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Guest Post: Ibanez – Denying The Antecedent, Suppressing The Evidence And One Big Fat Red Herring
Submitted by Greg Lemelson of Amvona.com
Ibanez – Denying the Antecedent, Suppressing the Evidence and one big fat Red Herring
The recent decision by
the Massachusetts Supreme Judicial court helped focus a few important
questions on the foreclosure crisis in America, but it is also being
used as a Red Herring, amongst other things, by the American
Securitization Forum and their Bank owners. The Massachusetts land court decision,
which was affirmed by the Supreme Judicial Court were correct, but only
addressed a narrow specter of the foreclosure crisis in our country and
the underlying violations of long standing property law. The case
does point however to much more fundamental issues.
Further, the opinions handed down by
both the lower court and the SJC, did nothing to change the operation
of Massachusetts legal principles, and there was no significant change
in the common law, which is why the ruling is not prospective in its
application, despite the request of the banks, a request which is
telling of the banks concerns regarding the potential costs of undoing
past foreclosures.
The ruling, should not distract from the
important underlying errors in the execution of securitized mortgages
which appear to be all but universal. Thus the SJC ruling, is not an
end in itself, but rather is part of a means to an end, which is
discovering the realities of mortgage securitization in the US and what
it may indicate regarding the banks motivations is expediting
foreclosure actions in recent years.
The first
part of the problem is the bifurcation of the mortgage, that is to say
the separation of the promissory note, from the underlying security
instrument, or the mortgage. In the Ibanez case, the notes were
conveyed, but improperly. The plaintiffs, in this case, the Trusts that
held the securities that the loans were bundled into, never had any
such conveyance of the related mortgages in addition to improperly
conveyed notes. The Plaintiffs aggravated their claims in the following
way:
1. By exercising the power of sale,
although they were not holders of the underlying mortgage, and thus did
not have proper standing to foreclose.
2. Possessing improperly conveyed notes endorsed in “blank”
3. Violating M.G.L. 244 ss. 14, by falsely indicating in their publications that they were the holders of said mortgages.
The conventional industry practice,
conveniently, is to assume that the mortgage follows the note; however
in Massachusetts (a Title theory state), that is not the case. In
Massachusetts, where a note has been assigned but there is no written
assignment of the mortgage underlying the note, the assignment of the
note does not carry with it the assignment of the mortgage: Barnes v.
Boardman, 149 Mass. 106, 114 (1889). In other cases, the assignment of
the mortgage may be held to be invalid, even if the note is properly
conveyed, and thus renders the debt, nonetheless unsecured. It is
possible that from the banks perspective an invalid assignment of the
note is the more serious concern for the following reasons:
1. Without first having proper ownership of the debt, the bank can not initiate any collection activity, let alone foreclosure.
2. Notes (ownership
of the debt asset), may be subject to further contention in bankruptcy
proceedings where many creditors have a vested interst in the assets of a
defunct mortgage lender, particuarly since these notes are often sold
in bankruptcy for a fraction of their face value.
2. The trusts that
are suppose to contain the validly conveyed notes will in fact, not
actually contain them (because they are not bearer paper), thus
violating the representations and warranties made to investors who
purchase these securities. Therefore, it is unsecured debt, and
potentially, no debt at all upon which to collect payments.
3. By way of exmaple, let's say there is an 11 billion dollar portfolio up for sale in bankruptcy, and strangely the successful bid is under 100 million.
Now how do you think the other creditors of the original mortgage
lender who went bankrupt are going to feel after taking a rather large
"hair cut" when they find out that the bankruptcy trustee may not
(according to the SJC), have had authority to actually sell the assets,
because they were not properly owned by the bankrupt mortgage lender in
the first place. Or how will the bidder feel when they find out they
paid about 100 million for secured debt, that is not really secured at
all?
4. What exactly is the relationship between US Bancorp, Wells Fargo and other large banks such as Credit Suisse? Probably will make for fun bedtime reading. Wells Fargo and US Bancorp sure do pop up on a lot of SEC filings for Mortgage Backed Securities - we'll learn further below from their press releases, they have "no role in it"
5. Even if the notes
obtain a valid conveyance, or confirmation of conveyance at a later
date, it is still may be impossible to place them into the MBS's:
a. It will have been longer than 90 days (the typical expiry period to transfer assets into the trust)
b. If it is a foreclosure matter, the loan is in default (the PSA's do not allow for the addition of defaulted loans)
c.
