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Some Very Bad News For The "Sweep Fraudclosure Under The Rug" Brigade

Tyler Durden's picture



Here is why this is relevant:

This was an Amicus Curiae brief (friend of the court) filed by the Massachusetts Attorney General Martha Coakley. (see attached)
Page 10:
“Plaintiffs’ claims that the Land Court’s ruling will cause widespread confusion or significant cost to innocent parties are greatly exaggerated, and such reasoning does not warrant ignoring the plain requirements of the law designed to protect Massachusetts consumers. Indeed, it is the foreclosing entities themselves who will bear the greatest cost of clearing titled from their invalid foreclosures.   Having profited greatly from practices regarding the assignment and securitization of mortgages not grounded in the law, it is reasonable  for them to bear the cost of failing to ensure that such practices conformed to Massachusetts law.”
Page 4-5:
“Rose Mortgage was the original lender for the Ibanez mortgage and Option One Mortgage Corporation was the original lender for the LaRace mortgage.  Rose endorsed the Ibanez note and property assigned the mortgage to Option One.  Option One then executed an endorsement of both promissory notes in blank, making each “payable to bearer” and negotiated by transfer alone until specifically endorsed.”  In both cases, Option One also executed an assignment of the mortgage in blank (i.e. without a specified assignee).  These blank assignments were never recorded and were not legally recordable because they failed to identify the assignee [cites state law].”
“After Option One sold the Ibanez mortgage to Lehman Brothers.  Lehman Brothers then sold the mortgage, together with hundreds of other loans, to Structured Asset Securities Corporation (“SASC”).  SASC then sold these loans to the Structured Asset Securities Corporation Mortgage Loan Trust 2006-Z, of which plaintiff U.S. Bank National Association (“U.S. Bank”) was the Trustee. All off the supporting documents concerning the Ibanez mortgage were placed into a “collateral file” and presumably were transferred between the entities listed above as each transaction was completed.  This collateral file contained the original promissory note, the Rose Mortgage endorsement of the promissory note to Option One, Option One’s blank endorsement of the promissory note, the mortgage issued to Rose Mortgage Inc., the assignment of the mortgage from Rose to Option One and Option One’s blank mortgage assignment”
[Goes through similar for the LaRace mortgage]
Page 8:
The Land Court was correct to invalidate the foreclosure on two distinct grounds.  First, the plaintiffs lacked the legal authority to conduct the foreclosures because they were not among the parties authorized to do so under either the statutory power of sale or under G.L.c. 244 §14.  Second, even if the plaintiffs had the legal authority to foreclose (which they did not) the foreclosures would still have been invalid because the notices issued by the plaintiffs failed to name the present holder of the mortgage as required under G.L. c. 244 §14.  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, one must be the original mortgagee or be the assignee under a valid assignment of the mortgage.  It is not sufficient to possess the mortgagor’s promissory note.  The Land court correctly held that the plaintiffs, U.S. Bank and Wells Fargo were not holders of the Ibanez and LaRace mortgages at the time of the foreclosure because they were not assignees of valid assignments of the mortgages.  Without valid assignments, the plaintiffs lacked the legal authority to foreclose the mortgages.  This, without more, is sufficient grounds on which to invalidate the foreclosures and the Land Court was correct to do so.”
Page 10:
“Plaintiffs’ claims that the Land Court’s ruling will cause widespread confusion or significant cost to innocent parties are greatly exaggerated, and such reasoning does not warrant ignoring the plain requirements of the law designed to protect Massachusetts consumers. Indeed, it is the foreclosing entities themselves who will bear the greatest cost of clearing titled from their invalid foreclosures.   Having profited greatly from practices regarding the assignment and securitization of mortgages not grounded in the law, it is reasonable  for them to bear the cost of failing to ensure that such practices conformed to Massachusetts law.”
Page 11:
“Plaintiffs had no legal authority to foreclose because they were not the original mortgagees, were not authorized by the power of sale, and because they lacked valid assignments of the Ibanez and LaRace mortgages.”
Page 12:
“Plaintiffs are not the mortgagees of the Ibanez or LaRace loans.”
Page 16:
“Neither plaintiff was authorized by the power of sale in the respective mortgages.”
Page 17:
The assorted securitization documents do not establish or compromise valid assignments.”
Plaintiffs contend that various securitization documents constructively assigned to them the Ibanez and LaRace mortgages.  Specifically, the plaintiffs contend that the Ibanez mortgage was assigned to U.S. Bank by way of a Trust Agreement that is not part of the record, but is purportedly evidenced by a Private Placement Memorandum.  They contend that Wells Fargo received the LaRace mortgage via a Purchase and Sale Agreement.  In each case, plaintiffs’ argument is without merit.”

The LaRace Securitization Documents
As the Land Court found, the LaRaces gave a mortgage to Option One when the loan was initially made.  Thereafter, Option One executed an assignment of the mortgage “in blank,” i.e., without naming the party to whom the mortgage was to be assigned.  As detailed above and by the Land Court, this “assignment in blank” was ineffective to transfer any interest in the mortgage.   Wells Fargo contends that the LaRace mortgage was assigned to it by the Pooling and Servicing Agreement it entered into with Asset Backed Funding Corporation (“ABFC”).  This agreement purports to transfer and assign all of the rights of ABFC to Wells Fargo.  However, there is nothing the record that ABFC had any interest in the LaRace mortgage.  Thus, even if the language in the Pooling and Servicing agreement was sufficient to transfer all of ABFC’s interests in the LaRace mortgage, the assignment would be ineffective because ABFC had no interest in the LaRace mortgage to transfer.”

Page 20:
“Not only did plaintiff’s lack legal authority to foreclose, but the foreclosures are invalid because the notices published prior to foreclosure are fatally deficient.”
-    G.L. c 244, §14 requires that the notice identify the “present holder” of the mortgage
-    Plaintiffs’ false identification of themselves as the “present holders” in their foreclosure notices renders the notices fatally deficient
-    Plaintiffs’ argument that they held the mortgages notwithstanding the lack of valid, written assignments as of the date of the foreclosures is unsupported by law.
Page 27:
“There are no grounds on which to limit the Land Court’s decision to future cases”
-    Plaintiffs request that if the Land Court’s decision is upheld, this Court limit its application only to future foreclosures.  This argument is without any basis in law and should be rejected.”
-    Notwithstanding the “industry practice” of subprime lenders and other who created mortgage backed securities, the statutory requirements at issue int his case are long –settled.


