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Breaking: Officials In 49 States Launch Foreclosure Probe
Today's most anticipated event has just hit the AP tape:
Officials in 49 states have launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners.
The officials, including attorneys general and bank regulators, will examine whether mortgage company employees made false statements or prepared documents improperly.
Alabama was the only state not to join the investigation.
"This group has the backing of nearly every state in the nation to get to the bottom of this foreclosure mess," Iowa Attorney General Tom Miller, who is leading the probe.
Four large lenders already have halted questionable foreclosures after evidence emerged that bank employees processed thousands of foreclosure documents without reading them. Other banks have not done so, saying they did nothing wrong.
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.....and XLF is up 1%. LOL.
Sorry to hijack, Ragnarok.
Even if the AGs settle with the banks, this will not stop the sh1t storm for two reasons:
1. Mortgage insurance. Old Republic, the largest mortgage insurer, will not insure REOs right now because of the inherit fraud in the system. Old Republic is THE mortgage insurer in states like Florida, where The Fund (the lawyer's title insurance fund) partnered with O.R. after the great housing collapse. AGs can't force title insurers to insure, any more than the government can force small biz to borrow their asses off. As TD has pointed out: no title insurance means no mortgage, means cash purchases only.
2. Foreclosure defense is, first and foremost, a DEFENSE. This is not like the tobacco settlements, tort reform, or any other controls on offensive lawsuits. In judicial foreclosures, at least, the banks have to prove their case. Unless the AGs from the judicial states convince the state legislatures to outlaw judicial foreclosures, a settlement with the AGs will only prevent offensive lawsuits. Every homeowner still has the ability to defend their foreclosure (again, in judicial states). Those rights are pursuant to the state constitutions and their individual rules of civil procedure. Nothing there that the AGs can barter away.
Apologies again for hijacking the spot.
Whoa Tort. This is confusing enough. Don't muddy the waters.
Title insurance, which everyone has, guarantees that lots of other people don't have valid claims on your property. It relies on abstracts and chains of title.
Mortgage Insurance is only required for those with a low down payment. As it sounds, mortgage insurance pays the note off if you can't, except that most of these clowns are already dead in the water.
I've seen other posters confusing the two. This is important, because without title insurance no sentient human would make a loan on the property. That is exacly why the Baja is still empty space. God knows who owns what.
Mortgage insurance is a mosty unexplored black hole, and seems to be another game of kick the can. I know I shouldn't feed the beast, but failure on either of these fronts is a slow motion train wreck.
On the sunny side of the street 11/2/10 Democracy is coming, to the USSA.
In the western USA there are usually 2 parts to each transaction; the deed of trust and the NOTE. The trust deed is recorded but the note is not.
Therefore, any confusion regarding the trust deed is quicky extinguished by looking at public records UNLESS somebody screwed up at the loan closing and didn't record the new TD or any release of an existing one, as the case may be, and that in itself is not unusual. Title companies are on the hook for that stuff.
The NOTE is a different story. Often, not always, the original note has to be produced to perfect the notice of breach and foreclosure process.
With regards to judicial foreclosure: that is only an issue if the lender desires to pursue a personal guarantee. Otherwise, the process goes through a title company or other trustee as prescribed by the law where the property is located.
This whole thing is going to be a lot of noise that will eventually make the politicians look like they are doing something for the benefit of the people but in reality it's all just hot gas. The banks will be let off the hook for failing to produce the NOTE.
As we already know, nobody has been held accountable for all the slicing and dicing and bundling of the mortgage securities and nobody will be. The system will find the ultimate scape goat, the tax payor. JMHO.
The outcome if fore ordained. The clincher in that announcement was that Miller "offers a settlement" before the investigation is even begun. Just more fraud and deception by politcal jackals.
Thanks for the update. There are clearly many variations among states, and even counties in regard to procedure and competence.
