This page has been archived and commenting is disabled.

Presenting The Full Ibanez Supreme Court Ruling

Tyler Durden's picture


This is not quite the end of Bank of America (and Wells.. suck it up Munger), but it very could be the start, unless Brian Moynihan's bank now spends hundreds of millions if not much more more bribing judges across the country... The only winners out of this? The plaintiff's bar as usual. Luckily, at this stage burying fraudclosure will be far more difficult for the kleptocratic banker mafia syndicate...


h/t 4ClosureFraud


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 01/07/2011 - 13:03 | 856508 Buckaroo Banzai
Buckaroo Banzai's picture

Release the hounds!

Fri, 01/07/2011 - 13:06 | 856522 Cdad
Cdad's picture

They have, for I am loose and shorting favorite f'n pastime in the whole wide world!

Aaaaahhhh riiiiiiiiight!  Kick ass, Tyler!

I am Cdad, and I come in the name of Average Joe!

Fri, 01/07/2011 - 13:10 | 856530 Spalding_Smailes
Spalding_Smailes's picture

I will steamrolllllllllllll your shorts and love it !!!




Fri, 01/07/2011 - 13:12 | 856539 traderjoe
traderjoe's picture

Isn't X one of your names? Down 4%...

Fri, 01/07/2011 - 13:16 | 856560 goldmiddelfinger
goldmiddelfinger's picture

Gold. Gold will be CRUSHED

Fri, 01/07/2011 - 13:22 | 856583 Hephasteus
Hephasteus's picture

You are just too funny. Gold bugs are just fucking leeches attached to banks balls. The only way to kill us is to kill yourself. So grab a knife drop your pants and start stabbing till you're a eunich. We can take it.

Fri, 01/07/2011 - 15:00 | 856978 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

As with todays theme, 'Respect!'

Fri, 01/07/2011 - 13:32 | 856594 Spalding_Smailes
Spalding_Smailes's picture

Yep. Manufacturing in Chicago is rolling ... And they are building tons of cars, gm, ford, toy, hon, ect. And on top of that Deere,Cat, Joy Global, Bucyrus are booming at record pace.

You will see 150 within 2 years. Jim Rogers 20 year Commodity/AG bullrun will keep Cat & Deere ... slammed for years. IMO

Fri, 01/07/2011 - 13:51 | 856705 Cdad
Cdad's picture

Look Spalding!  They are folding up the tents at L. Blankfein Wildest Dreams Park [oil futures].  I suspect that might play into your portfolio as expressed here...

Look at the totally depraved macho stud USD having his way with every moving thing on the planet...soon to affect all commodity related issues, too!

Fri, 01/07/2011 - 16:46 | 857425 jmc8888
jmc8888's picture


You can thank Valerie 'Queen of England pussy licker and complete ideological supporter' Jarrett.  You know, the fascist that really runs this country for the imbocile Nero.  Cheney is to Bush what Jarrett is to Obama.  Actually I should say Cheney/Rove is to Bush what Jarrett is to Obama. 

While I'm sure the numbers are properly fudged, there still is no doubt that Mrs. Queen of England, our President, will use her labor contacts, and let me use that again for full double entandra, USE the Unions, for her own gain and concentrate things in one sector to give an outlier the fucking idiots can point to on the bullshit data front to espouse their lunatic sophistry about how things are turning around. 

Yes this one outlier skews everything.  No, only the minds of fucktards. 

I'm not against unions, I actually prefer them against not. But, that doesn't mean their shit don't stink, but in this case it's about the unions gets used by Valerie the Visitor.   She is of peace, always.  (c'mon we saw the original, we know she's lying)

Chicago is definitely NOT rolling.  We're on the precipice of a new dark age, caused by British imperialist monetarism and all the fucktards who can't see a big hot iron poker impaled through them.   We'll see how well Chicago will be doing when fascists complete their great master plan.

'It's only a flesh wound'

Yep, I've seen this British bullshit before, except that time it was funny.  This time it's just sad.

British dominance in finance is over, forever.  Including it's role in usurping America.  America will no longer be the face for BRITISH IMPERIALISM.

But first, we need to realize that there aren't any American's per se anymore.  Just British Imperialists, that were born in Amerika.  Gee I wonder why America is failing.  Maybe because McDonalds serves oil changes and Checker Auto sells baseball cards.  Oh wait, what does Amerika do?  Follow the fascist british imperialists to their grave, with the above guy, one of the most clueless of all. 