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Fri, 01/07/2011 - 11:38 | 856145 HelluvaEngineer
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BAC @ 14.45

Fri, 01/07/2011 - 12:08 | 856295 HelluvaEngineer
HelluvaEngineer's picture

14.07 (BTFD)

Fri, 01/07/2011 - 12:16 | 856333 JLee2027
JLee2027's picture

Jim Cramer was just pumping BAC last night.

Fri, 01/07/2011 - 12:28 | 856382 HelluvaEngineer
HelluvaEngineer's picture

Yeah, I actually saw that.  Unfortuntately.  Something about BAC owning more homes than anyone, and since housing was about to make a complete recovery...

What bothers me about his show is that lately his callers all sound like they are 65-75 years old and chasing return to save their retirement.

Fri, 01/07/2011 - 12:29 | 856394 Cognitive Dissonance
Cognitive Dissonance's picture

Or to stay retired.

Fri, 01/07/2011 - 12:38 | 856428 Salinger
Salinger's picture



WTF watching Cramer and reading ZH   talk about oxymoron

Fri, 01/07/2011 - 13:56 | 856730 Almost Solvent
Almost Solvent's picture

Assuming that's not sarcasm, one should keep their friends close and their enemies closer.

How can you defeat your enemy if you do not study its ways?

Fri, 01/07/2011 - 16:26 | 857357 TheProphet
TheProphet's picture

Yeah. Reading ZH is the Oxy... watching Cramer is the moron.

Fri, 01/07/2011 - 16:25 | 857360 TheProphet
TheProphet's picture

Yeah. Reading ZH is the Oxy... watching Cramer is the moron.

Fri, 01/07/2011 - 16:54 | 857437 JLee2027
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For the record, I didn't watch, I just flipped channels while making din-din. But I have in the past, it's a macabre fascination like watching a train wreck in slow motion.

Fri, 01/07/2011 - 12:29 | 856391 Cognitive Dissonance
Cognitive Dissonance's picture

Too much of Jim Cramer causes blindness. Oh, wait a minute. Mom told me too much of something causes blindness, but I can't remember what.

Anyone? Bueller? Bueller?

Fri, 01/07/2011 - 13:19 | 856565 carbonmutant
carbonmutant's picture

Cramer causes contradictory spikes in your neural net leading to memory loss which leads to a decline in various neurotransmitters such as Serotonin ( source of confidence). The other thing as well as drinking and excessive eating are attempts to boost serotonin back to normal levels.

Sat, 01/08/2011 - 01:16 | 858268 Cheesy Bastard
Cheesy Bastard's picture

Just do it until you need glasses.

Fri, 01/07/2011 - 12:17 | 856341 jus_lite_reading
jus_lite_reading's picture

The real news is that the Primary dealers submitted $25 BILLION into todays POMO!!


Fri, 01/07/2011 - 12:43 | 856449 Tom Servo
Tom Servo's picture

So I guess the false flag terror hit is going to happen soon, so to get this off the news (if it even makes the news....)


Fri, 01/07/2011 - 12:53 | 856484 HelluvaEngineer
HelluvaEngineer's picture

Why?  Looks like the /ES is bouncing now and this will all be forgotten by Monday.

Fri, 01/07/2011 - 12:55 | 856492 pan-the-ist
pan-the-ist's picture

When will the begin to investigate fraudulent mortgage origination?

Fri, 01/07/2011 - 13:33 | 856626 tsx500
tsx500's picture

uhhhh.....when will Megan Fox show up at my front door and unzip my fly  ?

Fri, 01/07/2011 - 11:39 | 856148 docj
docj's picture

Good call by the SJC.  Let's see if (hope) it's the start of a state tsunami.

Fri, 01/07/2011 - 12:28 | 856388 JLee2027
JLee2027's picture

Yeah baby.

Stop your MERS Mortgage payment now. They can't foreclose....because they broke state property laws and no longer own your home. It's yours!

Fri, 01/07/2011 - 12:40 | 856436 Arthor Bearing
Arthor Bearing's picture

Well remember that there are still quantum meruit (unjust enrichment) contract claims by banks against mortgagors as well as equitable remedies. Courts have broad power to remedy unfair results. But this definitely gives momentum to the homeowners and it's very helpful that there's SJC endorsement of weighing the bankers' profits into the unjust enrichment balance. 

Fri, 01/07/2011 - 16:57 | 857445 JLee2027
JLee2027's picture


The bank sold the mortgage and was paid by the buyer. There is no unjust enrichment, except by the bank...who sold junk that cannot be foreclosed on. I didn't do anything wrong. 

Fri, 01/07/2011 - 12:50 | 856471 Sig Sauer
Sig Sauer's picture

sorry, but your obligation doesn't just disappear.  best case is it is now an unsecured obligation.

Fri, 01/07/2011 - 13:44 | 856673 Skeebo
Skeebo's picture

Which means if you are willing to take a significant credit hit... you own your house free and clear.

What's the value of a couple hundred grand extra over several years in your pocket vs your credit score?

Course, you'd never be able to move again, but still... their could be an interesting cost benefit analysis run there, especially if you were say... in you were 65+ and liked your current home...

Fri, 01/07/2011 - 16:57 | 857450 JLee2027
JLee2027's picture

Me thinks the banks would be around much longer, and if you have enough of a PM stash you can in the future. 

Fri, 01/07/2011 - 17:00 | 857461 TeMpTeK
TeMpTeK's picture

Your Honor.. Im not saying I dont owe a payment.. Im saying I dont owe a payment to the Plaintiff...

Bye Bye MERS

Fri, 01/07/2011 - 13:12 | 856540 docj
docj's picture

Methinks you'd best to a very thorough title search before trying that little stunt.

