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Gonzalo Lira On The Second Leg Down Of America's Death Spiral

Tyler Durden's picture




 

Submitted by Gonzalo Lira

The Second Leg Down of America’s Death Spiral

I swear to God Almighty: Mortgage Backed Securities are America’s Herpes—the gift that keeps on oozing.
 
Last Friday, Bank of America announced that it was suspending all foreclosure proceedings, presumably until further notice. Other banks have already suspended foreclosures in a whole truckload of states. A nationwide moratorium on foreclosures might soon happen—which would be a big deal: Global Financial Crisis, Part II—Longer, Wider and Uncut.

But the mainstream media—surprise-surprise—has downplayed the whole shebang. They’re throwing terms out there into the ether, but devoid of context or explanation: “Robo-signings”, “foreclosure mills”, forged signatures, “double booking”, MERS—it’s confusing as all get-out.
 
So the mainstream media just mentions it casually—“and in other news tonight . . .”—like it’s no big deal: A couple-three lines, lots of complicated, unfamiliar terms, an attitude like it’s a brouhaha over paperwork of all things!—and then zappo-presto-change-o!: They’re showing video footage of a cute koala nursing in the arms of a San Diego zookeeper.
 
But even the koalas know that something awful is heading America’s way. Smart little critters, they’re heading for the treetops, to get away from this mess.
 
So what the hell is going on with the God forsaken mortgage mess in the United States?
 
It’s got a lot of bells and whistles, but it’s basically quite simple: It’s all about the fucking Mortgage Backed Securities (MBS). Again.
 
So this is what happened, more or less—the short version:

In the crazed frenzy to get as many mortgages securitized during the Oughts, banks took shortcuts with the paperwork necessary for the Mortgage Backed Securities. The reason was because everyone in the chain of this securitization mania got a little piece of the action—a little slice of the MBS pie in the shape of commissions.
 
So in the name of “improved efficiencies” (and how many horror stories are we finding out, carried out in the name of “improved efficiencies”), banks digitized the mortgage notes—they didn’t physically endorse them, like they were supposed to by the various state and Federal laws.
 
Plus—once the wave of foreclosures broke, and the holes in this bureaucratic paperwork became evident and relevant—some of the big law firms handling the foreclosures for the banks started doing some document fabrication and signature forgery, in order to cover up the mistakes—which is definitely illegal.
 
Long story short (since this is the short version): A lot of the foreclosed properties might not have been foreclosed legally. The people evicted might still have a right to their old houses. The new buyers might not actually own the REO’s they bought off the banks. The banks could be on the hook for trillions of dollars, and in the sights of literally millions of lawsuits.
 
In short: This could become another massive oozing sore, complete with yellow-green pus drip-drip-dripping out of some unmentionable places on the Body Economic.
 
Now—the long version:
 
Homeowners can only be foreclosed and evicted from their homes by the person or institution who actually has the loan paper—only the note-holder has legal standing to ask a court to foreclose and evict. Not the mortgage—the note, which is the actual IOU that people sign, promising to pay back the mortgage loan.
 
Before Mortgage Backed Securities, most mortgage loans were issued by the local Savings & Loan. So the note usually didn’t go anywhere: It stayed in the offices of the S&L down the street.
 
But once mortgage loan securitization happened, things got sloppy—they got sloppy by the very nature of Mortgage Backed Securities.
 
The whole purpose of MBS’s was for different investors to have their different risk appetites satiated with different bonds. Some bond customers wanted super-safe bonds with low returns, some others wanted riskier bonds with therefore higher rates of return.
 
Therefore, as everyone knows, the loans were “bundled” into REMIC’s (Real-Estate Mortgage Investment Conduits, a special vehicle designed to hold the loans for tax purposes), and then “sliced & diced”—split up and put into tranches, according to their likelihood of default, their interest rates, and other characteristics.
 
This slicing and dicing created “senior tranches”, where the loans would likely be paid in full, if past history of mortgage loan statistics was to be believed. And it also created “junior tranches”, where the loans might well default, again according to past history and statistics. (A whole range of tranches were created, of course, but for purposes of this discussion, we can ignore all those countless other variations.)
 
These various tranches were sold to different investors, according to their risk appetite. That’s why some of the MBS bonds were rated as safe as Treasury bonds, and others were rated by the ratings agencies as risky as junk bonds.
 
But here’s the key issue: When an MBS was first created, all the mortgages were pristine—none had defaulted yet, because they were all brand new loans. Statistically, some would default and some others would be paid back in full—but which ones specifically would default? No one knew, of course. If I toss a coin 1,000 times, statistically, 500 tosses the coin will land heads—but what will the result be of, say, the 723rd toss specifically? I dunno.
 
Same with mortgages.
 
So in fact, it wasn’t that the riskier loans were in junior tranches and the safer mortgage loans were in the senior tranches: Rather, all the loans were in all the tranches, and if and when a mortgage in a given bundle of mortgages defaulted, the junior tranche holders would take the losses first, and the senior tranche holder take the loss last.
 
But who was the owner of the junior tranche bond and the senior tranche bond? Two different people. Therefore, the mortgage note was not actually signed over to the bond holder. In fact, it couldn’t be signed over. Because, again, since no one knew which mortgage would default first, it was impossible to assign a specific mortgage to a specific bond.
 
Therefore, how to make sure the safe mortgage loan stayed with the safe MBS tranche, and the risky and/or defaulting mortgage went to the riskier MBS tranche?
 
Enter stage right, the famed MERS—the Mortgage Electronic Registration System.
 
MERS was the repository of these digitized mortgage notes that the banks originated from the actual mortgage loans signed by homebuyers. MERS was jointly owned by Fannie Mae and Freddie Mac (yes, those two, again, I know, I know: Like the chlamydia and the gonorrhea of the financial world—you cure ‘em, but they just keep coming back).
 
The purpose of MERS was to help in the securitization process. Basically, MERS directed defaulting mortgages to the appropriate tranches of mortgage bonds. MERS was essentially the operating table where the digitized mortgage notes were sliced and diced and rearranged so as to create the Mortgage Backed Securities. Think of MERS as Dr. Frankenstein’s operating table, where the beast got put together.
 
However, legally—and this is the important part—MERS didn’t hold any mortgage note: The true owner of the mortgage notes should have been the REMIC’s.
 
But the REMIC’s didn’t own the note either, because of a fluke of the ratings agencies: The REMIC’s had to be “bankruptcy remote”, in order to get the precious ratings needed to peddle Mortgage Backed Securities to insitutional investors.
 
So somewhere between the REMIC’s and the MERS, the chain of title was broken.
 
Now, what does “broken chain of title” mean? Simple: When a homebuyer signs a mortgage, the key document is the note. As I said before, it’s the actual IOU. In order for the mortgage note to be sold or transferred to someone else (and therefore turned into a Mortgage Backed Security), this document has to be physically endorsed to the next person. All of these signatures on the note are called the “chain of title”.
 
You can endorse the note as many times as you please—but you have to have a clear chain of title right on the actual note: I sold the note to Moe, who sold it to Larry, who sold it to Curly, and all our notarized signatures are actually, physically on the note, one after the other.
 
If for whatever reason, any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.
 
To repeat: If the chain of title of the note is broken, then the borrower no longer owes any money on the loan.
 
Read that last sentence again, please. Don’t worry, I’ll wait.
 
You read it again? Good: Now you see the can of worms that’s opening up.
 
The broken chain of title wouldn’t have been an issue if there hadn’t been an unusual number of foreclosures. Before the housing bubble collapse, the people who defaulted on their mortgages wouldn’t have bothered to check to see that the paperwork was in order.
 
But as everyone knows, following the housing collapse of 2007–‘10-and-counting, there’s been a boatload of foreclosures—and foreclosures on a lot of people who weren’t sloppy bums who skipped out on their mortgage payments, but smart and cautious people who got squeezed by circumstances.
 
These people started contesting their foreclosures and evictions, and so started looking into the chain of title issue . . . and that’s when the paperwork became important. So the chain of title became important. So the botched paperwork became a non-trivial issue.
 
Now, the banks had hired “foreclosure mills”—law firms that specialized in foreclosures—in order to handle the massive volume of foreclosures and evictions that occurred because of the Housing Crisis. The foreclosure mills, as one would expect, were the first to spot the broken chain of titles.
 
Well, hell, whaddaya know—turns out that these foreclosure mills might have faked and falsified documentation, so as to fraudulently repair the chain-of-title issue, thereby “proving” that the banks had judicial standing to foreclose on a delinquent mortgage. These foreclosure mills might have even forged the loan note itself—
 
—wait, why am I hedging? The foreclosure mills actually, deliberately and categorically faked and falsified documents, in order to expedite these foreclosures and evictions. Yves Smith at naked capitalism, who has been all over this story, put up a price list for this “service” from a company called DocX—yes, a price list for forged documents. Talk about your one-stop shopping!
 
So in other words, a massive fraud was carried out, with the inevitable innocent bystander getting caught up in this fraud: The guy who got foreclosed and evicted from his home in Florida, even though he didn’t actually have a mortgage, and in fact owned his house free-and-clear. The family that was foreclosed and evicted, even though they had a perfect mortgage payment record. Et cetera, depressing et cetera.
 
Now, the reason this all came to light is not because enough people were getting screwed that the banks or the government or someone with power saw what was going on, and decided to put a stop to it—that would have been nice, to see a shining knight in armor, riding on a white horse.
 
But that’s not how America works nowadays.
 
No, alarm bells started going off when the title insurance companies started to refuse to insure the title.
 
In every sale, a title insurance company insures that the title is free-and-clear: That the prospective buyer is in fact buying a properly vetted house, with its title issues all in order. Title insurance companies stopped providing their service because—of course—they didn’t want to expose themselves to the risk that the chain-of-title had been broken, and that the bank had illegally foreclosed on the previous owner.
 
That’s when things started gettin’ innerestin’: That’s when the Attorneys General of various states started snooping around and making noises (elections are coming up, after all).
 
