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Gonzalo Lira On The Second Leg Down Of America's Death Spiral
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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oh i cruised every single foreclosure website for the last three years for info. always so embarrassed at what happened to me, couldn't really come out and tell me story. now i don't feel so bad with this fraud being publicized right now. i gave up and had a nervous breakdown, but now i just contacted one of my attorneys and explained this. she is specializing in white collar crime. see that is what needs to be the next new expertise in law.
WHITE FUCKING COLLAR CRIMINALS. banks no longer are ripe for big robberies any more, no money in the banks. sure as hell money to be made with white collar crimes, being invented daily by your friendly bankster. i sent a huge envelope of documents verifing fraud to the Colorado FBI. they had on their website report any fraud in your mortgage loan. never heard back ever. i called and called. i called all the foreclosure help lines for a years, i couldn't qualify. i got a lawsuit against sellers and realtors for 8 counts of fraud in the contract. contract law. it wears on me a lot. i am a survivor. i believed in the system of consumer advocates, guess what it isn't in their best interest to be on the consumer side. they really have to protect the very people that are licensed by the state to be professionals in these areas like realtors, title closers, mortgage brokers and appraisers. it is just a damn shame to learn the failure of the system to respect the laws under contracts.
i don't know the legal language for all of this. but i do know when i read advice at livinglies.com one man said go over your HUD statement very very thoroughly if you find one mistake their is bound to be more. go over all of the documentation. i did sir, and couldn't believe the mistakes and omissions. unreal, just unreal what they can get away with. i even had an attorney that read all my documentation before closing, then he turned on me and joined the boys club of aspen. WOW powerful that club is of white collar criminals all backing each other up with their lies. crazy. me crazy that is all they got. then i couldn't even live in this condo cause of the toxic fumes coming from right below my condo. they had an industrial sized paint spray booth for the furniture factory that wasn't even written in the plat nor had any state, fed or municipal permits to use hazardous chemicals. had to move out and still pay the mortgage. i am so fucking stupid it is unbelievable.
Girl, hang on, we are with Ya!
thanks babe, i believe in U.
Look at post #650498 and my others above. I sent a complaint letter to the Office of the Comptroller of the Currency outlining the fraud in an Affidavit format. The CEO of the bank called me 3 months later to ask me how I wanted my house back. I explained that I would no longer give them money, but I would discharge the debt under the Uniform Commercial Code (UCC)Article 3.
The banks are in sedition against the currency. This fact will take them down. You need to learn about the debt-based monetary system. Read Modern Money Mechanics posted at the Federal Reserve. Go to the UCC website at the Cornell Law University. File a UCC 1 Financing Statement and discharge your debt properly and as soon as possible.
i have read all of your posts. your smart and know your stuff. OCC sent me a letter, oh, say a year later after reporting Chase Home Finance fraudulent activities and said nope they told us they didn't do anything wrong, so go away ms chamberlin. i have kept every single letter reply BS i have worked on. so if the time comes and i could enter a class action against Chase Home Finance i am ready to produce my evidence. oh i guess i scared Chase enough that they eventually foreclosed on me in march 2010 with no deficiency. i called my public trustee of Garfield county, and told him my whole story and he told me to sue Chase with his blessings and any other options he could help out with. he was a mortgage broker before this job and he knew damn well these banks were creating fraud documents. cause the foreclosure mill in denver that is Chase's exclusive fraudster group really really fucked me over.
I don't know what your wording was in the letter. My letter to the OCC was spot on, and I got the results I wanted in 3 months. I performed the discharge of debt correctly. They have dishonored the discharge.
I wrote in the form of an Affidavit. You cannot make a statement that implies a decision of law. You can't write that the bank defrauded you.
You must write a series of statements that outline the facts of the case.
These facts I condensed into Subject-Verb-Predicate statements that were very simple and direct.
I tried to record my Affidavit in the County Recorder's Office. They refused. But registering your mailing and sending it through the post office is an official recording of the letter in the original jurisdiction (i.e. the first post office was the original recorder in the US.)
You don't need to sue. Find out if the house is still vacant and on the bank books. File a UCC1 Financing Statement. It must be correct.
If the house is empty and available, send a claim to the bank. State that they do not represent your commercial affairs, and they have terminated their authority to be a tax collector for your property at the address so and so. You want the return of your property as the Secured Party Creditor of the debtor. You are discharging your debt as a transmitting utility under Article 3 of the Uniform Commercial Code. Discharge your debt with the last Statement of account that says the grand total of what is owed on the mortgage. Send a line that states you will discharge another sum if they send you a new presentment.
You must understand the debt-based monetary system and the Uniform Commercial Code to discharge debt properly. I've outlined the procedure and the three pieces of paper needed: the presentment accepted for value, the payment bond, and the performance or surety bond in this blog.
Not only did I discharge the debt for a foreclosure, I have discharged all taxes and fines from the city and state, and posted two 50 million dollar bonds at the US Treasury. They have my name and address. I'm a law abidding citizen, and I endeavor to follow the laws of the Uniform Commercial Code. Follow the code!
my mouth is so dropped wide open i can't hardly digest what you are saying. i really really really don't want to re-own this toxic piece of shit. it's a huge liability, but why didn't my attorneys tell me about this. here i was hanging on a thread begging chase to give me a DIL and i lose my $100,000. + all my mortgage payment. jeeze this was just created in 1999. wonder why and who created this code. you know i remember reading this but since it had the word commercial i took it literally and didn't think anything residential would be relevant. good lord i am going to have to disgest all this over the weekend. maybe in the mornings when my lucidness is better.
