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Housing Crisis: Do You Know the Difference Between a Lien State and a Title State?
"On February 9, 2012, Attorney General Kamala D. Harris announced an historic $18 billion settlement with banks to bring relief to hundreds of thousands of home owners... "
Below is a link to an excerpt from the AEI event last week, "Bubble Trouble: Beginning of the End?" My presentation starts about 0:52 into program.
One of the reasons that the US housing crisis is not nearly at an end is that in the Northeast, where states require judicial action for a lender to foreclose, there is a backlog of years in processing foreclsores.
CA AG Kamala Harris wants to change CA into a LIEN state (I reversed the two in the AEI discussion) and make it like NY, NJ, PA. The safer way to refer to the difference is JUDICIAL vs NON-JUDICIAL states because there are subtle nuances in each jurisdiction. See nice map of the US c/o the Grabois law firm: http://title.grabois.com/
If Harris is successful in making CA a judicial state, the CA real estate market will be irreparably damaged and the CA and US economies will tank. Watch this closely.
I will be writing more about this in The IRA this week.
Chris
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After the Supreme Court KELO decision ownership of a home is questionable and individual rights versus corporations out the window.
Way the fuck off target on this one Whalen. Between lien states and title states, title stats tend to more closely uphold the rule of law. In other words, if you want to foreclose, then show me the fucking note.
In a system that fails to uphold the rule of laws and fraud remains unprosecuted, possesion rapidly becomes the fucking law. Just out of curiosity, what TBTF bank are you shilling for Whalen?
Fuck off.
Next step:
What is possession?
If my .50 cal outweighs your .30, do I get possession?
At least until you bring back your RPG.....
Are we Mad-Max?
What is the law, but the codified will of the people?
Sic: Do these issues affect enough people to care?
Na.
15% will lose their residences and some savings.
That leaves 85% watching the Final Four.
Exactly...a "wailen'" bank shill.
The diff -erence is ( Alpha-Delta)
I'm sure you learned that in business skool?
Because all those title states were the epicenter of the foreclosure mess...
Oh, wait. All the states with an over-the-top housing bubble were lien states. The states where the banks thought they wouldn't be able to just mail you a letter and say "get out!" had very subdued "echo" bubbles. The states that actually protect private property and didn't let the banks run roughshod over homeowners were the states that fared best. Funny about that.
And what good does switching to title state do now?
That reminds me of FASB: turn on mark-to-market in a bull market, switch back to mark-to-maturity/model/myth when the bear market arrives...
Malinvestment is a cancer that grows and festers. One cannot cure malinvestment with laws legitimizing malinvestment.
Same with fraud. One cannot cure fraud with laws or agreements legitimizing it.
And maybe the problem is that the petulent spoiled children in power cannot remain in power without malinvestment and fraud ... oh well, you screwed up, now step aside and let grown-ups take over.
It's not impossible for a lender to foreclose in a title state IF THEY HAVE TITLE. I agree Whalen is way off base. Once the regulators and the banks have failed to preserve property rights, the courts are the last chance.
The banks separated the note from the mortgage, then securitized the mortgage, scanned the signed note into a computer AND DESTROYED IT. The intentionally wrecked the title. Now they want to change regulations to bail them out.
It's funny but it boils down to the competency of the lawyer as well as the judge.
In non-judicial states the homeowner is the plaintiff, in judicial states the defendant.
In this one below, we are desperately trying to prevent an eviction. This was rubber-stamped by a "judge" who swiftly ordered a writ of possession.
US BANK PICKS HOUSE OUT OF HAT, DECIDES TO FORECLOSE, JUST FOR FUN
The Pooling and Servicing Agreement is embedded at the Hamlet link. It is very easy to see that this is wrong. US Bank Asserts Standing to foreclose in an illusion that would stun David Copperfield. Where did Wachovia go and why did they just disappear?
The family waiting to be evicted has just retained (very good) counsel. I think it's up to the Occupy folks now. They're camping in their yard in hopes of stopping the eviction.