The fact that Ally Financial (formerly GMAC), JP Morgan Chase, and now Bank of America have suspended foreclosures signals that this is a serious problem—obviously. Banks that size, with that much exposure to foreclosed properties, don’t suspend foreclosures just because they’re good corporate citizens who want to do the right thing, with all the paperwork in strict order—they’re halting their foreclosures for a reason.
 
The move by the United States Congress last week, to sneak by the Interstate Recognition of Notarizations Act? That was all the banking lobby—they wanted to shove down that law, so that their foreclosure mills’ forged and fraudulent documents would not be scrutinized by out-of-state judges. (The spineless cowards in the Senate carried out their Master’s will by a voice vote—so that there’d be no registry of who had voted for it, and therefore no accountability, the corrupt pricks.)
 
And President Obama’s pocket veto of the measure? He had to veto it—if he’d signed it, there would have been political hell to pay, plus it would have been challenged almost immediately, and likely overturned as un-Constitutional in short order. (The jug-eared milquetoast didn’t even have the gumption to veto it—he pocket vetoed it.)
 
As soon as the White House announced the pocket veto—the very next day!—Bank of America halted all foreclosures, nationwide.
 
Why do you think that happened? Because the banks are screwed—again. By the same fucking thing as the last time—the fucking Mortgage Backed Securities!
 
The reason the banks are fucked again is, if they’ve been foreclosing on people they didn’t have the legal right to foreclose on, then those people have the right to get their houses back. And the people who bought those foreclosed houses from the bank might not actually own the houses they paid for.
 
And it won’t matter if a particular case—or even most cases—were on the up-and-up: It won’t matter if most of the foreclosures and evictions were truly because the homeowner failed to pay his mortgage. The fraud committed by the foreclosure mills casts enough doubt that now, all foreclosures come into question. Not only that, all mortgages come into question.
 
People still haven’t figured out what this all means—but I’ll tell you: If enough mortgage-paying homeowners realize that they may be able to get out of their mortgage loan and keep their house, scott-free? Shit, that’s basically a license to halt payments right the fuck now. That’s basically a license to tell the banks to fuck off.
 
What are the banks gonna do—try to foreclose and then evict you? Show me the paper, motherfucker, will be all you need to say.
 
This is a major, major crisis. This makes Lehman’s bankruptcy look like a spring rain, compared to this hurricane. And if this isn’t handled right—and handled right quick, in the next couple of weeks on the outside—this crisis could also spell the end of the mortgage business altogether. Of banking altogether. Hell, of civil society. What do you think happens in a country when the citizens realize they don’t need to pay their debts?
 
If this isn’t handled right, then this will be the second leg down, in the American Death Spiral.

    Oh dear Lord, he said, calm yet despondent. Look at it, he said. I mean just look at it! Have you ever seen anything like it?!?

    No, said the koala—truthfully. And you know, uh . . . it’s . . . It’s pretty disgusting, actually. So would you mind putting that thing away?

«««  •  »»»
 
Note: Next post, I’ll discuss a possible—I emphasize, a possible—silver bullet that will fix this whole Mortgage Mess—but it’ll have to be done soon, and have to be carried out fast, and sold under the guise that it’s this great new program that everybody—and I mean everybody—will simply just love to be a part of!—
 
—Streamlined Refinance.

 

 

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Thu, 10/14/2010 - 15:40 | 650385 Overpowered By Funk
Overpowered By Funk's picture

No of course not, but if they do have reason to come by and visit they all better be up to fucking date on their mortgage payments. I hate hypocrites.

Thu, 10/14/2010 - 14:39 | 650066 kayl
kayl's picture

I agree. There is no money, and there is no debt. There's only fake money and discharge of debt. In this UCC contract law, a claim is just a piece of paper. They are not actually asking you for money (though people misunderstand), since there is none. They are asking you to discharge the debt.

Under the laws of the UCC, you must accept for value every claim you receive and return for discharge, settlement, and closure. The easy part is you can use a transfer instrument in the form of an international money order (a piece of paper you write yourself and sign) to discharge debt.

Get it: fake demand for money, fake payment back of money. You guys are way behind on Article 3 of the Uniform Commercial Code.

Most people treat money like it was gold and silver about 300 years ago. Get with the debt-based monetary system and figure out how it works. Modern Money Mechanics at the Fed website and UCC posted at Cornell Law University are the keys.

Thu, 10/14/2010 - 13:22 | 649758 iDealMeat
iDealMeat's picture

Banks ate they're own too..  You can bet that any lawyer and x-bank employee is looking into they're own mort..  And they have more info on the game..

Truly a full-blown cluster fuck..

I'm thinking about sending a letter to my servicer.. Gimmie 3% or I squat..

Thu, 10/14/2010 - 11:40 | 649370 buzzsaw99
buzzsaw99's picture

merely a flesh wound. [/monty python]

Thu, 10/14/2010 - 11:41 | 649373 WaltzTangoFoxtrot
WaltzTangoFoxtrot's picture

So lets do some math to see how big the issue is.

100,000 foreclosures per month in Sept '10 - lets call that peak, and use an average of 75,000 foreclosures.  And let's count the "skankie" mortgage broker years as 2002 through 2007, or six years.    And let just say that the average note is $100,000 (we are talking Detroit and Akron, not Prince Georges County here people). and lets just say that ahlf are frauds.

75,000 foreclosure actions/mo x 12 Mo/yr x $100,000 note x 6 yrs x .5  =  $2.7 trillion.  

Wow.  

WTF

Thu, 10/14/2010 - 11:50 | 649421 WaltzTangoFoxtrot
WaltzTangoFoxtrot's picture

Another thought - even if only 10% are frauds, its still $540 Bn. 

Tarp III anyone?

Thu, 10/14/2010 - 12:55 | 649666 Papa Legba
Papa Legba's picture

Nah. American Revolution II will come first.

Thu, 10/14/2010 - 12:55 | 649667 Papa Legba
Papa Legba's picture

Nah. American Revolution II will come first.

Thu, 10/14/2010 - 18:48 | 651038 Milestones
Milestones's picture

11,000,000 homes underwater, 20% or 2,200,000 underwater by 25% was 2.9 Bn. Didn't do your math but it sure sounds about right.    Milestones

Thu, 10/14/2010 - 11:43 | 649382 RobotTrader
RobotTrader's picture

Definitely worth watching these...

Not looking good..

First sign of weakness we've seen in several months.

 

Thu, 10/14/2010 - 11:45 | 649401 wintermute
wintermute's picture

The banks will have to buy back all $6 trillion of MBS. They are bust (again).

Thu, 10/14/2010 - 12:44 | 649606 packman
packman's picture

"They are bust (again)."

Not sure why everybody keeps saying that.  I've been making this point for several days now, to no response for whatever reason:

The banks don't have to write down the loss until the foreclosures goes through.

Solution for the banks?  Freeze foreclosures.  Then allow them through only at a trickle, and after housing prices have (once again) been artificially pumped up, and the loss that they do have to take on each foreclosure is minimal.

Problem solved.

P.S. You may ask - who the heck is going to be buying these foreclosed houses, at inflated prices, years down the road?  The answer - the U.S. government.  They will do it in response to the sudden "housing shortage" that will be declared about 3 years from now, in the name of affordability.  They'll buy them at inflated prices from the bank, and offer them as section-8-style housing "temporarily" owned by the government and offered at low rental rates.

You watch.  I am almost certain this is how this is going to play out.

 

Thu, 10/14/2010 - 12:46 | 649630 Jean Valjean
Jean Valjean's picture

I see it playing out a bit differently but with the same outcome.

In a few years, the federal government will own 50% of the housing in the country.

Thu, 10/14/2010 - 12:49 | 649639 redpill
redpill's picture

 They already do, through Fannie and Freddie.

Thu, 10/14/2010 - 13:35 | 649811 packman
packman's picture

Not so much.  At least with F/F peope eventually own the houses outright via payoff, or can sell them, and they have legal write to do what they want with them (subject to HOA of course).  If you're strictly renting you don't have those options.

 

Thu, 10/14/2010 - 12:57 | 649673 Papa Legba
Papa Legba's picture

So, since the federal government is "of the people, by the people and for the people," half of us will own our houses outright, eh?

 

Thu, 10/14/2010 - 13:18 | 649744 cossack55
cossack55's picture

Wow. Read much Machiavelli?  That is a rather thought provoking read.  HHHMMmmmm. Ponder, ponder.

Thu, 10/14/2010 - 13:36 | 649820 packman
packman's picture

I'm about as Machiavellian as they come, without crossing over into birther/truther-land.

 

Thu, 10/14/2010 - 13:23 | 649767 cougar_w
cougar_w's picture

Okay, let's game that out then:

Freeze foreclosures to halt price discovery and losses. Leads to...

Massive moral hazard (I hate that term) in homeowners with underwater mortgages (most of them are) leads to...

Massive halt in mortgage payments for many Americans esp unemployed or anyone at financial risk (which is everyone), leads to...

Everyone seeing the handwriting on the wall so everyone (even wealthy) halt servicing of mortgage debts, leads to...

Massive loss of income for banks and GSEs, implosion of RE industry, implosion of home builders, leads to...

No homes built, sold, exchanged or foreclosed in the US of A. Period. Forever. What you see is what we got. Cash is king on all sales. Home prices fall like a rock. Velocity of money in the shitter. Epic lulz ensue.

Did I miss anything?

Thu, 10/14/2010 - 13:26 | 649777 RichardENixon
RichardENixon's picture

You missed the part where the Federal Government takes all the bad loans from the banks and sticks the taxpayer with the liability. Other than that you were pretty spot on.

Thu, 10/14/2010 - 13:45 | 649852 Minion
Minion's picture

I don't think US bond sales will keep going well if FED keeps monetizing everything.  Look at commodities right now.......... QE2 isn't even out.  You can only steal for so long until the scheme gets figured out.  Taxpayer is not spending right now and Bernanke is nervous about it.  Will he spend after getting hosed yet again?