Any effort on the part of the trust to insert old or defaulted loans
would jeopardize the trusts favorable REMIC status – thus further
harming already impaired returns.
While there is no significant change in
the law, other positives are likely to come from the ruling. For
example, it may restore faith in the judiciary, or provide encouragement
to foreclosure victims to seek proper remuneration for their trials and
finally, it may provide a sound legal framework for homeowners to stop
paying their mortgages (especially in Massachusetts), irrespective of
their ability to pay, until their mortgage holder can guarantee clear,
insurable title, we will discuss this prospect further below.
Can Securitized Mortgages really be fixed? - Critical points from Attorney General Coakley’s Amicus Curiae brief
1. If there must be a
perfected interest in the mortgage (according to MA law) at the time of
foreclosure, then how many foreclosures have taken place in
Massachusetts with the same profile as Ibanez, and are thus invalid?
2. Clear title is
important - In the statement of the case, the banks actually brought the
complaint before the land court as independent actions in order to
“remove a cloud on the title” – thus the banks recognize that such
defects are a problem for future conveyance. All MA homeowners should
be worried about the same (discussed further below).
3. To foreclose on a
mortgage securing property in the commonwealth, one must be the holder
of the mortgage. To be the holder of the mortgage, the bank must:
a. Be the original mortgagee
b. Be an assignee under a valid assignment of the mortgage
c. It
is not sufficient to possess the mortgagor’s promissory note (bearer
paper). Apparently most if not all securitized mortgages were endorsed
in “blank”, in other words to the bearer.
4. The notice
requirements set forth in G.L.c. 244, ss 14 unequivocally requires that
the foreclosure notice must identify the present holder of the
mortgage. This likely was not the case in past foreclosures in MA. For
future foreclosure actions the question is can the real mortgage holder
be found and will they cooperate in assigning the security interest?
5. Assignees of a
mortgage must hold a written statement conveying the mortgage that
satisfied the statute of Frauds or even the most basic elements of
contractual requirements.
AG Coakley acknowledges that "the
securitization regime was required to conform to state law prior to
foreclosing, to ensure simply that legal ownership 'caught up' in order
that the creditor foreclose legally in MA. The lenders, trustees and
servicers could have done this, but apparently elected not to, perhaps
on a 'Massive Scale' " Saying that they "could have done this" within
the context of MA law is one thing, within the context of IRS tax code,
or NY trust law, is another.
Critical points from the Massachusetts Supreme Court ruling
1. Executed agreements that assign pools of mortgages must include detailed
schedules that specifically identifies the mortgage at issue as among
those assigned. Our question is; how many did, and can they be altered
under the REMIC rules?
2. There must be proof that the assignment was made by a party that itself held the mortgage.
3. In MA, where a
note has been assigned but there is no written assignment of the
mortgage underlying the note, the assignment of the note does not carry
with it the assignment of the mortgage.
4. The holder of the
mortgage holds the mortgage in trust for the purchaser of the note, who
has an equitable right to obtain an assignment of the mortgage, which
may be accomplished by filing an action in court and
obtaining an equitable order of assignment. If the average MBS has
5,000 notes for example, then we have to assume 5000 separate actions
would have to be filed in court to ensure they are truly “Mortgage
Backed Securities”, and that is only if the REMIC status isn’t
jeopardized by such a revelation or action.
5. In absence of a valid written assignment of a mortgage or a court order of assignment, the mortgage holder remains unchanged.
6. A post
foreclosure assignment cannot be treated as a pre-foreclosure assignment
simply by declaring an “effective date” that precedes the notice of
sale and foreclosure.
7. Title standard 58(3) should not be misinterpreted – the Court upheld that only where an assignment is “confirmatory” of an earlier, valid assignment,
made prior to the publication of notice and execution of the sale, that
confirmatory assignment may be executed and recorded after the
foreclosure.
Additional thoughts on the SJC ruling
The AG suggested that the ruling not be
merely prospective, but rather applicable to all previous foreclosure
cases in the common wealth that would be aptly affected. SJC confirmed
that foreclosures by note holders, who do not posses mortgages which
have been validly conveyed, were improper foreclosures, and that no
future proper conveyance of the mortgage can cure the fatal defects in
foreclosure that have already taken place under similar circumstances –
thus the SJC agreed with AG Coakley that the ruling not be only
prospective. Given what has been revealed about the securitization
industry, it is likely that most if not all foreclosures in the
commonwealth of MA on securitized mortgages are invalid.