If you don't pay your mortgage, you lose your home. In NY, people go an average of over TWO YEARS of non-payment before their homes get foreclosed (http://www.zerohedge.com/article/bank-america-foreclosuregate-heightened-risk-more-dismal-scenario). That seems more than fair to me. To suggest that their punishment should be a free house or even further delays through litigation is insane.
While I appreciate your outrage, you're missing the point. The title system is fucked. Millions of properties now have clouded title. That's a much bigger issue than letting deadbeats get free stuff. It's a bigger issue because you can pay some servicer for 30 years, or sell your home, or refi, and then find that you still don't have good title to your property.
What about people ( like me) who own homes and are current on payments and are not even underwater, that they may like to sell someday but can't because of all this shit. What are the banks gonna do to make me whole? F**k what "seems fair" to you!
People won't get free houses out of this, but the banksters will somehow use this to get Tarp 2.0 rammed through. Funny how the recent collapse of the USD coincides with all this.
since the pocket veto was handed to the prez just before congress adjourned, he can hold the notarizations act until a few days after the lame duck session starts, and use it outside of the political fervor of the mid-terms to quell some of this. betcha he does.
Another Lira post - factually accurate and completely over sensationalized. Just because he has the facts right, doesn't mean his conclusions are right. The system is NOT going to blow sky high, and people are not going to get to keep their homes free and clear. Oh, that's right, Lira didn't say that explicitly, only strongly implied it.
The takeaway is that laws and procedures need to be updated to match the securitization process. It's easier to change a few laws and regulations then it's going to be to get rid of securitization. MERS as it exists today is probably doomed. It will be replaced with a better, more refined, and legal system.
You must be watching too much CNBC, "all we need is a small patch and everything will be alright."
Undoing false/fraudulent notarial documentation or retroactively creating missing will require rewriting bigger pieces of current law at a minimum (making us even more resemble a banana republic.)
You just need to re-file the foreclosure with documentation that is legit. No need to undo anything or make anything retroactive.
One more comment on this sordid affair. Fraud was committed ... but it was committed ON THE COURT SYSTEM. The homeowner was not defrauded in the slightest way. The remedy is for key people in the securitization process to be fined and/or put in jail, not for the homeowner to get a house free and clear or even a principal reduction.
This leads me to a question, and, admittedly, there's probably a professional in my town that I need to speak with rather than posting a question on Zero Hedge, but maybe this will give me a better variety of answers:
What about the inflated prices of houses in general? I understand when I see people here say "well, deadbeats shouldn't get titles to their houses for free because of this" and I might agree. However, should the deadbeats have had to pay 10X what the house was "worth" in the first place? The property card on my house, for which I paid $75,000 in 2008 (non-foreclosure and comparatively a steal), says the assessed value is $3,160. Now, I understand that there is a difference between assessed value for purposes of taxation and what is determined to be "fair market value", but doesn't that assume a "fair market"? In addition, where I live, appraisal is required at the moment of a home's sale, and our appraisal was for approximately $4,000 more than we paid, causing our mortgage payment to jump by nearly 20 percent almost instantly because of escrow deficiency.
My question is which numbers are used to determine a house's value if it can't be sold or, in our case, won't be sold? It seems to me that there is a very severe disparity between the "market value" and the assessed value, so to what extent would the assessed value be used, or potentially useful, in helping to unwind this crisis?
We're not in default, not jobless and are having no trouble paying our mortgage payment, which is less than our rent was three years ago. We've made significant sweat-equity improvements to the property, have made significant green investments and are among those working toward a higher level of self sufficiency by making full use of our 1/3 acre for that purpose. But if we can't sell our house because of fraud (not saying that's the case - we went through the S.C. State Housing Authority, although a bank did originate the mortgage loan and transferred (?) it to SCSHA. There's no record of the property at the MERS finder site...
We're not overly concerned about our current financial condition and don't particularly think our house was overvalued (the boom never really got to our town), but would like to know our options in terms of refinancing and so on...so in the eyes of the key financial players, is our house worth closer to $78,900 or $3,160, and why does it matter?
I am not skilled enough to know where it was committed but I will say this:
Principal reduction for certain borrowers or broad based 3% 30-year-refi could be the settlement made because the issue of underwater borrowers looking to walk is still well in tact. Further, banks are de-facto encouraging people to stop paying their mortgage on time if they want to get a refi on an underwater loan because they'll then qualify for HAMP, etc. I went to two different Chase banks and was told this by both employees. And yes, I am aware those programs are and continue to be a complete lie.
I contend the courts were complicit with the fraud when they accepted the first MERS product. Precedent being almost sacrosanct in the judiciary and all.
As far as principal reduction, free and clear, etc., restitution is in order if my property's title has been clouded so as to prevent my ability to sell or transfer through no fault of my own. What form, shape, result and / or definition this restitution comes in will be interesting to see.
Especially given the fact that these entities have a special proclivity of never admitting failure, wrongdoing or defeat.
Every knee will bow.