Hyperinflation will crush everyone but .0000000000000001 percent of the population, or about a handful on this planet.  It won't be you, I can assure you.  




Fri, 01/07/2011 - 18:59 | 857770 anonnn
anonnn's picture

...All the railroad unions entered into this combination with the oligarchs, and it is of interest to note that the first definite application of the policy of profit-grabbing was made by a railroad union in the nineteenth century A.D.,namely, the Brotherhood of Locomotive Engineers. P. M. Arthur was for twenty years Grand Chief of the Brotherhood.

After the strike on the Pennsylvania Railroad in 1877, he

broached a scheme to have the Locomotive Engineers make

terms with the railroads and to "go it alone" so far as the

rest of the labor unions were concerned. This scheme was

eminently successful. It was as successful as it was

selfish, and out of it was coined the word "arthurization,"

to denote grab-sharing on the part of labor unions.

[from Jack London's Iron Heel]

Fri, 01/07/2011 - 16:12 | 857311 Joe Sixpack
Joe Sixpack's picture

"I am Cdad, and I come in the name of Average Joe!"


Thanks, Cdad, but I come in my own name.



Fri, 01/07/2011 - 13:03 | 856510 hedgeless_horseman
hedgeless_horseman's picture

When it comes to Judges, the banks can never out "contribute" the law firms.

Fri, 01/07/2011 - 19:34 | 857834 UncleFester
UncleFester's picture

When you can print money, you can out "contribute" anyone.

I Fester

Fri, 01/07/2011 - 13:03 | 856512 Archimedes
Archimedes's picture

Not the end...but a small victory for justice, law and order in the U.S.

Now if only Nevada, Florida, Arizona,Illinois and California Supreme court had the same ruling. Then it WOULD be the end for the banks!

Fri, 01/07/2011 - 13:05 | 856515 Sudden Debt
Sudden Debt's picture

Isn't the government debt hole deep enough to hide it in?

Fri, 01/07/2011 - 13:09 | 856525 Dick Darlington
Dick Darlington's picture

Now how many ES-points (up, naturally) is this worth?

Fri, 01/07/2011 - 13:09 | 856531 docj
docj's picture

Oh my, but is that a Black Swan swimming past us?

Fri, 01/07/2011 - 13:15 | 856549 schoolsout
schoolsout's picture

Black Bird event*



* El Vee

Fri, 01/07/2011 - 13:09 | 856532 chet
chet's picture

Everyone gets a free house!!1!

Fri, 01/07/2011 - 13:15 | 856553 traderjoe
traderjoe's picture


I argue a wholesale Jubilee would be one of the ideas that would really get J6P to buy into a collapse of the system. New currency, jubilee on all debts, and next day the pieces can be picked up. The banks are collapsed, nationalized, and sold as public utilities. All derivatives go poof. Yea, an over-simplification...


Fri, 01/07/2011 - 13:22 | 856589 chet
chet's picture

Makes sense to me, since we'll probably end up in the same place, but in the excruciatingly slow and painful way.

Fri, 01/07/2011 - 14:01 | 856751 Jerry Maguire
Jerry Maguire's picture

I have actually drafted a constitutional amendment to effectuate a "jubilee", among other things.  If you'd like to see it, I can post it over on my blog:


Fri, 01/07/2011 - 19:58 | 857855 pyite
pyite's picture

Fantastic idea - but who would be able to make it happen?  The only way a Jubilee can happen in the current environment is the way Zimbabwe did it - with years of pain & suffering first.


Fri, 01/07/2011 - 19:59 | 857860 pyite
pyite's picture

A little less cynical response this time :)

The modern day equivalent of a Jubilee is known as "bankruptcy."  I would argue that the 2005 bankruptcy reform is a major part of today's problems.  We should go the other way and make it unbelievably simple to write off debts (as long as you give up the collateral e.g. the house you're squatting).  Perhaps combine with some sort of corporate welfare to reimburse lenders for excessive losses.


Fri, 01/07/2011 - 13:37 | 856631 Eternal Student
Eternal Student's picture

Nonsense. These former homeowners are still on the hook for what's left on the original mortgage. And people who are worse than the Banks will go after that money, if someone doesn't produce some kind of settlement arrangement for all parties involved.


Fri, 01/07/2011 - 13:45 | 856680 chet
chet's picture

I was being sarcastic.  However, I do think that this would at least be good for a few more years of free living for the Ibanez's in their newly un-foreclosed house.  Then they just walk.  If they're in a recourse state, they then declare bankruptcy.