The question going forward, is can Trusts
which represent MBS investors, locate and properly convey the mortgages
in order to proceed with future foreclosures? This course of action may
present a further dilemma for the banks; either to loose REMIC status
for these securities and incur tremendous back tax liabilities, and
further harm investors interests (but possibly perfect the underlying
securities), or accept the “unsecured” status of the debt and attempt to
negotiate settlements with the debtors (formally considered
mortgagees).
The American Securitization Forum – Suppressing evidence and a Red Herring to boot
Tom
Deutsch, executive director of the American Securitization Forum, an
industry lobbying group, said in a statement that the SJC’s decision,
holds that “assignments of mortgage can be executed in blank, as
long as a complete chain of transfers can be shown through the
applicable deal documents.”
Let’s explore this first statement further:
1. It is true that the SJC held “Where
a pool of mortgage is assigned to a securitized trust, the executed
agreement that assigns the pool of mortgages, with a schedule of the
pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder.”
2. For the SJC clearly and specifically means the written instrument “must
contain the terms of the contract agreed upon – the parties, the
locus…the price, and it must be signed by the party to be charged or by
someone authorized to sign on his behalf.” Cousbelus v. Alexander, 315 Mass 729, 730 (1944).
Mr. Deutsch claimed that because the
deal documents with the loan schedules weren’t introduced as evidence in
the Ibanez and LaRace cases, “the court ruled that an otherwise valid confirmatory assignment was not sufficient to prove right to foreclose.”
That is not correct. The loan schedule
was missing in one case, and insufficient in the other. As AG Coakley
pointed out in her brief:
“Neither US Bank
or Wells Fargo… was an assignee under a valid assignment because, at
the time of the foreclosure, neither US bank nor Wells Fargo held a
written statement conveying the mortgage that satisfied the statute of
frauds or even the most basic of contractual requirements” (Cousbelus v. Alexander).
Given the criteria, we would be
surprised to find any schedule of pooled mortgages which constitute
valid assignment under MA law as described above. By focusing on an
irrelevant or secondary subject Mr. Deutsch is diverting attention from
the main subject – that the detail contained in the schedules of pooled
mortgage loans is insuficient to establish assignment, and that there
may not be any other "assignments" to speak of that can be legitimately
transferred into the MBS. Because people have strong opinions about the
validity of the assignments in blank, their attention is being diverted
from the more important issue of the ability to find the true Mortgage
holders, and if they do, the serious problem of altering the REMiC
status of the MBS's. For this reason, Mr. Deutsch's comments are a Red
Herring.
What the SJC actually said
“…Where an assignment is confirmatory of an earlier, valid assignment made
prior to the publication of notice and execution of the sale, that
confirmatory assignment may be executed and recorded after the
foreclosure…”
The key word here is “valid”,
and as we see from AG Coakley’s comments above, at no time where the
assignments valid, either before or after the foreclosure. Entry into
evidence, as Mr. Deutsch suggests has nothing to do with the validity of
the assignments.
In fact, what the SJC did say regarding the plaintiffs arguments to be the holders of the mortgages is:
“…their reliance
is misplaced because this proposition is contrary to G.L.c. 183, ss 21
and G.L.c. 244 ss 14 and their published claims to be the present
holders of the mortgages were false.”
Despite this, Mr. Deutsche added that his group was:
“Pleased the
court validated the use of the conveyance language in securitization
documents as being sufficient to prove transfers of mortgages under the
unique aspects of Massachusetts law.”
and added:
“The ASF is confident securitization transfers are valid and fully enforceable.”
Additional thoughts on the ASF’s curious comments
The SJC further held that “There must be proof that the assignment was made by a party that itself held the mortgage.” In
the case of Ibanez, a company called Rose mortgage originated the loan
and then properly assigned the mortgage to a company called “Option
One”. Option one then executed an endorsement of the note in blank,
making each “payable to bearer” and “negotiated by transfer alone until
specifically endorsed” At this point, the note ceased to be a valid
assignment under MA law (the same was done for the related mortgages).
