The Robo-Signing Mess Is Just the Tip of the Iceberg, Mortgage Putbacks Will Be the Harbinger of the Collapse of Big Banks that Will Dwarf 2008!

Reggie Middleton's picture

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anonnn's picture

Re: wealth being relative...

As there can be no rich class without a poor class. Thus class-war, albeit by stealth.

In practice, there are only the 2 classes.

The middle-class[es] are an obfuscation to promote infighting and distraction.[Divide & conquer.]

The "poor-" and "middle-" classes have enormous common interests.

I am repulsed at the idea of living in tenement squalor, but I respect and admire the valuable labors their occupants perform.

Janitors, nursing-home assistants, caretakers, nightwatchmen,garbage collection and waste gleaners, farmhands,child care...all make needed contribution to my existence.

anonnn's picture

Important to note that Fannie and Freddie gave explicit instructions to MERS and servicers on how to handle assignment matters...even directing hat MERS not be identified on Foreclosure complaints.

Since Fannie/Freddieboth are founders/Board members of MERS, that puts the US Gov into the mix, as Fannie/Freddie are GSEs and backstopped by USG.

The US Gov was party to the deliberate non-transparency that is the enabler of all it seems.



Geoff-UK's picture

Chart porn.  Unreadable.

Psquared's picture

This still isn't enough to tip over the apple cart for the simple reason that it was predictable and foreseeable. What will eventually tip over the banking system is something unknown - some intervening outside cause.

For one thing, banks are not carrying these foreclosed properties as losses now - they don't have to realize the loss if they don't foreclose. Secondly, suits against securitizers (by MBS holders and REMIC Trusts) will take years if not decades to resolve. Third, Congress will step in and force some sort of nationwide legislation to clean up the fraud, clear up titles and keep the foreclosure mills going.

Reggie Middleton's picture

The entire housing bubble and bank bust was easily predictable and foreseable as well, how did that serve to prevent the carnage that followed?

Whether they carry bad assets as losses or not, they are still bad assets and they cost money to carry, particularly if you are levered 20x.

Then there are the legal fees that may come as a result of class action and Rico cases...

Gwynplaine's picture
Gwynplaine (not verified) Reggie Middleton Oct 12, 2010 6:26 PM

This makes the rationale for QE2 much easier to understand.  The banking sector is still in danger of going under without another round of free money.  Is that the bottom line Reggie?

jkruffin's picture

Once again, Reggie is all over it!  Wish Reggie could get an hour long spot on a REAL news channel to go over this fiasco.  Time to get a lawyer if you own a home, lost a home, or buying a home.  The US is the Fraud country of the world.  Fraud everywhere.  Even our judges have been bought off.  What a crying shame.

CustomersMan's picture


Thanks Reggie,


You are a remarkable help here.


The rant by Rick Santelli at the commodity exchange will be a classic as this unfolds.


It ranks with Arnie talking about being an economic "girly man"  in his speech.


The are exposed for the scum sucking deceivers they are on the right-wing payroll.



non-anon's picture

and the beat goes on

RockyRacoon's picture

Once again all the blame can be laid at the feet of Alan Greenspan.  Why?  Because the Federal Reserve had the power, explicitly, to govern the housing and mortgage markets in the 1990s.  This current debacle would have been a no-news event if Greenspan had done his job.  Period.

If you want to jail people for fraud, or negligence in this case, then start at the source/top with Mr. Greenspan.  A CEO sets the moral tone at his company, and a lack of integrity at all levels seeps down from the top.  This failure to "do his job" on the part of Mr. Greenspan leaked into all the echelons of the housing industry.  All of them.  When a cop makes the point of looking the other way, in a public manner, crooks start stealing things, and otherwise honest people are given the opportunity to seek personal gain in what appears to be sanctioned looting.