The problem here is that no one has the note.  It's gone.  So sure the servicer, or debt collectors, can keep hitting them up for payments, but that's about it, until they get the note sorted out they can't take the house back.

Fri, 01/07/2011 - 14:38 | 856892 Eternal Student
Eternal Student's picture

Thanks for clarifying that. It's a little hard to see the sarcasm at times, especially with some of the people here spouting questionable statements as a matter of fact. :)

I'm sure there are a lot of people around thinking that they might get a free house. I agree with you about the note. But the Bankruptcy laws were changed back in 2005 to make it harder to get out from this type of mess. To me, it is one of many data points that the Bankers knew very, very well what was going to happen well in advance.

Also note that the no-recourse laws probably have little impact here, in terms of the number of people protected. Most people refinanced; and at least in California, re-fi's are recourse. Only the original purchase is non-recourse.

Fri, 01/07/2011 - 13:11 | 856536 TruthInSunshine
TruthInSunshine's picture

All it will take is for the SCOTUS, steeped in deep dedication to not trampling/interfering on/with states' rights and laws questions, to avoid the 10th Amendment altogether, in a much hypocritical moment, to overturn this case and lay down 'the law of the land: all your foreclosures are belong to banks.'

Fri, 01/07/2011 - 13:11 | 856538 Sudden Debt
Sudden Debt's picture

The VIX is showing some interesting action today. 0,00000% different from yesterday.

Fri, 01/07/2011 - 13:28 | 856603 sheep92
sheep92's picture

Indeed, even as the spy is -.60.

Everyone's fine with the decline.

Buying away happily secure in the knowledge that Ben will always bail them out......


Fri, 01/07/2011 - 13:14 | 856543 goldmiddelfinger
goldmiddelfinger's picture

All mortgage roads lead to FNMA

Fri, 01/07/2011 - 13:15 | 856547 MiguelitoRaton
MiguelitoRaton's picture

Wells Fargo just got a "dirty Ibanez" (dirty sanchez)

Fri, 01/07/2011 - 13:16 | 856550 What_Me_Worry
What_Me_Worry's picture

They better get busy making "political contributions" to the other states' judges.


Fri, 01/07/2011 - 13:16 | 856554 melvynny
melvynny's picture

Scalia will come to the banks rescue.

Fri, 01/07/2011 - 13:19 | 856567 goldmiddelfinger
goldmiddelfinger's picture

No. He won't.


Fri, 01/07/2011 - 13:19 | 856571 docj
docj's picture


Fri, 01/07/2011 - 13:16 | 856556 Byte Me
Byte Me's picture

Maybe now we will see if Wikileaks can produce the goods to implicate board level involvement at various stages of all this.

That would stir the pot nicely.

Fri, 01/07/2011 - 13:32 | 856622 Widowmaker
Widowmaker's picture

Remember, nobody saw it coming...

Nobody was the homeless transient that lived behind the Federal Self-preserve and has been calling all the shots.

And many thought it was the other "nobody."

Fri, 01/07/2011 - 13:17 | 856557 Blue Water
Blue Water's picture

All this does is delay the foreclosure action.  A decision that, in effect, the wrong party brought the foreclosure action, and so it must be dismissed, cannot affect the interests of the right party, who has the right to bring the action and no doubt will.

Fri, 01/07/2011 - 13:22 | 856586 What_Me_Worry
What_Me_Worry's picture

Who is the right party, though?  They would still have to show a clear chain of custody to come forward, right?


Fri, 01/07/2011 - 13:33 | 856628 breezer1
breezer1's picture

and the right party would have the right documents. and the right documents were most likely shredded so that no one would ever find out that many more dollars worth of mortgage backed bonds were sold than mortgages really existed. ponzionomics 101.

Fri, 01/07/2011 - 13:39 | 856648 euryale
euryale's picture

ah, but determining the "right party" is the crux of fraudclosure - there is often No party that rightfully owns the property, as a paper trail would indicate fraud in the lending and securitizing practices, it often does not exist.

Fri, 01/07/2011 - 13:21 | 856572 No Mas
No Mas's picture

A douse of reality for the big O running amuck here in ZH land.

Big picture:

The banks (all of them) will make money (Fed assured), the lawyers will make more money, the defaulted homeowners will hit the curb and go section 8.

There will be no one of note punished in any of this and life will just roll along.

