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GMAC Halts All Foreclosures In 23 States On Heels Of Florida Judge Finding JPM Committed Court Fraud In Mortgage Misappropriation
As we pointed out last week, a certain judge in Florida set quite a precedent when he found that JPM, as servicer for a Fannie mortgage, had committed court fraud by foreclosing while not in possession of the actual mortgage. We then concluded that "The implications for the REO and foreclosures track for banks could be
dire as a result of this ruling, as this could severely impact the
ongoing attempt by banks to hide as much excess inventory in their books
in the quietest way possible." Not a week has passed since, and we are already proven right. Today, Bloomberg discloses that GMAC Mortgage, a unit of the affectionately renamed Ally Bank, has halted all foreclosures in 23 states, including Florida, Connecticut and New York. Who would have thought that being caught with your pants down, doing something so blatantly illegal as collecting on something you do not own, would actually have adverse consequences. And GMAC is just the beginning - we expect many more mortgage servicers to scurry now that the light has been shone on their shell game. The silver lining - the permabull pundits will cheer this development now that foreclosures will plunge off a cliff as mortgage holders and servicers scramble to reconcile who owns what, and just on whose balance sheet the mortgage flows should show up.
From Bloomberg:
GMAC Mortgage may “need to take corrective action in connection with some foreclosures” in the affected states, according to a two-page memo dated Sept. 17 and obtained by Bloomberg News. Ally Financial spokesman James Olecki confirmed the contents of the memo. Brokers were told to stop evictions, cash-for-key transactions and lockouts, regardless of occupant type, with immediate effect, according to the document, addressed to GMAC preferred agents.
The company will also suspend sales of properties on which it has already foreclosed. The letter tells brokers to notify buyers that the company will extend the closing date on all sales by 30 days. Buyers will be able to cancel their agreement to purchase and get their deposit back, according to the letter.
Expect panic out of the banking crime syndicate once this story hits the MSM.
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more free rent, more $ for ipads
obama cheerleader burnett proclaiming americans dont care about fed debt or deficit - praise obama. haines with swollen face says things are great
ok, I watched her going through the "poll" results -- she needs to go back to statistics.
http://www.nakedcapitalism.com/2010/09/latest-real-estate-time-bomb-titl...
"Wells is sufficiently concerned about the risks of selling properties out of foreclosure that it is springing an addendum on buyers, shortly before closing, which effectively shifts all risk for any title deficiency on to the buyer.
This has been my supposition all along and yes people think I'm CRAZY for saying it: This was a setup. The whole derivatives scheme, cooked up by the Goldman/JPM/Fed/Treas Nexus, was a setup to make foreclosing on the US an impossibility. See, this is how it works: At the end of a dying fiat regime TPTB hoovers up the target country's assets, either by foreclosure or buying for pennies on the dollar. After the new currency is established they sell it at a profit, or just keep it, because why not. The money's hanging out in the Caymans right now and TPTB is waiting to pounce on MASSIVE deflation. (BTW I'm a goldbug but I'm not a sucker: I know metals-backed currencies always replace fiat but even that is a part of TPTB design: Guess who has all the gold after a deflation/collapse buying bonanza? DUH! So who does the new metals backed regime profit? DUH! Expect no less from them.) Well this time the US is the target. Russia and Argentina went before us. TPTB are waiting to run off with America's family silver. Except . . . except they can't. Not this time. Which is why the Nexus won't allow for deflation, and why inflation is the HFT-PPT managed game. And why metals prices are being suppressed. And why the country is barely hanging on by its naked shorts: It's going to take a LONG time to print itself out of disaster, but for now HAL9000 (conceived of by the Maestro himself apparently) appears to have things under control. The Committee to Save the World, indeed. Goldman and JPM, pirates or pirate heroes? Greenspan, sellout or brilliant? GMAC, traitor or patriot? Accidentally or on accidentally on purpose? I mean ALLY BANK? HAHAHAHAH. You decide. I have. This is hilarious. FREE HOUSES FOR EVERYONE!
One more thing: The pig-poke bag-holders are FURIOUS. Expect murderous retaliation.
Could it also be that the Obama leaned on Ally to halt foreclosures during election season?
No. Everything Obama does would be a photo op and a huge MSM story.
Had the same thought.
the king is not speaking from the "foreclosure center" or the bread lines?
Nobody owns, this bubble I see
Nobody knows the treason
Nobody owns this rubble it's mine
Glory Hallejulah!!!
The courts have not begun to weigh in on the treason in this government.
Nobody Knows the Trouble I've Seen
Louis Armstrong
http://www.youtube.com/watch?v=SVKKRzemX_w
Been feeling very spiritual lately. Thanks for getting it.
is it too much to ask that banks follow the law?
But they do follow the Law. All that is needed is an understanding of Law.
(double)
Damn, just when they thought they had executed the perfect crime with the MBS and derivative game. Guess they didn't expect the courts to uphold the law . . . on behalf of the little guy. But then, in these times, who would?
Whuddya know. I suppose some congresscritter scurrying to implement emergency/enabling legislation to "protect the financial system" will be forthcoming shortly, but it's fun to see while it lasts.
Define who owns the Courts, then look again at your causal statement.
There is no "win for the little guy" (aka "win for the guy who either took out a loan knowing he could not repay it, took out a loan with substantial risk of default, or took out a loan and can repay it but refuses"). All the court ruled was that the proper party has to bring the lawsuit... afaik, this is not new precedent... old precedent applied to new situations...
In the end, the proper party will bring the foreclosure suit... the biggest problem is most of the bankers are complete fucking idiots and they didn't dot their i's and cross their t's. This is but an incredibly temporary setback in the larger deleveraging process and its ultimate pricing destruction.
I wonder if it isn't so much "dotting I's" and "crossing T's" as it was intentional. Fannie and Freddie are supposed to be the good guys aren't they? These are loans that Barney and Chris, Maxine and Barack helped people get aren't they? We can't have these loans go bad; it doesn't look good. Let the banksters file.
Is it possible that they played with semantics and lost? Even if this isn't the case, it becomes a public image issue when Aunt Fannie throws your deadbeat ass into the street.