Fri, 01/07/2011 - 18:42 | 857738 Strider52
Strider52's picture

So, who actually owns the home, since the title wasn't properly transferred? The last legal title-holder?

Fri, 01/07/2011 - 11:39 | 856151 ReallySparky
ReallySparky's picture

Virginia, there is a Santa Claus.

Fri, 01/07/2011 - 11:40 | 856155 FaithEqualsZero
FaithEqualsZero's picture

Is there an honest court still out there? Whats the catch?

Fri, 01/07/2011 - 11:46 | 856208 Cognitive Dissonance
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Supreme Court, Ponzi banks, Congress giving it all away, martial law, SEC Porn, DOJ is DOA etc. Take your pick which "catch" you wish to examine today.

Fri, 01/07/2011 - 12:01 | 856268 tamboo
tamboo's picture

An attorney was sitting in his office late one night, when Satan appeared before him. The Devil told the lawyer, "I have a proposition for you. You can win every case you try, for the rest of your life. Your clients will adore you, your colleagues will stand in awe of you, and you will make embarrassing sums of money. All I want in exchange is your soul, your wife's soul, your children's souls, the souls of your parents, grandparents, and parents in law, and the souls of all your friends and law partners." The lawyer thought about this for a moment, then asked, "So, what's the catch?"

Fri, 01/07/2011 - 14:17 | 856807 I Am The Unknow...
I Am The Unknown Comic's picture

Tamboo, that's the first time you made me laugh.  Believe it or not, I haven't heard that joke before.  I will be using it all weekend, and will mention you as the source.  Thanks. Cheers.

Sat, 01/08/2011 - 01:59 | 858315 zero-g
zero-g's picture

Nice, first good laugh of the day!

Fri, 01/07/2011 - 12:13 | 856317 NotApplicable
NotApplicable's picture

The kangaroo was out sick.

Fri, 01/07/2011 - 12:18 | 856339 LMAO
LMAO's picture

Whats the catch?


Well if this shit is going to stick (which I seriously doubt as the fine gov. of the USSA will be working on a backdoor deal in which the perpetrators will receive a thumbs up and carry on deal) and the mortgage/banking industry has to take a serious hit, the taxpayer of course will be forced to the rescue.

Business as usual.

Carry on, nothing to see here.



Fri, 01/07/2011 - 12:33 | 856399 JLee2027
JLee2027's picture

Federal Government can't do laws are state law; not a Federal issue.

We should all thank the Founding Fathers today. This was one of the protections built into the system.

Fri, 01/07/2011 - 12:51 | 856457 Widowmaker
Widowmaker's picture

Don't be an ass-clown.  Anything involving money is a Federal issue.   If your state is in the red it belongs to the Fed. 

They can, and will taketh away (pick any entitlement from highways to health care).

Fri, 01/07/2011 - 16:59 | 857456 JLee2027
JLee2027's picture

What kind of sad country are you from? That's simply not true in the United States. Real Property Rights are the strongest in the world here.

Fri, 01/07/2011 - 17:09 | 857477 TeMpTeK
TeMpTeK's picture

Over 200 years of well settled contract and property case law cannot be undone...without a revolution by morning..

Broken title is Broken title.. You cant stiff the locality of its filing/recording fees which are required by law....then try to get its courts to back u up.. Every DA in the country will defend its own couffers..The banks are Beat!


Fri, 01/07/2011 - 12:30 | 856401 MachoMan
MachoMan's picture

How the hell is it going to get overturned?  On some procedural issue?  The providence of recording acts and the like are held by states... 

If the feds want to implement a national solution, then it will only apply to prospective foreclosures...  further, it will probably overstep federal authority and be patently unconstitutional...  and, in that case, you can expect the SCOTUS to strike it down (yes, that SCOTUS).

That is not to say that any other state has to follow this decision...  as all have different rules...  but, it is clearly an important step in the process and, in all likelihood, the facts present in the ibanez case will be incredibly similar to those throughout the country, including the applicable land statutes.

Fri, 01/07/2011 - 17:12 | 857484 TeMpTeK
TeMpTeK's picture

Agreed.. A national solution would never pass muster..

Fri, 01/07/2011 - 11:42 | 856174 Jason T
Jason T's picture

should I but TOL before it gets upgraded because its been up the last few weeks?

Fri, 01/07/2011 - 11:43 | 856175 americanspirit
americanspirit's picture

Honest judges. Military intelligence. Both oxymorons.

Fri, 01/07/2011 - 13:17 | 856564 LFMayor
LFMayor's picture

Go stick that military intelligence cliche right up your ass, next to your head. Included is my most heartfelt junk, dicksmack.

Fri, 01/07/2011 - 14:07 | 856777 chumbawamba
chumbawamba's picture

Jeez, dude.  It's not like he's the first person to ever use that phrase.

Hits home, does it?

I am Chumbawamba.

Fri, 01/07/2011 - 11:42 | 856177 youngman
youngman's picture

I still think the Feds will intervene and put this to bed somehow.....

Fri, 01/07/2011 - 12:07 | 856283 Eternal Student
Eternal Student's picture

They will certainly try. The question is whether they will be successful. If the Feds don't try, they (I.e. we) will probably get stuck with the tab for the clean up, one way or another. So there's a huge financial incentive for them to try and change the law.

The problem here is that this is under centuries (at least) of Common Law. Common Law is what says that "the rain may enter your house, but the King may not". People in the Judicial arena really do take this stuff very, very seriously. And not just them. Many make a very strong argument that it is this type of law which separates success and failure when it comes to Capitalism.

So even if the Banks are able to get the law changed, it will absolutely be challenged, and any changes have a very good chance of being struck down.

Personally, I think the Banks are completely screwed. But beware a wounded animal, especially a crazy one.

Fri, 01/07/2011 - 12:35 | 856420 MachoMan
MachoMan's picture

All this means is that the notes are going to get put back on the originators or the first to securitize, whichever is latter...  which then entails them going out of business given the underwater nature of the collateral/debtor.  This leaves a few scenarios: (1) get a GSE to go ahead and be assigned the things to save the originators or (2) let them fail and have the TBTF (or wealthy private actor) come in and pick them up for pennies on the dollar, thus increasing their level of capitalization and systemic risk.  The size of the originator will determine which scenario occurs. 