Thu, 10/14/2010 - 14:00 | 649940 traderjoe
traderjoe's picture

I don't think the tax-payers will be willing to bail-out the banks again, especially in this instance where they were so clearly at fault. 

CNBC had a guy on earlier that pointed out NO ONE might have clear title to their home. This is NOT just a foreclosure problem. Every mortgage securitized. Slowly the MSM is leaking out some of the implications. 

Thu, 10/14/2010 - 14:20 | 650005 Dagny Taggart
Dagny Taggart's picture

I don't think the tax-payers will be willing to bail-out the banks again

You say that like its optional.

Thu, 10/14/2010 - 18:02 | 650905 CH1
CH1's picture

Right. Who's going to do anything about it? At least not as long as their TVs still function!

Thu, 10/14/2010 - 14:28 | 650039 FEDbuster
FEDbuster's picture

If originator and securitizers are forced to buy back all the MBSs they sold at original sale price plus fees, this is the straw that breaks the camels back.  Of course the FED still has a bunch of the MBS that their owners (member banks) dumped on them.  The other MBS holders out there should be calling securities law firms this week to pursue rescission of the fraudulent securities.

Thu, 10/14/2010 - 14:37 | 650071 traderjoe
traderjoe's picture

Yes. And I think the big banks would be nationalized this time around. That might qualify as a 'bail-out', but not in the TARP/$144 billion bonus one-year later sort of way.

Of course, we haven't touched on the whole derivates/CDS mess at both the bank and MBS level. YIKES!

Thu, 10/14/2010 - 15:36 | 650371 FEDbuster
FEDbuster's picture

Even if they are "nationalized" (when banksters own the government, what is a government takeover of the banks?), Obumer would still have to say FU to the MBS bagholders (like he did with the GM bondholders) to "save the system".

Thu, 10/14/2010 - 22:35 | 651684 StychoKiller
StychoKiller's picture

Careful there, Obamatron -- stay away from Dealy Plaza!

Thu, 10/14/2010 - 13:41 | 649843 Boxed Merlot
Boxed Merlot's picture

No homes built...

 

Funny thing here, new homes currently have clear title.  This is the element that will make a new structure have more value than an old one, even if all other things are equal.  Imagine, being able to transfer your property legally. Priceless.

Thu, 10/14/2010 - 14:45 | 650092 Big Corked Boots
Big Corked Boots's picture

+1

Most people don't understand that when the property is held for a long period of time, the title starts to fade away. Completely opposite of what you might think. I bought a farm that was family held for 3 generations... I learned from experience.

Thu, 10/14/2010 - 13:41 | 649844 packman
packman's picture

That's the general idea, but I wouldn't take it out quite that hyperbolically actually.  I'm Machiavellian, but I'm also realistic.  A complete breakdown of the housing market would kill the goose that lays the golden egg.  As it is - the goose remains on life support, but alive.

Thu, 10/14/2010 - 16:25 | 650615 cougar_w
cougar_w's picture

That's why I called it a game.

In game theory you deliberately go into every corner. That was just one corner of probably 6 or 8.  I'm not the only one running out the outcomes into all their corners. A couple more come to mind, in brief:

 

Corner 2: If mortgage loans can realistically only go out against new houses then new home prices go through the roof due to low inventory (due to a massive credit problem for builders) and increased competition among those with good credit but no cash;

Corner 3: If cash is the best way to buy a used home, then those with cash will tend to name a price they like. Cash buyers will bid against each other it some markets, but that is a much smaller pie to slice up than those with good credit bidding up new home prices in all markets. Imagine the buyer cartels that could be created in certain profitable markets ... [ahem]San Francisco Bay Area

Corner 4: Some markets will have net loss of buyers due to undesirable location or jobs environment. Sellers there will have no recourse except to abandon their homes as soon as they need to find a cash buyer. Those communities will have massive inventory of homes (used and new) and will become wastelands with no sales of any kind of home to any buyer. This could become a generational problem. [cough]Detroit[cough]

Like CD says further down, there is a price to the insanity they promoted over the past 20 years. We don't even know the true extent of the damage, yet from what little we've seen it's already mind-blowing.

Thu, 10/14/2010 - 21:09 | 651465 kayl
kayl's picture

Just become the banker and fund the loan. You could just send in a valid claim against the buyer and help him facilitate a non-cash discharge of debt through the Treasury.

Companies have been dipping into people's credit account at Treasury without their knowledge or consent all over: insurance, social security, assisted living, you name it.

Thu, 10/14/2010 - 14:01 | 649934 Cognitive Dissonance
Cognitive Dissonance's picture

No homes built, sold, exchanged or foreclosed in the US of A. Period. Forever. What you see is what we got. Cash is king on all sales. Home prices fall like a rock. Velocity of money in the shitter. Epic lulz ensue.

We would most certainly find out the true "cash value" of a home, that's for sure. Or more to the point, we would find out the the premium paid on the housing stock because of "easy" financing. Isn't that what's really going on? Isn't that what we're really talking about when we say "inflated" housing prices?

Remember how we were told that Congress wanted to put a house in every family? Did they try to do this by increasing the overall standard of living or up wages or encourage reduced credit card debt?

Nope, they leveraged leverage. Insanity squared doesn't give you more insanity, just a more acceptable insanity.

Thu, 10/14/2010 - 13:29 | 649787 malek
malek's picture

You should read a little more before posting opinions.

The banks would actually welcome if no one can foreclose anymore, as then they can postpone writedowns to eternity.

However, the MBS holders can demand all their money back (not just interest) from the originators, which tend to be the banks, as the securitizations stop generating income streams not due to default of underlying entities, but due to fraudulent construction.

Thu, 10/14/2010 - 13:35 | 649814 ZakuKommander
ZakuKommander's picture

MAYBE they can demand.  Depends on the documentation under which everyone transacted business.  And THAT can be fought over in court over many, many years.  As, of course, can any allegation of fraud.

And the States having any material impact because of their investigations?  Ho Ho Ho!  Like the way they brought down the cigarette industry?  LOL

Thu, 10/14/2010 - 13:56 | 649919 malek
malek's picture

Sure this could be dragged out in courts for years.

But you forget to reflect on who is the demanding people, and if they will (or even can) wait quietly and peacefully during these years.

Thu, 10/14/2010 - 14:57 | 650125 Ripped Chunk
Ripped Chunk's picture

Spaulding:I want a hamburger, no a cheeseburger, I want a hotdog. I want a milkshake. I want potato salad.....

Judge Smails: You'll get nothing and like it !

http://www.entertonement.com/clips/lxrxkfdbhw--You'll-get-nothing-and-like-itCaddyshack-Ted-Knight-Judge-Smails-John-F-Barmon-Jr-

They can demand all they want. Just because that crap went out the door with a AAA rating from Moody's & S&P doesn't mean it's worth a fuck now after all this shit has hit the fan.

Thu, 10/14/2010 - 13:47 | 649894 packman
packman's picture

However, the MBS holders can demand all their money back (not just interest) from the originators, which tend to be the banks, as the securitizations stop generating income streams not due to default of underlying entities, but due to fraudulent construction.

You're forgetting though that the MBS holders either:

  • Are the banks (e.g. Citi, JPM, etc.) (why would a bank demand payment from itself?)
  • Are cahoots with the banks (partners at the Fed etc. - e.g. GS)
  • Are the government (not politically expedient to demand payment and "crash the economy" again, especially when you have no transparency and an unlimited taxpayer backstop)

 

Thu, 10/14/2010 - 14:00 | 649937 malek
malek's picture

So you declare the problem nonexistent because no (material amount of) MBS are held outside the banking/federal system?

Laughable.

Thu, 10/14/2010 - 14:21 | 650009 packman
packman's picture

Not declaring it nonexistent at all; the problem still exists.  I'm just stating what I think is a possible method of transferring the problem from one of MBS writedowns to one of inflation; by using treasury debt as a medium.

It's not like we don't already have a huge precedent, in the form of $1.25T in Fed MBS purcahses.  This just extends that to the Nth degree, in perhaps a more politically-expedient fashion.

Thu, 10/14/2010 - 14:26 | 650031 packman
packman's picture

P.S. - please don't let this be construed as me being a proponent of this "solution".  Instead I find it incredibly insidiuous.  But I think it may happen.  The banks ain't goin' down without a fight - no way no how.  IMO the thought that "Wall, that's it for the banks then - they're screwed" is much more laughable.

Thu, 10/14/2010 - 14:38 | 650078 traderjoe
traderjoe's picture

State, corporate, union pension funds. Insurance companies. Foreign countries, banks, etc. 

This will be a mess!

Thu, 10/14/2010 - 14:46 | 650094 centerline
centerline's picture

It might postpone the write downs, but the income stream is further impaired and the bank is still on the hook for property taxes, maintenance, etc. and the liability (e.g. property insurance side of things).  Maybe, overall, the net benefit here is on the side of stopping or slowing foreclosures.  Just adding some thoughts...

Thu, 10/14/2010 - 14:27 | 650034 A Man without Q...
A Man without Qualities's picture

If banks have to buy back the mortgages, which they would have to do at par, there is a cash vs non cash event and this will destroy their capital ratios, regardless of what mark to fantasy method they employ... and everyone will know they are sitting on billions of bad loans....

Thu, 10/14/2010 - 15:13 | 650223 wintermute
wintermute's picture

packman. The foreclosures are irrelevant.

The problem is the MBS sold to investors. Every MBS sold has a revenue stream which comes from a trust. The trust must own the mortgage notes in order to collect the payments from homeowners. They all have a clause that if a certain percentage of the mortgages are not conveyed into the trust then the MBS can be put back to the originating bank. Because MERS never had any mortages properly transferred to it - then the MBS contain 0% valid mortgages. They are empty!

The banks have to buy them back from investors! The investors know this and have been trying to see inside the MBSs for months if not years already. But the banks are stalling them! They are cracking now under relentless pressure.