Here's one guess, after the banks dumped the mortgages on the GSEs, they entered into a service agreement with the GSEs to handle note payments, lawsuits, etc. The lawsuit part is enough of a headache/money sink/goodwill killer that they have no interest in pursuing it and now can dump it squarely back on the GSEs.
More simply though, I think it was just a temporary reflation measure. In a desperate attempt to reflate banks and give them commish/service fees for handling bad notes, the GSEs forgot to hook up the doll (weird science reference). The banks were oh so desperate to take the money and just hoped they would never get called on the issue... but, at this juncture, they've made out like bandits and can now prospectively dump the problem back on the GSEs. It was just a temporary measure to help reflate the TBTF... another measure that has had its legs hacked off.
it isn't so much that they don't want to look bad for making trillions of bad loans (that fact is inevitable/already happened), it's that they were just wanting to give a backdoor bailout on servicing fees until a judge pulled their card. Now they'll move on to plan 394240932432C, whatever that is.
No, there's still a very big elephant in the room, even if they do manage to sort things out, and start bringing proper foreclosures. Specifically, there's a HUGE potential lawsuit here on behalf of all of the homeowners who have been foreclosed on, fraudulently.
Such a class action lawsuit would bankrupt all of the Banks.
There's a lot more that has to happen rather than just dotting the i's and crossing the t's. A law is going to absolutely have to be passed to protect the Banksters here, and it's going to have to be made retroactilve.
And the person you're voting for in November is going to go along with it, with very few exceptions.
The homeowners had a chance to address the issue in court and chose not to... If they were represented the first time around, maybe they'll have a malpractice claim, but the judgment isn't getting overturned. It's a different story if default was entered (probably vast majority).
The other issue, practically speaking, is if the homes are sold at a properly conducted auction, what are the homeowners' damages? Let's not forget that they were not paying on the notes... they were in default... Further, the homes have probably been sold to bfps, multiple years ago... and have been improved, etc. Where do the bfps come in? Who has to reimburse them for improvements?
The only possible route is punitives... which I would love to argue, don't get me wrong... it's a no brainer. But I'm not even sure the case would get that far.
I agree that it is possible the foreclosure judgments obtained by default could be void ab initio... and that no "meritorious defense" need be shown in order to overturn them... but, presuming one does need to be shown, you give these peoples' houses back and they just default in a month... and they're back in foreclosure... practically speaking, do you see judges everywhere overturning decisions that will just be back in front of their courts in another month or two? With the same result that happened the first time?
I just see this more as a prospective disciplinary paddle than a pandora's box...
What I see is the potential for a major class action suit here. Do you seriously think that one isn't going to be brought? And I think it's a fair bet that the Banks will settle such a lawsuit.
Right, but you have to make the case for the suit to be brought/win... I'm sure someone will try it... but success is another story altogether.
Why will the banks settle the lawsuit? How much are we talking here? With the amount of potentially effected transactions, how do banks maintain capital ratios and also settle?
The way to knock the ball out of the park isn't with one big suit, but many suits... round up all the folks in X area and file suit on their behalf... file a separate suit with each foreclosing bank as a unique defendant... don't let them know what you do on any of the other claims with the other banks. You get to maximize gains while ensuring you get paid...
Why will the banks settle the lawsuit? How much are we talking here? With the amount of potentially effected transactions, how do banks maintain capital ratios and also settle?
We all know the answer to that one: Change the reserve requirements or we bail them out.
"Specifically, there's a HUGE potential lawsuit here on behalf of all of the homeowners who have been foreclosed on, fraudulently."
Not to mention all the folks who bought foreclosures and who don't really have clear title. Thank goodness for title insurance, right?
insurance only works when claims < assets of insurance company
Or when you are AIG or any other insurer who is TBTF.
The same concept applies to sovereigns...
In the end, the proper party will bring the foreclosure suit...
Maybe, maybe not. The description at market-ticker is that the note and the mortgage have been separated. The entity holding the mortgage has been paid, and the new owner of the note doesn't hold the mortgage (as it was never legally transferred - a cost saving idea to avoid real estate transfer/recording taxes).
So the entity currently holding the note is holding an unsecured note. The entity holding the mortgage can't foreclose because the debt owed them has been paid (by the new note holder).
At least one attempted foreclosure has been thrown out of court with prejudice on the account of missing paperwork, and maybe a bit of lying by the banks.
This is going to be fun to watch.
When the current note holder bought the note, they should have received an assignment of the mortgage. There should be a chain of those assignments for each note. One instrument can be used for all of the assignemtns and recorded when it gets to the final note holder - FNMA or whichever GSE or pool for a MBS. Pull it out and record it before doing the foreclosure is how it is supposed to work.
right, there will be a temporary moratorium to ensure everything is in order and then it's game on... all it takes is for the lienholder to transfer the lien to the present noteholder... it's really not that big of a deal. If the lienholder refuses to transfer, then you go to court and invalidate the assignment/transfer and let them try and screw with it. They will gladly pony up the assignment when faced with giving the proceeds back.
Temporary delay.
Yves did a great article on this last week. She doesn't always get the credit she deserves for her excellent blog, so here's the link:
http://www.nakedcapitalism.com/2010/09/latest-real-estate-time-bomb-title-of-foreclosed-properties-clouded-wells-fargo-dumping-risk-on-hapless-buyers.html
signs, i've been emailing it around. great work. i can't stop laughing.
Thanks for the link 'Signs'...
This could get very ugly... is there a litgation ETF I can get into fast?
Will forward this to a title person I know with decades of experience and extensive knowledge of the ins and outs of title. Is this just a speed-bump in the process, or does it bring the whole REO game on properties with securitized mortgages to a screeching halt for the forseeable future? For damn sure, I'm going to be going over any future purchase with a fine-tooth comb (and competent legal advice from someone of my choosing!)
For now, my guess is that most title companies aren't going to insure title based on Wells Fargo's weasel words in their addendum...at least not the ones that aren't affiliated with the TBTF financial institutions. (Be careful here, as most REO's stipulate use of their pet escrow and title insurance companies.) Without title insurance, lenders won't loan on the property. I seriously doubt that many cash buyers are going to sign up for the pig in the poke either.
Regardless of how they try to cover themselves in their addendums, this amounts to fraud in my eyes. I suspect we'll see some vague legislation buried in some unrelated bill to provide a workaround, but it would be satisfying to see a RICO prosecution and treble damages...at least until they pass the bill along to us...again.