Do you see a problem with deficiency judgements in non-recourse states? In Florida, the exemption only holds for owner occupied, original purchase money, first mortgage. Lots of folks who re-fied, got a big heloc, whatever, are screwed to the wall.
The west is usually more consumer friendly. Anything strange going on?
Do you honestly believe that 6 or so new Tea Party (or mock-TP) congressmen, and a few changes of jacket from blue to red and vice versa, among 535 congressmen will bring democracy back (for what that's worth) and change anything? I think not.
The best you can expect is gridlock between a "hung" congress and an antagonistic administration. Sorry ... that will not fix anything and is not the way out of this mess!
I think it will change very little, but we now have a Dictator-in-chief with no end of enablers. First, we have to stop the bleeding.
Eh? You can get title insurance in Baja. And it's hardly "empty" space, but to the extent that it is undeveloped, there may be other reasons for that.
Speaking in short hand, my bad. It's the corruption of cops and judges, the inability to enforce contracts that make most of Latin America so backward. I'll bet you can buy title insurance in China, too. Call AIG. It won't be the dumbest shit they have written.
Whoa, Kaiserhoff! You are also muddying the waters, e.g.," Title insurance, which everyone has",--
well, no, not everyone has it. Only people with mortgages are required to buy it, and it's the lienholder who owns the insurance, i.e., the person who buys the house with a mortgage also funds the bank's ownership of its title insurance policy.
People who use cash are not required to buy title insurance, although it's certainly a very good idea, assuming one chooses a good insurer.
No one without a mortgage should be foreclosed upon. The wrong house should not be foreclosed upon. The wrong bank can't sue for foreclosure.
And yet, all of those things have occurred thousands upon thousands of times. The only way this can happen is if all the parties involved (banks, mortgage dealers, title companies, mortgage insurance companies, etc.) commit fraud.
Think of all the papers you sign at closing. There are multiple checks and balances to insure that the property rights are clearly delineated. In order for the process to fail, many people along the chain must commit fraud.
If this is just incompetence, we have a lot of stupid ass, greedy people to blame - from small time mortgage sharks and title rip-off con-artists to behemoth-CDS leveraging-MBS stacking-idiot-TBTF banks. (Don't forget Fannie Mae and that crony, slime ball, dumb-ass Barney Frank's role in this either.)
On the other hand, if it's deliberate malfesance to destroy property rights, there's no bottom to our economy. No rule of law, no country or economy...just graft, corruption, fraud and fascism.
Is this all really happening? Someone wake me up from this nightmare...please.
Fascism is good. It is Law and Order as well as few thousands bankers hanging on trees.
It works in China but they call it communism. For all practical purposes, all -isms are the same.
should be good for another 10 ES handles.
Alabama Man!!
Can you say Richard Shelby...a bankster/gangsters best friend.
And big friend of Telco
Yeah, and why does all the trees in Tennessee lean towards Alabama? - cause Alabama sucks, that's why.
and poorly at that, with the exception of the aforementioned Shelby.
Yes, I believe the Alabama AG's exact words were "Shut up, bitch!"
+1372
Meanwhile, the same group of "officials" will launch an investigation into steroid use among junior tennis players. Come on, you really think this is nothing more than a bunch of attorneys battling for the biggest paychecks?
And you really think this will go away quietly? Have you looked into the providence of your mortgage note? What happens when an extra 10 million Americans figure out no one has standing to foreclose on them? You think that is that far off?
Have you noticed the surge in re-fi activity? Any fallout from this is more than being absorbed by strong re-fi's. This is exactly what the Fed wanted and it's working. Bringing down mortgage rates frees up tons of money to stimulate the economy through consumer spending. Can't you see that?
"Any fallout from this is more than being absorbed by strong re-fi's"
Since you clearly don't know what you are talking about, why don't you refrain from making dumb comments.
Not sure why you were junked, you're right.
Oh, that's just Harry saying that the last box of Massengill didn't rinse all the sand out and he's still chafin'.
