Grayson Sends Letter To Geithner, Bernanke Demanding Foreclosure Freeze, Warns Of Systemic Bank Failure Risk

Tyler Durden's picture

Alan Grayson is back on the scene, having sent a letter to Financial Stability Oversight Council which includes pretty much all of Wall Street's pawns, including Bernanke, Geithner, Bair, Gensler, Walsh, and DeMarco, in which he asks the FSOC to "suspend foreclosures until this problem is understood and its ramifications dealt with." And the ramifications, per Grayson, Zero Hedge and everyone else, will be dire for the banking sector: "So far, banks are claiming that the many forged documents uncovered by courts and attorneys represent a simple 'technical problem' with foreclosure processes.  This is not true.  What is happening is fraud to cover up fraud... The banks didn't keep good records, and there is good reason to believe in many if not virtually all cases during this period, failed to transfer the notes, which is the borrower IOUs in accordance with the requirements of their own pooling and servicing agreements. As a result, the notes may be put out of eligibility for the trust under New York law, which governs these securitizations. Potential cures for the note may, according to certain legal experts, be contrary to IRS rules governing REMICs. As a result, loan servicers and trusts simply lack standing to foreclose. The remedy has been foreclosure fraud, including the widespread fabrication of documents.  There are now trillions of dollars of securitizations of these loans in the hands of investors. The trusts holding these loans are in a legal gray area, as the mortgage titles were never officially transferred to the trusts... The liability here for the major banks is potentially enormous, and can lead to a systemic risk."

So now that Obama has declined to halt the foreclosure halt process, TARP 2 anyone?

Full letter attached (pdf)


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traderjoe's picture

I junked you. While ZH has been on the case, so have more than a few other sites - many for a year or more. 

Don't know why you called him a sleaze-bag. He's writing a letter on a particular issue and (IMHO) correctly identifies the securitization issues - WHICH COULD IMPACT ALL NOTES SECURITIZED DURING THAT TIME (whether the borrower is delinquent or not). 

His efforts, at least in this particular instance, are appreciated from this quarter. 

SloSquez's picture

Yes TJ, agreed.  Sometimes you have to settle for a lesser horse just so you can be in the race.  I'll take it, however it comes.

hedgeless_horseman's picture

That is classic jockey-ho talk.

On the other hand, an owner might say, "I ain't paying to run no loser."

SloSquez's picture

Stud fees bro, stud fees.  "Yes, this horse ran in the 19XX Derby and finished strong."

Cognitive Dissonance's picture

I almost bagged the head cheerleader in high school and finished strong in a field of 1,392.

Where are my stud fees? :>)

SloSquez's picture


"I almost bagged the head cheerleader in high school"

Your looking for the "Rose Garland".  You missed, no stud fees if you don't plant the flag.  Truly enjoy your posts CG!'s picture

now CD i was  cheerleader in H.S. but not the HEAD one. TOO MUCH

pressure. get my drift.

Henry Chinaski's picture

His efforts, at least in this particular instance, are appreciated from this quarter. 

And the other 98% of the time the socialist sleaze bag votes with Nancy Pelosi...

Changing the subject, they say the time to buy is when there is blood in the streets.  Metaphorically, residential real estate is about there.  But maybe this time around the indication of the market bottom will be more literal.

Cammy Le Flage's picture

Whatever description one has for this member of Congress he brings up good points in same and this is decent.  Except there is no rule of law in this country anymore and anyone blaming the current administration on that fiasco is simple-minded.   The rule of law has been eroded over time for many reasons.

Nacho.Libre's picture

This is what I want to know.  I'm on time with my mortgage and am not underwater.  BUT, I did refi in 2007 and though Everbank is the original lender, MERS is listed as a nominee for the lender and their successors.  So, I've been paying Citimortgage for a few years since they picked up the note.  When I finish paying this off, will they be able to give me title free and clear?  I imagine if they can't foreclose on someone then how can they give me title when I'm done paying?



traderjoe's picture

This is the crux of the matter - when the very chain of title for millions of homes is placed into question. [Can you imagine millions of homeowners simultaneously asking for proof of note possession?]

Just my opinion, but if you are paying, aren't close to a payoff, then I wouldn't do anything yet. Who knows how this will play out. It's very early days. Grab some popcorn, stay informed, and see what happens...

Nacho.Libre's picture

Actually, when this first came up on Zerohedge, I called Citi and asked them for copies of the paperwork.  They had no idea what I was talking about when I said that the papertrail on foreclosures was bad.  I asked them to fax me over proof that they owned my loan.  What they sent was a copy of the deed of trust that lists Everbank as the lender, some random guy named Tommy Bastian as Trustee, MERS as the nominee for Lender and Lendor's successors and assigns.  It also says MERS is the beneficiary under this security instrument. 

Under the section of TRANSFER OF RIGHTS IN THE PROPERTY it says "The benficiary of this security instrument is MERS...and the successors and assigns of MERS.  This security instrument secures to lender: (i) the repayment of the loan, and all renewals, extensions, and modifications of the note; and (ii) the performance of the Borrower's covenants and agreements under this security instrument and the note.  For this purpose, borrower irrevocably grants and conveys to Trustee, in trust, with power of sale, the following described property in the county of...." 