Sorry doomers, but this is just going to be a bug on the windshield of the banker's Bentley as he is driven to the airport for his GV ride to paradise.

Now, back to the crisis of the day.

Fri, 01/07/2011 - 13:21 | 856579 williambanzai7
williambanzai7's picture

Fri, 01/07/2011 - 13:30 | 856621 irishgurl4
irishgurl4's picture

+1 :)

Fri, 01/07/2011 - 13:40 | 856660 NotApplicable
NotApplicable's picture

Nice pic, but MERS has no employees!

Fri, 01/07/2011 - 13:53 | 856713 Withdrawn Sanction
Withdrawn Sanction's picture

Those aren't employees, they're securitizers who are on the hook for fraudulent conveyance.

Nice "optics"  WB

Fri, 01/07/2011 - 14:05 | 856765 Hephasteus
Hephasteus's picture

Start singing chitti chitti bang bang NOW!!!

Fri, 01/07/2011 - 13:23 | 856584 jal
jal's picture


The winners are not the borrowers.

The winners are the pension funds, 401k, and grandma.


Of course if you were smart like PIMCO, you would have bought all of the MBS that you could for pennies. Since PMCO is too big to fail, since they have lots of lawyers, and lots of accountants, and good connections, then the gov. can find a way to give you 100 cent on the dollar to make PIMCO whole and then turn around and make the banks eat their shit. ONE SPOONFULL AT A TIME.




Fri, 01/07/2011 - 13:24 | 856592 goldmiddelfinger
goldmiddelfinger's picture

"The winners are the pension funds, 401k, and grandma."


Only if they BTFD

Fri, 01/07/2011 - 13:22 | 856585 goldmiddelfinger
goldmiddelfinger's picture

And to think the banks paid mortgage brokers fees of $20,000 for every $1,000,000 to get financial HIV.

Fri, 01/07/2011 - 15:52 | 857218 Things that go bump
Things that go bump's picture

That's what happens when you lie down with a whore.

Fri, 01/07/2011 - 13:23 | 856587 CrashisOptimistic
CrashisOptimistic's picture

You are somewhat right, but functionally wrong. 

The idea is not that the previous owners re-occupy the houses.  The point is putbacks and ENORMOUS costs the banks have to eat to get the paperwork in order, often after the foreclosure, and very possibly some damages paid to the evictees.

They don't get the house back, because there may be new owners living there, but they are likely to get some cash in damages.  That's off the banks bottom line.  It is likely to be a big hit, too, unless they can strike deals nationwide with AGs, who are going to be working for various governors who have big budget holes to close.

There is no upside here for banks.  They just got hit in the teeth with a 2X4.

Fri, 01/07/2011 - 13:41 | 856670 NumberNone
NumberNone's picture

You just hit it on the head.  What the AG's did to 'Big Tobacco' in order to blackmail some funds is about to be done to "Big Bank". 

As in the case with 'Big Tobacco' it's not about the money, its about doing what's right for the public and of course children.  (Brings a big freaking tear to my eye.)



Fri, 01/07/2011 - 13:28 | 856604 Widowmaker
Widowmaker's picture


Put up a survey to see how many of your readers STILL use TBTF banks, and perhaps even which ones (top 5).

I have the feeling that many, many chump-posters on ZH complain about and then contribute to the same fraud.

Fri, 01/07/2011 - 13:45 | 856678 NotApplicable
NotApplicable's picture

Personally, I've never had a bank account in my life, using only credit unions.

Although "Suck it up" Charlie did manage to get ahold of my mortgage note from a local mortgage company, thanks to MERS.

Fri, 01/07/2011 - 19:45 | 857842 UncleFester
UncleFester's picture

WF has my note (or so they say), but like you, I had no say in it.

Fri, 01/07/2011 - 21:05 | 857954 sayno2fat
sayno2fat's picture

Yeah, me 2!  Countryfried sold mine to Charlie

Fri, 01/07/2011 - 21:10 | 857964 sayno2fat
sayno2fat's picture

Me 2!  Countryfried sold mine to Charlie

Fri, 01/07/2011 - 13:29 | 856606 Ned Zeppelin
Ned Zeppelin's picture

More evidence of the malignant tumor hiding beneath all of the fraudclosure shell game - the docs are wrong and don't support the process, so the banks resort to robosigning, document manufacturing after the fact, homeowner intimidation, AG cajoling etc. etc. etc. but none of that fixes an organic defect.  This is a good case if you favor truth, justice and the American way.