Fri, 01/07/2011 - 15:29 | 857124 MaximumPig
MaximumPig's picture

My guess is that the fix will come in the form of an exception to the REMIC tax rules, which currently have severe adverse consequences for adding collateral to a REMIC trust more than 90 days after closing.  If the IRS (which is part of Tim Geithner's Treasury) creates an exception for these situations (i.e. where the assignments of mortgages to the trusts are flawed, leaving the trust without proper standing to foreclose), the banks can then go back and paper over the assignments properly, get the mortages into the trust, and then have a clear path to foreclosure.  It will still be time-consuming and probably a little more costly than now but it is not a wholesale wipeout of collateral as it currently is, at least in Massachusetts after this case.

Fri, 01/07/2011 - 18:28 | 857706 MachoMan
MachoMan's picture

I envison something like this for prospective foreclosures...  those that have already happened however are subject to some pretty damning precedent, which is increasing daily.

Fri, 01/07/2011 - 11:42 | 856182 Archimedes
Archimedes's picture

This will make Denninger very happy.

Fri, 01/07/2011 - 12:32 | 856408 VisualCSharp
VisualCSharp's picture

Do I detect a hint of bitterness? Should it not make anyone who believes in the rule of law happy?

Fri, 01/07/2011 - 13:05 | 856187 Byte Me
Byte Me's picture

Good news so far provided it develops momentum and doesn't just get rubbished by the MSM.

Also, with luck and dedication, perhaps part of the FIRE could be hungry enough to go cannibal?


The updated content indicates a very pissed off court. Interesting to see how the plaintiffs wriggle out from under this shitheap. Burn the forkers at the stake.

Fri, 01/07/2011 - 11:45 | 856188 Stoploss
Stoploss's picture

Who'd of thought that the words "banks" and "lose" would be in the same sentence? Eye's are happy.

Fri, 01/07/2011 - 11:49 | 856222 Cognitive Dissonance
Cognitive Dissonance's picture

Eye candy. Enjoy it while it lasts because Congress is back in town.

Fri, 01/07/2011 - 12:00 | 856257 nevadan
nevadan's picture

Exactly.  Put another way in this famous quote...

“No Man’s Life Liberty or Property is Safe…While the Legislature is in Session”

“No Man’s life liberty or property is safe while the legislature is in session”. Long attributed to Mark Twain and various other nationally prominent humorists, the quote is actually the invention of Judge Gideon Tucker, formerly of the New York legislature, and my source suggests it was soon appropriated by Mr. Clemens for his Twain persona. Whoever said it first, neither would have much to complain about if he used the number of days Congress is in session as a guide.


By Robert E. Freer, Jr., President of The Free Enterprise Foundation

from a quick google to see if it was from Mark Twain as I wrongly assumed

Fri, 01/07/2011 - 14:41 | 856909 gangland
gangland's picture

"man will never be free until the last banker is strangled with the entrails of the last politician"

Fri, 01/07/2011 - 12:15 | 856297 Problem Is
Problem Is's picture

I think this issue will stay alive because every state AG is claiming their counties recorder offices are owed a fee every time the TBTFs transferred assignment of the mortgage.

As you can see from the above ruling... this is many assignments on each mortgage.

States and Their AGs Are Deficit Desperate
States and counties smell a fix for their budget deficits by pursing the back recorder fees... States are desperate and they won't let this go until they get a settlement...

That Said
Congressional fucktards probably will pass a retroactive any robo fraud forged signature on a note is now notarized and legal bill... They'll call it:

The Consumer Protection and Mortgage Reform Act

Fri, 01/07/2011 - 12:16 | 856325 Cognitive Dissonance
Cognitive Dissonance's picture

In other words, it's not the rule of law that rules the day and the only reason to seek justice. It's the rule of the (county) pocket book that is compelling justice to be found.

So county justice is broken except when it can turn a fiat dime in the process. 

Fri, 01/07/2011 - 12:21 | 856350 Problem Is
Problem Is's picture

Don't forget it's the state AGs who will certainly skim their share before it trickles down to the counties...

Any justice for a citizen-serf defrauded is simply an unintended consequence...

Fri, 01/07/2011 - 12:39 | 856434 MachoMan
MachoMan's picture

This is how the whole thing gets undone.  When states' interest collide headfirst with the federal government...  the trick of course is getting enough juice on the feds to offset the states' dependencies...  at that point, the whole thing implodes.

Fri, 01/07/2011 - 12:20 | 856349 NotApplicable
NotApplicable's picture

They will have to pass a retroactive law (or create a settlement), because there is no legal mechanism to allow for the retroactive collection of filing fees for things never filed.

In other words, no legal assignment of title means there are no fees to collect. The state AGs would have to go after them for failing to make a legal assignment, not for failing to pay fees for something that never happened.


Fri, 01/07/2011 - 12:32 | 856395 Problem Is
Problem Is's picture

Good Point
I think the argument was when Congress passed the retroactive forged and fraud law (unanimous voice vote in the Senate douche-erary) that Obummer chickened out and did not sign in the lame duck session... then all those bogus assignments would become valid...

Disclaimer: I am no attorney... just a novice dick...

Fri, 01/07/2011 - 12:47 | 856459 MachoMan
MachoMan's picture

Right, but it wouldn't be able to affect any foreclosures that already occurred...  it could only have prospective application (presuming it was even valid).

Fri, 01/07/2011 - 17:34 | 857553 TeMpTeK
TeMpTeK's picture

Congress and the Obama enact laws only for the United States (DC, guam, American Samoa,Puerto Rico US Virgin Isl etc)... the 50 States of the union DO NOT fall within congressional jurisdiction.. The Feds are granted limited authority to regulate Interstate Commerce, which is narrowly defined and does not cover property disputes within the 50 states.