Thu, 10/14/2010 - 11:47 | 649407 Turd Ferguson
Turd Ferguson's picture

Yes, and what is the % of the S&P that is made up by financials?

$30B more in POMO through 11/8 ought to help keep the rest of the market (AAPL) afloat but after that.....

Thu, 10/14/2010 - 12:11 | 649499 HarryWanger
HarryWanger's picture

After that, Turd, more POMO.

Thu, 10/14/2010 - 12:21 | 649533 Turd Ferguson
Turd Ferguson's picture

I hear ya, Harry. Every single sign says to go 200% short yet everyone who does will be at the mercy of Bennie and The Inkjets.

Bob Pissonme will undoubtedly call it a market "climbing a wall of worry". What a fucking dumbass, arrogant stock pimp he is.

Thu, 10/14/2010 - 13:22 | 649759 Minion
Minion's picture

Weak hands are leveraged hands.  Banksters don't use leverage, they rent it out to the weak hands!  :D

Thu, 10/14/2010 - 13:19 | 649748 tmosley
tmosley's picture

The banks have a fever, and the only prescription...is more cowbell er POMO.

http://www.youtube.com/watch?v=q4royOLtvmQ

Thu, 10/14/2010 - 13:58 | 649928 GoinFawr
GoinFawr's picture

Haha! Did someone say 'COWBELL'?

http://www.youtube.com/watch?v=B_zNg__isZQ

Wait a sec, didn't C.Walken also say,

"You people, you sit there... you're in for one helluva surprise.."?

Regards

Thu, 10/14/2010 - 11:48 | 649413 HarryWanger
HarryWanger's picture

Yet the second largest company in the world continues it's climb higher. If AAPL breaks during all of this, we could see a major sell off. Remember, every fund on the planet holds AAPL, one little hiccup during this uncertainty and look out.

Thu, 10/14/2010 - 12:44 | 649621 Minion
Minion's picture

Indeed....... and there are no more shorts left to check the fall.  :) 

Thu, 10/14/2010 - 12:49 | 649642 Skeebo
Skeebo's picture

Jeez this is getting f'ing old.  Apple is not the second largest company in the world, not even close, not even in the Top f'ing 25.

 

Apple has the second largest MARKET CAP in the world b/c of it's insanely overvalued stock.

 

2nd largest Market Cap != 2nd largest company.  And such an insanely large market cap vs the size/value of the actual company?  Nuclear bomb waiting to go off (which I know you are alluding to in your post).

Thu, 10/14/2010 - 20:07 | 651223 akak
akak's picture

Yet the second largest company in the world continues it's climb higher. If AAPL breaks during all of this, we could see a major sell off. Remember, every fund on the planet holds AAPL, one little hiccup during this uncertainty and look out.

It is interesting, Harry, how no matter what the topic of discussion is here, or the subject of the thread, you always manage to try to turn it back to stocks, particularly the trendy stock-du-jour.  Do you have the ability to sing any other tune than "The Wall Street Rag"?  That one has been overplayed more times than I can count, and most people are sick of it by now --- especially the screeching decrescendo at the end of it.

Thu, 10/14/2010 - 22:42 | 651698 StychoKiller
StychoKiller's picture

AAPL may be dragging the rest of the market up with a chain, but that chain works both ways -- so long as the chain don't break!

Thu, 10/14/2010 - 11:43 | 649385 MountainMan
MountainMan's picture

The fucking banks are doomed.

Thu, 10/14/2010 - 11:51 | 649423 SWRichmond
SWRichmond's picture

The fucking banks have been dead men walking for years, zombified by regulatory forebearance, accounting forebearance, massive "injections" of stolen taxpayer capital, and the intertia of the vested interests.

TARP II: The Seizing of Private Retirement Assets.  5 minutes later, the shooting starts.

Thu, 10/14/2010 - 12:19 | 649529 1100-TACTICAL-12
1100-TACTICAL-12's picture

Let'em Burn.... Well got to go reload my pressure cooker with green beans, mabye a couple of boxes of .270's , Then i think I'll count my silver for the hell of it..

Thu, 10/14/2010 - 12:55 | 649668 Pining for the ...
Pining for the Fjords's picture

LOL-  Last night I finished our final tomato canning of the year, then grabbed my junk silver to do a count total based on the new and improved price!   At least I'm not the only one. 

Just FYI, your sentance reads as though you are throwing the .270 in with the canned green beans.  If true, let me know how that works out in the boiling phase...

Thu, 10/14/2010 - 19:13 | 651125 Milestones
Milestones's picture

I think you are the person I advised to get all "determinite"type tomato's for canning as they all ripen about the same time.

I was looking at a new seed catalog (2010) and the difference in price from a 2008 catalog was incredible. Many of the seed prices had doubled!

If this is any indicator, next year may well see a doubling again. If ya got a large garden in mind I sure would suggest you buy now. Seeing as I had four or five acres in mind, this is gonna be an expensive proposition.   Milestones

Thu, 10/14/2010 - 11:44 | 649395 Problem Is
Problem Is's picture

"Mortgage Backed Securities are America’s Herpes—the gift that keeps on oozing."

That's Tyler worthy...

Thu, 10/14/2010 - 12:20 | 649532 Dagny Taggart
Dagny Taggart's picture

Ick. I want to think of fuzzy kittens and flowers when I trade.

Thu, 10/14/2010 - 12:39 | 649599 williambanzai7
williambanzai7's picture

Use only as directed by your personal healthcare advisor

Thu, 10/14/2010 - 13:26 | 649779 Cognitive Dissonance
Cognitive Dissonance's picture

LOL. Please ship immediately. I have a note from my doctor.

On the other hand, someone needs to take your crayons away WB7 because you're starting to overheat and boil over. :>)

While many here admire your art work (myself included as an early fan of WB7) I'm beginning to worry about you walking into post offices and going.......well......postal. See, there's a fine line between brilliance and bat shit and I suspect you cross over many times a day.

Keep up the brilliant bat shit and ignore those voices in your head. :>) 

Thu, 10/14/2010 - 11:45 | 649400 Turd Ferguson
Turd Ferguson's picture

"The move by the United States Congress last week, to sneak by the Interstate Recognition of Notarizations Act? That was all the banking lobby—they wanted to shove down that law, so that their foreclosure mills’ forged and fraudulent documents would not be scrutinized by out-of-state judges. (The spineless cowards in the Senate carried out their Master’s will by a voice vote—so that there’d be no registry of who had voted for it, and therefore no accountability, the corrupt pricks.)
  
And President Obama’s pocket veto of the measure? He had to veto it—if he’d signed it, there would have been political hell to pay, plus it would have been challenged almost immediately, and likely overturned as un-Constitutional in short order. (The jug-eared milquetoast didn’t even have the gumption to veto it—he pocket vetoed it.)"

Lots and lots of good stuff, here, Gonzalo, but the lines above are my favorite. The can be no happy ending. All will not be well. God help us.


Thu, 10/14/2010 - 12:57 | 649672 Screwball
Screwball's picture

I was quite fond of "the corrupt pricks" part.  Well done Sir.

Thu, 10/14/2010 - 13:31 | 649795 malek
malek's picture

+3 oz. AU

Thu, 10/14/2010 - 11:46 | 649404 LostWages
LostWages's picture

The homeowners won't be allowed to keep the lottery ticket to win their house.

What should be more of a concern for the "too big to jail" banksters is the possible put-back from all the investors holding the trash.  If there is one court ruling stating the banksters didn't perform their function properly, therefore have to buy back at par all the trash the pension funds are holding, it's check-mate.

Thu, 10/14/2010 - 12:55 | 649662 Big Corked Boots
Big Corked Boots's picture

I think this is far more likely. The quality of the assets are subpar, impaired, misrepresented, whatever; the billionaires will start suing one another and that is the real problem.

Of course somewhere in there the PTB will state that the government has to step in and solve the problem - another bailout. That could happen too.

Get a free house? NFW will that ever happen. When does J6P ever come out on top?

Thu, 10/14/2010 - 11:47 | 649406 bullwhip29
bullwhip29's picture

I wonder what Corexit equivalent will be used to clean (uh, I mean bury) this mess? Things are getting very interesting...

Thu, 10/14/2010 - 11:48 | 649414 bullwhip29
bullwhip29's picture

I wonder what Corexit equivalent will be used to clean (uh, I mean bury) this mess? Things are getting very interesting...

Thu, 10/14/2010 - 11:49 | 649420 bullwhip29
bullwhip29's picture

I wonder what Corexit equivalent will be used to clean (uh, I mean bury) this mess? Things are getting very interesting...

Thu, 10/14/2010 - 12:03 | 649469 DosZap
DosZap's picture

Stutter bad, or hiccups?

Thu, 10/14/2010 - 12:08 | 649489 bullwhip29
bullwhip29's picture

Fat finger

Thu, 10/14/2010 - 22:46 | 651710 StychoKiller
StychoKiller's picture

So, you work for Waddell & Reed then? :>D

Thu, 10/14/2010 - 11:52 | 649426 George Costanza
George Costanza's picture

I agree with Harry.  Folks are NOT going to end up owning a home by not paying their mortgage.   That is just silly.  

Thu, 10/14/2010 - 12:00 | 649460 deez nutz
deez nutz's picture

I thought giving an incarcerated man a mortgage of 500k was silly until I saw it happened in CaliPornia.  Its anything goes right now!!

Thu, 10/14/2010 - 12:12 | 649504 PlausibleDenial
PlausibleDenial's picture

Oh, then I suggest you go to freeandclearin90.com that was posted here a couple of weeks ago.  I would not be so sure that it cannot be done. 

Thu, 10/14/2010 - 14:53 | 650115 kayl
kayl's picture

You guys are so behind in the debt-based monetary system and the Uniform Commercial Code (UCC). All this debt can be discharged at will, and you can get your house back!

In this system, you can't even pay money. You can only discharge debt!

Thu, 10/14/2010 - 15:10 | 650204 High Plains Drifter
High Plains Drifter's picture

Tell that to a judge and see what happens.