In foreclosure actions the lien holder (bank) has to prove a validate lien on the property via a valid mortgage on the premises which is properly recorded in the county in which the property resides. Common problems during the housing boom was un-recorded mortgages on properties. So the banks have to take curative action. Similarly, was the problem of unrecorded assignments, either individual or blanket especially when the sub-primes were packaged into pooling and servicing agreements via the investment banks.
The issue is that the banks know they hold the note, but cant prove in a court of law that they have a valid lien on the property because of un-recorded documents.
When using words like "prove" it makes me think you are not a steward of reality.
Proof=NO taxpayer funded bonus.
PROVE is the basis of Real Property Law for the past 100+ years
In the case where Fannie holds the note but JPM is in court trying to foreclose JPM was found NOT to be the holder.
That is the fact found by the Judge.
If I am in Court trying to foreclose on property that the leasee has stopped paying on and YOU hold the note, I am guilty of FRAUD.
Your post is meaningless in this context.
Well, somebody owns those mortgages that aren't being paid.
increasingly, YOU the taxpayer do, via ben and the fed
Which means they are now zero recourse loans. Fantastic. We really put a stop to the evil banksters' shell games.
No, it just means a GSE is going to have to pony up and start foreclosing directly on folks rather than through its proxies, e.g. JPM.
It's one thing to be unenforceable for all parties, it's another to be unenforceable for a party that has no right to foreclose... big difference.
It will, perhaps, mean shedding some additional sunlight on the roach-infested balance sheets of the GSEs rather than allowing them to continue to be the dumping ground for the banks.
If there are new mortages that are not immediately purchased by a GSE, then you have a refusal to lend by the banks... can't make this loss up on volume (even though they tried).
The question is whether or not this will be recognized on our national debt...
expose the heart of the corporatist connection and allow everyone to judge for themselves whether they choose to continue to contribute to it as is.
no choice. drug dealer and meth addict.
- let's see, the banks created the money, out of thin AIR, then charge interest on this funny money, that has to be payed back in real work/dollars. The only one who has any skin in this arrangement is the buyer, (giving that he/she has made at least a couple of payments).
Exactly. Like bankrupty, this is just another delaying tactic. In a few cases, lenders were stupid enough to back-date documents. That's fraud, and in those cases, and those cases only, they are well and truely fucked.
I think the shocking thing will be that it is far more wide spread than you think. The issue is will this cause in fighting among the banks -- the last one left with rapid depreciating assets loses...time will tell.
Possession is 9/10ths of the law.
LMAO, heads will roll.
Bullshit, laws don't apply to corporations.
The only thing rolling is the joint at the Federal Reserve Bank of Treason.
Fed = Ex-US Corporation.
And with this development we are able to scratch out the second line of your comment.
Good point, make that powder on a mirror instead.
Wait for the class action suits to follow. Were you foreclosed? Locked out? Short-sold? Sue the fool who thought he was your lender!!
lol: that is super!
How about leaving it for that fool to get it from the (former) investment banks who created this shit. From that perspective, is there an element of fraud here?
rhetorical question of the century....
Sorry sushi, but you only have a limited time period to set aside judgments or seek to otherwise re-argue the issue... waiver/estoppel/laches issues aside.
A failure by your attorney, presuming you hired one, to contest the ability of the foreclosing party's right to do so would be malpractice... (presuming they did not have the right). The only way any of these suits would go to trial would be as malpractice... the odds of overturning past decisions are slim and none... you likely can't get the house back because it's been sold to a bfp... the only way any attorney would take these would be for punitives... but, again, it's going to be a really hard time to get an audience.
Prospectively, I could see attorneys coming out of the woodwork to take on the mortgage servicers in the hopes of hitting the puni jackpot... but retroactive application is probably a no go.
True.
From what I've seen on dockets, most defendants in foreclosure actions are self-represented or simply fail to appear giving the foreclosing party a default judgment.
~Misstrial
sounds like a potential opportunity. wonder if enough people would be willing to donate, for example, say $5-10/month to a 'legal advocacy network' that could compensate attorneys that would be willing to represent these people across the country using a consistent legal framework? or maybe even better, set up a wiki that would share & collect information on how to make an effective legal argument?
all you need are a couple of precedents and attorneys everywhere have enough ammo to hang their asses... albeit persuasive authority rather than mandatory.
A large class action lawsuit still can be brought, and you'd better believe that there are lawyers starting to move on this. All they need are enough clients who are within the time window, and there are plenty of those around.
Remember, the goal of lawyers is not necessarily to win the case. The goal is to collect their fee; anything else is gravy.
I can say for a fact that in big litigation, just collecting a normal fee is not the carrot in front of the attorney... it's the pot of gold at the end of the rainbow.
My guess is that this will end up just the same as so many attempted class actions (BP for example) that will never be certified because of the varied damages of the claimants. Each person is affected differently... you have homeowners, you have subsequent purchasers (sometimes multiple purchasers)... you're going to end up with a federal court being a central location to hear all the various cases... but, you'll also have clever attorneys who try them in their own states under state laws... This will not be certified, but there may be many claimants per case (doing one right now on another matter that didn't get certified and we have quite a few hundred plaintiffs)... same thing will happen here... but, there will be a federal judge to oversee the many cases... same thing will happen in BP.
I don't understand why the servicer couldn't foreclosure on homes and distribute the proceeds from the sale of the home to the owners of the notes.
Because the servicer is not necessarily the lien holder. Either way, a properly recorded assignment to the servicer would have to be recorded. If the original mortgage was not recorded, than an assignment could not be recorded. (until the mortgage gets recorded).
The article here is basically about missing documents, nothing more.
I beg to differ.
How long does it take to get to your Court appointment?
Do you know EXACTLY what you need on that day?
Does the Judge allow you plenty of leeway to meet these document requirements?
Will he/she even go so far as to allow extra time to come up with the documents?
This is a very very interesting case. The blockage and dynamite that has been created by this ruling IS the point of the matter.
The judge is OWNed by JPM as they all are.
Let's think outside the conventional (for many) box. Let's appreciate the game on another level.