Fri, 01/07/2011 - 12:35 | 856416 VisualCSharp
VisualCSharp's picture

But how is it that counties are owed a fee for a transfer that did not legally take place? Counties cannot have their cake and eat it too. Either it was a legal transfer and thusly they are owed the fee, or it was an illegal transfer and they are not.

Fri, 01/07/2011 - 14:46 | 856930 cranky-old-geezer
cranky-old-geezer's picture

The Court is ruling the transfers we're illegal and is treating them as if they never occurred.  That's why the foreclosures were ruled illegal. 

I'm not an attorney but it seems the mortgagors now have massive civil remedies available to them and possibly criminal remedies.

Fri, 01/07/2011 - 12:45 | 856448 bankonzhongguo
bankonzhongguo's picture

Having been through my own Hell with Wells Fargo on this crap, at the end of the day they ask you; 'Did you get the money.'  "Were you able to buy and enjoy the property.'  TANSTAAFL! (I need more Heilein).  There is no free house.  Don't pay your mortgage, live for free, destroy your credit, but if you have a job and save your money maybe you can buy a HUD or Fannie foreclosure.  The "fair thing" and you get a Noble Prize for getting this out in the public policy sphere is to adjust mortgage debt organic to the value of the property on an on going basis - as a simple ratio - just like property taxes.  That sounds insane, but banks, investors and mortgagor need a mechanism to not lose everything when values drop so quickly.

Rest assured; between Reid, Holder and the Daly (lite) JP Morgan Borg, the little guy will get crushed again by non-executive action and a corrupt congress.

Fri, 01/07/2011 - 14:57 | 856967 cranky-old-geezer
cranky-old-geezer's picture

"... adjust mortgage debt organic to the value of the property on an on going basis - as a simple ratio - just like property taxes."

Never will happen. 

The entire financial system is held together by mark-to-myth where commercial paper values haven't dropped as market value of underlying assets dropped.

Mark-to-market (what you're proposing) would crash the entire financial system overnight.

By the way, property taxes are following mark-to-myth also.

Fri, 01/07/2011 - 11:45 | 856192 Bob
Bob's picture

Hope?  I'm all out.  How are they going to derail this?

Fri, 01/07/2011 - 11:51 | 856198 Cdad
Cdad's picture

America's favorite silver manipulation bank is down 1.3% and falling.  So maybe after they claw through this sticky wicket, the CTFC will hit 'em with the fire hose on that whole commodity limit thingy.

Sell the bad guys...banks that were pumped over the last three weeks to lift the Roach Motel [SPY] into year end.

Speaking of the Roach Motel, it would appear that the hangover stage is set now that criminal syndicate Wall Street bankers have drunk their fill at the open bar this morning where the bartender had been making tax payers supported Bloody Mary's.

I don't think a single being on the planet is lost on the form and nature of today's BLS report....



Selling pressure in the banks is increasing...

Fri, 01/07/2011 - 11:52 | 856233 SheepDog-One
SheepDog-One's picture

Lots of starlets hurlin up bloody marys...the wickets are getting stickier. I think I even saw Erin Burnett mouth to herself 'I dont know how much longer I can keep spewing this shit'. We'll see.

Fri, 01/07/2011 - 12:01 | 856261 Cdad
Cdad's picture

The killer blow will come...the nail in today's coffin...when the stud man USD, totally depraved and without an ounce of moral conscience, turns and ramps and presses in on Ben Bernanke's love child...which I anticipate will happen, indeed.

They will not hold equity pumps into this weekend as the consensus on risk is that it is amazing that they have kept the blanket over top of it this long...and risk is about to say, "Booooo!"

Fri, 01/07/2011 - 12:23 | 856363 NotApplicable
NotApplicable's picture

She'll just go to another CFR indoctination event to restore her faith.

Fri, 01/07/2011 - 12:11 | 856311 Cdad
Cdad's picture

Intraday bank capitulation has arrived.


Oil should now implode....

Fri, 01/07/2011 - 12:27 | 856380 Orly
Orly's picture

Along with the USDCAD pair...only the other way.


Fri, 01/07/2011 - 12:39 | 856432 Cdad
Cdad's picture


Depraved stud USD could really do it today...and take out the power supply at L. Blankfein Wildest Dreams Park [oil futures].  I cannot imagine a better market expression for Average Joe.

So let's all get together and push that bad boy over the edge.


Fri, 01/07/2011 - 11:47 | 856201 Implicit simplicit
Implicit simplicit's picture

The "Naked Capitalism" has bee following this and all foreclosure related issues religiously.

Fri, 01/07/2011 - 11:50 | 856227 velobabe
velobabe's picture

yes you are right, with that information, i received this email yesterday.

On Monday, I submitted your names and comments to all major bank regulators.  On a quiet Christmas holiday, over 17,000 of us signed the petition at and said that we want regulators to start setting rules on the mortgage servicers who put their profits over their obligations to investors, homeowners, and communities.

The petition generated real momentum, including coverage by Dylan Ratigan on MSNBC, deep participation with a great partner Credo Mobile, and lots of the major financial blogs.  And the Federal Reserve heard us.

You can watch the segment here:

Zach Carter of the Huffington Post just reported that the Fed has reversed its position opposing the regulation of the big bank servicers. A major FDIC official told Carter that  other regulatory agencies are "moving in our direction on the issue."

Read the article here:

When people pay attention, regulators act.  And while we haven't won yet, we're getting closer.


Yves Smith

Fri, 01/07/2011 - 12:05 | 856282 Beatscape
Beatscape's picture


Fri, 01/07/2011 - 11:46 | 856203 DarkAgeAhead
DarkAgeAhead's picture

Excellent if the headline is as implied.

The Rule of Law must stop the elites' push to bring a new form of feudalism (corporate) to the masses.  Eroding property ownership rights and law is key to this.  No coincidence that many in power try to create the illusion that financially renting rather than owning is the better strategy.  Yes, I understand economically that, at times, that's true.  My argument is based on levels other than economic.

Fri, 01/07/2011 - 13:00 | 856503 Widowmaker
Widowmaker's picture

Joke's on you. There is no rule of law on incorporated ANYTHING!