What the New Mortgage Mess shows to the world is just how irresponsible business and political leaders in the US really are. That introduces an element of risk that many did not fully suspect and will find unacceptable for investment going forward.
if there is a TARP 2, I think the USA could see Social Unrest. There is no more stomach for bank bailouts.
One form of social unrest (very civil) is the abandonment of Equity Investments.
There was no stomach for TARP 1 outside of Congress and the Bush White House (remember the Congressman who, in a rare moment of public honesty, said feedback to his office regarding the bank bailout was running about half and half -- 50% no, 50% hell no).
If they can do that in the weeks leading up to a presidential election without substantial public unrest, they'll do it again with the same result.
Here's a thought. The banks right off our mortgages and we forgive them TARP, QE, etc. Does the math work out for that?
Banksters and their agents, have created the ......Commies wet dream.
God-dammed brilliant job of journalism, right there, folks.
There is hope.
Time to start hoarding prozac.
Time to start hoarding prozac.
No POMO day--market bleeds. Coincidence? No just more fraud.
Disclosure: Long Meds
There will be government intervention, with Obama riding off on a white (or maybe black) horse....The sheep still will not understand the scam, and will probably feel good about the cornholing they have taken.....lol
"Next post, I’ll discuss a possible—I emphasize, a possible—silver bullet that will fix this whole Mortgage Mess".
Don't fix it. Let the banksters feel the burn, as it's the only sensation they recognize. Sure, it'll hurt some other people, but if the crooks skip out again, wash/rinse/repeat.
Has the Congress adjourned yet?
if not, the "pocket" veto doesn't mean squat!!!
As long as Congress is in session, WITHOUT AN ACTUAL VETO within ten days of hitting the POTUS desk, the Interstate Recognition of Notarizations Act AUTOMATICALLY becomes a LAW, signature or not.
Obama sent it back to the House...I take that as a real veto, not a pocket veto. It would appear there's a level of confusion about this.
Is there a way for homeowners(not in delinquency) to call and request a certain document to see if the bank carry a broken chain of title? I know Americans are lazy, but this is more than enough of a reason to get their asses off the couch away from the TV...
This is an excellent article. However, there is too much focus on foreclosure as the issue. The issue is even greater than foreclosure. It affects any mortgage taken out and then was subsequently securitized. When you have paid your mortgage in full the lien holder is required to record a satisfaction. If your mortgage has been sliced, diced and re-sold the question arises who is the "lien holder." The next logical question is whether or not you have a valid recorded satisfaction.
Thus, the problem extends beyond so called "deadbeats" not paying their mortgages, but to the prudent and careful who have been paying their mortgages who may never receive a properly recorded satisfaction, thus impairing the ability to re-sell their home. If this is correct, it is a gigantic problem well beyond "foreclosure-gate"
While this problem is making its way through the blogopshere the markets still seem to be holding up although there is a crack in bank stocks today.
http://www.prophetwithoutprofit.com/2010/10/12/this-magic-moment/
http://www.prophetwithoutprofit.com/2010/10/13/postscript-to-foreclosure...
All is not lost: EU to the rescue (de sauvetage)
(Reuters) - High-frequency trading of stocks requires extra regulation given the risks it poses and the European Commission will work with U.S. counterparts to craft new rules, said Michel Barnier, the EC's commissioner for internal markets and services at the European Commission.
http://www.reuters.com/article/idUSTRE69B31120101012
Sorry if I posted this in an additional thread but think I am an example and yes, I have realized it..Thoughts on my mortgage please:
July 2005: purchased property
August 2005: security closing date <private label not Fannie Mae loan; held in trust>
Dec. 2007: mortgage assigned from original lender to MERS
Both the county records and MERS show assignment from original lender to MERS (presumably to the trust) more than two years after the security closed. (The lender went bankrupt in 2007 and perhaps they finally attended to the docs.)
What I am thinking....
Since the docs (presumably both mortgage and note) were delivered two years after the closing of the trust/security, the Trustee would have no standing to sue in event of non-payment. (We are current on the loan/high credit scores.)
Just wondering if somehow holding the mortgage in the name of the original lender for two years is somehow deemed delivered to the trust for purposes of the closing of the trust. If not, we are in the situation where no one -- not the servicer, not trust, nor original lender (they were paid by investors at trust closing) have standing to collect the mortgage payments.
Right or wrong? What would you do?
It's a mere technicality, and in a more normal world you would ultimately held to account as soon as the chain of ownership of your mortgage was remedied. But hey, the way things are going you might hit the jackpot like millions of other enterprising Americans ... the politicos have little to lose by encouraging what seems to be the modern equivalent of Jubilee.
No, it is not a technicality. Unfortunately, it is the law. If the docs are not delivered on or about the closing date of the security, the trust has no standing...cannot come before the court...to get payments of the note (or mortgage). Their recourse is back to the bank for the failed security.
The bank broke it; they will have to buy it (back). It's the Pottery Barn rule.
No, it is not a technicality. Unfortunately, it is the law. If the docs are not delivered on or about the closing date of the security, the trust has no standing...cannot come before the court...to get payments of the note (or mortgage). Their recourse is back to the bank for the failed security.
The bank broke it; they will have to buy it (back). It's the Pottery Barn rule.
I knew, right away, comrade Obama is a good guy.
You are lucky guy, man
Champagne is on you.