For all those who cry "This will show those banksters!!" You are not thinking correctly. Not Even Close. You think that you won a round. How?
agree on the point and thinking outside the box, LeB. but this is an assumption, and not necessarily true:
"The judge is OWNed by JPM as they all are."
Not all, and all it takes is one precedent, yes?
Again, it goes back to Real Property Law: A lienholder needs a properly executed and recorded mortgage and/or assignment in order to properly foreclose. This is no different then it has been for the last 50+ years.
I love it when greedy bankers get caught with their pants down.Burn them at the stake, and then move onto DC.
Lots of fun, and adds to the general level of chaos in housing, but signifying nothing. The bankers and lawyers will gradually clean up their acts, and even if they don't, judges, those ultimate bureaucrats, will look the other way.
Why? Consider the scale and implications. What if everyone with a mortgage suddenly decides to play the "maybe my house is free" game. Payments stop on 7 trillion plus of mortgages. Fun to think about, but it ain't happenin'.
It certainly is fun to think about! It would seem at least to offer opportunities for a grassroot movement to put the banksters' balls to the fire, though. A de facto referendum that bypasses the political machinery altogether, perhaps.
Too bad it has become our Patriotic Duty to protect banksters at all costs.
Banksters don't have balls, they're all pussies.
They only "think" money makes them tough.
+100
Yes, they're just extremely clever . . . sorry to degrade the term here . . . bitches.
Agree kaiserhoff.
Although title may be temporarily uncertain due to failure to record, one thing is certain and that is the present non-performing occupants are in default of contract and thus do not have a legal right to remain in the premises per that contract.
Non-performing home-buyers should not enjoy renter's rights.
~Misstrial
All hatred of "banksters" aside. Is there any question that someone who has stopped paying his mortgage should be foreclosed? Is there any question that the owner(s) of the mortgage have a right to do this for themselves or to hire a servicer?
In civil cases, the standard to win is the "preponderance of the evidence." So let's get this straight. If you are driving down doing 41mph, and the road is marked 35mph; and a child jumps out from between two cars 1 foot in front of you, you hit the child, and the result is a year of intensive care, the child loses an arm and is permanently paralyzed from the neck down.
Any jury in the country would take every penny you own and then some to award to the parents. Even though the child caused the accident, you have some culpability for driving over the speed limit.
But in a case where someone "buys" a house that they cannot afford, stops making payments, lives in it free for 18 months, and a special servicer who does not have the signed loan paperwork is committing an act of "fraud" by filing a foreclosure proceeding. What happened to the preponderance here??
An attorney named Jerome Daly was a defendant in a civil case in Credit River Township, Scott County, Minnesota, heard on December 9, 1968. The plaintiff was the First National Bank of Montgomery, which had foreclosed on Daly's property for nonpayment of the mortgage, and was seeking to evict him from the property.
Daly based his defense on the argument that the bank had not actually loaned him any money but had simply created credit on its books. Daly argued that the bank had thus not given him anything of value and was not entitled to the property that secured the loan. The jury and the justice of the peace, Martin V. Mahoney, agreed with this argument. The jury returned a verdict for the defendant, and the Justice of the Peace declared that the mortgage was “null and void” and that the bank was not entitled to possession of the property.[1][2] The Justice admitted in his order that his decision might run counter to provisions in the Minnesota Constitution and some Minnesota statutes, but contended that such provisions were “repugnant” to the Constitution of the United States and the Bill of Rights
http://en.wikipedia.org/wiki/First_National_Bank_of_Montgomery_vs_Jerome_Daly
http://www.lawlibrary.state.mn.us/CreditRiver/1968-12-09judgmentanddecree.pdf
now we're talkin...interesting that he was a justice of the peace.
Bearster,
You only get to the preponderance after you've proven you're entitled to bring the foreclosure action... you are the owner of the lien (presuming this is raised by the other side). It only deals with issues there is a "fact question" about... the rest can be determined before trial.
It may be that the documents are so disorganized, it really does take a jury to determine whether or not the plaintiff owns the lien (the issue of who owns the lien is not before the court, but whether or not the plaintiff is entitled to foreclose, they are related, but the scope of presentation is substantially different). However, I suspect in the vast majority of cases the assignment, to a GSE for example, will be incredibly cut and dry... and there will be documentation of this fact. As soon as a judge looks at a mortgage in some other corporation's name, s/he will have plenty of questions for the plaintiff.
The biggest issue about this case is that it forces the lien holders to actually file suit... because now, the issue will get enough exposure to where every tom dick and harry attorney will start questioning whether or not the plaintiff even owns a valid lien... (you might think this would happen in every case, but it doesn't... it is costly for many homeowners, who have no money, and the defense doesn't get presented, I would guess most all of foreclosures end in default judgments... most of the ones I see do, which is only anecdotally useful of course).
Additional cost to the GSEs to foreclose? How many billion?
Cut to the Chase (Bank)...the Judge then realizes his pension is paid from the basket of mortgages that he has decided were null and void. Next move.
Judge Martin V. Mahoney was murdered shortly after the above verdict.
Lee Harvey Oswald acting alone again, i'm sure.
Thanks for those Rusty.
SImply put, Show me da papers, bankstah bitchez! That is zee question. Who owns what... shouldn't it all come down to possession is 9/10 when no bankster or agent can make heads or tails of their paperwork? And whether or not someone is behind, shouldn't everyone look into this and if they cannot figure out who they are paying... stop paying immediately!
Two wrongs neither make a right..nor clear, marketable title. Liens from hell; no one to buy. There is no FREE lunch except the Sun on this planet.
If one can no longer find who holds their paper, then why should one continue to send money to nowhere?
There is a way to help homeowners.. and yet keep them paying.
http://www.ianwelsh.net/how-to-help-homeowners/
To, absolutely agreed that it's vitally important not to advocate or encourage more moral hazard, for karmic reasons if nothing else. however, would it be wrong to withhold the interest from every monthly payment with a letter claiming that the payment is to be used for principal reduction only, until clear & marketable title can be proven? obviously, it would need to be written in proper legalese, but do you see the point?
besides, the whole point is to clog the gears of the machine so that it chokes on its own fraud.
Looks to me like the dumbasses should have read the fine print. Damn, where have I heard that one before?