You're witnissing the largest heist on the planet and where is your precious law?

It's completely hollow on incorporated-fraud that's where. 

The heist was already complete with the first 787 billion.   The founding fathers, rule of law, state's etc LOST at that moment.  Everything since then is rearranging the chairs on the Titanic.

Fri, 01/07/2011 - 11:48 | 856218 Ahmeexnal
Ahmeexnal's picture

Doesn't matter. Bank won't lose. Any penalties will be more than made up for by the new fees to be instituted. Welcome to the caste system in banking:

Fri, 01/07/2011 - 11:56 | 856248 SheepDog-One
SheepDog-One's picture

And who will pay new fees? I clearly see here in my state the new taxation mechanism is handing out tickets, so I never speed, even check tail lights daily to ensure theyre ok. They can only squeeze so much blood from a turnip.

Fri, 01/07/2011 - 12:25 | 856377 Alex Kintner
Alex Kintner's picture

In CT, electric company just notified customers that the state will convert a surcharge on utility bills, due for phase-out, into a new tax to fund the bloated state budget.

In other news, you now need a license to fish in the ocean. I guess they need to cover the cost of stocking the ocean with fish.

And yeah, speed traps are now all the rage.


Fri, 01/07/2011 - 11:48 | 856219 the not so migh...
the not so mighty maximiza's picture

The bribe was sent to the wrong judge, damm it!!!

Fri, 01/07/2011 - 12:05 | 856277 chistletoe
chistletoe's picture

That's because the "Pay to the order of" field was left blank!

Fri, 01/07/2011 - 12:45 | 856453 Arthor Bearing
Arthor Bearing's picture


Fri, 01/07/2011 - 12:17 | 856340 Sudden Debt
Sudden Debt's picture

To who did we send the Hitman then?

Fri, 01/07/2011 - 13:15 | 856551 LFMayor
LFMayor's picture

You want the job, it's yours.  There are some study materials available from Paladin Press.

There are no hit men, until we all become one out of necesity.  Something like "Ich bin ein Hitman".

Fri, 01/07/2011 - 11:48 | 856220 Charles Ponzi
Charles Ponzi's picture

Trust me when I tell you that the Commonwealth of Massachusetts is merely playing games. I smell a State-Street backed attack on the hegemoninous Wall Street banks.

Beantown's Brahmins imagine a return to the glory days of old when her financial center rivaled New York's!  I have on very well placed authority that they sense this is their moment to strike!



Fri, 01/07/2011 - 11:54 | 856239 SheepDog-One
SheepDog-One's picture

I trust what you say, mainly because of the heavily waxed handlebar moustache. Here...take my wallet its burning a hole in my pocket.

Fri, 01/07/2011 - 12:28 | 856393 Orly
Orly's picture

Always delighted to have a laugh with you, Dog.


Fri, 01/07/2011 - 12:53 | 856483 Cdad
Cdad's picture


I need you to pull out the old faithful super LOL Dog comment on days like today.  You know it, right?

Hit me with it, brother!


Fri, 01/07/2011 - 12:46 | 856458 Arthor Bearing
Arthor Bearing's picture

Good, hopefully the banks eat each other enough that real people can assert themselves in the vacuum that's created. I for one am proud of my state today

Fri, 01/07/2011 - 15:08 | 857030 cranky-old-geezer
cranky-old-geezer's picture

Hmmmm.... does this ruling (almost) make up for Mass doing it's own version of Obamacare mandated medical insurance?

Fri, 01/07/2011 - 12:48 | 856469 Don Birnam
Don Birnam's picture

Verily -- the Signore knows of what he speaks. 

Fri, 01/07/2011 - 11:52 | 856229 velobabe
velobabe's picture

yeah, TAXachusettes†

Fri, 01/07/2011 - 11:53 | 856231 Beatscape
Beatscape's picture

I thought the TBTF banks were above the law?  Can't they just make it up as they see fit?  These losers who can't pay their mortgages are deadbeats-why should they be granted due process of law? 

I do this as a very pivital case.  Are the TBTF banks above the law?  So far they have been.  Let's hope that the rule of law has some integrity. 

Fri, 01/07/2011 - 12:51 | 856479 Alex Kintner
Alex Kintner's picture

When 'Rule of Law' interferes with the profit$ of the Morbidly Rich, they just change the law. Won't be long now.

If only they would just legalize pot so we could get stoned to watch the looting.

Fri, 01/07/2011 - 11:53 | 856232 Salinger
Salinger's picture

Ken Feinberg will soon be looking for a new job after the fantasic work he did in controlling Banksta bonuses  and reducing the BP $20B fund to just $10B - Ken would get this fixed up quick to the satisfaction of the courts and the banks

Fri, 01/07/2011 - 12:53 | 856480 Don Birnam
Don Birnam's picture

That's SPECIAL MASTER FOR EXECUTIVE COMPENSATION to you, sir. To borrow a line from Barbara Boxer, he worked hard for that title.

Fri, 01/07/2011 - 12:01 | 856250 Northeaster
Northeaster's picture

Decision here:


"Conclusion. For the reasons stated, we agree with the judge that the plaintiffs did not demonstrate that they were the holders of the Ibanez and LaRace mortgages at the time that they foreclosed these properties, and therefore failed to demonstrate that they acquired fee simple title to these properties by purchasing them at the foreclosure sale.

Judgments affirmed."

Fri, 01/07/2011 - 12:00 | 856266 SheepDog-One
SheepDog-One's picture

Basically the court concludes that inconvenience to the bank does not warrant overturning home owner protection laws. My God....whats this country coming to, has a shred of sanity taken hold??

Fri, 01/07/2011 - 12:11 | 856298 Northeaster
Northeaster's picture

The banks actually claimed "constructive conveyance" which is allowed under UCC, but that isn't the issue here.

Fri, 01/07/2011 - 12:49 | 856467 MachoMan
MachoMan's picture

GL arguing the UCC on a real property case :)

Fri, 01/07/2011 - 13:29 | 856607 Northeaster
Northeaster's picture

That was my point, sorry if I didn't state it correctly.