"Greed works"
G.Gekko
Write to the Office of the Comptroller of the Currency. The banks have committed fraud in creating a loan. You must write it in the form of an Affidavit.
The bank indicated that it was lending you its money or credit. This is a violation of the law.
The bank accessed YOUR credit through your signature on the loan application. It took the credit and leveraged it up through the miracle of fractional reserve banking.
The bank withheld your credit. Technically, your house was paid off when you signed the loan application because you are a Transmitting Utility under the Uniform Commercial Code Article 3. Then, they presented you with a mortgage note which made you promise to pay back YOUR credit plus interest to the bank.
Three years later,the bank filed an abandonment form with your name saying that you abandoned your credit. They did this without your knowledge and consent.
They did not file a 1099OID form reporting the taxes they owe to the Fed and the IRS for the new money they created in the system through fractional reserve banking.
You have many reasons to outline the fraud in the loan application. Tell the Comptroller you want a full investigation of the bank loan practices. They failed to disclose the material terms and conditions of the loan contract.
Then, write to the bank for a final Payoutstatement or find your last statement for what you owe.
File the UCC 1 form declaring yourself the secured party CREDITOR with a security interest in all your property, assets, body, marriage, children, debts, and liens in the name of you, the DEBTOR. Then, you will be fit to handle your commercial affairs.
Then, file a discharge of debt for the mortgage. The information is in Article 3 of the UCC posted on the Cornelll Law University website. Be a good citizen and follow the laws of the land. Discharge your debt. See my other posts on this blog.
The banks are in sedition with the laws of currency. This fact will take them down.
Disclaimer for the following: I hate the financial institutions, I hate the American system, I would expatriate myself if I in any way good. This out of the way:
Remember that the foreclosures were based upon Americans defaulting on their loans. These were not innocent, sweet people. They took out mortages based often GREED (speculators) and often because they were just given the chance. The point is that very often they lied to get the mortgage, mistated finances, work history, wages. Yes, they were encouraged to do this. But the point is that these sweet, patriotic, greedy American people did this.
Americans who took out sub-prime loans are as complicit as the banks in every degree.
Sorry Traveler-2
"Greed is Good"
http://www.americanrhetoric.com/MovieSpeeches/moviespeechwallstreet.html
"nothing happens by accident. If it happens, you can bet it was planned that way."
F.D. Roosevelt
+1
This mess spins into ever more complex chaos and... "we'll never unravel this mess," the Feds take all MBS liability and re-fi those under water (reducing principal to fair market value).
Problem solved, bankers off the hook (back to business a usual), and the masses pay, pay, pay... until they don't.
Your morality stance is absurd. The banks created loan products, and the people used them. Period.
The banks don't lend their money or credit. They provide access to YOUR credit through the US Treasury exemption account. They take your credit and leverage it through fractional banking. Technically the house was paid for when you signed the loan application.
Then the banks withhold your credit, and lead you to sign a mortgage note promising to pay back YOUR credit plus interest to them. So who is getting ripped off? The consumer. The banks are greedy, and they've been at it since 1933.
They withhold your credit, which is a violation of the Uniform Commercial Code (UCC).
They steal your credit when they file the abandonment of credit using your name without your knowledge or consent. Another violation of the currency laws.
Then, they don't file the 1099OID form reporting the tax they owe to the Feds and the IRS.
Apparently, you don't know anything about the debt-based monetary system or contract law under the Uniform Commercial Code. You don't know how to manage your commercial affairs.
So, have you read: http://www.nmcservices.net/
or are you associated with said site in any way?
No association whatsoever. And I can tell you these guys making money off the misery of the people is even more shameful than the bankers. The general concepts of what they teach are absolutely correct. However, the forms and advice they give is mixed with truths, half-truths, and outright lies.
It took me two years to sort out the difference by relying on the sources: the description of the Common Law, proper writing and recording of an Affidavit, the responsibilities and procedures of a notary public, references directly to the Uniform Commercial Code, the instructions on the online UCC 1 Financing Statement tutorials. I reviewed the concept of a creditor perfecting a security interest in a borrowers or debtors property. I reviewed the STRAWMAN. Looked up key definitions in the Black's Law Dictionary. Read the book Jurisdiction in the Admiralty by James Hall based on the Clerks Praxis under Edward I. This book describes the historical precedence.
Then I looked at the contracting forms with the government. If it is true that the individual is a transmitting utility that creates debt-based money, then it is also true that the bid, payment, and performance bonds that a company files when contracting with the government is the means by which the government gets work paid. In essence, the contractor is creating the money needed to pay for his own job. He has insurance and reinsurance bonds to specify price and to acquire insurance, which is a surety bond, a promise to pay. Three pieces of paper is the format to discharge debt.
Prison bonds follow the same format. The bid, payment, and performance bonds SF273, SF274, and SF275 state the bid, the insurance, and reinsurance for a criminal offense. If you file the prison bonds yourself, you become the owner of the claim and the court cannot incarcerate you. Under the UCC, you must accept every claim for value and return for discharge, settlement, and closure of the account. This format goes all the way back to the Clerks Praxis under Edward I.
I'm a technical writer by profession. It wasn't too hard to decode with a background in structural analysis, linguistics, and semiology.
The Banks are screwed??? What planet are you on? The people are screwed, especially those of us who owe nothing on our own homes.
Quickly, get some loan!