But the fact is they knew exactly what they were doing. Unfortunately--for them--perhaps we have not yet devolved into pure gangsterism and what went around will yet come back around.
Preponderance of evidence:
The bank extended a loan for more than the property was worth, based on an estimate of value that they paid for, in order to facilitate their resale of the loan as a security, and further they made the loan under terms that they knew I could not afford.
The bank would need to argue that it is staffed with dimwits that do not understand the value of money, the NPV of a future stream of earnings and simply could not concieve of a waitress being unable to service a mortgage on a million dollar home.
I think a smart DA could crank up a RICO case.
Taking your analogy, what if the child had been lured into the street by his own parents (they were playing catch with the kid and pitched the ball over his head or, as simple neglect, had offered the kid $100 per day to cross the street at the same time each day without watching for traffic) as a means to make money or cut down on their child rearing expenses (say it is a high-maintenance, special needs child)?
Somehow the Clean Hands Doctrine comes to mind in this MBS scenario, at least in spirit. The failure to legally maintain clear title of the properties was completely willful and the intent nothing but nefarious.
These people borrowed money with a home as collateral, but we say that they bought a home. Investors borrowed money with implicit government backing as collateral, but we say that they used leverage. Which was riskier and which was performed by someone supposedly able to price risk?
So, is there any question that when a business looses its ability to pay its obligations it should go out of business? Yes, I guess there is. The point being that these are apparently extraordinary times where normal expectations have been altered.
I don't think anyone should get a free ride, but I don't think that it wise to suckle failed businesses while simultaneously throwing people out in the streets. I can't see how that would make for a good outcome.
Is this where the sharks start a feeding frenzy on themselves? My neighbor, original home loan from broker, the mortgage was passed, in the space of just a few years, from broker to a bank (Wells F) then passed back and forth 3 times to different banks, finally back to Wells. The banks will be fighting banks? Fighting with the MBS people? What happens when one of the banks or MBS brokers is not in existence anymore. What a mess. If I was in a home that was financed like this, I wouldn't pay either. Free housing for all! (sarcasm). Shit, was I stupid. Actually paid for my house.
Washington needs a new bailout program...JAIL
Uh, Glad ZH is reporting this, but it (this problem) is old news and has been reported for years at Naked C and FDL to name a couple of places.
Uh, the news is last week's court decision, not the underlying problem.
The vote-buying rally continues.
Psst! It's not called fraud when you're a fag, it's called God's work.
I've always felt that real estate got this all started and will finally be where the pain becomes undeniable. I guess the question is whether this actually results in more market price disclosure or less. The more stinking crack shacks that are revealed for not being Beverly Hills Mansions, the more mark to market mortgage holders must endure, thus messing up their pretend balance sheets and leverage ratios. But didn't the banks largely sell all their crap mortgages to suckers like the Fed and other robotic buyers or non-performing paper? So who out there is claiming this junk on their balance sheets that is really worth a nickel on the dollar?
less price disclosure in the short term, the same in the long term...
The stories out of Las Vegas are legendary. People NOT in default coming home to be locked out of their own house by some piece work agent working for the RE agent, who is working for the bank's servicer, who is working for the bank, would might not be a bank, but nobody is really sure who own the mortgage because it was filed electronically and been sold as part of MBS a couple times over. There are a handful of scam/solution folks working to vacate these liens on sold mortgages that no longer have the "original" note/dot. Strength in numbers.
If there is a class-action lawyer in the house, I know of a couple of condo deals done by Wells Fargo in San Diego, which were done Fannie Mae. Problem was the condo association did not have enough in the reserve accounts for any units in the complex to qualify for Fannie. Now the properties is underwater big time because the complex is next to bankrupt. Its OK though. Wells Fargo will send their bill to Fannie/tax payer and be made whole on any deficiency. It was a gray area at underwriting, but now that WF broke the rules on the FHA requirements and wants you to make them whole, well someone needs to chase it.
Its a mad house.
Remind me again why I still make a mortgage payment.
- cause that's the way Mom raised us, always do the right thing.
The same reason the economy still works--force of habit.
Best to quit now, cold turkey, before you become said turkey.
Perhaps, and I'm serous about this, that you should stop paying your mortgage until the lender is proven to be the holder of the mortgage because how do you know that the money is going to the right place?
Because, you may need to protect yourself from the possibility of some other lender to showing up and claiming that you have never made payments, or perhaps said lender winning some lawsuit you never knew was going on, and being awarded via clawback or repossession. If your mortgage changes hands more than twice, How would you know you are paying the correct lender since you have no proof?
Im not a legal expert. Just a thought...
You know this makes sense. I've been renting since 2003, but if I had a mortgage still after all these CDOs/derivatives nonsense and my loan was passed around. I would write a certified letter asking the lender sending me invoices for proof of ownership of my mortgage.
If they refused, I would sue in court to get the title to the home assigned to me since I cannot find out who actually owns my debt anymore and don't know who to pay and they cannot prove that they own the debt.
This guy has the process figured out:
www.freeandclearin90.com
JT,
The only reason I make mine is that it is held in the portfolio of a small regional bank. Otherwise I'd be far more tempted to tell them all to go shove it. (Though I really wouldn'
t, but it's getting so damn insane you have to wonder)
How grateful are all these lenders? GMAC? JPM?
http://money.cnn.com/2009/12/30/news/companies/gmac_bailout/index.htm
http://www.huffingtonpost.com/2009/03/23/jp-morgan-spending-millio_n_178...
You can cut the greed with a knife.
Think about all of those people that Bought Forclosed Homes who do not have a Good and Mercantile Title. They may not even know they do not have a good Title until they go to Sell. If I bought a Forclosed Home I would be very worried right now.
I wonder how many Law Suits will develop from that little ditty.
One question (sorry if this was covered above), would they not have title insurance and unless it includes a specific exclusion (as mentioned) it would be covered, right? I guess title insurance is optional?
For those not understanding the problem at hand.
Banks use to be the originator and holder for life of the loan.
Then banks started selling those loans after holding for shorter and shorter periods of time.
Those that bought up the loans pooled them with other loans. Then they sold of shares or 'tranches' of those pools. This diluted the chain of title.
In addition, because it saved the banks a whopping $50-75 per sale, they did not bother maintaining chain of title by registring the transaction with the county.
