My data company, Legalprise, tracks and traces foreclosures, analyzing the substance of the cases rather than just the volume of filings. There are more than 1 million cases in our database, with almost 100 million pieces of supporting public records data. I’m one of a small group that helped identify the patterns of well known foreclosure fraud. These patterns of fraud point to a deeper problem with the housing finance market. They raise deep public policy concerns, which need to be addressed if we can ever find a genuine bottom to the housing market. Let me illustrate the problem with a few examples from days where mortgage assignment volume was unusually high. During the last week of 2007, HomeBanc assigned 1,076 mortgages, in Palm Beach County, Fla., that ended up with Bear-Stearns/EMC. HomeBanc was sold about a week later, at the beginning of 2008. About three months later Bear-Stearns collapsed from the weight of its subprime exposure, leading to the government’s $29 billion subsidized sale of the firm, ushering in the era of bank bailouts. On Oct. 7, 2009, 592 mortgage assignments were recorded in Palm Beach County, Fla. The usual number of assignments, the median, is 75 a day. Most of these assignments involved mortgages from Financial Freedom Senior Funding Corp., a subsidiary of Indymac Bank. Two days later Financial Freedom/Indymac followed up with 579 assignments. More recently, as the robo-signing controversy has unfolded, servicers have been assigning mortgages at exceptionally high volume to Fannie Mae and Freddie Mac. This leads to the obvious question: Why is the government bailing out banks and servicers from their toxic mortgages notes first, then making sure they actually own the notes after? Further, when a bank wants to foreclose — or even when they record a satisfaction — are they sure the named bank really owns the mortgage? Even if the banks owned the loans the government money was used to subsidize losses for, these deals erode the public’s trust in government as impartial. They injure the natural working of the credit markets. For better or worse — at the core of American DNA — we know a free market is a precious natural resource. But our leaders hurt our market, especially the housing market, and spent a fortune of our money to do so. If the market hadn’t been broken, the loans in those high-volume assignments would have been sold for a few cents on the dollar. Buyers could — and presumably would — have renegotiated with borrowers on more sustainable terms. For example, a borrower who owed $400,000 on a subprime note would have received a call from the buyer of that note, who may have purchased it for, say, $20,000, and asked if they are able to pay, say, $60,000.. Allowing the market to function like this would have benefited both the borrower and new lender, while holding prior investors, who knowingly and recklessly lent money on unsustainable terms then refused to renegotiate those terms, accountable for their bad decisions. Families could have remained in their homes. Vulture investors would have made a fortune. Public confidence in the marketplace and the government would have remained high. Increased consumer liquidity from the lower payments would have offset economic damage. Public debt would be lower. And investors would be more careful the next time lead was marketed as gold. Olenick is founder and CEO of Legalprise focuses on data aggregation and analysis surrounding consumer debt, with a focus on foreclosure and collection fraud as well as predatory lending and servicing policies. Have an issue you want to sound off on? E-mail the editor of HousingWire.