Fri, 01/07/2011 - 15:44 | 857191 Bob
Bob's picture

For a couple homowners, for today at least.

Meanwhile, teevee is repetitively running video of two sisters released from life sentences after serving 16 years each on an $11 robbery. 

Problem is they look and act completely wrong.  Black and ghetto-fabulously overjoyed. 

As long as putting people with big money and fine clothes in prison is as repugnant as burning the flag,  the system is not going to change. 

Sadly, high-paid bankers actually serving time is in a very real sense unpatriotic--it bares the underpinnings of the American Dream system.   It's like admitting your mother is a crack whore and your daddy a pimp--you'd really rather not know.

Fri, 01/07/2011 - 18:32 | 857719 Dr. Sandi
Dr. Sandi's picture

Would they let Bernie Madoff out of prison if he gave a kidney to his brother?

Fri, 01/07/2011 - 13:30 | 856609 TruthInSunshine
TruthInSunshine's picture

Screw over 200 years of title law, everyone, at the state level (this court had the balls to uphold it, though), because in the battle of business interests vs. rule of law and stare decisis, the SCOTUS could never let business interests lose - that would be too harmful and is unacceptable to out judiciary 'branch' of government.

Someone said Scalia will ride to the rescue of banks, and I agree, but Roberts will lead that charge.

Fri, 01/07/2011 - 13:38 | 856658 chet
chet's picture

Yes, or even congress.  If the choice is between some deadbeat (with a latin name no less) not paying their mortgage, and the "most respected" financial institutions in the land, bulwarks of pin-striped prudence and propriety, guess who is going to win.

"Mr. Boehner, it was just a paperwork mishap.  You know these things happen sometimes when we're so busy keeping the American juggernaut well-greased with capital.  Just an oversight.  Besides, we're talking about trillions in MBS.  We can't monkey around with that, now can we?"

Fri, 01/07/2011 - 13:48 | 856690 NumberNone
NumberNone's picture

Irony is that the laws that are screwing the banks now most likely were put into place by the banks themselves in order to screw the public in some fashion. 

Personally shocked that the backdoor CYA they tried last year got vetoed.  Would not be surprised if we some sort of legislation pushed on the floor of Congress at midnight on Easter Sunday that tries to negate all of this. 

Fri, 01/07/2011 - 19:20 | 857814 anonnn
anonnn's picture

The majority opinion already written using 2000 boilerplate..."This is a one-off opinion and not to be used as a precedent".


Fri, 01/07/2011 - 13:29 | 856613 sheep92
sheep92's picture

If this were are real dip buying opportunity there would be all sorts of ZH'rs jumping into the inverse ETF's and vol would be moving higher.  As it is there are only yawns and a few sheep baaaahing quitely.


Fri, 01/07/2011 - 13:30 | 856617 deselby
deselby's picture

This is a ruling from Massachusetts, which is by tradition and its old state constitution subject to quaint old New England notions about the rule of law, and thus might not be followed by states more subject to oligarchic control, or by the Federal courts.

Fri, 01/07/2011 - 13:30 | 856620 Fred Hayek
Fred Hayek's picture


I'm pleasantly surprised that here in the People's Republic of Massachusetts we would actually have the court come down correctly on a property rights issue. 


Fri, 01/07/2011 - 13:33 | 856630 Miss Expectations
Miss Expectations's picture

Ibanez Bitchez

and since I like "full retard" I'll edit the title, thus:

Presenting The "Full Ibanez" Supreme Court Ruling
Fri, 01/07/2011 - 13:40 | 856650 CrashisOptimistic
CrashisOptimistic's picture

I don't know guys.  I don't think this goes to SCOTUS.  It's a pure state real estate decision.  There are no Constitutional aspects to it.  It's pure state law.  So will be the other states that cite it as precedent, and the banks can't roll over the other party with legal fees because it is AGs bringing the case to further their political ambitions.

The banks are going to eat a big earnings hit on this.  Really big.

Fri, 01/07/2011 - 13:44 | 856681 TruthInSunshine
TruthInSunshine's picture

Watch the federal courts turn this into an 'interstate commerce issue,' somehow, someway, thus clearing the path for federal judicial jurisidiction.

Fri, 01/07/2011 - 13:50 | 856702 NotApplicable
NotApplicable's picture

And failing that, they can fall back on "promote the general Welfare."

There are more than enough weasel-words for them to find an entry.