Also MERS started becoming the default chain of title which actually is not a valid vehicle. MERS was suppose to be just a data base for reference.
So, because of the tranches, claiming title to a house would be like trying to claim title to a piece of sod in a condo complex. All is owned by everyone but none is owned by one.
The originator of the loan or the 'servicer' has passed the title on so they can no longer close on that title.
The orginal rules of title transfer were there for a reason. Very good reasons.
The problems the banks are having now were created by those very banks. They are getting what they deserve.
Good.
I hope a lot of people get to keep their houses and maybe even declare 'adverse possession' That means if you don't pay on the mortgage but you occupy the property and pay the property taxes for 5 years, you get to keep the house free and clear. (At least in Calif)
This cost will only be carried by the tax payer if you allow it. What would normally happen is that the bank would fail and the stock holders in the bank would lose. Because the bank was poorly managed, that is the way it should be.
MERS and free housing for everyone bitcheeeez
+ AAA rated tranche
Thank you for the concise and accurate summary! It may "create chaos," but the issues are pretty damn clear.
The banksters, rating agencies, etc., may never have jail to fear, but is it too much to expect them to lose their ill gotten gains at least?
Given the "stress" this would place upon their ponzi system, of course, the public would again have to assess what to do about "the financial system."
Perhaps we'd actually think about it this time--and do things differently.
WFC in Minneapolis had an Institutional Lending Dept that was 98% staffed by temps in 2002-2004. Billions of dollars flowed through that office and the staff was totally random. Due diligence was a laughable concept not even given lip service.
So many banks have closed branches or just closed and moved piles of files to someplace else or had them shipped to a storage warehouse. You have to wonder who tracked all those documents by file number and "bankers box" number and pallet number and pallet rack location number WITHOUT A SINGLE ERROR! One error and they've lost the document, misfiled until every document is handled and verified again through the records locator. All the "produce the documents" defense does is force the bank to do its homework before the court date. If they don't have it, they can punt on that foreclosure and just move onto the next ream awaiting processing. As for title insurance, the mortgage lenders require it and have it name them as the "benficiary", not the people paying the bills at closing. Any current delay is just that, the process machinery will keep grinding, so keep paying your mortgage if you're current and don't jump into a ship that sinks you.
MERS has no bearing on Title or Chain of Title. Title is ownership interest in the real property.(NOT the Mortgage or Note) MERS may be used/is used for tracking Chain of Assignments, (which is probably what you intended to say)
MERS is accurate as to whom the LIENHOLDERS may be/are. You are right that it was original set up as a database to quickly transfer LIENS (Mortgages) to other parties.
Anyone remember my and other posters comments about the Addendums the Buyers of Forclosed Homes have to sign, prepaired by the Lenders.
Especially the clause about giving a Special Warranty Deed in leu of a General Warranty Deed. Another clause about having to give the house back if the Buyer prevailed in a Suit against the Lender. Plus, a lot of other clauses that would be of concern.
rally on garth.....rally on wayne!!!!
I WANNA SEE <INSERT BANK HERE> BLOW UP!!! REALLY, I DO....
"Detroit-based Ally, the auto and home lender formerly known as GMAC Inc., is 56.3 percent owned by the U.S. after more than $17 billion of taxpayer bailouts. "
Hmmm
This could setup a real battle between mortgage companies and servicers and homeowners. Traditionally, state "recording laws" govern these sorts of things, but you can bet JPM and GMAC, along with every other bank, will run to Barney Frank and their other buddies in DC. So will Congress try to enact some sort of law to supersede state laws. Mortgage lending and securitization goes across state lines so you've got the commerce clause to deal with. But whether a lender, or subsequent assignee, records the assignment has always been a matter of state law.
This could setup a real battle between mortgage companies and servicers and homeowners. Traditionally, state "recording laws" govern these sorts of things, but you can bet JPM and GMAC, along with every other bank, will run to Barney Frank and their other buddies in DC. So will Congress try to enact some sort of law to supersede state laws? Mortgage lending and securitization goes across state lines so you've got the commerce clause to deal with. But whether a lender, or subsequent assignee, records the assignment has always been a matter of state law.
Will defaulting homeowners get a free house out of this? If the foreclosing creditor cannot establish a "chain" of assignments giving it legal ownership of the note and mortgage that might actually happen. My gut reaction was, "this ain't right ... they don't get a free home" but after further thought I am of the opinion that this entire mortgage game is such a racket it would serve them right if some of these homeowners are able to obtain clear and unencumbered title.
You think defaulting homeowners should not get a free house. But if one cannot prove who owns the house, and the bank takes it back, doesn't the bank get a free house? Well, they don't keep the house, they sell it. So- where do the proceeds from that sale go? That is the question I am interested in. If the proceeds actually flow through to the same folks that the monthly payments flowed through to, then things are fine. But who is watching to see that this actually happens? Would the owner(s) of the loan sue the bank if monthly payments stopped? If yes, then that would probably be a sufficient check and balance. However, if the foreclosed-on homeowner sued for proof that the ones that bank was sending monthly payments to were the actual owners of the loan, and if such proof could not be offered in court ... what then?
The PDs are front running each other off a cliff trying to buy as much worthless pieces of paper that do not reflect anything close to earnings. They may just price in the next 20 days of POMO right here and now.
What if they took a $100,000. Loan and Counterfited it. Then put $200,000. in many different Traunches.
What if they have to go back and find all of the pieces of the Loan to find all of the Owners before they can Forclose. What if they find twice the amount of Owners than the Loan Amount? I think they will.
"What if they have to go back and find all of the pieces of the Loan to find all of the Owners before they can Forclose. What if they find twice the amount of Owners than the Loan Amount?"
forensic accounting & title services could be a growth industry, yes? instead of shouting at TPTB on Missouri's dime, Bill Black should start a new firm. he'd make his point & make a mint in the process.
The Insurers like MBI, ABK, AIG that wrote Credit Default Swaps will have to release the rights.
Hopefully everyone facing foreclosure will find out about this and take the time out of their busy schedule job-hunting to go to court and say, "I don't believe these guys have valid title."
Simple enough.