After Option One endorsed the notes in blank, it sold the mortgage to
Lehman Brothers (which of course went bankrupt). Lehman Brothers then
sold the mortgage, together with hundreds of other loans, to Structured
Assets Securities Corporation “SASC”. SASC then sold the bundled loans
to SASC Mortgage Loan Trust 2006-Z of which Plaintiff US Bank National
Assoc. was the trustee.
These were distinct legal entities, the
later entities created for the sake of being both discrete but also
bankruptcy remote. We know that once the notes left Option One they
ceased being recordable assignments. The question is which entity from
that point of the initial valid assignment forward can “prove”, as per
the SJC ruling, that the assignment was made by a party that itself held
the mortgage? When we consider the added complication of the
bankruptcy of an intermediate owner in the process (which is now
commonplace in mortgage securitization)new possibilities arise. We'll
have to call it something else other than a chain of title issues,
perhaps "Chain of MERS" issues, since we can't legitimately call it a
chain of title any longer, that would imply a public democratic system
of real property rights ownership, and would be incorrect under the
current system. Add in MERS secrecy regarding disclosing mortgage
holders, the lack of requirement that assignments be recorded into MERS
at all, and the matter becomes far more interesting.
US Bancorp - Suppressing evidence with a non-sequitur argument
“This judgment has no financial impact on U.S. Bancorp”Teri
Charest, a spokeswoman for the Minneapolis-based bank, said in an
e-mailed statement. “Our role in this case is solely as trustee
concerning a mortgage owned by a securitization trust” and the bank had
no responsibility for transferring the loans.”
Presenting only the part of a piece of
evidence that supports your claim while ignoring the part that
contradicts your claim is hardly fair.
If the judgment has no financial impact on U.S. Bancorp,
should we expect there will be no more Investor, Title Insurance, or
Pension Fund Lawsuits? Don’t trustee’s have fiduciary responsibilities
that they get paid for. If they get paid, but don’t perform, don’t they
have responsibility?
Us Bancorp had no responsibility for
transferring the loans - got it. How about the Mortgages? Isn’t it a
“Mortgage Backed Security” US Bancorp is the trustee for? Wasn’t there
some mention of Mortgages in the Ibanez ruling? Otherwise, the investors
could have just as well bought, say, debt in Madoff Securities or some
other unsecured debt.
Also, good to know that US Bancorp’s
role was only as “trustee”. Last time we checked, the root of the word
“trustee” was, well, “Trust”. How should the investors trustthat the
mortgages actually accompany the notes, or to ensure that the notes and
the mortgages were properly conveyed, or that the PSA’s are met, or that
the reps. and warranties are met, or to ensure foreclosures are handled
properly on behalf of the interested parties, including investors and
insurers. Didn’t US Bancorp effectuate the subject wrongful foreclosure
in Ibanez, isn’t there liability there? Don't trust perform various
compliance tests?
We are further confounded by Ms. Charest comment“Our role in this case is solely as trustee concerning a mortgage owned by a securitization trust” But
didn’t the SJC just rule that the “securitization trust” did not in
fact own the mortgage? According to Ms. Charest, US banks’ failed at
their sole responsibility as “trustee”. It’s not often you find this
kind of self-incriminating honesty in corporate America – Ms. Charest,
we tip our hat to you – perhaps the most honest of all players in this
debacle, you put it all on the line, in writing, in the media, our
heartfelt thanks goes out to you for making our job so easy.
Wells Fargo - Denying the Antecedent with a Straw Man
Oddly,
Wells Forgo felt compelled to defend the Mortgage loan industry,
although they have “no role” in it… Rarely are banks so selfless.
Wells Fargo said in a statement that, as trustee, it had no role in originating or servicing the loans. They went on to say:
“Wells Fargo
believes the court’s ruling does not prevent foreclosures on loans in
securitizations,” it said. “The court simply set forth a standard legal
process that mortgage servicers must follow in Massachusetts.”
Wells Fargo’s statement has presented a caricature of the SJC ruling so that it is easy to refute.
1. The court was
never considering whether or not to allow foreclosures on securitized
loans, that was not the issue before the court.
2. The court did not
“set forth a standard legal process” they affirmed a long standing one,
and indeed went on to rebuke the banks disregard for that long standing
legal precedent.
3. The “legal
process” that the court upheld and recognized, negates the ability to
foreclose in most if not all cases of securitized mortgages, given the
realities of the securitization industries practices, which were nicely
revealed, at the national level, thanks to the plaintiffs appellate
action.