Jasper M's picture


    Clairvoyance and precognition are a heavy burden. Try to use these awesome powers only for Good . . . 

blunderdog's picture

I do love Reggie's work.  There are some issues that I just can't get a handle on, though.

What's step FIVE?

I believe that the biggest US banks are indeed already insolvent, and only accounting fraud, voluntarily overlooked by regulatory agencies permits them to continue operations.

IF that is the case, what possible solution exists?  The banks "hold" asset levels which can't be purchased by anyone at this point.  A resolution trust corporation is supposed to provide a means of liquidating assets and distributing any remaining value among the stake-holders, isn't it?  What is there to liquidate?  Even completely wiping out the share-holders doesn't seem to provide a big enough break to make any satisfactory payment to bond-holders.

Small banks don't hold sufficient reserves to keep the underlying basis of the US "real economy" afloat.  Lots of them are failing too.

Based on a non-financier's reading of the history of the past 200 years, I ask: how can any of this actually be resolved without floating a new currency?

tallystick's picture

There are at least 9 entities I've identified so far just in DE and MI that are either MERS  shells or imposter organizations.


Delaware Department of State:Division of Corporations

To request hardcopy of annual reports, specify File #, report year, shipping info and payment info to (CC by fax). Cost is $12 per report. This will get you the full documents (images and text).

Division of Corporations
PO Box 898
Dover, DE 19903
Fax# 302 -739-3812

The following are entries from the DE Division of Corporations Websites of known and suspected MERS shell corporations.

File Number: 2915165 Incorporation Date / Formation Date: 06/30/1998

File Number: 0776829 Incorporation Date / Formation Date: 12/01/1971
(mm/dd/yyyy) Entity Name: MERS, INC. Entity Kind: CORPORATION Entity Type: GENERAL Residency: DOMESTIC State: DE REGISTERED AGENT INFORMATION Name: THE CORPORATION TRUST COMPANY Address: CORPORATION TRUST CENTER 1209 ORANGE STREET City: WILMINGTON County: NEW CASTLE State: DE Postal Code: 19801 Phone: (302)658-7581

4333439 Incorporation Date / Formation Date: 04/12/2007

File Number: 4735339 Incorporation Date / Formation Date: 09/25/2009

File Number: 3518833 Incorporation Date / Formation Date: 04/25/2002

File Number: 4531992 Incorporation Date / Formation Date: 04/10/2008
(mm/dd/yyyy) Entity Name: MERS INVESTMENTS, LLC Entity Kind: LIMITED LIABILITY COMPANY (LLC) Entity Type: GENERAL Residency: DOMESTIC State: DE REGISTERED AGENT INFORMATION Name: CORPORATIONS & COMPANIES, INC. Address: 910 FOULK ROAD, SUITE 201 City: WILMINGTON County: NEW CASTLE State: DE Postal Code: 19803 Phone: (302)652-4800

Other states
Searched for: MERS, LLC
ID Num: B49863

Type: Domestic Limited Liability Company
Resident Agent: SAI R KUMAR
Registered Office Address: 2832 RENFREW STREET ANN ARBOR MI 48105
Mailing/Office Address:
Formation/Qualification Date:5-10-1999
Jurisdiction of Origin:MICHIGAN
Managed by: Members
Status: ACTIVE, BUT NOT IN GOOD STANDING AS OF 5-1-2003 Date: Present

ID Num: 785656

Type of Entity: Domestic Nonprofit Corporation
Resident Agent: RONALD BEATON
Registered Office Address: 1134 MUNICIPAL WAY LANSING MI 48917
Mailing Address: MI
Formed Under Act Number(s): 162-1982
Incorporation/Qualification Date: 3-25-2005
Jurisdiction of Origin: MICHIGAN
Number of Shares: 0
Year of Most Recent Annual Report: 10
Year of Most Recent Annual Report With Officers & Directors: 06
Status: ACTIVE Date: Present

Searched for: MERS HOLDINGS, LLC
ID Num: D3551J

Type: Domestic Limited Liability Company
Registered Office Address: 21815 BON BREA ST. CLAIR SHORES MI 48081
Mailing/Office Address:
Formation/Qualification Date:12-22-2009
Jurisdiction of Origin:MICHIGAN
Managed by: Members
Status: ACTIVE Date: Present

malek's picture

Thanks for the fantastic post.
I especially liked your first chart.

