So far the banks are mostly getting a pass.  But there is enough bad faith stuff going on that the right snowball could really shake things up.

The Florida Attorney General produced a presentation documenting a number of the frauds that servicers and lawyers are perpetrating on the court. The slides include many example documents showing the shenanigans. It is fascinating to look through. I love the examples of people signing for companies with dates after the company ceased to exist and the back dating of documents uncovered by the use of notary stamps that didn’t exist on the supposed signed date.

Warning PDF: http://www.stayinmyhome.com/blog/wp-content/uploads/2011/01/Foreclosure-Report-from-Florida-AG.pdf

The Massachusetts Supreme Court is also looking at whether the incorrect transfer of mortgages and their notes invalidates foreclosure proceedings. If the court rules against the servicers, this would likely cascade into a big deal.

http://www.bloomberg.com/news/2011-01-06/foreclosures-may-be-undone-by-massachusetts-ruling-on-mortgage-transfers.html

And here are a couple of stories of banks acting badly (i.e., abusing people who have never missed a payment).