This is all so very frustrating. I personally reached out to over 400 foreclosure attorneys to sue the secret AG settlement. There are tons of them moaning about the settlement on facebook and youtube.
Only 14 responded.
(I take pride in the fact that I was suspended from facebook after a very brief stint. It's silly.)
But it would seem that if they can't change the rules - they just continue to do as they please - as if they dare anyone to do anything about it. Bastards.
Whalen you are way way off base here !!!!!!!....and i usually like your info
why do you just skip entirely over fraud and following property laws.......whats the purpose of even having rules and laws if they dont have to follow them in the first place
it seems to me , it is actually one the few things New Jersey is doing right
Well said. I agree Whalen is off base.
Lien states, as Whalen describes them presume the lien holder is correct, has not erred and there is no fraud, bad accounting or other lender/lien-holder shenanigans.
Considering the MERS fiasco has clowded Title, and has raised serious questions about true ownership vs right to payments and right to foreclose, etc., moving to become a Title state until the chain of title has been resolved, seems imprudent, and maybe that's his point vis-a-vis K. Harris.
Until then, Judicial Review of lien foreclosures seem to offer the best combined solution.
Those that do not pay their mortgages do not deserve to remain in their houses, but similarly lenders that fail to maintain the perfection of their lien rights, do not deserve the right under law, to freely enforce the corrupted lien, and have no undisputed right to title.
What Is The Difference Between a Title Theory and a Lien Theory State? http://www.escrowhelp.com/articles/20000317.html
The idea that everythng needs to be expedited and whitewashed to reignite markets is a big big mistake. You paper over all the dry rot like they are trying to do and guess what, the rot just keeps getting worse. As long as there are people in the system who know they can get away with whatever the fuck they want, there is no point in getting involved with it. End of case...
Better off playing the lottery.
They want everything to be written on the back of an envelope. Their envelope.
....when the end justifies the means, cover your ass with both hands.
How will the CA real estate market be irreparably damaged and the CA and US economies tank if committing fraud becomes more difficult?
The whole fraud model doesn't seem to work well at all.
What am I missing here?
You haven't committed massive institutional fraud, so you can't possibly appreciate the benefits and how things like due process and having to get an order from a judge put a damper on your game.
WB-7 that was a ( comment)! Thanks for that fantastic post earlier! AWESOME!
Further evidence that in the U.S. - If you perpetrate a fraud big enough and bad enough that it is so widespread to overwhelm and complicate it with issues to confuse...you have then proven that crime sometimes does pay. Then...if your feet get held to the fire, take the 5th.
Further, the guy makes the allusion that doing something about fraud, as opposed to empty yapping, is a political ploy to get elected.
That would be a pretty good plank to run on in my book; just expect the pig men to max out campaign donations/bribes right to "fraud is good" candidates.
You seem to be one of those who think if we freeze everything as it is right now, it would be a perfect world.
Often this thinking is ingrained in the older generations, who never take the time to wonder how they would feel today if they were entering adulthood NOW.
Christopher Whalen clearly laid out in his presentation that he prefers market clearing forces over artificially clogged foreclosure pipelines.
You most likely only see the home buyer who was somewhat fraudulently suckered into buying an overpriced home with a planned-to-fail mortgage. And it makes me wonder if you think a postponed foreclosure really is a stable and sound situation for such a person.
But as Chris mentions you also have to think about the subsequent generation (or "investors") - those will soon not have any mortgages available to them (even sound ones with 20% down) because even on a clearly non-fraudulent mortgage the lender will be almost unable to ever foreclose again! By contrast if the foreclosure process is diligent and speedy, the lenders writing too many over-leveraged, unsound mortgages will fail, but the lenders making sound ones will prosper.
In other words Kamela Harris' proposal to make California become a Title state is today's equivalent of Prop 13 (1978) - it privileges the existing home owners and fucks over the future ones.
And now please tell me again why you cannot see a political ploy?
No one has adequately explained this business model to me. Why would a bank want non-performing loans voluntarily? Why would a bank want to be in the foreclosure and real estate sales business when they classically have avoided it?