In Florida - the tax lien trumps the mortgage and wipes it out. I hope some of these servicers are paying attention to the property tax payments because most of the teaser loans required the borrower to pay the taxes. If no one is paying said property taxes (and they are not) - a whole notha can of worms. Someone with some $200,000 in cash could end up owning a few houses for the cost of the tax lien and tell everyone else to "kiss it" and that person holds the tax lien for 3 years - borrower does not redeem - house is the tax lienor's....... Looks like some big financial institutions failed to learn about basic property law which is different in all fifty states and also different per municipality........Now - all we need is one huge Florida hurricane and a huge California Earthquake and this system goes down the drain entirely.
DOW weekly chart shows key resistance around 10,700
http://stockmarket618.wordpress.com
I will add: Judges don't like it when their property values go down and in Florida - Judges are elected. And are watching pensions aand their real estate holdings tank.
Question: If I own an MBS with 40 tranches composed of 160 different mortgages, do I own the mortgages or just the right to receive the income?
You don't hold the mortgages, just the right to the income stream (if there is one).
FI wonder how many people might be able to sue for damages due to this. Considering there's been what ~8 million foreclosures (with HBPA of 2007 there would have been 0, and with actual letting the market do its job [not that that is the right choice] we would have had 20+ million), and many of those mortgages were chopped and screwed, it would not surprise me to see 1 million of such bs foreclosures already run through the system.
We all know EVERY bank in the world is broke, but how about after being sued (or having loans with those that are...derivatives buster???) by a million homeowners. This could get, really, really ugly. But if its prosecuted like anything else, expect a 10 million dollar settlement in 2016.
Hell you probably have a few people (I know hard to believe) that moved into such fraudulently repossessed homes, what happens to them?
Punitive damages?
Jail time?
Well at least in the upcoming deadlocked congress, Ben Bernanke keeps his default printing press option, since you know the republicans (the greatest whores as opposed to common streetwalkers) won't take it away. Meaning repubs and dem bitch at each other about how to do nothing (like this congress was..but 1000x worse), and in the meantime benny can print whatever he wants without congressional approval or power to stop him...for years.
So how much will Helicopter Ben print for this?
Worse yet, how bad would these banks be, if they WEREN'T profiting on this bs this whole time by defrauding the American people?
So many ways to look at this. So many possibilities. All on a silver platter. I give 90 percent odds no one is prosecuted for this blatant, industry wide (i'm sure) defrauding practice.
Final thought, how many people are paying their mortgage to the wrong people? You're paying X Rigged TBTF bank, when really it should be going to that one, or Freddie/Fannie.
How much is Freddie and Fannie GIVING in a backdoor bailout by allowing the Queen's banks a free ride in foreclosing on the governments inventory?
Just a thought.
I'm hard pressed to see how in any way casting a shadow of doubt on the chain of title of millions of properties can possibly be good for property values. This is a losing proposition for everyone but the squatters who live rent free at the expense of the rest of us. But I am sure we can all feel better now that these wretches won't be turned out on the streets .... next question is what kind of new tax we will have to pay to cover their right to cell-phone and internet access? After all, an I-Pad without the net is as good as a paperweight.
Ah, the squabbling of the jealous children over which one of them gets the bigger piece of candy and who deserves it more. Divide and conquer always wins and it's so easy for the PTB to mobilize it.
How about turning our sights upon the crooks who set this whole thing up, fraudulantly squeezing untold trillions from people the world over in the process--and then blackmailed the American public to bail their asses out with Trillions more dollars, many of which also ended up in their nasty little pockets?
This is like arguing about who gets the better prison cell . . . and it ain't the real criminals.
All the purchaser in forclosure need do to protect himself is go to the county courthouse in which the property is located, look up the owner of the mortgage as of its last assignment, contact that last assigned owner and slip that owner a few bucks to assign the mortgage to the buyer. Record that assignment to buyer and there is what we call a "merger of title"!
If this isn't obvious to lawyers who represent buyers in forclosure sales, there is something seriously wrong with the legal profession these days. Do law schools still teach property law these days, or is it all feminist legal theory?
I'm guessing a good deal of these judgments would be void ab initio... at this juncture, an assignment isn't going to help anyone...
Prospectively this might help, but who buys property without a title search and title insurance? When the search comes up that the seller is the lienholder, not much you can do or that would put you on notice of any contrary arrangement.
Any attorney worth his salt isn't going to allow a purchaser to buy without getting a release/assignment of the mortgage... the issue is knowing whether one exists and if so, who has the lien.
Also, it most cases for residential real estate, I'm guessing attorneys for the buyer don't get involved until the homeowner attempts to redeem the property or some other issue arises... we only get to play cleanup, not cook the dish.
If there is a judicial foreclosure action transferring title to the holder of an unrecored mortgage, which title is then transfered to a new buyer, then to get the property back, the foreclosed owner or his assignee is going to have to file an action to have the foreclosure declared void, and such an action is highly unlikely because the outcome is so uncertain, the equities being so profoundly against the foreclosed homeowner. If I were the buyer from the foreclosing lender/servicer, in addition to getting a quitclaim assigment of the mortgage from the last recorded assignee of the mortgage, I would file a verified (talking) petition to quiet title after my purchase (and before the property rises in price), with relevant docs attached, naming and serving all revelant parties, and I would get a default judgment since none of those parties would have an incentive to appear.
Admittedly this would add a couple grand to the cost of the purchase out of foreclosure, but it is a hell of a lot better than taking a crap shoot on title insurance, which may cost just as much as a suit to quiet title. I have reviewed several different title policies over the past few years, and some of them are full of very disturbing and surprising traps for the unwary in the exclusions. Most disturbing are the mineral leases which might have surface rights that you won't know about until you get a copy of the lease, and past voidable foreclosures, all of which arguably "show up" in the chain of title but are excluded by the insurance.
And even bigger trap will be the county appraisal district which is sure to ignore your purchase price and tax you on some much higher value derived from some CAD estimate based on new construction costs from a couple years back. If your real estate purchase involves big bucks, you had better approach the county commissioners and get an agreement capping your appraisal at your purchase price with a max annual escalator.
Real estate is a snake pit these days.