The first part of wells Fargo’s
statement is also a deductive fallacy. Let’s analyze the implications
of this statement a little more carefully:
Wells Fargo’s argument is as follows:
a. If the SJC’s
ruling “does not prevent foreclosures on loans in securitizations”,
foreclosures proceedings on securitized mortgages can proceed.
b. The SJC did not prevent foreclosures on loans in securitizations
c. Therefore foreclosures proceedings on securitized mortgages can proceed.
Both premises A and B above are true,
but the conclusion C is still false. First, the cause and effect
relationship in the initial premise A is misrepresented. Further, there
are other reasons why foreclosures may not be able to proceed on
securitized mortgages besides the SJC ruling. The Argument overlooks
and oversimplifies alternative explanations, such as the inability to
properly convey notes into trust that are closed, the fact that the
mortgages do not automatically follow the note, and therefore, the loans
in the securitizations are not actually securitized by mortgages, etc.
American Home Mortgage Servicing – the “long shot” approach
“The
SJC’s ruling effectively rejected many grounds for the lower court’s
decisions, and generally represents a good result for the mortgage-loan
securitization industry,”Coppell, Texas-based American Home Mortgage Servicing Inc., the mortgage servicer on the trusts, said in a statement. “The
SJC’s decision confirms that the securitization processes currently in
place in the secondary mortgage market are sound, and can and do validly
transfer mortgages for foreclosure purpose.”
The fallacy used by American Home
Mortgage is used somewhat less often, and is little known - it is the
“insanity” fallacy, and requires no further explanation.
Are judges expected to clarify business matters as well? and other Important questions for the American People
Ibanezdid little more than reaffirm a long standing Massachusetts
case law, it is not a commentary on the likely business outcome of a
badly corrupted securitizationmarket, the Judges are not business
people, they are not financiers, and were not asked to comment on the
future of these businesses
1. If banks are
bidding on and purchasing properties for which they owned the note, as
was the case in Ibanez, who are they really buying them? Are banks now
in the real estate business? And if so, why?
2. Unlike short sales and modifications, are REO’s held on the balance sheet of the bank at unimpaired values? aka “mark-to-fantasy” accounting.
If so, is this the explanation for the banks sudden interest in REO?
How else can you avoid writing down the value of your assets? If you're
a home owner in America, the value of your real estate has gone down by
40-50% over the last few years, but if your a bank, the good news is,
you've still got 2006 pricing on your books.
3. Is the deficiency
between the note and the sale price at auction paid through insurance?
If so, who is the recipient of these funds? Are there relationships in
these agreements that constitute a conflict of interest?
4. Are mortgage insurers being gauged when
sale prices are artificially low? In Ibanez, as in so many other
auctions, no other bidders showed up to the auction? Is the deficiency
delta increased through the banks preference for foreclosure over
modification, thus harming the financial interests of the mortgage
insurer and their shareholders?
5. If the investors
are taking a loss because of a defaulted loan, isn’t it a conflict of
interest if the servicer simultaneously takes action to profit from
foreclosure? Isn't it a further conflict of interest if the servicer,
who makes far greater profits from foreclosures than conventional
servicing, is also owned by the bank that underwrote and profited from
the creation of the MBS in the first place? As underwriter of these
securities, where they not responsible then for:
a. The attributes of the securitized loans
b. Ensuring strict underwritting guidlines to select the loans sold into the transaction?
c. Conduct extensive due diligence on the securitized loans to ensure compliance with strict guidlines.
6. Can servicers
really claim they represent the alleged owners of the mortgages, i.e.
the bond investors in the MBS’s, when the investors are suing them for
misrepresentation?
7. If the trust
represent “Mortgage Back Securities”, but the mortgages are not validly
assigned, then what are they representing? If servicers are subject to
the Fair Debt Collection Practices Act, as ordinary debt collectors,
than they would be subject to all sorts of transparency, and above all
the ability of the debtors to simply refuse to work with them, and
instead elect to work directly with the owner of the debt, whose
interest are far more aligned with the barrow than those of the
servicer, if the true owner of the debt can be found that is. The
servicers would have no recourse to this refusal to cooperate, and under
the FDCPA, FCRA, and FTC rules would not even be able to report the
matter to credit reporting agencies.