They are giving houses away.
I have to agree with The Alarmist, and wonder where Mr. Lira has been lately?
"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."
I'm afraid Mr. Lira has been listening to the propagandistic American non-media for far too long.
The crux of the problem is not as quoted above, but the ultra-leveraging, and layer upon layer upon layer of leveraging on top of that.
Once more, to simplify, Wall Street's definition of infinity is the number of times one loan can be sold (or the number of credit default swaps generated on one transaction or financial entity).
Take one securitized loan (as in securitized debt, as in snake oil), and sell it. The receiving institution lists it as an asset, then generates securitized financial instruments on the liability side. Now follow that chain to institution after institution after institution, and one begins to get the idea.
Now keep in mind those CDSes generated to "remove risk" -- and keep in mind that along that exponentially growing chain of CDSes, when one decides to back out of the deal, or further "remove risk" he generates two more securitized financial instruments, which creates four more counterparties and the chain continues to expand exponentially.
Therefore, one ends up with an exponentially-growing exponential situation on top of another exponential situation.
Get the picture? This is how we end up with over one quadrillion worth of credit derivatives.
And the top five banksters who control this global financial virus? JPMorgan Chase, Goldman Sachs, Morgan Stanley, BankofAmerica and Citigroup.
Those who own the gov't, in other words.....
The answer in 2008 was "let it burn".
The answer in 2010 is "let it burn".
Trying to save these banks and let them continue is 1000x worse than letting them fail.
Letting them fail would have resulted in hardship yes. Not letting them fail resulted in the total destruction of everything else financial.
*************Gonzalo***********
**************stop***************
**************Congratulations**************
**************stop**************
***************check the title***********
***************stop*******************
***************stop payments**********
****************stop*********************
**************buy metals*******************
*****************stop*******************
**************American Dream*************
*********************stop****************
Please, just stop. :>)
which one of the 3 stooges owns the title on the koala's treetop?
Alarmist, you need to take a couple of aspirins (or preferably something stronger) and calm down. I have a right to my opinion, which is that if you own your home, what are you attacking me for?
My point, which I did not make clear: Yes, the failure of the financial institutions is preferable to their existance if they can be re-structured. But, the banks could not have perpetuated this fraud if Americans did not go along with it!!
Now, don't freak out. Settle down. I am sure many, like you, will dislike my free speach. lol
WTF, bro? What are you responding to?
It appears he was so emotionally triggered by some one's comments that in his rush to reply he lost control and prematurely.......er......commented in the general comment space?
Now the damn thread is all sticky and yucky. I hate it when that happens. And worse, it stinks for days afterwards around here.
I admit that when I was younger and less......er....experienced I did it as well. But only twice and both times late at night. Never during the day. Honest! :>)
Got SKF?
That and XLF in the opposite direction seem to be the early tell. But one day don't make a trend.
...trends? This close to the edge? With no fundamentals or technicals to defrag this? The trend over the cliff and into the abyss is generally straight down. It all comes down to whether the Fed pump can keep wood. Hahaha, trends!
Please don't use the terms "wood" and "pump" around me. :>)
May I ask how many up days we have had during the last 6 weeks compared to down days? So before I go calling the end of the stock pumping, I would like to see more than one or two days down.
BTW Friday 10-15-2010 is Fed POMO pump day. Until stocks don't go up on pump days, I'm going to assume they will. And considering the Fed hasn't officially pumped in a week (10-06-2010) I suspect Friday will be a BIG pump.
BTW2, only 3 weeks left to vote so vote early and often.
edit at 4 PM Thursday 10-14-2010. Nice late day pump in the stock market, which brought all indexes nearly into the green. This will be the springboard for tomorrow's pump. This insanity will continue until they can't do it anymore. I often talk about desperate men doing desperate things. I suggest this might qualify. The hidden hand is always careful not to be too obvious. When they are, it is often because they have no choice.
And there goes Google after hours up 6%. Bingo.
Here's an equally outstanding analysis from CHS:
The Coming Collapse of the Real Estate Market (October 14, 2010)
The system for financing mortgages and regulating that financing has failed, completely and utterly. The mortgage and real estate markets are now in collapse.
http://www.oftwominds.com/blogoct10/foreclosure-collapse10-10.html
More gloom and doom, poison for your mind. You are what you think.
Move along, nothing to see here! PLEASE, invest your money in bank stocks. This is HUGE. The ongoing frauds finally have a chance of being revealed at the tail end of the process, the foreclosure, the only point where paperwork must be presented and to a COURT no less. Here's another person with what you call a "poisoned mind": Ha Ha - NOW CNBS Reports On The Underlying SCAM? http://market-ticker.org/akcs-www?post=169189
Alarmist, take a couple of aspirins (or maybe something stronger). Diverisity of opinion raises the blood pressure, and yours is up there. By the way, if you own your home, what is the problem?
However, my point is that millions of Americans took out sub-prime loans dishonestly; they fabricated their earning, their financial position, etc., etc. Yes, they were encouraged to be dishonest, but the went along with the fraud.
Putting them on a pedistal and worshiping them as martyrs agains the financial system (the banks) is plum silly. The disgusting people are as complicit as the banks, and they deserve whatever. They are part of the problem, what is wrong with America.
Now, go enjoy a bong or some smack. Quit attacking me.