This whole thing reeks of government, FHA handing out bonuses for any business Frank Raines could dummy-up. It was all allowed by politicians who got big contributions. The banks seem to be unwilling participants now seeing a chance go get out from under the shit storm.
This is a good question.
In the Real Estate hay day, back when they weren’t making any more Real Estate, money started looking for people.
The money was looking for people for one reason and one reason only.
I’ve said this before (aided by the clarity of hindsight) but the sociopaths had the vision to see this coming and acted accordingly. Presently, there isn’t much left to steal except debt.
How do you steal money from those who don’t have any?
Simple. Just give it to them.
It was the perfect crime.
While keenly focusing on the fact that no one was making more Real Estate, it was “Triple A” safe to assume the value of Real Estate would never do anything but go up.
That “conventional wisdom”, often called “speculative”, “irresponsible” and “reckless” nowadays, was repeatedly and professionally affirmed by experts (lenders’ agents) in the form of property appraisals.
The zenith of the heist is the appraisal and exemplifies the brilliance of the perfect crime.
Precisely at that moment, the vaporous, phantom, wealth of debt is born
Fast forward…
Actually there is plenty of Real Estate and it never does anything but go down in value. In keeping with the state of affairs we find ourselves in; we are forced to re-examine the definition of “value”.
Once upon a time, the value of something was a direct corollary to what someone would pay for it.
Not anymore. Value is defined in a cell on a spreadsheet[s] and one that never budges. That would be the inflated, outcome-based appraisal value.
Enter the Credit Default Swap. (Feel free to call this what you like; just don’t call it insurance. If it’s called “insurance”, theoretically it would be regulated as such. Contraption works fine.)
Buying and selling these “insurance contraptions” was especially lucrative and worked like a charm for a few, but was really bad for many.
You see, there was never any intention by these “insurance contraption” companies to actually pay, much less have the ability to pay any of these claims with their own money.
The only logical and prudent thing to do, absent any other possible option, was to once again foist this on the sap of last resort, the taxpayer. Translation: the “insurance contraption” companies got bailed out, and coincidentally, can’t really account for much of their bailout loot.
Fortunately for TBTF, the taxpayers are busy pointing fingers at each other, exactly as planned. They are laughing at us. Oh, and as a bonus, we now have clouds over millions and millions of titles and wild deeds as far as the eye can see.
In this upside down world, lenders have found a way to profit more when loans are not paid back. Lenders get paid by insurance contraptions (and still get bailed out), insurance contraption companies get bailed out, and everybody gets to blame the original deadbeat borrower who is out in the street holding a 1099 because they want the house too.
Unless I'm mistaken, the popular phrase "Too Big To Fail" refers to the banker men.
On paper at least, they're doing pretty good. It's the beleaguered 99% that have taken the beating.
If this is a political ploy; it isn't a very good one because Harris will be attacked and villified by TBTF dirty tricks and their campaign donations.
How the heck can you call making a change to a Title Theory state a "freeze"? Wouldn't "melt" be more appropriate?
You also suggest that subsequent generations will suffer if we legitimize fraud???
What makes you sure this isn't going to get worse? You're making a supposition we can just flush this toilet and it will magically refill with clean water instead of just refilling itself with more shit.
So far, all the economic insults have hit the bottom of the ponzi food chain. The fatal financial bludgeon will be the 1099.
Hello Alice...
[FWIW...I'm not the one throwing junks around]
How can it be a "melt"? It is a clogging the foreclosure pipeline, nothing else. And it does nothing to address the underlying problems.
Oh, and what Kamela Harris is alleged to propose would delegitimize or even prosecute fraud??? How exactly?
And ask yourself if you're sure you don't want to apply a little "two wrongs make it right" here, plus a little extra wishful thinking.
You obviously didn't read the PSA I linked above.
Look, we're just not going to agree. That's fine.
You would evict that family and I would not.
Huh? I cannot see any link in a post of yours.
Edit: oh, down there.
The difference is I try to plead for systemic good laws, and you are pointing out single example of things gone wrong.
We will never get on common ground that way.