Thu, 10/14/2010 - 17:37 | 650843 kiwidor
kiwidor's picture

I guess you've lived from an iron ricebowl.  Not paying your bills is the way to get wealthy.

Thu, 10/14/2010 - 11:55 | 649436 Tao Jonesing
Tao Jonesing's picture

"To repeat: If the chain of title of the note is broken, then the borrower no longer owes any money on the loan."

That statement is simply not true.  The debt does not magically disappear, the note-holder's recourse does.  That is, without a clear chain of title, the holder of the note cannot institute foreclosure, but it still can sue for breach of contract for failing to pay the debt.  This could very well force the debtor to enter bankruptcy and require the sale of the house.

Bottom line: nobody gets a free house.  The debt is still owed.

Thu, 10/14/2010 - 12:13 | 649507 Maos Dog
Maos Dog's picture

I think you may be right, but, there are states where you can't lose your house to bankruptcy by law, Florida being one of them. I wonder what happens in this case? A giant lien that never goes away until you sell?

 

Thu, 10/14/2010 - 12:25 | 649544 Boxed Merlot
Boxed Merlot's picture

...This could very well force the debtor to enter bankruptcy and require the sale of the house...

 

Would You buy this house?  What is it about this that people don't understand?  This house has a clouded title that due to no fault of the home buyer/ owner became clouded and thereby legally UNtransferable to Anyone else.

 

Let the state's AG keep their "fines", these people deserve restitution! 

Thu, 10/14/2010 - 13:34 | 649806 malek
malek's picture

Well, then answer this simple question:
The debt is still owned... to who? (Based on what documents?)

Thu, 10/14/2010 - 15:14 | 650233 Misstrial
Misstrial's picture

The real estate industry through NAR will figure this one out fast.

Their agents' commissions depend on it.

~Misstrial

Thu, 10/14/2010 - 11:56 | 649445 cossack55
cossack55's picture

What do you think happens in a country when the citizens realize they don't have to pay their debts?

 

Paraphrase:  What do you think happens in a country when the Government realizes it doesn't have to pay its debts? 

Let me guess, Mortgage Backed Securities?

Thu, 10/14/2010 - 11:58 | 649448 Ieetseelmeet
Ieetseelmeet's picture

People still haven’t figured out what this all means—but I’ll tell you: If enough mortgage-paying homeowners realize that they may be able to get out of their mortgage loan and keep their house, scott-free? Shit, that’s basically a license to halt payments right the fuck now. That’s basically a license to tell the banks to fuck off. 

Then they start to think - Why pay municipal taxes?  Even if they could.

Then the town can't pay off their bond issues.  The town can't pay for police, fireman and teachers. I just finished reading "The Fourth Turning" and am looking for the gray old man.

 

 

 

 

 

Thu, 10/14/2010 - 15:00 | 650143 kayl
kayl's picture

There is no money, and there is no debt. There's just fake money, and the discharge of debt. So discharge all those taxes. Technically, they already accessed your credit and took the credit to pay themselves. That is what the tax bill is: a notice that they got into your exemption (credit) account at the US Treasury.

When you send them money with your tax bill, you are just sending them more promise to pay debt notes. You are paying them twice: once through your exemption (credit) account at the US Treasury, and second with your hard earned labor dollars (that are worthless too).

Thu, 10/14/2010 - 22:50 | 651720 StychoKiller
StychoKiller's picture

And just what, pray tell is this account at the US Treasury?

Can I access it and use it to my advantage?

Fri, 10/15/2010 - 01:58 | 651790 kayl
kayl's picture

It is the Ces qui te Trust set up for you when you were born. Your birth certificate was sold to the IMF bank, and the US Treasury received in turn credit for you as the surety or chattel of the monetary system. It is known by the same number as your social security account, but it doesn't have any dashes.

The exemption (credit) account at the Treasury can be used to discharge debt. You need to have a valid claim against you. This could be a mortgage or hospital bills where some company wrote that you owe a specified amount of money.

You need to file a UCC 1 Financing Statement to claim yourself as the CREDITOR with a security interest in all the debts, assets, body, marriage, children and property of you, the DEBTOR. You must check that you are a transmitting utility. That means you create debt-based money or credit with your signature.

You need three pieces of paper to discharge debt: the presentment, the payment bond, and the surety bond or promise to pay. The presentment is the bill from the bank with the final demand to payout your mortgage. You write Accepted for Value and Returned for Discharge, Settlement, and Closure of the Account" across the presentment.

The payment bond is in the form of an international money order. It is a three-party check: You, the bank requesting payment, and Timothy Geithner the Secretary of the Treasury. An international money order must have the names and addresses of the parties printed on it. Write "Pay to the Order of" and the Bank's name followed by the amount in numbers, and the amount written in letters just like a regular check. You sign the money order and presto you have created money under Article 3 of the Uniform Commercial Code.

The performance bond or surety is a promise to pay. You can use a 1040V voucher with your social security number. The voucher promises to pay and it instructs the Treasury to access your exemption (credit) account to perform a non-cash discharge of debt.

Then, download a Standard Form SF5510 Pre-Authorization of Transfer of Payment form from the GSA form library. Fill out the top with you DEBTOR name in ALL CAPS. Make sure to write non-cash discharge of debt in the type of transaction box. Fill out the bottom half for the bank requesting payment.

Make copies of everything for you and the bank. You must sent the original presentment to the US Treasury first in order to alert them that a non-cash discharge of debt is being set up. Then, send a copy of the paper work to the bank.

Be a good citizen and discharge your debt. Also like any business send the bank an Account Statement that shows the balance owed, and the balance at zero for the discharge of debt. Do this at least three times. Your paperwork can be used later in a Quiet title suit against the bank.

The banks don't respond. Silence is consent under the law. Therefore, if they dishonor your discharge of debt, you under the UCC are discharged and you can actually request damages from the bank for their dishonor.

The Office of the Comptroller of the currency is very concerned with matters that violation the currency laws.

This is just a bit of background. You should learn everything about the debt-based monetary system by reading Modern Money Mechanics at the Federal Reserve website. Also learn about the Uniform Commercial Code (UCC) posted at the Cornell Law University website. Read my other posts on this blog for more details and links.

Thu, 10/14/2010 - 11:58 | 649449 Andrew G
Andrew G's picture

"Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay."

From what I read on other websites, Gonzalo is wrong here. The mortgagee still owes the loan but instead of a secured loan it's non-secured. The quick foreclosure process is therefore denied, and the bank would have to go through much more painful processes of debt recovery to see any money... which ultimately gives the debtor much more leverage in negotiations.

Can someone with proper knowledge on this topic clarify.

Thu, 10/14/2010 - 15:29 | 650324 Misstrial
Misstrial's picture

Correct.

Read "honcho"'s posts on the Irvine Housing Blog.

He is a former attorney for MERS:

http://www.irvinehousingblog.com/blog/comments/politicians-encourage-str...

~Misstrial

Thu, 10/14/2010 - 12:34 | 649458 Boxed Merlot
Boxed Merlot's picture

What do you think happens in a country when the citizens realize they don’t need to pay their debts?

 

Funny you should ask.  Many will and do continue to pay because of their definition of "need".  You see, there's a DNA of "ought" built into them.  Not all of them, but enough to keep the US middle class the world's golden goose.

 

However, I will agree with you this "can of worms" is changing the landscape because the servicing of these notes is now being seen as the "wrong" thing to do because it's supporting a fraudulent and destructive industry that has killed the goodness of the nation. 

Personally, I support the proper application of existing laws with the chips falling where they may. If that means the financial wizards have to "suck it up and cope"  by evaporating into the ethereal world they created, then so be it.  Leave the "Real" estate to the productive elements of the nation.

 

Whether this can happen due to the political process of judicial appointments is the fly in the ointment.  imo

Thu, 10/14/2010 - 12:01 | 649463 Perseid.Rocks
Perseid.Rocks's picture

So where IS the note ? It's not in MERS, and it's not in the REMIC. Where is Saddam ? Let's see, he's not under here.. and he's not back there.. hehehe..

Thu, 10/14/2010 - 12:06 | 649480 tip e. canoe
tip e. canoe's picture

where's Osama?

Thu, 10/14/2010 - 13:23 | 649763 cossack55
cossack55's picture

1600 Pennsylvania Ave.

Thu, 10/14/2010 - 13:31 | 649793 Rusty Shorts
Rusty Shorts's picture

argh.

Thu, 10/14/2010 - 13:42 | 649857 aheady
aheady's picture

lol

Thu, 10/14/2010 - 12:05 | 649475 weinerdog43
weinerdog43's picture

Excellent work Gonzalo!  It was your terrific articles on hyperinflation that finally got my 84 year old Dad to see the light on gold/silver.  I'll have to redact some of the 'naughty' words for him, but otherwise this is a roadmap of what is on the way.  I wish you were wrong, but I'll be darned if I can see where.  The only question is when this all blows up.

Thu, 10/14/2010 - 13:58 | 649926 The Alarmist
The Alarmist's picture

84? Didn't he get the word that according to the Dems he has a duty to die?

 

Thu, 10/14/2010 - 14:45 | 650091 MsCreant
MsCreant's picture

Didn't you get the word to drop the Dem/Repub stuff? Both corrupt to the core. I wouldn't chose to post something to someone, joking about their father dying.

Thu, 10/14/2010 - 12:05 | 649478 -Michelle-
-Michelle-'s picture

I don't as much see "free houses for all" as the opportunity for those in recourse states to walk away without the banks coming after them.

For many, that will be more than enough.

Thu, 10/14/2010 - 13:30 | 649790 Cognitive Dissonance
Cognitive Dissonance's picture

Who knew?

When I decided to relocate some years ago, my priority was to move to a state that was open minded when it came to gun ownership and open/concealed carry. It never occurred to me to also check to see if it was recourse or non. Missed it by that much!