It seems to me, this random guy is in charge of the house while MERS just gets the note payment.  If I check the county records, Everbank is still listed as the grantee, but so is MERS and "public" on another doc.  I probably need to get to the courthouse to check it out.  How do you all read this?


Oh, and on the copy of the Note that was faxed to me, was the original note I signed with a stamp on the bottom that says "pay to the order of citimortgage, inc. without recourse by everbank.  Signed Betty Y. Ellis Vice President." No date or indication that the there was a title transfer.

calltoaccount's picture

The banksters have gotten away with it for years in the equities markets with Cede & Co., the nominal owner of all the securities in your brokerage account.  That's how the shorting, naked shorting, counterfeiting, DTCC loan/sell the same shares over and over again without having to actually deliver ponzi works-- and is made further unaccountable to anyone.    They've succeeded in getting the SEC to look the other way--  and plundered the country with abandon and impunity.  

They just adapted the M.O. to RE, sleight of handing the original fraudulently procured mtgs into esoteric, intentionally misrepresented, mens rea laden MBS CDO and CDSs.  Same guys, different floor.

But the coverups will be harder because the stench of dishonesty is rising.

Hooter Shaker's picture

We paid our mortgage off last November.  GMAC was holding the note at the time of payoff.  They never sent any information that our loan was down to the last payment even though our year end statement from the previous year showed we were closing in on freedom.  Instead, they sent us a new payment book.  Needless to say, they weren't very happy to see the loan paid in full and getting "paid in full" documentation was like pulling teeth.  We finally got it, complete with a shitty attitude from customer service. 




Ned Zeppelin's picture

I've been a real estate lawyer for many years. You raise a very valid question. If you for years are paying your mortgage debt to X, but Y still owns the loan, that is a problem. 

This is why the title companies will be next on board: Homeowner sells home, goes to closing, MBS servicer says pay me $200K and I will release mortgage. Title company dilemma soon to emerge: how do we know you are the proper payee? Prove it.  

Closing cancelled pending title insurance underwriter review. Guaranteed. 


pamriallc's picture

first we had people in say.... Arizona who bought their neighbor's house for 25% of what they owed on their own home---- ONLY TO THEN DEFAULT ON THEIR PREVIOUS HOME WHILE LEAVING THE BANK WITH THE BAD DEBT--- REGARDLESS OF THEIR CAPACITY TO PAY.

now we have chumps like GRAYSON who while politically impotent, have decided to allow people who are CURRENTLY NOT PAYING THEIR BILLS the right to live in a house, rent free, on some BS technicality.

truth is that only people in DEFAULT are being foreclosed on.

many people, in light of feeling good about themselves, bit off more than they could chew and decided to let their house go back to the bank.  that's a normal system.  what's NOT NORMAL is the heavily politicized, socialized system that makes "do-over weddings" and "do over drunken shopping sprees" and "do over credit card binges" and "do over home purchases" some kind of government "responsibility" ----

GRAYSON is *precisely* what's wrong with our system.  these socialized, mass market solutions BREED INSTABILITY vs letting the people go broke, letting the houses swiftly into hands of those people willing to assume the risk, offering a credible market.  Instead Grayson is willing to morally bankrupt the system for a flight of political "technical" fantasy that says someone who isn't paying their bills should stay.  Like a bad marraige where the parents "stay for the kids" what we end up with is a system of screwed up kids.

I say "accelerate" the process, purge the excesses, allow a free market, and place people of true moral responsibility in place of those trying to impose the will of "political fantasy" while they are paid to Robin-Hood the system (salary wise) with our own tax dollars.

Kina's picture

OK a bank shill, or ulta selfish/jealous person.

Interesting, rule of law never applied to the big guys, or they get off of criminal behaviour through a slap on the wrist. Here we have fraud, a criminal act and you also don't want the rule of law to affect the big guys.

Those little peasants who have trouble paying their home loans in the middle of the greatest 'recession' since the GD, those lazy cheating bastards, throw them out you say.

Let the banks smash down their doors, pilfer their belongings, even if it is the wrong house, who cares.... go the banks, hey. How dare the little guys get a break.


What a selfish, jealous scum bag position to take. Go back to your desk, manipulating gold and silver.

Ned Zeppelin's picture

PAMRIALLC, you're obviously a bought and paid for, and remarkably uninformed tool. Who is paying you to post this bullshit? 

PeterSchump's picture

Tell us when all of you are done jizzin' on his picture.'s picture

this website

is really informative. have been following it for a couple of years. learned so very very much. i believe they broke the fraud crime and discovering MERS etc. i started putting two and two together. i thoroughly went through all of my loan and closing paper work from chase, mortgage broker, title work, everything. nothing was truth all fudged and different numbers. different dollars amounts on the sellers HUD compared to my the buyer's HUD. no final loan application and the initial one made out and falsified with forged signature's by the mortgage broker. Truth in Lending, Joke, all lies. Good Faith Estimate, joke all different amounts and numbers. property taxes, joke property didn't legally exist in the public records until 4 days before closing. can you imagine the appraisal for this property was done before it was even a legal and filed in public records. no records what so ever. i called and wrote for a year to chase and tried to tell them they got an appraisal done on a property that didn't even exist. i ask chase to rescind the sale for two years. these jokers are utterly crooks in sheep clothing. i tell you, america is unbelievable how gullible we all are to believe these servicers know what in the fuck they are doing and sticking it really well to honest folks.