Fri, 01/07/2011 - 13:52 | 856708 Widowmaker
Widowmaker's picture

Really?  When have the banks ate anything?!

YOU (and your offspring) will be gobbling up every bit, citizen-shiteater, just like you have already.


Fri, 01/07/2011 - 13:37 | 856653 breezer1
breezer1's picture

i picked up a few FAZ on the news just to make them short me.

Fri, 01/07/2011 - 13:45 | 856676 Contura
Contura's picture

When is panic.....

Fri, 01/07/2011 - 14:02 | 856749 Ned Zeppelin
Ned Zeppelin's picture

You can bet the lawyers at Fidelity National Title Insurance Company are reading this case and will be looking hard at titles coming out of foreclosures where the foreclosing party is a servicer or trustee for a pool of mortgages.  I bet quite a few of them are all fouled up, and the question will be in each case: can the organic defect be cured?

The court here handled this quite in line with hardened legal principles that are not hard to understand (if you want to foreclose, you need to be able to show that you own the mortgage, not have some vague entitlement to it). The latter was all the banks had in this case, and I can feel the lawyers cringing as they attached unsigned documents as "proof" that title to a mortgage had changed hands.  This case was over before it was filed. 

Fri, 01/07/2011 - 14:09 | 856779 TruthInSunshine
TruthInSunshine's picture

1) The assignee did not properly perfect the title in accordance with Mass state law.

2) The court saw no ability based on current law to let them perfect a title instrument after the fact, as that would be run contrary to the whole reason for being of 'recording statutes' (i.e. timely notice of ownership, properly recorded).

3) Title recording statutes are to be conformed with, period, given the enormous implications of vesting title and communicating ownership of real property.

Fri, 01/07/2011 - 16:47 | 857429 Ned Zeppelin
Ned Zeppelin's picture

Actually, in the opinion the court even allowed that a non-recorded assignment would be sufficient (but said recording it is preferable.) A chain of actual, but unrecorded assignments would have sufficed, according to the Mass. Supremes.  The key was these guys couldn't produce anything in the nature of an assignment. So it was game over.

So, if you are unscrupulous and can get a notary to back date an assignment you're in business. Well, a crook, but hey, you're in business. 

Having read the whole thing, and seeing the outcome so clearly, why didn't they simply go back, get the assignment, and start over again. For these 2 paltry mortgages, it would have been far more cost-effective.  What made them think they might win? Or was it more like: there was no other option - as Karl Denniger correctly points out: the problem is the REMIC rules require that the assignment into the MBS box be done within x days of formation of the trust (relatively quickly).  That didn't happen.  So to go back doesn't fix the problem of the defective formation and defective tax status of the trusts and the securities they issued.  It's too late. Hard to follow, but this is at the core of this: the MBSs like the ones in this case, and we're talking Lehman and Wells here, are all EMPTY BOXES - there ain't no mortgages in them.  What is an empty box worth? Perhaps its put back value, eh PIMPCO? Otherwise, zip, nada, diddly.  

This is BIG, I don't care if Kramer says it will be forgotten by Monday - it is like a slowly eroding beach under an expensive Malibu house - it will fall down, assertions of Ivy League degreed structural engineers who approved the construction notwithstanding.

Fri, 01/07/2011 - 18:11 | 857660 mrcmmm
mrcmmm's picture

YES!  These are the short hairs homeowners have them by if ownership of the loan is in question.   If ALL of the loans were not properly assigned to the REMIC by the deadline, it loses its tax status, and the investors pay double tax on the income.  If even ONE loan is not properly and timely assigned, the structure fails.  Which means that the REMIC is highly incentivized to either bury the homeowner in litigation (make them cry uncle), or pay through the nose to make the homeowner go away and pretend the problem never existed.  The very first thing ANY defaulting homeowner should do is demand proof of ownership of the loan, or if already in litigation, ask for it in discovery.  Short hairs, baby.

Fri, 01/07/2011 - 21:25 | 857980 Ned Zeppelin
Ned Zeppelin's picture

Absolutely - if your home was financed in the boom by a mortgage that ended up in ina private MBS, you've likely got some major leverage, baby. 

Fri, 01/07/2011 - 14:05 | 856768 buzzard beak
buzzard beak's picture

This was a big spanking for the banks, and richly deserved, of course.