Yes Harry
Which will promptly be eaten away by surging food, energy and gas prices.
Net even best case...well done Barry.
The good news is I can now stop paying my mortgage and buy gold and silver...
WHOT !!
What surge? Apps are at a 20+ year low.
Try refing if you bought a property between 2003 & mid 2008. Unless you put down 45% or better its a no go.
I just did a re-fi on a property bought in 2006. Original mortgage on $1M place of $650,000.00. New mortgage, within conforming rates here, $500,000.00. Went very smooth with no hitches. And, even better, used some of the profits from AAPL trades to pay the difference to bring it within conforming levels.
So, I did what you said is impossible just 4 weeks ago.
Sounds like you have a large difference between market value and amount refinanced. Which was Ripped's point.
You initially put down 35%, bravo for you. But you paid down balance to restructure (not refi) because the value of the property has apparently dropped significantly.
Not many can afford to bring cash to the table at a refi. And if they could, why not deploy that money to purchase other productive assets or pay down more costly debt? Unless of course the bank was pressuring you to put more skin in?
Your boast is a different scenario all together from the one I posted. Especially if the original loan was 90% - 95% LTV.
Yes. That's part of the solution, whether by accident or by purpose. Every new mortgage written retires an old problem and makes any issues with any documents go away for that particular deal.
My guess it will go away quietly. One set of lawyers will work with another set of lawyers to figure out how to spread the money around. Cash will exchange hands, a proclamation will be spoken, tax dollars will be spent and, poof, it will be long forgotten.
There is nothing to see here. There is really nothing to see anywhere. Markets are up of course.
By the way, what of the calamity to be caused by all of the "unrest" yesterday in France. Seems like exactly nothing has happened. Yeah, pretty much exactly nothing. Oh yeah, except that earnings are great and the market is up. Well, imagine that.
Yawn.... Next sensational story of the world's end please ZH; I am beginning to feel like the end isn't near.
Thanks for summing up my feelings as well. I'm keeping count of the "this shit's gonna end badly" quotes and stories. Wasn't something that "would end badly" supposed to take place in Ireland yesterday? I guess that announcement never came.
I imagine if you put out every possible "end of everything" scenario something within that has to come to fruition. Like the Hindenburg Omen. All the proponents of that will tell you how it did happen and we saw a 3% pull back, just like it predicted. Of course, everyone really thought it would be 10% but that's beside the point.
Ok, now back to depressing topics - AAPL seems to have stalled at 301 area. Oh god, someone bring me another cup of tea, this is horrifying!
Now we don't want our people getting all "uppity" here in Alabama, they know who the boss man is...da banks
Since when do the TBTFs recognize the AGs or the law for that matter. The way they are trading smacks of "rules don't apply to us".
...and the band played on.
We are less than 20 pts from 1200. The recovery is here for all to enjoy. Unemployment must be falling like a rock, and consumer spending is back up to 2006 levels.
Another poor confused young soul.
The market has nothing to do with the US economy, or any economy for that matter.
In terms of equity prices, yes the recovery has long been here. And Ben WILL keep it that way. There is only one limit to his power to print and that is so far away as to be meaningless.
If you have no job, you are fucked. But really, there isn't anyone in our culture that really gives one rat's ass about the unemployed.
Again, been saying this for weeks. There is no connection between the markets right now and the economy other than the economy is stabilized putting a floor under stocks. The rest is EOY buying, Fed pumping and AAPL pushing the needle higher. Unless King Apple stumbles, this thing will run higher and higher regardless of how many stories about mortgage-gate are thrown before us.
I nominate you the Jim Kramer of ZeroHedge. Well done.
Go play on Cramer's sound board -- it's a hoot:
http://www.cnbc.com/id/23278941/
Another poor confused young soul.
The market has nothing to do with the US economy, or any economy for that matter.
In terms of equity prices, yes the recovery has long been here. And Ben WILL keep it that way. There is only one limit to his power to print and that is so far away as to be meaningless.