The problem with a quiet title action right after a foreclosure is that you give the homeowner an opportunity to contest the foreclosure judgment... Obviously, if they had the money in the first place, then they wouldn't have been foreclosed upon, but if you got a bargain purchase price, then you might get screwed when the judgment gets overturned and the property is auctioned again... and all that will cost a lot of time and money.
The problem is that, for me anyway, the sales price of a lot of this stuff has to be dramatically reduced to account for the title risk. The only reason I can conceivably try to purchase property at tax sale or foreclosure auction is that my attorney is cheap as hell. Otherwise, at this point in my life, I'd be forced to sit on the sidelines. I suspect a lot of other people are in the same boat... sitting, watching, waiting.
Also, when the bank screws up, you can sue them for not properly following the requirements of a sale... so, you'll collect one way or the other... but, with real property, you generally want the land instead of the cash (that's why you bought it). In the case of a contested sale, it's best to enter into an agreement with the bank that the SoL will be tolled for your claims as buyer, then you can present a unified front to the trial court against the homeowner... and bicker amongst yourselves after the fact.
The foreclosed homeowner or his assignee will be the only one with standing to try to void the sale. Most likely he will be precluded for failure to assert lack of a valid assignment of the mortgage in the original foreclosure action. Further, by statute in most states the homeowner has "constructive knowledge" of the last recorded assignee of the mortgage and thus "knows" that the foreclosing party did not have a right to foreclose. The homeowner isn't going to get a second chance to litigate the original foreclosure. And, of course, the equities are against him.
The danger lies with an earlier purchaser of the mortgage somewhere in the chain of title who was defrauded when he purchased the mortgage (or income rights in that mortgage) who had no knowledge of the foreclosure action, and who may have a legal or equitable right to a judicial transfer of the mortgage from the last recorded assignee, and who might be able to claim standing to attack the foreclosure and thus void the title to the current owner of the property.
Obviously, if the current owner has obtained and recorded an assignment of the mortgage, as a bona fide purchaser without knowledge of fraud between parties to a prior sale of the mortgage, then that goes a long way toward precluding successful suit by any other claimant buried back in the chain of mortgage title.
In this state, and I suspect most states, if a judgment is obtained through fraud on the court, it is likely void ab initio... it could have never been in front of the court in the first place... if so, and the judgment was obtained by default (which most probably are), then the homeowner need not show any meritorious defense to overturn the judgment. The homeowner need only show that a fraud was committed on the court. It doesn't matter if one month from the overturning, the same parties are back in the court, this time with the right paper work after another default by the homeowner...
I suspect that with a judgment that is void ab initio, the relative equities make no matter as the judge's hands are bound by law to invalidate the judgment.
Practically speaking, in the quiet title action, the homeowner will neither have the resources nor resolve to keep fighting... and to do the necessary discovery work to determine the fraud on the court. However, that doesn't mean the homeowner won't try.
The other issue is that if these judgments are void ab inito, then you may be able to dig many years back and "undo" the deals... precedent may bind the courts' hands... obviously it is terribly inefficient, but sometimes that's the law. No telling how many may be subject to being overturned.
Practically speaking, I don't think many will be overturned... but there is a bigger ammo pile for those wishing to fight the issue.
If you are buying a lender owned, foreclosed property then you need to get a general warranty deed (with no exclusions or qualifications) or you walk away. That will protect you in the event that a default judgement - in which the foreclosed homeowner never answered or appeared - might be overturned. Default judgments are vulnerable to be "reopened" in ways that do not apply to cases in which the defendant answered.
A ruling of Fraud on the court usually will result in a comtempt order in which the plaintiff in the fraudulently filed cases will have to cure the fraud or face fines or jail. In a well considered order, the plaintiff would be required to pay a stiff fine, and sort through the fraudulent cases and restore the status quo ante, undoing the foreclosures pending proper assignment of the mortgages and refunding proceeds to subsequent purchasers of the wrongfully foreclosed properties.
The job of a judge is to do justice, and he has the power to order the cure of all consequences of the fraud - not only restoring title to wrongfully foreclosed homeowners but also ordering the cancellation of subsequent sales and refunding the purchase price.
I cannot imagine a judge allowing subsequent purchasers to be damaged as a result of this kind of fraud on the court.
However I am not about to do the research required to check the judge's work in this particular case.
Practically speaking, what lender is going to issue a warranty deed with these risks overhanging? The whole point of the foreclosure is to get a haircut into the equation, giving the buyer a good deal (i.e. they couldn't find a private buyer). As a result, the buyer goes to insurance instruments rather than the document of transfer. The banks get to offload risk, the buyer gets protected to the extent the insurance company is solvent or systemically important, and everybody wins. The risk is just too difficult to quantify (as with about every investment presently)... which is why insurance plays such a huge role rather than a haggle between the parties.
I'm guessing that by statute, every state has mandatory law that binds the court's hands as to contribution required to be paid to a bfp for improvements made to the property prior to invalidation/service. This will ultimately be paid by the homeowner (never seen it, only seen it on farmland), since it is the homeowner that would benefit from the improvements. Not only would the judge not let the buyer get screwed, but there is probably a statute to that effect. Now, whether or not the buyer has the wherewithal to pay for the improvements is another issue altogether... as is what happens when the property is auctioned again since the homeowner is insolvent... (you get screwed on your initial bargain purchase price).
The court can only "do justice" insofar as the legislative body/court rules issued by highest court in jurisdiction have not tied its hands... and those hands may be tied in an incredible amount of ways in these actions...
Don't forget all the fees and taxes to register and transfer those mortgages. The banks were trying to skate past several hundred bucks per mortgage. Most of which thay had -fraudulently- charged the borrower for.
That's also a reason for judges to nail the banks. In many states those fees and taxes pay the judges salary. I bet a judge in Florida or Nevada could raise enough this way to pay his salary and the overhead for his courtroom.
excellent point
I guess no one on here watches the Apprentice or the recent re-runs that are
on 10x a day.
There are a ton of unemployed lawyers out there who cant get work.
Now, Lawyers have found other lawyers work.
Lawyers always figure everything out....they are the smart ones.
Wish I was a lawyer.
I see this as a well conceived plan to window dress the foreclosure numbers just before the elections. Who wants to argue that the Obama administration will laud the dramatically improved foreclosure situation just prior to the November elections. Of course, all attributable to the administration's astute and timely management of the economy.