Maybe next time. :>)

Thu, 10/14/2010 - 15:08 | 650187 kayl
kayl's picture

Recourse has to do with the loan, not a state. A non-recourse loan means they can take only the house as collateral. When you refinance, your loan automatically becomes a recourse loan. A recourse loan means they can take your house and all your other assets to pay for the outstanding debt.

Who would refinance and let some bank get even more deeper into your commercial affairs? If your loosing a house, don't ever refinance. If you default on the refi, you loose all your assets.

Don't confuse recourse with judicial and non-judicial states regarding foreclosure. Judicial means the bank must show up in court to process a foreclosure, non-judicial means the opposite. They just steamroll you outside of a court proceeding.

Thu, 10/14/2010 - 15:20 | 650264 Cognitive Dissonance
Cognitive Dissonance's picture

Recourse has to do with the loan, not a state.

Ummmm, I believe it does.

Not confusing anything here my friend. Some states are recourse states, some not. Some states are judicial and some not. These may or may not over lap in each state.

I was talking about buying a home in a state that was non-recourse. I wasn't talking about how the foreclosure process was handled, only if the bank could come after me for the remainder of the total costs not recovered from the eventual sale.

http://www.forecloseddreams.com/recourse_states

Thu, 10/14/2010 - 14:23 | 650016 kaiserhoff
kaiserhoff's picture

Had similar thoughts Michelle, and that would be an equitable compromise.  Unfortunately, the current owner/servicer of the note has only the slightest relation to whoever originated the silly thing.  As Bruce pointed out in a recent post, many of these loans are already being sold to glorified collection agencies.  This is a procedural nightmare, but it gets worse.

In some states, they can wait out a statute of limitations on fraud or bad behavior, and then sue for the full amount as holders in due course.  The taxpayers will not be amused.

Thu, 10/14/2010 - 12:06 | 649481 Donutwarrior
Donutwarrior's picture

Exactly, I thought about calling Chase and offering to refinance and mention this issue as a form of leverage.  I am at water, or slightly under, and have no intention of defaulting, although the more I see the more angry I get....your last article (The Coming Middle Class Anarchy) certainly did give me pause.  Guess I'll wait until the fees are thrown in and validity of the title chain is (will be) clearer.

Thu, 10/14/2010 - 15:36 | 650355 kayl
kayl's picture

Write a letter to the Office of the Comptroller of the Currency. Tell the director that your bank committed fraud against you, but your letter must be in the form of an Affidavit.

The bank indicated that it was lending you its money or credit. At least you thought it was lending you its money. This is a big red flag.

The bank received your credit from the Fed overnight lending window from the signature on the loan application. By the miracle of fractional reserve banking, it leveraged up your credit to create 10 times more magical loans.

The bank withheld your credit. You didn't know that your signature created the credit for the loan as you are a transmitting utility under the Uniform Commerical Code Article 3. The bank is actually accessing your exemption (credit) account at the US Treasury, which is yours, then turning around and making you sign a mortgage note promising to pay back YOUR credit plus interest for the life of the loan. Withholding credit is a violation of the law for the bank.

The bank did not file a 1099OID form to report the tax it must pay for the new money creation. This is a big flag for the Fed and the IRS.

Three years after the loan, the bank filed an abandonment form with your name saying you abandoned your credit. They took this action without your knowledge and consent.

The banks have committed crimes against the currency. After sending this letter to the Office of the Comptroller of the currency and the bank, send a demand for the final payment of the house.

File a UCC 1 Financing Statement claiming yourself as the Secured Party CREDITOR with a security interest in the property, liens, debts, and assets of you, the DEBTOR.

Discharge this debt properly under the UCC Article 3. You discharge debt with 3 pieces of paper: the presentment, the payment bond, and the surety or promise to pay.

The presentment is the final payout letter stating you owe a certain amount. Write across it in a blank space "Accepted for Value and Return for full Discharge, Settlement, and Closure of the Account."

The payment bond is a transfer instrument like from a checking account. However, it must be in the form of an international money order. The names and addresses of three parties are typed on it: You, Timothy Geithner the Secretary of the US Treasury, and the bank requesting discharge (payment).

Write Pay to the orde of The BANK's NAME, and the amount in numbers, and the amount in written letters. Sign your transfer instrument and write agent after your name.

The surety is like insurance. It's a promise to pay. You can use the 1040V voucher form with your social security number. This informs the Treasury that they can access your exemption (credit) account to process a non-cash discharge of debt.

Download the Standard Form SF1055 from the GSA forms library under the Standard forms tab. This is a Pre-Authorized Transfer of Payment form.

Fill out the top with your ALL CAPS name for the Debtor. Make sure to write non-cash discharge of debt for the type of transaction. Fill out the bottom part for the bank requesting discharge. They will never send you the account number that the discharge is to go to. But it really doesn't matter. Make copies of your paperwork for yourself and the bank.

Send the original presentment, final payout note, to the US Treasury and the other forms first. Then, send the copies to the bank. You must instruct the Treasury that a non-cash discharge of debt is being set up with a bank.

Behave like a company that is processing accounts. Include a Statement of Account showing balance owed of the mortgage. Then, the discharge of debt zeros the balance. This is a claim to the bank indicating you've discharged debt. Do this procedure at least three times, then you've proven that you discharged debt.

The banks never answer. Silence is consent. They've dishonored your discharge of debt. Under the laws of UCC, you have discharged. If you've got the balls, you could actually sue them for failure to discharge debt, which is sedition against the currency. You can even collect damages.

The UCC is so much fun.

Thu, 10/14/2010 - 23:10 | 651749 StychoKiller
StychoKiller's picture

SF1055 is titled:  "Claim Against the United States for Amounts Due in the Case of a Deceased Creditor"

Funny, I don't feel dead!  You sure you got the correct form number there, pardner?

Thu, 10/14/2010 - 23:45 | 651812 kayl
kayl's picture

Oops, SF5510. Authorization Agreement for Preauthorized Payments

http://www.gsa.gov/portal/forms/download/A731643BC02CBD5F852570290048F198

Thu, 10/14/2010 - 12:11 | 649488 williambanzai7
williambanzai7's picture

I just want to say when you refer to "big law firms" you are implying big Wall Street firms. But those firms don't go anywhere near the foreclosure process. The big foreclosure firms you are referring to are really way down the food chain with ambulance chasers. They are really paper mills and the guys who run them look like reinvented Florida money launderers.

The Big NY firms, contributed to this whole cluster fuck by engineering the CDO securities.

Naturally, the bar is silent on this whole fucking mess, but they are right smack in the middle of it! 

So far i have not heard the words legal malpractice mentioned, but don't worry, it will come.

Thu, 10/14/2010 - 12:10 | 649493 alexwest
alexwest's picture

#Show me the paper, motherfucker, will be all you need to say.

ZEEEEEEEEEE THE BEST... :)))))))))))

alx

Thu, 10/14/2010 - 12:12 | 649495 Problem Is
Problem Is's picture

"What do you think happens in a country when the citizens realize they don’t need to pay their debts?"

Then Amerikan citizens become Rubin, Dimon and Blankfein...

Too Big To Fail Assholes...
What is good for the oligarchy/looters, is good for the... bitchez...

Thu, 10/14/2010 - 12:10 | 649498 MAGICWIZARD
MAGICWIZARD's picture

this could be the worst event in the history of not just the United States but the world.  Forget the black plague, world wars and famine.  Nothing short of us pushing the button has the potential to fk the system as much as this current mess with mortgages.

Thu, 10/14/2010 - 13:24 | 649773 cossack55
cossack55's picture

Getting a little overdramatic, are we not.

Thu, 10/14/2010 - 12:16 | 649513 Bluntly Put
Bluntly Put's picture

Now, what does “broken chain of title” mean? Simple: When a homebuyer signs a mortgage, the key document is the note. As I said before, it’s the actual IOU. In order for the mortgage note to be sold or transferred to someone else (and therefore turned into a Mortgage Backed Security), this document has to be physically endorsed to the next person. All of these signatures on the note are called the “chain of title”.
 
You can endorse the note as many times as you please—but you have to have a clear chain of title right on the actual note: I sold the note to Moe, who sold it to Larry, who sold it to Curly, and all our notarized signatures are actually, physically on the note, one after the other.
 
If for whatever reason, any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.

 

That's clear but the banks couldn't have maintained a clear "path" of signatures as the note was transferred since then there would have been no reason for them to have acted as the "servicer" collecting fees. It was fraud from the get go. These guys should be in prison.

Thu, 10/14/2010 - 12:17 | 649520 Yossarian
Yossarian's picture

Wouldn't it be just peachy for Ben and Barry if the TBTF Banks end up taking a huge hit for the benefit of their pension fund customers and debtor homeowners?  That way they can just shovel more funny money their way to enable them to "repair their balance sheets."  Boom: consumers have a quick and painless (if you don't count inflation and general undermining of confidence in property rights and the entire monetary regime) deleveraging just in time to leverage up all those TBTF reserves and drive up those pension plan assets. 

Tyler: I think we need to see a graphical representation of the process, where it went wrong, and where we stand now.  Who holds the note, who is owed what, what these parties rights are, etc.

Thu, 10/14/2010 - 14:06 | 649959 NotApplicable
Thu, 10/14/2010 - 14:48 | 650104 TreadwCare
TreadwCare's picture

@yossarian et al, for a good graphical representation and explanation, go here:

http://rortybomb.wordpress.com/2010/10/08/foreclosure-fraud-for-dummies-...

from a previous thread here at ZH on the topic. 

HTH.

Thu, 10/14/2010 - 12:17 | 649524 Jake Green
Jake Green's picture

If this entire sordid tale is true, then the banks would have had to know this would eventually blow up once the foreclosures began in earnest.

With all the lobbyist influence during the financial reform bill, surely the banks would have pushed through some cover-your-ass ammendments; no?

Thu, 10/14/2010 - 12:39 | 649596 Winston Smith 2009
Winston Smith 2009's picture

Oh, it's true and the bosses knew.