If you have no job, you are fucked. But really, there isn't anyone in our culture that really gives one rat's ass about the unemployed.
AG = Aspiring Governor
Good one!
This is the bankers solution. A broad settlement with the States' AGs like Eddie Lampert's favorite retailer and its reaffirmation fiasco.
It gives the fascists legal cover for their systemic enslavement of the populace.
I like Michael Hudson's analysis: Why don't they just print $50 trillion and buy the country? That would make their fraud obvious.
Exactly.
Great point. Also, if they bought it, they would have to manage it, and they can't manage a lemonade stand.
Better to tax everything at 150 % of it's best possible use. That's what Europe has done for the last 50 years, more or less. It has two great advantages:
You can still blame the "capitalists" for everything.
If someone's children are well fed, he is obviously a criminal. No problem, we all have to be criminals to survive, but if he makes noise about the system... So much for free speach.
Nationalisation of all real estate and use it to back a new currency? Nothing new just a bit unexpected by 99% of Americans. Hell, no need to confiscate gold and silver just legislate MERS to digitally transfer all deeds to the Gov. Couple of keystrokes and its all over.
Think I'll just hold onto my physical barbarous relic.
Officials in "The officials, including attorneys general and bank regulators, will examine whether mortgage company employees made false statements or prepared documents improperly."
Mostly irrelevant. The prommissory notes most probably resides in the REMIC without recourse.
The loan servicer is the money changer for the Real Estate Mortgage Investment Conduit.
http://www.irs.gov/pub/irs-pdf/p938.pdf
This is the astonishing part and what most people fail to realize. It looks like the fundamental concept behind the MBS structure is flawed and has been from the beginning. The robo-signing aspect is secondary to the fact a multi-trillion investment sector is unravelling before our eyes. Anybody who lost money at any stage in a MBS investment has a strong case for damages because they purchased a fraudulent security.
"strong case for damages"
I don't see how, the notes go into the REMIC that is WITHOUT RECOURSE. Buyer beware. Now if someone is selling an investment that someone sold the same paper twice, well that would possible be fraud. The investor is well aware these were setup WITHOUT recourse to the originator.
There simply is no holder in due course that is starting these foreclosures, that is the only thing the homeowner needs to know.
Mako, please keep bringing this to the simple point you just made; if the security interest was never perfected, there is no secured party. If there is no secured party there is no holder of due course on record, and there is no legal standing to foreclose.
I know I might be incorrect here, but in MHO, there are going to be trillions vaporising on bank balance sheets if enough people just stand and fight for the right to know your standing.
who is the 1 state that didn't participate?
-Alabama was the only state not to join in the investigation-
of course, Sen. Richard Shelby's state. The self proclaimed anti-bank activist who is the biggest bank puppet after maybe Dodd and Frank.
Shelby is a massive tool.
VOTE OUT ALL INCUMBENTS FOR THE NEXT 4 GENERAL ELECTION CYCLES
3rd paragraph in the very short article. Did you manage to read it?
oh boy ... will we see this BEYOND United States?
In other words, a orgy of AGs.
Is that like a murder of crows?
BTW this helps explain the market pump today. There is no problem as long as the market continues on its ballistic path to the moon.
Holder MIA
You didn't think Eric "Empty Suit" Holder was going to show up to work anytime soon, did you CD?
Holder is probably busy organizing CREEP 2012:
Committee to RE-Elect the President...
CD,
Talking about collective nouns, are you aware of the 'flange of baboons' story? In the UK, the word 'flange' means a lady's front bottom.
Shakespeare would be proud.