ZackAttack's picture

The way I look at it, he might be a nutbag, but in this particular case, he appears to be *our* nutbag.

Also, it's really entertaining to watch him rip economists new orifices when they come to the House.

RockyRacoon's picture

Sleazebag reads ZH.  No way he comes up with truth on his own.

Who cares where it comes from as long as it gets out there.  There was someone who could have signed that letter that you would have approved of -- who is it?

Waterfallsparkles's picture

I applaud Senator Greyson for taking this issue head on.  Thank God for Senators like him to make sure the Rule of Law is upheld in the Country.  I truly admire his gumption for persuing this issue as so many are overlooking the Fraud.

The Alarmist's picture

You can say he's politically astute, but there is no doubt that he made a very good living essentially chasing ambulances.

Dolar in a vortex's picture

This guy is the quintessential sleazy politician.

That doesn't mean that all of his positions are wrong, just that he's a lower life form.

Turd Ferguson's picture


This guy is the consummate sleazebag, douchebag, asshole, partisan hack. The exact type of politician that needs to be fired next month. 

(I applaud his efforts on this issue, however.)

traderjoe's picture

Some of us, myself included, are hoping for a great reset that ends with a more free, independent, and peaceful society. 

One of, IMHO, the key triggers for this will be when those not in elite circle start fighting amongst themselves. When they turn on themselves/their masters in order to preserve their own skin. When a state AG sues all of the big banks. When an otherwise un-likeable senator gloms onto an issue, even if just to win an election. I don't know how far it will get, but the banks don't really have a scapegoat here. They shredded, threw out, and just simply failed to transfer documents (assets) into trusts, but still collected the money from the trust buyers. Let the games begin!

Breaker's picture

" I don't know how far it will get, but the banks don't really have a scapegoat here. "

In all fairness, you need to add at least Fannie Mae to the mix. Poke thru the MERS website. Fannie was deeply involved in creating MERS during the Clinton years. I suspect Fannie is the supposed authority for MERS suspending state recordation laws for mortgages or deeds of trust, which it does. Or if we poke further, I bet we find Barney Frank and Chris Dodd with their fingers on this with authorization or their typical committee bullying of private parties.

This doesn't excuse the banks. But it will be important information to disseminate to remind people that most really big problems are created by the government. Here's how MERS describes itself on it's website.

"MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans."

Eliminate the need to record assignments?? Wow! It just declares it has overturned centuries of land recordation laws. A private company can't do that. There's stinky government stuff under this hood.

The Alarmist's picture

Nice sentiment, but the "great reset" you are hoping for would  be nothing more than the expropriation of property and wealth from one sector of society to another. Every where this has ever been tried it has led to disharmony, resentment, and civil strife.  You may dream of a utopia, but you will destroy civil society that has benefitted the majority of the people and will, in the process, merely install a new criminal elite to return us to the dark ages or to repeat the mass privation you still see in "fair" societies like North Korea and Cuba.

weinerdog43's picture

Perhaps if you were not such a douchenozzle yourself, people might respect your opinions a tiny bit too. 

ReallySparky's picture

I don't know about you all, but that beard is way creepy. Yikes.

mrhonkytonk1948's picture

YES!  Some way to agree with a post without adding to the clutter.  Make it so!

oddjob's picture

anything to do with facebook is gay,even a link.

pan-the-ist's picture

You have problem with Comrade Grayson's beard?

midtowng's picture

He shaved it off months ago.

Ned Zeppelin's picture

I believe the name of that beard is a "prison pussy." 

RobD's picture

Does this guy have a bodyguard and how much does he pay him?

H. Perowne's picture

Less than a month left for Taz. Hope he started looking into dogcatcher positions . . .

virgilcaine's picture

Grayson is starting to look like Louis Cypher aka Lucipher, in Angel Heart. Old Mickey Rourke Movie. 

Waterfallsparkles's picture

Never judge a book by its cover.  He is doing the right thing for the American People.  He is also preaching the Rule of Law and that everyone should follow it, including the Too Big To Fail Banks.

How dare you criticize a Senator for doing the right thing because of his looks.  If that was the case I could think about a lot of other great Senators that do not look that good but do great things.

hedgeless_horseman's picture

He is a congressman.  We would not dare to criticize one of our cock-sucking senators. 

Ned Zeppelin's picture

+1. Especially Senator "Banking Bob" Casey, specialist in financial institution analingus. 

Sorry for the harsh language Bob, but you richly deserve it for furtively shoving through that notarization bill in a pathetic attempt to help the banks hide their problems with these MBSs. Douchebag.