Reggie, as you said in a comment: "Wealth is relative, and is not defined by how much money you have but how poor everybody else is!"

I wonder more about relative truth these days... how is the US standing in truthfulness, in accounting and therefore accountability not limited to financial statements, compared to other countries?

Al Gorerhythm's picture

The world uses Fiat, it starts and ends there.

LadyH's picture

Oh come on, Fannie and Freddie will be brought to heel and loans back to the banks from the GSEs will be held static so not to arouse suspicion. The question is, who were the five calls before and after that billmgot vetoed? I bet the GSE bosses were told to cool their jets on push backs

Fat Ass's picture

It's not 100's it's 100s -- for hell's sake.

How can ANYONE make this mistake?  "s" is for plural (that means "more than one").

For example, cats, dogs, 100s, 1000s, the 1980s, idiots, morons, etc.

Apostrophe is only for ownership, like "John's Pub or "Ben's Nightmare."

DO NOT write " 100's ", it is simply " 100s ". Unbelievable. Makes the whole article look like a child wrote it.

mudduck's picture

#pfffffft;">. scusee.

Bear's picture

Thank's for yo post ... we gotta keep do writing word's pure

blunderdog's picture

But, its not like you loose brain cell's reading wrong punctuation, is it.

(Grammar-fanatic duel!  I think the third sentence's leading "s" should be capitalized, you should have used a colon in place of the first comma in your list of examples, and you forgot a double-quote in the fourth line.  Finally, spaces should never be placed around words inside quotation-marks.  [Double-spacing after periods is one of my errors that I refuse to correct.  It's a matter of principle.  Two spaces forever!  Just to be sure!])

MarketFox's picture

Another question would be the prospective changes regarding Fannie Mae and Freddie Mac....

Surely they are are not going to be in their same position either....

And any effort regarding these entities should be the questioning of their existance as well....

Add this to the mix....


Thank you, RM....


walküre's picture

Nothing that a few trillion extra Dollars couldn't fix!

There will be TARP ad infinitum as long as there's JPM and GS. Few others as well.

Lehman pissed some very influential people off or fell on their own sword to make the rest happy with TARP.

Know your enemy, folks.

Elections are a few weeks away... nobody wants to discuss QE2. It will come, rest assured.

Cow's picture

Thanks Reggie.  Brilliant

tom's picture

Thanks, Reggie, very helpful overview that explains what I was missing, that GSEs and monolines have already been pushing back a lot of mortgages onto the banks for a variety of reasons, so the discovery of widespread notary fraud is only going to make it harder for banks to defend themselves against a growing wave of push-backs.

woolly mammoth's picture

Reggie, I for one em glad you are a contributor to Zero Hedge. Ahh... gotta go, I suddenly have this strong desire to go add more supplies to my fox hole.

Montgomery Burns's picture

I think Costco opens up at 10. See you there!

virgilcaine's picture

Reg puts a few more holes in the American Dream model.

Mercury's picture

Because when we had the chance to put the injured banks to sleep and redirect resources to into new productivity, we instead allowed politics to shovel 100's of billions in tax payer capital into zombie institutions as they turned around and paid much of it right back out as bonuses.

We also had the chance to let supply meet demand in residential real estate - allowing the market to clear.  Instead it looks like Robo-gate, if it ends up crashing the big banks, might (by definition) very well end up handing a bunch of real estate to deadbeat borrowers on a technicality.  Don't these defaulted home owners owe money to somebody even if it's not the bank waving the bogus mortgage title at them?