In other words, assume the position
Hopefully they'll be so busy with each other they'll never notice I've slipped out the back.....Jack.
http://www.youtube.com/watch?v=298nld4Yfds
"The problem is all inside your head", she said to me
The answer is easy if you take it logically
I'd like to help you in your struggle to be free
There must be fifty ways to leave your lover
She said it's really not my habit to intrude
Furthermore, I hope my meaning won't be lost or misconstrued
But I'll repeat myself, at the risk of being crude
There must be fifty ways to leave your lover
Fifty ways to leave your lover
You just slip out the back, Jack
Make a new plan, Stan
You don't need to be coy, Roy
Just get yourself free
Hop on the bus, Gus
You don't need to discuss much
Just drop off the key, Lee
And get yourself free
Ooo slip out the back, Jack
Make a new plan, Stan
You don't need to be coy, Roy
Just listen to me
Hop on the bus, Gus
Don't need to discuss much
Just drop off the key, Lee
Get yourself free
This will end up like the tobacco settlement. Lawyers make out, States get a huge check to make the budget right and fund the pensions, banks get immunity, people get screwed after the money is gone.
+ 1
And taxes go up
New highs here we come. It's like Christmas in stock fairy land.
Eat the bankers!
Now that....is awesome!
Arnold,
the terminator/gubanator/originator?
Now I have been humbled by the greatness of this artistry.
I wonder who will play the role of the boy and his mother? Or that of the liquid metal bad guy?
Barn door.
Horses.
Gone.
Burned to ground.
Lock it now.
Brilliant.
Lock it? Not hardly. Simply off down the road with a bucket looking for a water source
And now the feds can safely punt to the states with the exception of the real juice that will be under federal investigative and national security seal. I am sure the various state ag's have as much a clue about finance as they do in fairly & impartially enforcing all of the laws within their preview. The fact that we find ourselves here speaks to the various ag's prowess. Believing that the state ag's will get to the bottom of all this with clarity is akin to trusting Ben Bernanke to get tough on bank regulation.
This things not even glowing red yet - at some point somebody will find the oxygen lever and this torch will be white hot and cut thru anything.....my mind reels when I imagine the possibilities of outcomes. The drooling lawyers must have to keep Gatorade around just to stay hydrated.
Bless their evil souls.
laughed out loud in a quiet office
Did you say Ben Bernanke to get tough on "bank ejaculation"?
The new maestro of the circle jerk
Is that Marv I see? Another long goodbye to be sure....
My, my, aren't we the Debbie Downers today! Isn't it possible that a couple of these AGs (yes, most are aspiring governors) might actually find some wrongdoing and propose some penalties and maybe offer a deal to the banksters, as in, "principal reduction or jail, fellas, take your pick."
Somewhere along the line, somebody besides the resident genii here at ZH will figure out that the securitization of mortgages and the subsequent fallout from foreclosures is the end game.
I memory serves, most AGs started out as lawyers, so, they're scum of the earth, but, well-educated scum. They probably have a pretty good handle on this. Plus, since Eric Holder is a prime PIECE OF SHIT (yeah, in all CAPS), these guys represent the states, and maybe they want some autonomy or at least to start a little fight with the overbearing federales.
I've been on this mortgage and finance mess for years and it's been an education. Just so anybody who wants to disagree, agree or junk me from behind the wall of anonymity, here's my blog:
http://moneydaily.blogspot.com
Not a promo, just getting a little tired of everybody thinking totally negative and putting my money where my keyboard is - in a little envelope between the matresses ;-)
The economy will come down. Just not today. I'm sorry if any of you are short and pissed, but that's your problem. The more we push for change and push the AGs to actually enforce the laws, the closer we come to resolution in some manner. Just whining - and that's all these comments above are - doesn't really help anybody.
Of course they'll find some wrongdoing and impose some sort of sanctions. Window dressing that actually aids and abets the underlying fraud.
Nice to know that you view freedom of expression as a waste of time.
While all legitimate speech may be protected, not all legitimate speech is equally effective in solving the target problem. Speech can be protected and a waste of time at the same time.
Saying that some protected speech is a waste of time is not the same thing as saying protected speech is a waste of time. Miles, you are putting words in Fearless' mouth. Protected speech, but a waste of time.