Banks may be efficient after all, and
perhaps we’re just not giving them enough credit. If you can position
yourself as a senior, secured debt holder, and take back equity in a
security without a bankruptcy trustee or any judicial oversight for that
matter, it’s a pretty efficient way to build your balance sheet. We
could also come up with a new moniker for this business practice; how
about…hmm…. Stealing.
Important points for Home Owners in Massachusetts
We are not lawyers, and this should not
be taken as legal advice, it is business advice. If you live in
Massachusetts and your mortgage has been securitized, or if you have
purchased a foreclosure property, we think it would be wise to consider
suspending your mortgage payments if you haven't already. We provided
fundamental reasons for our position in our November post here as
well as some simple advice on the proper way to go about doing it, we
further hope that the Ibanez decision and this article provide more
specific justification for such a decision. It may be naive to think
that the bank is a friend of the borrower, or has the borrowers best
financial interest in mind, or will have any interest in pointing out
the following:
1.
If you are not sure about what we have written above, watch what the
banks do next, as has been said "actions speak louder than words".
If Ibanez really does not present a problem for the foreclosure process
and clear title in general in Massachusetts, as the ASF and their bank
owners have suggested, than we should expect to see banks showing up at
auctions all over Massachusettes to bid on title to the properties that
secured their own defaulted loans as they have done in the past - it
will be business as usual, there is no more efficient way to build
equity than to steal it, particularly when recently alter accounting
rules allow for unimpaired assets.
2. However, if the
banks are not showing up to bid in Massachusetts, what do you think that
says about clear title and their real feelings about the soundness
of chain of titles concerns in general in Massachusetts?
3. If banks and
their lawyers are worried about a "cloud on title", which will make a
title impossible to convey or insure, shouldn't you be? Especially if
you happen to have purchased a foreclosure property. Even if you
haven't purchased a foreclosure property, wouldn't a cursory review of
the chain of title (if you can even get it) to your property likely
identify the possibility of multiple parties who will have conflicting
interests in a potential lien on your title? We believe this is
the case in Ibanez, as well as many other MA titles we've examined.
4. The banks have
been worried about clear title for a long time, which is why they
brought the original action before the land court in the Ibanez case.
Although they had serious doubts about clear title, it did not stop them
from collecting mortgage payments from their customers. The customers
make payments under the assumption they will one day have clear, fee
simple title to their properties. Are you sure you will get clear, fee
simple title to your property if you continue to make payments under
the current regime? With Ibanez, we now have confirmation that many, if
not most, Massachusetts home owners, in fact, can not get clear title
to the properties they are making payments on. In other words, they are
renters who are paying a premium to feel like owners.
5. But you might be
saying to yourself, wait, there was title insurance in place. Our
response is an insurance company would never not pay a claim right?
After all, Insurance companies are beacons of business ethics. Just think of the medical insurance business, where peoples lives are on the line, do they always pay?
A great many medical insurance policy holders thought they would, right
up until the time they were refused treatment because their insurance
companies wouldn't cover it. Now in mortgage insurance, we're not
talking about a life, we're talking about a piece of paper, a title to a
property. If the insurance companies have already stopped agreeing to pay on policies to their large bank customers (who wield very big sticks), and instead have sued them, how do you think they will treat you?
6. If insurance
companies are refusing coverage on pre-Ibanez titles, do you think they
will insure your title in a post-Ibanez transaction?
7. Problems such as
this have many dimensions. There is a legal dimension (the court and
competent lawyers opine), a theoretical or academic one (which is why
many professors have chimed in), and since money is changing hands,
there certainly is a business component (not too many businesses folks
have chimed in, because they're far more likely to have an interest in
the revenue streams from MBS's).
In
business, you should always do what you say you are going to do,
written contract or not - it's called integrity. However, if you find
out that the counter party you were involved with in your business
dealings was not honest, and that you made a business decision based on a
false premises or representation, then all bets are off - the deal
needs to be looked at again. You have not harmed your integrity by
taking such action. You have acted wisely to protect your financial
interest and the financial interests of your familys' future. Do not
worry about what other people think or say, make a rational decision
based on the best evidence you can find.