Basically, as banks got into the habit of selling their mortgages in ABS form, they also got into the habit of delaying recording those sales with their county clerks, because they didn't want to pay recording fees every time, and mortgages packaged into ABS tend to be sold and re-sold and transferred and re-transferred many times. 

Instead the banks would wait to record them until they needed to do for some reason, such as forecsosure. In non-judicial states like Massachusetts, banks would typically wait to assign the mortgage to its ultimate owner until after that owner had already foreclosed and needed to clear up the title in order to sell the property. That is what has been ruled illegal here. And I do think most other states where this was the practice are likely to rule similarly. How can you foreclose if you haven't yet legally established your ownership of the mortgage? Dumbasses were asking for this. Now it's time for class-action suits to overturn foreclosures back to about 2001. Oh what fun havoc that will be.

However in judicial states like New York banks woud typically assign the mortgage to its current owner just before filing foreclosure suit, because in those states there are judges who would likely throw out the cases if the bank didn't show standing by recording its ownership at the county clerk. I don't know if this is true in every judicial state, but it is in New York. So at least in NY and probably in most other judicial states the standards set by this ruling are not new and past foreclosures aren't threatened. Phew.

Fri, 01/07/2011 - 14:06 | 856773 Logans_Run
Logans_Run's picture


Fri, 01/07/2011 - 14:19 | 856824 CrazyCooter
CrazyCooter's picture

Actually, I think Munger said "Suck it in" ... sorry for being pedantic ...



Fri, 01/07/2011 - 14:32 | 856869 atomicwasted
atomicwasted's picture


This is what happens when entities ignore state law issues in boom times because they're making money so fast.   I wouldn't want to be either in-house or outside counsel that blessed the mortgage procedures for the defendant entities.  Next stop for them - malpractice and disbarment.

Fri, 01/07/2011 - 16:50 | 857434 Ned Zeppelin
Ned Zeppelin's picture

I doubt getting disbarred. But the malpractice claims will be legendary.  It is possible however, that the lawyers cleverly provided "how to" guides to the investment bankers busily packaging up all this stuff, and they may be able to point to a failure to follow simple instructions.

Fri, 01/07/2011 - 18:39 | 857736 Dr. Sandi
Dr. Sandi's picture

Disbarment: Too sleazy to continue being a lawyer.

Funny, you don't hear about this very often, do you?

Fri, 01/07/2011 - 14:58 | 856968 goodrich4bk
goodrich4bk's picture

I make my living in the foreclosure/BK world and am still surprised by the extent of fraud I see in the cases I handle.  Here's one from yesterday:


2002 purchase: $240k

2003 purchase: $262k

2005 purchase: $340k

2006 purchase: $690k (with a $500k loan)

2007 HELOC 2nd: $200k


This is all public record.  Also public record is the borrower's 2008 BK in which he admits his annual income from selling used cars is less than $20k and that his wife cleans houses for a living.

Criminals: borrower, mortgage broker.

Civil fraud defendants: Appraiser, lender

Those who should be hung from the rafters: Christopher "40:1" Cox, Alan "ZIRP" Greenspan, Phil "Dereg" Graham; Barney "CRA" Frank and Chris "Fannie/Freddie" Dodd.

Fri, 01/07/2011 - 15:01 | 856994 Seasmoke
Seasmoke's picture

is this ONE house bought by 5 different buyers, one house refi by one buyer, or 5 differenthouses bought by one buyers.......and in 2007 if they paid 690K and took loan for $500K did they not lose $190K (HELOC not withstanding ???)

Fri, 01/07/2011 - 15:14 | 857061 goodrich4bk
goodrich4bk's picture

This is all one house.  I believe the first two purchases were arms-length, the 2006 purchase was fraudulent.  By paying $690k, it set up the 2007 HELOC.  The reason I believe the 2006 purchase was fraudulent is because the buyer must have lied about his income to get the $500k loan.  Based upon my experience in these kinds of transactions, I suspect that buyer was a straw man for the seller who bought in 2005.  And I also suspect that the 2005 seller was either a real estate agent, mortgage broker or related to somebody in either industry.


BTW, this home is set for a trustee's sale on Jan 13th with an opening bid of about $570 (the first plus two year's worth of unpaid interest).  It took the lender over two years to get to an actual auction.  The home is trashed and it does not appear to be worth more than $165k.  Oh, and the fraudulent owner is still living there. 

Mon, 01/10/2011 - 10:48 | 863527 Crusader Rabbit
Crusader Rabbit's picture

What state is this?