Ben Bernanke is at it again ...
http://www.reuters.com/article/idUSTRE69C5KO20101013
It is a given his only objective would be to roll out multiple acronyms with only one aim: get his bankster pals off the hook.
This man is becoming more and more dangerous for the health of America.
How will this play out? Everything rests with the amount of risk that title insurance companies are comfortable with and what they will charge the insured for that risk.
If the charges are high enough to stall house sales, the Gov will step in with a title guarantee program.
For the title insurance companies to cease issuing insurance based on cloudy titles would be suicide for them. The usual remedy in these circumstances is state intervention.
A run on the banks and a run on the dollar seem inevitable. This is a heads up to be looking for the nearest exit and start creeping towards it.
.
Sick Sick thought here but hear me out. What if tracking who owns title to any of this shit is going to be impossible and the banks and uncle sugar are never going to let the common man default, how do you "solve" this problem. What if regardless of who thinks they own title the government takes it, the government also forces the homeowner to pay their mortgage payment into a trust or lockbox. In return for the title the government will issue treasuries to the banks at an approved rate of 85% of value, so let's say a $300,000 mortgage is turned over to the government trust they would issue $255,000 worth of treasuries to the bank. This would take the place of the rotted ass securities the mortgage was the basis of, allow the treasury to keep "printing" money, suck all the investors into treasuries whether they like it or not, essentially absolve the CDS problem (until the US defaults) and allow the government to own a very substantial portion of real estate and gain even more control over the citizens. They can claim that they made the banks suffer by giving them a 15% haircut, will make profit off the eventual payment of the mortgages, and best of all steal the money from the trust.
This is just a thought with a lot of holes, but I'd be curious to see if anyone else can picture a similar scenario.
yeah, but tomorrow $255,000 ain't going to be worth a shit!
http://www.youtube.com/watch?v=GPYLJoq_40Y&feature=related
I would definitely tend to agree with you. Headed to the gun store tonight for more ammo and then to Sam's for a sh#tload of food.
I feel like I'm living next to the worlds largest water balloon.
the problem is that "trusts" set up to accomodate securitization are the owners of notes.
Trancheholders are not. This is a big ass can of worms.
Servicers and banks are refusing to foreclose, meaning there is SIGNIFICANT impairment going on in the junior tranches, as they get paid out of cashflow last.
This is going to end up a dogfight between the ownership, which is big pensions, mooch funds, etc., and the banks on the other end who are protecting their "balance sheet" aka, executive bonuses.
I just LOVE seeing those mf'ers FINALLY gettin' their long-deserved smackdowns, and J6Ps all over America deliving those smackdowns.
I love the smell of JUSTICE in the morning.
Good job William.
One critical point you left out is:
In all my over 3 decades in the brokerage business, I know to be suspicious of any, I MEAN ANY, markets where the products/investments are not standardized. Just like derivatives, anytime you have a custom investment, one not standardized, there is a huge, and I mean huge potential for mis-pricing, widening spreads, and outright theft from the investors.
So, investments that are custom made, like CMO's, derivatives etc., that are one- of-a-kind ( or close to it ) and created for a specific purpose, and not traded on a national exchange, ARE HUGE OPENINGS FOR STEALING INVESTOR's MONIES.
These firms pushed this shit because they knew the investors would not be able to find prices, could easily be misled, and bamboozled, and the MARKUPS COULD EXCEED THE 5% LIMIT, and catching them would be hard to prove. Until Now. They did it for the money. Efficiency only allowed them to steal more.
And one of the most important governing rules that these firms violated is and was FAILURE TO SUPERVISE.
Add to my list of violations from the other day.
"Streamlined Refinance"
Better have 1% interest, and revaluation (i.e., principle reduction) built in, otherwise it won't work. Also, it needs to account for the fact that people have 2nds, 3rds, etc.
mr lira is pure gold. zh needs more lira - and not of the paper variety.
"Show me the paper, motherfucker, will be all you need to say." pulitzer prize nomination
'So the mainstream media just mentions it casually—“and in other news tonight . . .”'
We got the bubbleheaded bleach-blonde, comes on at 5
She can tell you about the plane crash with a gleam in her eye
It's interesting when people die, give us dirty laundry
We need to make up our minds, Mr.Lira is Gold one day, and ravaged the next.
Respect..............the mans got it goin'.
Did lira ever stomp a mudhole in Mish Shedlock and walk it dry yet or has that fabled confrontation been put on immediate hold for the duration? Shedlock with his tired straight jacket type deflationary arguments do get a bit old after a while.
Dungeon Master Mish doesn't have the stones to do a one-on-one debate.
Me? I got a couple of brass balls, and a big ol' cock ring wider than a silver dollar—I'm always up for a fight. Pick your weapon, mo-fo, and we're on.
The Windy City Windbag knows it—which is why he shies away. Which is of course why he's pussy.
GL
Much like the ludicrous and disingenuous crap that Fuhrer Denninger arrogantly spewed out in response to GordonGecko's posts on gold earlier this year here. Karl loves to go all Stormtrooper on anyone's ass in his OWN forum, but get the bully outside of his own playground and he is a coward and an intellectual wimp.
It's sad, really, to see intelligent men let their oversized egos get in the way of their reason and logic.