Fri, 10/15/2010 - 02:03 | 650408 kayl
kayl's picture

They revised Article 9 of the Uniform Commercial Code to cover their asses in the late 90s. This Article describes the criteria for ownership, and it clearly supports the MERS digital recordings for the chain of title. Many bankers and statesmen have said in public that the contract and wet ink mortgage note are antiquated means of proving possession.

But it seems the judges and lawyers didn't get the memo. They are still trying cases under the former terms of ownership.

Lol for bankers.

Thu, 10/14/2010 - 12:20 | 649530 nwskii
nwskii's picture

So what do you do when B of A or Wells Fargo goes bust? Who are you gonna pay your bill to? FYI Im stopping my auto withdrawal and paying by check

Thu, 10/14/2010 - 12:33 | 649570 Perseid.Rocks
Perseid.Rocks's picture

Meet the new boss, same as the old boss. You live and die by the leave of your master.. this whole freedom and democracy thing has been a myth for at least 100 years.. they simply found that you're more productive and cooperative if you believe you're free.

Thu, 10/14/2010 - 12:26 | 649546 High Plains Drifter
High Plains Drifter's picture

One reads what Gonzo has to say, then one listens to CNBC and Scott Sperling, talking about  how great this recovery is.

Thu, 10/14/2010 - 12:44 | 649619 Winston Smith 2009
Winston Smith 2009's picture

"then one listens to CNBC"

Only to laugh at their cluelessnes.  There are a few exceptions, expecially in this GREAT video from yesterday where the "light bulbs over dumbshit heads" start pinging on after listening to the guy with a clue starting at minute 3:04:

http://www.cnbc.com/id/15840232?video=1614271234&play=1

 

Thu, 10/14/2010 - 12:43 | 649608 Caviar Emptor
Caviar Emptor's picture

Gonzo, this will certainly rekindle the crisis atmosphere and could send markets into a tizzy. Again.

But it's not the "next leg down". That implies that once the mess is cleaned up that the sun will shine. 

While people argue about paperwork and legalities the economy is crumbling on a very steady downward trajectory with a few small bounces in between. It's clear that it's a structural, secular problem and not a cyclic one, correctable with the very next business cycle that comes along. 

The entire FIRE sector has an implicit backstop. So there's a perception that more consolidations and bailouts is just business as usual. However while we're focused on the hoopla, the economy is undergoing gradual irreversible damage. 

 

Thu, 10/14/2010 - 12:52 | 649652 Winston Smith 2009
Winston Smith 2009's picture

"the economy is undergoing gradual irreversible damage"

I think that the damage has already occurred, but it's not "irreversible."  It can be fixed only with a proper, but extremely painful correction which causes those who _should_ have gone bankrupt back in September of 2008 to go bankrupt and thereby flush the system of the massive amount of bad debt _they_ created.

Thu, 10/14/2010 - 13:04 | 649688 Caviar Emptor
Caviar Emptor's picture

I thought "creative destruction" was the answer at the very beginning of the crisis. TARP and bailouts should never have happened. 

Now we've entered a new phase that's far more pernicious. 

The US economy has been picked dry of productive capacity. Nothing short of reducing the standard of living to third world status could make us competitive. That leaves very little.

Thu, 10/14/2010 - 13:40 | 649839 High Plains Drifter
High Plains Drifter's picture

Yep, tarp should not have happened.  Let us not forget that about 90 percent of the American public was totally against it and also voiced their displeasure to their congress critters about it but to no avail. They went ahead and passed the measure . Let us also not forget that Paulson went around threatening congress members telling them if they did not pass it , there would be rioting in the streets. Yeh I remember and I for one won't forget either.

 

Thu, 10/14/2010 - 12:43 | 649610 atomicwasted
atomicwasted's picture

Gonzalo is 100% correct.  He's one of the only people that really understands the foreclosure mass and its most serious implication: the title system in the US is completely fucked, courtesy of MERS.   Anyone who bought a home or refinanced a mortgage in the past 10 years now has no idea who owns the note, so they have no way to pay off the mortgage (whether by sale of the property, by refi or by just toughing it out for 30 years) and get clean title to their property.  As a result, millions of families may have no way to sell or refi their house.  Not just now, but forever - if the note's gone, it's gone.

Traditionally, title issues are handled locally.  Recordation of deeds and notes is typically handled at a municipal or county level.  So, traditionally title related issues such as quitclaim actions are handled in municipal, county, or state courts.  However, millions if not tens of millions of mortgages are at issue here.  There aren't enough judges (or even lawyers, and that's saying a lot) in the United States to clean up each mortgage individually over a time span of less than a decade, if not two.

As much as I hate federalizing local issues, the title mess is an issue of national scale that affects a significant minority if not a majority of Americans.  In order to solve that mass in a time frame that allows a house to be sold or refi'd before 2020, some kind of federal action is going to be necessary as a practical matter.

Perhaps the rational thing to do would be to establish some kind of Resolution Title Authority akin to the RTC in the savings and loan crisis.  The responsibility of the RTA would be to quiet title to properties across the United States.  The RTA would have to have a definite timeframe in which to accomplish its job and disband; I would propose one year.  The RTA would first have to establish which mortgages would be subject to its authority.  That may be up to the lender.  One could establish an RTA in which title to each property in the US would go to its current occupant unless the lender had its title validated by the RTA.  A better approach might be to set up the RTA such that only the mortgages handled by MERS would go through it, which probably makes more sense, given that it's the MERS mortgages, by and large, that are all screwed up.  The lender would have, say, six months to submit actual non-forged paperwork to the RTA that establishes that it holds the note or otherwise is entitled to title to a particular property, the mortgage for which had been processed through MERS.  If the RTA accepted that paperwork as a valid chain of title, the lender's title to that property would be confirmed.  If the RTA rejected that paperwork as a broken chain of title, the RTA could issue some sort of quitclaim deed to the mortgagee in possession of the property, so that that mortgagee would have clear title. 

One advantage of the RTA is that it would have access to a vast quantity of paperwork with regard to title transfers and murders, such that Robo signers could be easily identified and flagged.  The RTA could setup a process whereby the presence of a signature on a particular paper of a known Robo signer would kick that particular mortgage up a level of scrutiny.  Another "advantage" of the RTA (depending on one's point of view) is that it would require literally hundreds of thousands of employees, providing year-long employment to people who actually need jobs.

The federal government would have to get the states to buy into this, but that's never a problem; there's always the stick of losing highway money if the states don't play (and the states would do anything the federal government said to keep that highway money) or the carrot of giving away some kind of bribe (aka stimulus money) to states that played ball.

Don't get me wrong.  I'm not in love with this solution.  I'm not in love with giving people title to their homes when they are deadbeats who should never gotten loans in the first place or who lied their way into their mortgages.  I'm not in love with a federal bureaucracy establishing a lot of federal jobs, or giving the government more power.  However, this problem is so immense, and has the potential for locking Americans into their homes for such an extraordinary duration, that I'm not sure there's any other solution.  At least the RTA would be an attempt at trying to establish who's actually entitled to a quitclaim deed and who needs to repay their mortgage, as opposed to simply forgiving everyone's mortgage debt and handing them a deed.  And I say this as a homeowner and a mortgagee, for whom a quitclaim deed would be quite a gift.  Further, an RTA with a limited mandate and a limited life, and an RTA that is a separate branch of the government from the Federal Reserve, would be more palatable than adding this to the Fed's bureaucracy or the Treasury's.

Thoughts?

Thu, 10/14/2010 - 13:08 | 649699 weinerdog43
weinerdog43's picture

Atomic, this seems well thought out to me, but I think you've left out a critical component, namely, consequences for those who caused this mess.  Without punishment for those who did this, we'll have learned nothing. 

Thu, 10/14/2010 - 13:42 | 649859 atomicwasted
atomicwasted's picture

+1.  This is just back of the envelope stuff that I threw together as an outline of the kind of solution that is going to have to happen.  Punishment in the form of the lenders losing a lot of $, and in the form of servicers having 95% less mortgages to service, may be a start.  Punishment in the form of serious jail time for those who have orchestrated the production of fraudulent documents is hugely necessary.  Not punishment of some clueless (although hopefully hot) hairdresser who got hired to robosign a bunch of dox, but punishment of the people who orchestrated the scheme of fraud in the first place.

Thu, 10/14/2010 - 15:59 | 650496 Cognitive Dissonance
Cognitive Dissonance's picture

....as an outline of the kind of solution that is going to have to happen.

You are assuming the powers that be wish to "fix" this situation in a fair or reasonable manner. Or even that their intent is to repair the housing market and the mortgage mess because it could, and will, harm the economic system if they don't. Thus you are assuming they are going to have to do so.

I suggest that this would be a poor assumption.

Thu, 10/14/2010 - 13:24 | 649770 magis00
magis00's picture

All that and no one replied?  Well I'll offer my reaction to your ideas:  I agree in that I think we are absolutely, positively fucked.  And I also agree (CD was it?) that this will have a "political" rather than a judicial solution.  And in that vein, I think yours is a good - we're on much the same page concerning a queasy feeling about government job creation, but a sort of urgency to do just that. 

 

My larger concern is how we balance the three-fold equities of: (i) resolving widespread homeowner title crisis, (ii) legitimate repayment to creditors (if we care about honor and integrity anymore--which I'm not sure we do), (iii) without again bailing out TBTF by taking all the fraudulent loans off their books. 

 

Still trying to grow my understanding to a level where I can verbalize it ...

Thu, 10/14/2010 - 13:45 | 649873 atomicwasted
atomicwasted's picture

I agree completely.  I am deeply concerned that any RTA, no matter how well intentioned at first, is going to be politically gamed in order to save the bacon of politically favored entities, TBTFs or otherwise.  I don't know how you stop that.  It may not be possible to establish something as quasi-independent as the RTC in today's environment.  In my view, if the RTA process kills some banks, servicers, financial services companies, what have you, so be it. 