I've seen this done in MD for the past 20 years that I've been in RE here. The valves were less in the 90's but the game much the same.

Fri, 01/07/2011 - 15:13 | 856973 Seasmoke
Seasmoke's picture

i think homeowners in non-recourse states are going to be able to declare for bankruptcy and the banks will just be another nobody creditor dropped off the list as they have no mortgage backed collateral......then since no one has "ownership" of the house, but since the debtor has been the latest home squatter , will be given the house to live in (although perhaps not able to resell)......

Fri, 01/07/2011 - 15:44 | 857188 TruthInSunshine
TruthInSunshine's picture

In non-recourse states, the mortgagee can simply walk away, especially when the home is underwater.

The bank or mortgagee (one holding the mortgage note) CAN NOT obtain a judgment against the mortgagor, their only recourse being seizing the house through judicial or non-judicial (e.g. power sale clause) proceedings.

Fri, 01/07/2011 - 16:07 | 857286 Things that go bump
Things that go bump's picture

Wouldn't they have to produce the note?

Fri, 01/07/2011 - 15:58 | 857254 onlymyopinion
onlymyopinion's picture

Like Cramer just said, the market will have forgot about all this by Monday.  Took the opportunity to pick up some FAS on da' cheap! 

Fri, 01/07/2011 - 17:25 | 857519 ThisIsBob
ThisIsBob's picture
Since the founding of the Republic, nay, since the Magna Carta, in order to forclose a mortgage you have had to show up at the courthouse with the right paperwork. Apparently notations on a hard drive somewhere don't pass the test. Dumbasses.

Case closed.

Fri, 01/07/2011 - 20:29 | 857912 gwar5
gwar5's picture

It's up to the Bamster to bail the banks out now.

William Daley, JPM exec & now WH Chief of Staff, reporting for duty!

Fri, 01/07/2011 - 22:06 | 858024 halvord
halvord's picture

I hereby nominate "The Full Ibanez" as the catchphrase for nailing these bastards.

Fri, 01/07/2011 - 22:24 | 858043 kdervin
kdervin's picture

Looks like JPMorgan still has some pull - while WFC and US Bank were losing in Massachusetts, Maine's high court ruled in favor of JPM even though their documentation was found lacking.



Sat, 01/08/2011 - 04:14 | 858375 indio007
indio007's picture

I have to agree. The court claims that JPM had the note at the time of the filing. So they allegedly had an interest. However if you read the case , the travels of the note and mortgage seem to be at odds.

Fri, 01/07/2011 - 23:05 | 858103 MsCreant
MsCreant's picture

I had a vision I wanted to share with my fellow ZHers.

Robo crambacks.

Sat, 01/08/2011 - 22:28 | 860714 Dr. Sandi
Dr. Sandi's picture

Hon. R2D2: Breet! Zworch! Tweedle, hoo hah!

C3PO: Judge R2 says the plaintiffs will have to allow the Skywalkers to remain on their farm.

Hon. R2D2: Wheep, zworch! Thippy thippy. Ack!!

C3PO: The judge also says that the plaintiffs will have to accept the amount already paid on the instant mortgage as payment in full and a complete discharge of the debt.

Hon. R2D2: Fnord, zeet! Rama lama ding dong. Brrrack!!

C3PO: His honor would also like to point out that the plaintiffs are a bunch of Mondeveian Slime Weasels who should be buried in the sand and left for the worms.

Plaintiff: Love your tie, your honor!

Mon, 01/10/2011 - 04:01 | 863183 MsCreant
MsCreant's picture

Nice work doc!

Rama lama ding dong!

It did strike me that if the volume of cases was so huge on this thing that they would stoop to these measures, then the volume should be a freaking tsunami on the way back in, bankward bound. Thanks for playing with me.

Mon, 01/10/2011 - 08:47 | 863340 yuansavvy
yuansavvy's picture

This is amazing! Still the servicers pretend to be injured lenders!


The fact is Servicer who are not the lender can never suffer any loss - so they can never come to court. The injured party, the investors are the taxpayers - they have already lost money and they were never the lender or holder of the note and mortgage - because the Trusts (MBS Securitizations) were simply fraudulent documents to steal borrowers and investors funds. This is not resolved yet and by the time it is resolved it may not matter- America is China's bitch!

Wed, 01/12/2011 - 17:16 | 871179 Ditos
Ditos's picture

Dave Krieger has written an e-book on filing quiet title actions.  This is an important read for people wanting to defend their homes.

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