Doesn't it seem like a good idea to set up a system to identify the last good, legit holder of a  particular mortgage title and let them foreclose on the property in question?

That would get rid of a lot of free-lunch perceptions and market distortions plus, since so many of these bad mortgages are ultimately owned by a handful of big banks, a lot of the bad title/good title discovery might cancel each other out.

HeavyHands's picture

Define "legitimate." If mortgage A is held by a particular beneficiary but serviced by B, there is no definitive paper trail. Only when the actual interest is transferred to another entity is a document recorded linking the two (if you're lucky.)

With MBS pools though, who owns the actual mortgage? Investor X who owns 10% of tranche BB? You might get lucky with CMBS documents listing multi-million dollar property but good luck with RMBS'. Not to mention the fact that lenders enjoy transferring notes back and forth between wholly or partially owned subsidiaries in order to generate fees.

Moving to a Torrens based land system might help matters as the recording office geniunely checks the chain of title, leaving the current holder as the only responsible party. 



atomicwasted's picture

How is it a technicality to expect an entity that's foreclosing on your house to actually prove it has the right to foreclose on your house?

I see the bigger issue out of all this mess being that MERS has completely screwed up the title system in this country.  Who really owns the note on your house?  How can they convey title to you if you sell the house or pay off your mortgage?  If no one can convey title to you, then you're stuck in your house pretty much forever.  So much for mobility when searching for a job, or retiring to a lower-cost area.

Bob's picture

This continuing meme of "just legal technicalities" is getting old, especially when it is repeated day after day by ZH regulars who should know better. 

Not that I too wouldn't love to get the nation's housing stock back into the hands of the banksters to whom it "belongs." 

Mercury's picture

Whether it's a technicality, premeditated fraud or somewhere in between, forgiving mortgages for millions of people who bought way more house than they could afford with little money down is even worse than socializing bad bank debts because it's more visible to average, working Americans.  It will be rubbed in their faces that they are fools to play by the rules, be prudent with their money and live within their means.

minus dog's picture

Technicality or no, you can't just let it slide.  There are a hell of a lot of your "average, working" Americans caught up in this, not just homeowners but those who own or work in businesses that have been crushed by the collapse of the housing bubble.

Do we have the rule of law or not?  I don't think we do, so I'm pretty sure they're going to try to let the banks off the hook for this one.  You're worried people will take it as a signal to just do whatever the fuck they want... we're past that point, EITHER choice is a signal to do so.  They WERE fools to play by the rules, because there is a different set of rules for the wealthy and the politicians, where there are any at all.

Mercury's picture

They WERE fools to play by the rules, because there is a different set of rules for the wealthy and the politicians, where there are any at all.

The rules are: pay your mortgage or your house gets taken away. Defaulting on your mortgage is not playing by the rules.  The banks aren't playing by the rules either. I got it...really...I got it -  but this isn't a zero-sum game where one party has to "win" and the other "lose." If, in any given case, the bank is trying to pass fraudulent paperwork AND the home owner is a deadbeat, they should both take it in the wallet.

Reggie Middleton's picture

You are forgetting to factor in litigation costs. With our legal system, it's not about right and wrong, but who can afford the most resources to bring to bear. Big banks are wealthy, but they may not be able to withstand a deluge of class action lawsuits.

tallystick's picture

A deluge of civil suits by individual homeowners acting Pro Se on their own behalf would destroy the banks by making them appear in more courtrooms than they can possibly afford to defend themselves in. All it takes is some good web resources to train MERS victims on how they can file lawsuit  and what to do.


For those who need a visual  see here:


The ants will feast on bankster before this is over.

apberusdisvet's picture

Reggie:  you have overlooked the fees due to the states and counties upon each transfer; MERS conveniently did not pay these costs, because in many cases that have been brought to light, only the first transfer may have been recorded, albeit fraudulently.  Imagine a RICO judgement for billions due the sand states; politicians are already salivating.