Fri, 01/07/2011 - 14:13 | 856788 NumberNone
NumberNone's picture

...but paperwork is hard.

Fri, 01/07/2011 - 12:03 | 856276 What a mess_man
What a mess_man's picture

Cue another back-door, TP funded bank bailout in 3...2....1

Fri, 01/07/2011 - 12:03 | 856278 beastie
beastie's picture

This is Big. I mean really fucking BIG. If it holds up then every poor slob who has been foreclosed on can fight to get compensation or their house back. Any mortgage written since around 2003 on is probably tainted.

If this gets traction then we are going to see real estate get valued at it's real worth pretty damn quick.

The real hero here is a Lawyer named Glenn F Russell. He has tirelessly pushed this case for years. Remember his name.


Fri, 01/07/2011 - 12:08 | 856286 Northeaster
Northeaster's picture

It will hold up, this is our highest State Court, and most property law is ruled under State Jurisdiction (in this case).

Fri, 01/07/2011 - 12:35 | 856421 JLee2027
JLee2027's picture

Yes, final appeal possible. This is BIG

Fri, 01/07/2011 - 12:09 | 856291 tao400
tao400's picture

All i can say is WOW!!!!!

Fri, 01/07/2011 - 12:09 | 856292 tao400
tao400's picture

All i can say is WOW!!!!!

Fri, 01/07/2011 - 12:07 | 856293 RobotTrader
RobotTrader's picture


JPM and WFC taking massive incoming fire....

Fri, 01/07/2011 - 12:20 | 856346 Sudden Debt
Sudden Debt's picture


Fri, 01/07/2011 - 12:10 | 856296 flagg707
flagg707's picture

Game on. 

Fri, 01/07/2011 - 12:09 | 856299 MacHoolahan
MacHoolahan's picture

Anyone hazard a guess at how much money the banks have tied up in this? I assume trillions, but would be interested if a more accurate figure was known....

Fri, 01/07/2011 - 12:11 | 856309 Northeaster
Northeaster's picture

If other courts use this decision, it will make the banks insolvent.

Fri, 01/07/2011 - 12:10 | 856302 Fearless Rick
Fearless Rick's picture

Another win for yours truly. This and the Allstate put back case and many other foreclosure cases in which the banks have been spanked goes into my brief, should I ever need to use it. BofA still hasn't moved my FC case from square one, which, in NY means another 90 days minimum before even a mandatory conference, then another 4-6 months of dithering and bargaining, and then we get to the fun stuff, discovery, recision, fraud upon the court (I have copies of robo-signed assignments), oh, and did I mention that BAC FKA Cuntrywide had no standing to sue in the first place because at the time I was served the mortgagee was... you guessed it, MERS, as nominee.

Think I'll start drinking early today.

Life's a bitch, then you become a banker, and you're a bitch.

-unidentified banksta

Fri, 01/07/2011 - 12:12 | 856305 SMG
SMG's picture

I think with with piece of news, the Baltic Dry Index, jobs, Ron Paul on the FED comittee, Austerity, employment, Target not doing well, Border's triggering a CRE meltdown...

Maybe just maybe the pullback/possible crash I have been waiting for over the past 4-6 months is very near.

Fri, 01/07/2011 - 12:14 | 856320 SMG
SMG's picture

Oh yea and Austrailian floods, Canada/China/ Austrailia RE bubble popping, margin squeezing, necessity inflation....

My God, how has it taken this long????

Fri, 01/07/2011 - 12:11 | 856310 Waterfallsparkles
Waterfallsparkles's picture

Real Estate Laws must be upheld.  Other wise we are in the Wild Wild West.  No one has the right to take away Real Estate rights without proper authorization.

This is a good decision.

Fri, 01/07/2011 - 12:13 | 856318 MacHoolahan
MacHoolahan's picture

Another question - if the banks can't show they own the mortgages - do homeowners *have* to pay them at all? 

Fri, 01/07/2011 - 12:17 | 856327 Cdad
Cdad's picture


Well, that is the question the banks are desperately trying NOT TO HAVE TO ANSWER now isn't it?

The NEW NORMAL makes it very hard to figure the answer.

Fri, 01/07/2011 - 12:24 | 856366 MacHoolahan
MacHoolahan's picture

:) interesting.... Am also curious as to how much of this legislation would pan out the same in the UK.

Fri, 01/07/2011 - 12:40 | 856442 Seasmoke
Seasmoke's picture

lots of people are finding out NO they do not have to pay their mortgages as they can not/will not be forclosed upon ......they may not be able to move and/or sell their houses but thats a small price to pay !.....i am actually amazed that anyone is still paying their mortgages at all


1st reaction is the banks will get themselves out of this mess by bribes or worse, but if you stop and think about it, by doing so they would be saying the rule on the ownership of ALL properties is not following the law that built the republic, then you can see how they may not be bigger than the issue at hand .....


my QUESTION, is how does this play on the townships revenues and who is paying the property taxes on all this ?....from what i can tell no one is talking....not the towns, not the banks and not even the homeowners , who might not want to rock the boat on their "good fortune"

Fri, 01/07/2011 - 12:54 | 856489 MachoMan
MachoMan's picture

The banks are not foreclosing in hopes that the defaulting homeowner will be on the hook for the property taxes and that, eventually, when the property is sold, the purchaser will be on the hook to pay the backed taxes.  This is what's being done now anyway.  The problem is that when the property gets certified to the state and the property sold via tax sale, then banks' hands off approach gets their interest in the property taken from them and a BFP gets clear title...  presuming they bother to petition for quiet title.  Banks have a duty to protect their interest in the property and, at a certain point, they lose by sitting on their hands.  Essentially, this is the issue that forces open the shadow inventory...

Fri, 01/07/2011 - 12:27 | 856387 NotApplicable
NotApplicable's picture

The promissory note still stands. What happens is the loan is now unsecured by the property.

So you can stiff them, destroy your credit rating, but still keep your house (until Congress acts, that is).