If you are a Massachusetts resident and
have been foreclosed on, it is worth reviewing the documents. Similar
thoughts to ours were posted in this article
last September. Improper notice as defined by the SJC ruling above
(i.e. Bank advertised that they held the mortgage, and the related power
of sale when they in fact did not, irrespective of later confirmatory
transfers) invalidates the foreclosure. Furthermore, if you were
foreclosed on by a bank that did not have a properly assigned note or
mortgage at the time of the foreclosure, it also invalidates the
foreclosure as per the SJC ruling above. These simple criteria likely
include the majority of foreclosure actions in Massachusetts over recent
years, and we imagine would also apply in title theory states that have
similar statues and case law to those of Massachusetts.
With the SJC ruling it should be easy
enough to find a fee-contingent attorney (it really should be fee
contingent given the clarity of the SJC ruling) to take appropriate
action to recover what is fairly owed throug the banks abuse of process,
particularly in states such as Massachusetts where barrows did not have
the added protections of any type of judicial review prior to
foreclosure.
You
might think the banks have all the leverage in the world, the big
secret is it's actually the opposite. Who do you think has more
leverage, those who make payment on 7 trillion in securitized mortgage
debt, or those who collect the payments? Who do you think is more
worried? You probably make your income from a wage, they make their
income from an investment, you wouldn't believe how quickly investors
can become insecure, that's why your servicer doesn't want you talking
to them directly, their brokers, and make a handsome living at it. Our
thinking is the guy who writes the check has the leverage. After all,
if you owe the bank $100,000 dollars you've got a creditor, If you owe
them 7,000,000,000,000.00 we're pretty sure you've got a partner. Stop
making rental payments on the home your supposed to own, then just sit
back and feel the love.
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I need to buy a McMansion on 10x leverage.
Scrap that. I'll wait for another 35% draw-down.
Every human in the US that has negative equity in their house should not make another payment and should tell the bank holding the mortgage or deed of trust to piss up a rainpipe.
I predict another boom and cottage industry:
Speculators will start offering NINJA’s a couple hundred bucks for the assignment of their right to sue and reverse unlawful foreclosures.
Even if the banks go bankrupt, there are the title companies, if the title companies go bankrupt, the right to the property exists.
The only overhead will be the piecemeal litigation expense for each property.
I'm hoping to be able to buy a spread on ebay at 10 cents on the dollar after all this plays out.
Try Velveeta. Nasty but affordable as spreads go. Contains no actual cheese, so it must be good for you.
Once this all plays out, Velveeta may top SPAM as a gourmet item, so stock up!
Title theory states...
http://title.grabois.com/
fuck everyone one of those god damned financial terrorists....they should be prosecuted for felony crimes and incarcerated for life. they broke the law; the people should keep their homes.
Calling them Financial Terrorists gives them more prestige than they deserve. I prefer the term 'Worthless Cocksuckers'.
BofA foreclosed on a single family home I owned (I did not own the mortgage - long story) and it took them all of 4 months from the date of the first missed payment.
What the hell happened to all these stories of 1+ year before foreclosure?? I live in Texas which has administrative (non-judicial) foreclosures so a judge was never involved. I managed to sell the property and pay off the mortgage three weeks prior to it being auctioned on the court house steps. Whew.
In regard to...
""Tom Deutsch, executive director of the American Securitization Forum, an industry lobbying group, said in a statement that the SJC’s decision, holds that “assignments of mortgage can be executed in blank, as long as a complete chain of transfers can be shown through the applicable deal documents.”""
This statement is an outright LIE. It doesn't need to be explored
I can't even believe this guy would so shamelessly lie quite honestly. Whatever credibility ASF had is gone completely.
This is directly from the ruling. It's very unambiguous THERE CAN BE NO ASSIGNMENT IN BLANK!
We have long held that a
conveyance of real property, such as a mortgage, that does not
name the assignee conveys nothing and is void; we do not
regard an assignment of land in blank as giving legal title in land
to the bearer of the assignment. See Flavin v. Morrissey, 327
Mass. 217, 219 (1951); Macurda v. Fuller, 225 Mass. 341, 344
(1916). See also G.L. c. 183, § 3.
If I owe you $200,000, its my problem.
If I owe you $7,000,000,000,000 - its your fucking problem.
In Massachusets the duration to establish adverse possession appears to be 20 years. In Washington (state) is 7 years. The latter might actually fall within a 'convient' time span to initiate a Quiet Title action if no other comers can show proof of title
MA - Barney's backyard.
You can keep his "Freddie or Fannie" proclivity, this is one activity happening in MA I hope doesn't stay in MA.
