSS: Right. So I don't know if you'd have the answer to this, but for anybody who is in the process of buying a home, what should they be looking out for to make sure that the paperwork will be what they need for now and the future so that no other bank ever shows up and says, you know what, the bank who you bought the mortgage from doesn't really -didn't really own the property, we own the property - like what should you do to make sure you've got your paperwork in place?

Ms. MORGENSON: Well, what a borrower should do is just make sure that they buy rock solid title insurance. If a title insurer is concerned enough that they say they're not willing to insure the property that you're buying or the obligation that you're buying, then I would say -then I would walk away from that transaction, because you're basically on the hook for the possibility that somebody comes along and says you never had the right to buy this property because it belonged to me. As long as the title insurer is standing in between you and that problem, and the title insurer is sound financially, then I think you're on solid ground.

GROSS: How do you know if it's rock solid title insurance that you're getting?

Ms. MORGENSON: Well, you know, these are these problems, Terry, you -obviously companies can go, you know, into - get into trouble. I would look at the financials, but I know that's way too much for the...

GROSS: Oh gosh...

Ms. MORGENSON: ...average homeowners to do.

GROSS: ...I have to study the financial background of the title insurance companies.

Ms. MORGENSON: But you know, I guess, you know, look at - it's hard to just say that you can rely on a rating of the insurance company, because we know how abysmal the rating agencies performed in this mess. So, you know, if there's anything we learned from this disaster, it's that, you know, everybody really has to do their own work and make sure - make it certain as they can that they're, you know, on good footing and that the companies they're relying on are on good footing. But I know that's a really, really hard thing for the average person to do. But, certainly, if a title insurer is not willing to ensure the transaction, then that's a real, solid giveaway that maybe that's not the right thing to do.

GROSS: Gretchen, you have been coming on FRESH AIR ever since the very start of the financial crisis and the mortgage crisis. And as I recall, right from the start, you know, you were wondering on our show: So what happens if you own a mortgage that's been securitized? What are the implications of that for selling or for modifying your mortgage? And there was no answer in sight. And now we're seeing the evidence...

(Soundbite of laughter)

GROSS: ...that there were real problems involved with that. And I'm wondering, like, if I knew to ask about it and you knew that there were problems coming down the line, how did this go on for so many years?

Ms. MORGENSON: Well, you know, people in positions and institutions of power have a real interest in keeping these things under wraps. I mean, I have been writing about the problem of who owns the mortgage since 2007, okay? Almost three years. And yet it took this long for it to gain critical mass so that now we have attorneys general interested in knowing who owns the mortgage, and do they have the right to foreclose.

Throughout this process, throughout these three years that I've been writing about it, consumer lawyers have been banging their shoes on the table, screaming about this problem. Some judges - a handful of judges -have been very forthright and open about these problems. But for the most part, it was a pay-no-attention-to-the-man-behind-the-curtain. This is not a problem. This is the way it's always been done. Don't worry about it. These are just, you know, a one-off or anomaly, anomalous people. They don't know what they're talking about, or pay no attention to them - because the people in these institutions that are so powerful didn't want people to take a look at it for obvious reasons.

Now we know why. We have depositions of people explaining that someone signs 1,000 documents a day, and when they get tired, they let somebody else sign their name.

We have documents showing completely different signatures for the same person. It's clear now. None of that was clear at the time. We just had this face-off between sort of a small group of people, not so powerful, against a vast, very group of people who didn't want this sort of process to be scrutinized. Well, you know, my hat's off to the people who've been yelling about this for years, because it turns out to be a problem and it turns out to have been something that really should never have gone on.

GROSS: Gretchen Morgenson, thank you so much for coming back to FRESH AIR. Appreciate it.

Ms. MORGENSON: Anytime, Terry.

GROSS: Gretchen Morgenson is a financial reporter and columnist for The New York Times. You can find links to NPR's continuing coverage of the housing crisis, as well as links to Gretchen Morgenson's articles on the foreclosure crisis on our website:

Coming up, Ed Ward reviews a new collection of singles that were released by Apple Records, the company founded by The Beatles.

This is FRESH AIR.

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