Fri, 01/07/2011 - 12:37 | 856430 JLee2027
JLee2027's picture

Act of Congress has no authority on state property law.

Fri, 01/07/2011 - 12:39 | 856435 SilverRhino
SilverRhino's picture

And if it is a non-recourse state then the promissary note holder is SCREWED. 

Fri, 01/07/2011 - 12:56 | 856493 MachoMan
MachoMan's picture

bingo.  Isn't cali one of those states?

Fri, 01/07/2011 - 13:15 | 856544 SilverRhino
SilverRhino's picture

These are all the mortgage walkaway trustee sale states, meaning they are non-judicial foreclosure states.
California (as long as non-judicial foreclosure is used)
District of Columbia (Washington DC)
Montana (as long as non-judicial foreclosure is used)
Nevada - note that the lender CAN get a deficiency judgment (See below)
New Hampshire
Texas (but even in a non-judicial foreclosure, the lender can pursue a deficiency judgment)
West Virginia

These are states that also allow non-judicial foreclosure, and/or where non-judicial foreclosure is more common and deficiency judgments can be obtained more easily:
North Carolina
Rhode Island
South Dakota

Fri, 01/07/2011 - 14:46 | 856936 MachoMan
MachoMan's picture

Non-judicial foreclosure simply means that the mortgagee does not need to involve a court of law in order to foreclose.  They set up a specific protocol which must be followed by the mortgagor...  and the property sold by private auction.

What I am talking about is non-recourse states.  Meaning, if a debtor defaults on a note payment and the debtor is underwater on the note, leaving a deficiency, then the banks cannot go after the debtor for the deficiency...  the property is the only thing they may recover...

Fri, 01/07/2011 - 12:38 | 856427 JLee2027
JLee2027's picture

Another question - if the banks can't show they own the mortgages - do homeowners *have* to pay them at all? 

NO. Who are you paying? You don't owe them...they screwed up.


Fri, 01/07/2011 - 13:00 | 856504 MachoMan
MachoMan's picture

The debtor has to pay someone.  The note is still valid, it's only the holder that is in question.  You cannot say for certain who should be paid until you are made aware of the chain of assignment. 

If you live in a non-recouse state, then fuck it, don't pay and see what happens.  If you live in a recourse state, you're going to have to pony up the monthly payments to the registry of the court if you want to get very far. 

If I was trying to foreclose, given this precedent, I would include the entire chain of assignment as plaintiffs and get the court to determine the proper party to foreclose and then foreclose...  rock and roll.  After the dust settles, the subsequent transferees can file a claim against the party that is determined to be the proper holder.

Fri, 01/07/2011 - 14:00 | 856741 Calculated_Risk
Calculated_Risk's picture

In a non-recourse state the lien holder gets screwed. If you have a second/heloc etc they will come after you. I've heard if the second forecloses on the house, the supposedly they can't come after because the laid claim to the property... but I'm not sure about that.


Fri, 01/07/2011 - 14:34 | 856882 Rotwang
Rotwang's picture

Another question is whether the bank ever gave any 'good and valuable consideration' in the first place. The amount in question was just created as part and parcel of their privilige. They channeled no funds. They created the funds on the back of the promissory note.

Fri, 01/07/2011 - 18:35 | 857722 MachoMan
MachoMan's picture

This has been discussed ad nauseum on this site by me and others.  The money was created, but it was created by another institution (the FED).  As a result, the originator did provide adequate consideration because it had to borrow the funds from the FED in order to make the loan.

This has been happening since creation of the central bank...  it's not like in 2011 someone comes up with a novel legal idea that no enterprising attorney in the last century could come up with...  you are parroting jibberish from some crazy ass website or have misinterpreted it.

Ask yourself this question, if your premise is true, how does any bank fail?  Why doesn't BoA just print itself a quadrillion dollars?  Or, to keep the facts straight, make quadrillions of dollars in loans?  [hint, it too has to pay them back...  in concept]

Fri, 01/07/2011 - 12:16 | 856319 DaveyJones
DaveyJones's picture

early in the game. this is only a state supreme court. The federal courts are where the real constitution bashing occurs.

Fri, 01/07/2011 - 12:23 | 856365 Northeaster
Northeaster's picture

It's not early in the game, this is the "end game" as far as Massachusetts is concerned. This was a STATE issue, not a Constitutional issue. It will allow other courts discretion if they want to use this for their courts as well. 

Fri, 01/07/2011 - 12:52 | 856481 Arthor Bearing
Arthor Bearing's picture

Exactly. It would take a constitutional amendment giving fed courts jurisdiction over property law in order to overturn this ruling. Which isn't out of the question. Remember, congress did try to ram through that notarization act when this fraud business began. If the banksters and politicians feel like the stakes are high enough they'll do whatever it takes.

Fri, 01/07/2011 - 13:30 | 856615 unununium
unununium's picture

Process for amending constitution is completely different and not subject to your normal railroading techniques.  Amendment must be ratified by 3/4 of state legislatures.

Fri, 01/07/2011 - 13:33 | 856625 Northeaster
Northeaster's picture

That Act made it to the desk of Obama under a "voice vote", so not only did both sides (Republican AND Democrat) agree on it, we have no idea who exactly voted which way.

Fri, 01/07/2011 - 14:31 | 856858 Bob
Bob's picture

IIRC, the vote was unanimous, but attendance was not recorded. 

Fri, 01/07/2011 - 16:08 | 857297 DaveyJones
DaveyJones's picture

yeah, I wasn't awake this morning. should have had some coffee first. Still, won't be surprised if the banks political around this. The law is so irrelevant these days.   

Fri, 01/07/2011 - 12:18 | 856336 Boilermaker
Boilermaker's picture

Sounds like it's time to pass some new laws and take this out of the hands of the courts.

Fri, 01/07/2011 - 12:19 | 856344 vote_libertaria...
vote_libertarian_party's picture

aaaand AAPL and GOOG are still green.


Must be because everybody will buy an ipad to google the court ruling.

Fri, 01/07/2011 - 12:19 | 856351 DonnieD
DonnieD's picture

Where's the Wikileak documents?

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