Hey akak! Where've you been? I missed you! (In a non-gay way, of course . . . though that pirate avatar . . . it's so <i>cool</i> . . . it gets me so <i>horny!!</i>
Cheers, matey!
GL
Sitting back watching the banks tank on my screens...I'm lovin it!
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.
With all due respect, that is not how it works. This is why a film director shouldn't be writing about legal processes. The same legal processes, by the way, that differ quite a bit from state-to-state. The theories running around about how some people are just going to magically wind up with title to their houses despite the fact that there's a deed of trust recorded against the property are right up there with alien autopsies and cold fusion on the Lack of Reality scale.
This.
The foreclosure process varies state by state, but generally the owner of the note proves ownership of the note by producing a copy and the applicable documents (endorsements) that shows he owns it. If the owner can't produce these documents readily, it's more difficult but not impossible to prove ownership, through an evidentiary process. As a lawyer friend of mine pointed out, a clerk knocking out 500 affidavits a day isn't the type of evidentiary proof a competent judge will accept, but it can be done. It's just going to take longer and be more costly for the holder of the defaulted debt to proceed. I would expect the .gov to approve some sort of unified procedure to streamline this aspect of the process.
Also, the mortgage or deed of trust isn't an issue either. It's recorded (publicly) in the same locale that the property is located and a copy from the courthouse is perfectly permissable evidence.
"Equity abhors a windfall" as they say in law school. Sorry, no free houses.
Well put. It is a evidentiary issue at best. Folks like the couple down in Simi Valley may be able to stop the foreclosure process by claiming technical requirements were not followed and frankly, they should -- they're entitled to due process. But once you've defaulted on the note, you've really lost control over the process. The whole point of nonjudicial foreclosure is to allow lenders to escape from having to honor a homeowner's ability to remedy his or her default. But the lender still controls the whole process. Seriously read the deed of trust on your house -- it grants incredible power to the lender. Once you default, it's a done deal and largely out of your control.
That said, the incredible incompetence of the lenders is shocking. They outsourced this work to the lowest common denominator law firms and then claimed to be shocked when those law firms couldn't follow (admittedly highly technical) statutory procedures for a huge volume of cases. You get what you pay for.
So I just attempted to locate my note and servicer on MERS... doesn't exist. Is it possible Wells Fargo never registered my note with intent to keep it? They were the original lender, and we currently pay them for the mortgage. Anyone have any ideas?
I looked mine up the other day and nothing came up with MERS. However, when I looked up my documents online with the county, it shows MERS as the holder there.
This is really the best thing that could happen . i MEAN THE kARMIC BEAUTY OF THIS IS TOO FUCKING PERFECT . Americans get their jubilee , and the banks get thrown into the abyss for all of the bullshit they have caused . Who says there is no God ?
Who would have thought the banks would tie their own nooses ?
Why do people say the banks will have to "buy back" in full those on the security/tranche/bond side of the broken chain? Seems to me that side of the broken chain would have NO standing whatsoever. They simply invested in something which doesn't exist (no title). If wrong, I surely do not understand why they are not all beating down bank doors demanding a "buy back" now?
No mention of the rating agencies in Lira's article. They should have been aware of the broken chain of title in their rating of MBS. Therefore, they and their minions they employed have commited fraud of the highest order.
You're right, of course: The ratings agency created perverse incentives, not to mention didn't really keep an eye on things and fulfill their obligation.
There was only so much perfidy and deceitfulness that I could cover in this exceedingly long post. Sorry! Next time.
GL
Wait until the Planetary Boundaries we are blasting through culminate - that spring rain will be summer drought.
must watch
http://money.cnn.com/video/news/2010/10/14/n_foreclosure_lawyer_sig.cnnmoney/
I read an interesting paper on why more people aren't doing jingle mail, walking away from underwater mortgages in non recourse states.
The conclusion was, that people are not really the economic beasts that we would have ourselves described as and, quite aside from bank ratings, there is a social pressure to be seen to uphold ones word and pay ones debts honourably. And so you have people coming up to retirement, sitting in houses that are worth 40% less than they paid for them and still mailing the check every month.
The other point the paper made though is that society sets its own level of honor and that ones position within that is relative. What is 'honourable' to us might seem dumb as shit to a ruthless pragmatist like a Somalian pirate.
What this will do is make not paying debts less dishonorable than it was and the societal reset will mean far more walk aways. Society at large now says "fuck the banks". And they will. You walk away now in the face of fraud and extortion, you're still better than the bum hill billy that could never avoid his house and got tossed out when the crisis first hit right?
"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."
Qualitative Oozing.
Smash the system.
Matt Taibbi style :)
I mean the post
I think a lot of mortgagees will be given 100 year loan terms.
There is indeed a silver bullet. It is terribly simple, and it would not only prevent another MBS meltdown, but would also bring about the long awaited job growth:
I assume that the missing assignments or endorsements may be replaced after the fact. This "merely" requires that the missing assignors duly sign the appropriate paperwork. Simple in theory, but difficult in practice, because millions of documents would have to be executed.
The servicing firms and their lawyers wanted to save time and efforts by using improper robo-signing. This attempt apparently failed.
Now, the banks will have to do it the hard way. And they will have to hire tens of thousands of humans to do the job.
This is job creation American style.
Unfortunately, the boost to the job market will only last temporarily.
A quote: "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."