Wasted time as are expressions of resignation to all the criminals getting off and the taxpayers getting screwed. If that's how it is, why makes it worth saying or worth hearing? It's akin to playing the role of holding down a rape victim--you're an enabler.
And if with that attitude you think you're a victim, think again: you're a volunteer. You embraced being screwed in advance.
Thwack Double chins and plastic smiles on full display as working to achieve some measure within a fraud gets exposed for what it is. Criminally enabling co-dependency.
http://www.youtube.com/watch?v=yZKoLzgVVs4
Unless it's a reverse 5K1 of sorts ... then it becomes a matter of simple prostitution to earn fish n chips without the co-dependency issues attached to the other side of the fence. The best kind of ear worm...
http://www.youtube.com/watch?v=Z8ZeBog2yFM
We need a soft landing boys, round up the AG's and get them on the same page.
pathetic.
Absofuckin'lutely
No! Chaos is the order of the day. All facts and circumstances will not be revealed if there is order in the system. The more chaos, the more disclosure. If Congress gets involved in this you can be sure of our having the cover up of the century -- and it's subsequent bail out of all wrongdoers.
Our society operates pretty much on a need-to-know basis. No one person needs to know all facts and circumstances. Therefore, you can be pretty sure that all facts and circumstances won't be revealed to everyone. Chaos won't change that (transmission of good information tends to diminish during chaos). Those who need to know will be told. The rest will sit around and speculate.
Those who need to know will be told.
ROFLMAO. Transmission lines are never that good.
Those who need to know will be told.
I was referring to what is being discussed - the foreclosure problem. Those in the chain of need-to-know for any given foreclosed property will be told only what they need to know. It won't be broadcast widely. Bringing on chaos, as was suggested, won't cause a better and wider transmission of this information.
alabama politicians are pining for a return of jim crow laws...it's no surprise that those creeps are providing safe harbour for criminals.
I'm pretty cynical on what the final fix/solution will be here. Smells like it could be the ol' Problem- Reaction- Solution.
Alabama the only state not to participate.
Contaminated shrimp?
Shrimp!!
It's a pivotal day. The start of a total disconnect between the dollar, bonds, commodities, and equities. It's a brave new world out there and its getting way out, but you don't have a choice as to whether you'd like to participate or not,.... your in.
Alabama AG says they will join the suit. Shelby's check must not have cleared...
What suit????
It's merely an investigation, far as I can see.
Just a thought, could closing attornies have some liabilty issues here? Is it not their responsiblity to make sure all the docs are ligitimate.
"...Four large lenders already have halted questionable foreclosures after evidence emerged that bank employees processed thousands of foreclosure documents without reading them. Other banks have not done so, saying they did nothing wrong."
First of all, bank employees - for the most part - aren't gonna go putting themselves personally on the line legally for not reading stuff they're supposed to read at work. Why? haha
Next, no - no loser who agreed to buy something should get away with getting it for free. Needs to hand back the keys, or pay.
Finally, I'm not really interested in the details of all this mess but the overall timing of these deals is interesting. Fed's hinting about QE2, and suddenly the banks 'get good' and say 'Oh wait - perhaps we need to halt everything foreclosure and review the docs."
To even begin to believe this action has anything to do w/ backdraftin' homeowners rights is fantasy.
I do believe it's on some level for Fed to 'make book' so to speak on getting more back on all that subprime mortgage paper in conjunction with it's reinflation with QE2 - allowing the banks to perhaps even take back some of Fed's inventory in this process - but do the take back at inflated values so as not to screw the banks' books as hard as a 'real deal' for the consumer. A win/win for them (Feds/Banks), who cares for the consumer.
Perhaps someone may better clarify or elaborate my line of thinking here regarding the timing - think 'good for the Fed - double their money back' - how would they do that - and help their buds at these banks - in this process?
that's what's happening here imo.
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