These banksters obviously feel that their shit don't stink. The elitist arrogance of filing suit for clear title in these cases. Did they get a memo from Ben or Timmie that "it would be taken care of"?
Would that other States show some backbone and move this whole discussion to some interrogations in small rooms with dim lights... if ya know what I mean.
I know a couple of County Sheriffs who could get some "confessions" outta these scumbags.
"Possession is 99% of the law".
Yeah, but REposession is the scary 1% of the law.
Excellent article!
Little by little, the "Securitization" scam crumbles.
Mortgagees should be aggressive, and gang up on everybody who touched their notes and mortgages.
Tom Deutsch "grasping at straws."
I am a lawyer, do a lot of real estate, and would never advise a client to stop paying their mortgage because of a Supreme Court decision in Massachusetts. You are entitled to find out whether you are paying the right party - that is the issue here. But that would require some investigation. The Mass Supremes left open and available the cure of obtaining the proper assignment of the mortgage before initiating the foreclosure. What we know is true is that this "after the fact" correction of the paperwork poses thorny issues for REMICs and trust with PSAs forbidding the assignment into the trust of defaulted mortgages, or mortgages after the initial 90 day formation period of the trust. These issues may be enough to enable a mortgagor/debtor to negotiate with the affected lender and receive rather favorable payoff or other terms.
That's a point I think deserves to be restated, and often. The person who borrowed the money still owes payments to...somebody. The fact that the somebodies have totally screwed the pooch doesn't change the original obligation. In a sense, when the borrower accepted the debt and agreed to repay it or cede the collateral, the pooch was fine, and as far as the borrower is concerned, that hasn't changed. The pooch got screwed later, and elsewhere. It's the bond market (broadly speaking) that needs to reassess in light of the screwedness of the pooch. At least, as far as I understand it.
That's the fly in the zipper, for sure.
I'm giving my lunch money to the bully because I have no choice. But I have no idea if he's giving it to the lunch lady or just buying dope with it.
At the end, have I paid for my lunch or has the bully merely subsidized his dealer, leaving both the lunch lady and me out on the street and nobody paying for the food?
'Cause if I don't have clear title when it's time to move along, I can't just beat up the lunch lady. And even if I could, it's not how kids play in the place I want to live.
Nicely stated. Thank you. These things got so complicated (intentionally so, the better to confuse you with, methinks) but the underlying issues are typically quite simple. Analogies can be misleading of course, but they can also help to illustrate the fundamentals of the situation.
Another issue is, who is actually the lunch lady? A whole bunch of people claim to be, but when you ask to see their school ID's, they get all snippy and send you to the back of the line.
You are giving your lunch money to the bully? Is that the bully who lent you money in the first place? So that you could OWN A HOUSE? Is that the bully you went to of your own accord in order to beg for the money? Or is that the bully who had the lowest rate among all the bullies who you checked with when you asked them all whether you could borrow their money?
Where do people get off thinking that they are not responsible for their decisions to purchase a house and enter into a contract to repay debt they incurred?
Sheesh.
Excellent analysis! Anyone who signed a rep that required due diligence is toast.
Fantastic article. Outside my area of expertise, so I'm going to print it out and read it at length. But I absolutely loved this gem: "The fallacy used by American Home Mortgage is used somewhat less often, and is little known - it is the “insanity” fallacy, and requires no further explanation."
That's just good writin', there; that is.
The biggest problem, as I see it: You could make all of your payments on time, do everything by the book, and then, say, 10 or 15 years from now, when you want to sell your place so you can move to the beach or something, some slimy character from an obscure pension fund someplace shows up with the original mortgage and note, and claims to have seen no payments, ever. What do you do then? In my opinion, every mortgage that ever hit the MERS system will have major problems with clear title down the road. No amount of settlement cash paid out now will paper over the absolute carnage that will occur when people find out that most residential titles are faulty and everyone is locked into a place that they cannot sell, no matter how many willing buyers there may be. I'd really hate to be a banker or mortgage pimp if and when that occurs....
Oh, and one other little problem. Every municipality is probably salivating over the prospect of suing banks and everyone down the paper chain for the fees that were never paid for the transactions. Several hundred bucks per transfer, times lots of transfers per property, equals a potential bailout for the cities and counties all across the country. Muni bonds are saved! Mead and virgins for everyone!
Right, and everyone will still respect the bankers in the morning...
rule #1 of every broker, NEVER put your two parties together