THIS IS ABSOLUTELY INCORRECT. A break in the chain of assignments has no such effect. Even before the days of MERS, we had single page paper assignments, or we had blanket assignments with twenty pages of loans on spreadsheets. If an assignment was missing from the record as in: a, b, c then e we set it up as a break in the chain and either one or two things would occur: 1) the missing assignments were found and recorded, or 2) assignments were created and executed, often with an affidavit. end of discussion--completely legit. Title always vests and that is just how it is.
In some cases, a bank changed names or bought another bank, the munaments of title reflecting changes of corporate names and etc. had to be recorded.
It is true that (e) cannot foreclose without an assignment into and out of (d.) Some lawyers would take an assignment from (c,) but that isn't so wonderful, if there was a (d) involved.
One of the selling points that really got MERS going had everything to do with difficulties described above.
Why on earth would you think the debt would DIE, just because of goofs in a chain of assignment? That is just crazy talk.
You may be utterly correct in everything you state, and yet I cannot help but wonder just how many shrill challengers to this post are paid agents of Bank of America and Wells-Fargo, sent here to discourage any discussion or thoughts of just how this issue may imperil the parastical banking behemoths who spawned it.
Dude, I'm not going to die and go to hell. I've never agreed with what these people have done. I was arguing against this stuff before it got going good--before 2000, for sure. And it cost me a lot--and I knew it might cost me a lot, when I was raising objections.
Breaks in chains are simply not fatal errors. I found a Warranty deed recorded more than 100 years late one time. It sat in someone's desk till the family decided to sell it. But they found it, recorded it and the attorney had them create affidavits of possession. Hell, that land had moved from one county to another, because the old county failed and was merged into another in the last great depression. RE isn't supposed to be crooked in the least.
You see what we get when RE gets crooked, don't you?
TE, I apologize ---- my last comment was poorly worded, and I did not mean to cast any aspersions upon you personally. I agree with you here, and was merely trying to make a broader point, which I now see I did poorly.
AKAK: We're cool. I didn't blow up on you--I hope. If I did, I apologize, too.
But you are right, there are probably plants and trolls.
Something for the trolls: I video taped a foreclosure back in January, trying to defend a builder against deficiency judgment. He was the kind of guy that got everyone paid--he had not one single lien filed by a materialman.
Bank decides to foreclose, even though he was being pretty successful, squeaking sales out--intent on doing the honorable thing.
Watch this: Foreclosed on coldest day of the year, 17 degrees. I was out there all freakin day long, they said they were going to do it at 10 am. Their dude shows up at like 3:10. Everyone has essentially gone home. He reads off the 5 foreclosures, multiple lots in each, each went back to the bank. Heard it, recorded it. And I figured, that is that.
But, when the deeds under power of sale finally hit the record, guess what? They said that some party who wasn't even at the sale had bought them on the steps. NOBODY ELSE WAS THERE.
There is no legal way to sell something on the steps and bid it into the bank and then make up a deed saying someone else was there, who bid it in. THAT is pure shit.
So, all you attorney trolls need to video the foreclosures. They are, in fact, doing shit like that.
Here's the trick: Some fancy judge will make MERS and them create assignments documenting each and every INTERNAL conveyance they did inside that BS MERS apparatus for a given loan.
THAT is when things will get interesting.
Deed Dawg. woof woot.
You are spot on, spot on. That is why the banks and the govt. and the MSM is acting the way they are now. They see exactly what may happen, and that is people saying I won't pay my mortgage and then take you to court to produce the note, and if not then I own the house scott free. And on top of the hundreds of thousands and millions of people clogging the courts in order to have this done and then the lawyers seeing a goldmine from this. Your correct, if they continue to allow essentially the awakening of the US populace to the possibility of keeping their houses and/or getting it back without mortgage, it can take down the banks and halt the Mortgage industry for years if not decades of litigation.
Obama didn't want to sign that not because he thinks that american people are being wronged, it's because he knows that the game loves know one. As soon as he would have signed it the republicans would have gone all out after him saying he doesn't stick up for the little guys and even his own people would have gone after him. The dems would have lost the senate and the house and the president would have been a one term president if not impeached. The cabal of bankers and the elite are running scared and it's because they have lied and cheated so much, that they got sloppy and it got them.
First of all I would like to give Mr. Lira a big hearty Thank You for this article. Reading his diatribes is always a pleasure, and this one is no exception. I've read quite a number of articles regarding the foreclosure gate, but most of them focus on one or two specific issues of the whole mess, while this one looks top to bottom at the whole situation. Once again, thank you!
At the same time there are a couple of points that I would like to make:
1. MBS per se are not good or bad, it's how you use it, which is obviously the case here. Just like nuclear energy - you can use it for powerplants or for bombs. Therefore it's not MBS that have caused this mess, but rather the bank's own greed and corruptness.
2. This article doesn't really look at the other side - the owners of CDOs. It does mention them, but that's about it. Wouldn't there be a shitstorm of litigation coming from those people once they find that they're ultimately screwed?
But once mortgage loan securitization happened, things got sloppy—they got sloppy by the very nature of Mortgage Backed Securities.
Nope, it's the nature of most industries: dealmakers bring in money, executing deals costs money. So- you cut execution costs to the bone. When there is no accountability anywhere, why bother to execute at all?
Really this is a great post from an expert and thank you very much for sharing this valuable information with us.
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