Thu, 10/14/2010 - 16:06 | 650523 Cognitive Dissonance
Cognitive Dissonance's picture

Not trying to beat on you. I liked your post which was very well expressed.

But many here on ZH as well as in the general blogging population assume that for whatever reason the economic system just sorta careened out of control and greed took over. Or that the Bankstas want to steal all the money/wealth or bail their asses out. Rarely do I hear anyone discussing that the destruction may have been deliberate in order to execute social engineering on a global scale.

We need to seriously consider this. Of course, in order to do so we must first deal with many unacknowledged Cognitive Dissonance's we're burdened with.

Thu, 10/14/2010 - 17:58 | 650896 kiwidor
kiwidor's picture

"...the destruction may have been deliberate in order to execute social engineering on a global scale."

Kinda like..."hey, we've fixed this system, all you have to do is take this chip implant..?"  The really sad thing is, the sheeple are stupid enough to take it. 

hmmm, let's see

1) sheeple scared of x, y or z and bombarded with fear language. <check>

2) sheeple used to being fingerprinted, presenting ID for every trivial action <check>

3) chaotic breakdown which upsets the dependent sheeple's lives. (nearly there)

4) a new system to the rescue!! 

Thu, 10/14/2010 - 13:44 | 649861 Maos Dog
Maos Dog's picture

Not just now, but forever - if the note's gone, it's gone.


In Florida, there is an adverse possession law.

This means that if I pay the tax on a property for seven years, possess the property by fencing it in and actively using it, and no one else tries to claim it during that time, I can get a clear title on the property. 

I have researched this because there is property in my area abandoned for years that I may attempt this on.

So, after seven years of no title at least in Florida it is possible to get a clean title to the land.

 

Thu, 10/14/2010 - 13:54 | 649915 atomicwasted
atomicwasted's picture

That's true in most states.  However, you have to wait 7 years, which is a long time to clear out a logjam.  Then, if you want to get a deed, you're going to have to jump through some hoops.  I'm not a real estate attorney, but I would imagine you would need to get a lawyer and then go to court.  The problem is do we really want to wait 7 years before the majority of Americans are able to sell their homes?  What if you need a job and one's available in the next state, but you can't sell your house?  This is a solution, don't get me wrong, but I don't know that it's going to be widely palatable.

Thu, 10/14/2010 - 16:02 | 650498 kayl
kayl's picture

There is no money, and there is no debt. There's only fake money and the discharge of debt.

The bank doesn't lend any money or credit. It accesses YOUR credit in the exemption (credit) account at the Treasury. It takes the credit into the bank and leverages it up through the miracle of fractional reserve banking.

Then, it withholds your credit. Your house is paid off after the signature on the loan application. But the bank makes you sign a mortgage note promising to pay back your credit plus interest for the life of the loan. This withholding of credit is a violation of law on the part of the banks.

Three years after you get a loan, the bank files a form saying you abandoned your credit. They take this action without your knowledge or consent. Essential they steal your credit. This is a big violation too.

Then, the banks fail to file the 1099OID form which reports the tax they must pay for the creation of new money from your credit. They become tax evaders with the Fed and IRS. Another big no no.

All this while, you have been tricked into paying your hard earned dollars to pay back credit that already belongs to you. Who do you think should own the property? It's you and your credit.

However, we are born as DEBTORS with the birth certificate, and judging from this blog most people are unfit to handle their financial affairs since they don't understand the debt-based monetary system, and they have no idea how the Uniform Commercial Code (UCC) operates. When you file a UCC1 Financing Statement and claim yourself as the CREDITOR with a secured party interest in the assets, debts, liens, and property of the DEBTOR, you become the owner of all your life productivity. Right now, the IMF is the implied CREDITOR if you don't file, and you have the status of diminished capacity and chattel.

Until our people know this stuff, they will be treated like slaves. It's easy enough to discharge debt. Get it: when you get fake demands for money, you discharge the debt with paper, a transfer instrument that you write yourself. The UCC states that all debts can be discharged with debt-notes the government prints or a transfer instrument you write out yourself. See UCC Article 3 at the Cornell Law University website.

Thu, 10/14/2010 - 18:00 | 650901 atomicwasted
atomicwasted's picture

I am a lawyer, and I have absolutely no idea what you're talking about with the UCC.  The UCC1 statement you propose to file seems as shady as some of the mortgage paperwork out there.

Thu, 10/14/2010 - 21:17 | 651495 Milestones
Milestones's picture

Article 1 Section 10 of the U.S. Constitution Powers denied individual states---- or law impairing the obligations of contracts,--. All in all, the suggestion provided involves the Federal Government being part of the solution? Why invite the entity who has caused the problem to the party?

My primary problem Gawd Damit is that we are fuckin around with one of the cornerstones of what this country was about. No one is above the law; and now we are all groveling around as to how we can appease these fuckin crooks.

Our efforts should be to correct the issue at hand. 1) nationalize the banks and fold the Fed into the treasury w/o Timmy. 2) Strip all the $$ out of these M.F's and execute them for treason. 3) Devalue the currency so that we are on an even keel with the industiralized nations and then let the merican worker prove he is worth more. We are resting on past laurals. 4) No seperate Corp can have more than a $500 Bn. cap with no interlocking directors. 5) Mish-no national unions and no government unions.

What has the above B.S. have to do with the existing problem? Once we begin playing with the right of contract, we are on the down slope. Our Constitution is a contract, so are treaties and declarations. Civil intercourse becomes impossible without that ability.

These fuckers came after not just this people, but the entire world. Lets not dismantle the entire structure just to please the courts and these scumbags.  Milestones

Fri, 10/15/2010 - 01:18 | 651931 StychoKiller
StychoKiller's picture

It looks like the form (and the argument) is stating for the record, that JOHN DOE

as Debtor owes John Doe as a Creditor, does this do any harm to the real flesh-blood John Doe?

Fri, 10/15/2010 - 02:39 | 651989 kayl
kayl's picture

If you are a lawyer, you've taken an oath and operate under the American (British Accreditation Registry) BAR. You are operating from a foreign jurisdiction, and I wouldn't expect you to utter a word of truth.

The following book explains it all:

"Jurisdiction and Practice of the Law of Admiralty" by John E. Hall, it's based on "Clerk's Praxis".

How many poor souls have you lead into Dishonor in the courts under the UCC?

If it is so shady, why are banks and creditors busy filling out the forms to perfect their security interest? Then, they whip up securities for the defaults and sell them on the securities market with licensing through the Department of Corporations.

Are you so oblivious? I think not.

 

Thu, 10/14/2010 - 12:43 | 649611 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

gonza lo, love your writing style. love your humor, cause that is the only way i got through that brilliant piece documenting the fraud in that industry. i experienced all of the above. including the foreclosure mill. you can't even believe the mistakes they made. including sending me some woman named juanta gomez's foreclosure document to my sister's address in white ass, Cohasset MA. i copied it and sent it back to them. seems like my address was as good as any to use for all type of bad delinquent USA mortgage holders. plus i demanded the note. nope we don't have to send it to you. demanded what amount of money i owed chase. couldn't find that out in the amount of time they were required to send to me before foreclosure. demanded again for the amount i owed, cause i knew it had to be the absolute correct amount. nope they never ever got it to me. demanded to have title and a partial release of title. nope they couldn't do that either. what a mess this was, on top of all the FRAUD at contract signing. i started writing letters by the galore, to CHASE HOME FINANCE. nope no fraud, look i proved it with documentation on file with the clerk in the county. nope we don't admit to anything. look a appraisal was accepted by your underwriting team in texas for a property that didn't exist and had no legal description let alone any comparables. every entry on the appraisal was fraud. nope, sorry it isn't a fraudulent appraisal. oh look not signed final residential loan application. sorry that is ok if the mortgage broker just wrote in amounts so the loan would go through. we encourage that kind of behavior with our mortgage brokers using CHASE HOME FINANCE. look their was no title at the signing of the note at closing. well we will look for it and get back to you. no i went to the title insurance company and they tried to track it down. look, two different HUD documents. sellers have different numbers then the buyers. oh that is ok, we know them. look the sellers didn't sign the bottom and final signature page of the HUD. that's ok we got their signatures on other documents. look, the closer attached the entire buildings 2007 property taxes, that my condo was located in to my mortgage escrow account. the entire tax liability was fraudulently attached to my mortgage to show it had proof of value by paying $7000. in taxes. there was no other proof of value for the property cause it really wasn't even in existence until 3 days before i closed. REALLY. how does that happen. you go under contract put down $20,000 and the property doesn't even exist in the public records cause it hasn't gone through finalized approval for condomization. damn, must know someone in high places to pull that off. image Chase underwriting not knowing the property doesn't even exist that they are giving a mortgage for. no release of title at closing. damn. and to think i wrote Chase a letter a week for almost two and a half years. Colorado attorney generals office documenting all of this with real honest documents vs the fraud documents. no word. wrote HUD, called HUD a lot. RESPA laws pursued via QWR letters to chase, they never answered. complained about the no answer to OCC. it's ok lady we know Jaime and he would not let anything that your describing go down at CHASE HOME FINANCE. gotten about 6 attorney's, almost $100,000. later fighting my cause and
B O O M  guess they were bad, not me bad.

i have more about the fraud with contract, but save for another post. kiss kiss gonzo.

Thu, 10/14/2010 - 13:32 | 649801 magis00
magis00's picture

Good Lord.  First, that's f'ing horrible, and having been on hold one time this month for a grand total of probably 17 minutes I can't even imagine. 

 

Secondly, if I were you, I'd be licking my lawsuit chops.  A little redistribution of wealth, for ya.  I typically shy away from the litigious mindset school of thought, but when we've all been fleeced so thoroughly and you, in particular, have been abused like you have, it'd sure be a relief to get some assistance from a court -- not that I believe that will happen. 

 

Have you visited stopforeclosurefraud.com? 4closurefraud.org? Fantastic info, and maybe could put you in touch with some of the right people.

Do NOT follow this link or you will be banned from the site!