Mercury's picture

I'm not really looking to save the mega banks here.  They should have been euthanized two years ago via some sort of Resolution Trust Co.  I'm more concerned that the residential real estate market isn't further fouled up and artificially supported by the government in the form of basically forgiving mortgage debt.  It will turn neighbor against neighbor.

Furthermore, if some system isn't put in place to identify the last good mortgage title holder, new buyers would be fearful that their purchase could later be "undone" (like the SEC canceling wild HFT prints) if ownership of the previous owner's mortgage later comes into question. 

So, regardless of how evil/stupid the big banks are,  new moral hazards and broken market mechanics will be created if "the little guy" wins big here.

hbjork1's picture

Through the decades, the domiciles I purchased in verious states, required title insurance.  And a copy of the title status was included with the purchase or sale records.  Title, protects both the buyer and seller. 

Today's readily available computer data storage and power have enabled title lookup and printout, admittedly for a fee, but it is a title.  There is no doubt that title imformation, including precise lattitude and longitude location could be economically stored and backed up. 

The only thing that is missing in the establishment of a required nation wide system.  

Yes, more Big Brother, but it appears that we, the people, are not able to function without big brother. 

Of course, bundling mortgages for sale would be more cumbersome.  All that title data would have to go with the the bundled package.  But the law is the law and the individual cost, once the initial data was properly in place,  for computer transfer should be nominal.  I wouldn't even object to a national registry backup.   

This existing situation is crazy.  It is like what we once would call a "South American Banana Republic"  Quasi criminal intermediates, incompetient politicians and uninvolved (until forclosure) banking institutions disputing ownership, would not be able to get around the data base.

The lawsuits now under way are, IMO, a very positive development.  Hopefull people who hired the individual to falsely certify the documents would be subject to perjury charges as well as lawsuit.  

RockyRacoon's picture

Markets WILL clear.  That's the nature of the beast.  The objective will be not to get in the way of the spittle and claws.  Prices will find their levels regardless of the destruction the process generates.  If it appears that banks will again be bailed out to cover this mess there might be hell to pay from regular folks.  One never knows what the catalyst will be.  

Bob's picture

Not to mention the possibility of RICO, as the climate heats up for Barry and Eric Placeholder.  Yes, Reggie, I actually read your whole article. 


LadyH's picture

They must be dancing in the streets of Frankfurt.  First the Greeks loosen monetary policy for them, next the dumb americans screw up so much that the dodgy loans that their crappy banks bought by the thousand can be faxed straight back to New York with a refund request.

Reggie Middleton's picture

What the US has going for it is that much of the developed world is in a similar boat, just a little further upstream. Wealth is relative, and is not defined by how much money you have but how poor everybody else is!

hbjork1's picture

So True Reggie.

Real wealth cannot be separated from quality of life.  As we get older, interest in "things" abates.  The things that matter most are the people around us.  IMO, you can buy physical comfort but cannot buy the comfort of human associations that you respect and respect you. 

Money is a medium of exchange.  Money can only buy so much.  And no matter who we are we eventually leave it all behind.  That is why an endless stream of people like Rockafeller or today's Gates, Buffet and so on, tend to give it away.  It can secure a legacy and toward the end, that is what they really want.

Thanks for your postings! 





DosZap's picture

Amen Reggie.

All things are RELATIVE .................

Dagny Taggart's picture

You nailed it Reggie. Its all about who sucks less now. Sad that our standards are rated upon mediocracy. Thanks for all your hard work. If the TBTF even writedown their losses, you will have aided in keeping my family well fed.

Rogerwilco's picture

New marketing tag line:

MERS, fraud at the speed of light.

Bob's picture

Great, Reggie! 

ZH is on fire today!  This shows what a critical mass of the right people can do.

Prediction: The MSM will soon pick this stuff up. 

Again, great work.  Thanks.