Who would you pay?
If you think this is isolated; I think you are being genuinely insincere.
FWIW: It's easy to get the wrong impression about Whalen from this tiny excerpt.
He's stated multiple times (and he sounds sincere about it) that you have to restructure all the big banks. Now I don't know for sure if that means (to him) what I'd take it to mean, but for sure, it means the TBTF has to end and the balance sheets have to be cleaned up.
I'm in perfect agreement on that. IF we want market forces to be permitted to operate, it means all the insolvent big bank shareholders get wiped out, all those banks get shut down and placed into trustees' hands, and everything gets liquidated to cover deposits. Houses, debts, etc.
Nothing wrong with that picture in my view. And yes, there are tons of examples of banks committing fraud NOW because they know they've got a good shot at getting away with it.
If all the banks are already "dead," there's no motivation for them to lie/cheat/steal to survive.
(I admit, I find Whalen's partisanship a bit dismaying, but he's older, maybe it's brain calcification from awhile back. To each his own.)
Who would you pay? US Bank? Wachovia? Ocwen (the servicer)?
US BANK PICKS HOUSE OUT OF HAT, DECIDES TO FORECLOSE, JUST FOR FUN
I don't know these people but I do know they have little kids. So much for that future generation...the sheriff is gonna throw them and their toys right in the street.
The house will likely languish empty for years until it becomes a moldy hazard with bad title.
How exactly did you turn this into Whalen vs. a handpicked family, when it was Whalen vs. Harris at the start?
How do you know what Whalen proposes would make things worse for the family?
How do you know Harris' proposal would make it better?
Would any effects be long-term, and sustainable in large scale?
Also I am still waiting for the slightest mention or examination of the motives and intentions of Kamela Harris.
Why isn't Harris prosecuting some deserving people?
Are you, after reading ZH for over a year, still taking it hook, line and sinker that a democratic female DA is automatic a good person, so Whalen criticizing her must be the bad guy? No questions on side effects or long-term consequences - dogooderism at its finest?!
That's a reach.
I don't support Kamala or any of the other 49 AGs who signed on to this monster.
(The lone holdout thought the settlement was too tough on "Too Big To Fail")
In fact, I advocate suing them all under equal protection of the law described in the constitution.
50 STATES FILE NOTICE OF INTENT TO INTERVENE IN MORTGAGE FRAUD SETTLEMENT
I don't find Whalen's argument that speeding things up as an equitable remedy very persuasive.
In the long run, should we follow his logic, the problems will only get worse.
You paper over all the dry rot like they are trying to do and guess what, the rot just keeps getting worse...
Unfortunately, there does have to be a reckoning of degree of severity. While it's true, many signatures were applied to documents attesting to fabricated incomes prior to Linda Greens being afixed, those responsible for the inducements, reaping rewards and currying favor due to their positions of authority are more culpable for their conduct, imo.
Back when the US was a christian nation, the admonition by Jesus that the one causing the least of these to stumble would be better off with a millstone tied around their neck and thrown in the ocean would be an applicable point of reference.
I can say the comment re: dry rot is correct. I used to inspect homes for wood destroying organisms in CA during the hayday of housing craziness and witnessed first hand the phenomenon in the central valley. Dry rot never goes away on its own. It can be stopped when the conditions for its growth are removed, but it can remain 150 years or longer, waiting for the correct combination of moisture / ventilation to return in order to digest and weaken the cellulose it has attached itself to.
"Remove and replace" was the state mandated recommendation whenever the finding was made.
the problem is where...where is better and not under the heal of the USA. Good luck, you may find expats may be unwelcome or highly taxed at some point.
It's not 'heal' as in the fiction of Obama care or that Uncle Sugar is going to take care of you, it's 'heel' as is the jackboot on your neck or that you've been leashed and brought to heel.
If you look, you will find quite a few pockets left in the world where the US is not that interested.
Besides which, it is an empire teetering on collapse. It's reach will not be extending too much farther in the future, and will be foreced to withdraw. Whether this happens quickly or not is a question. It could take decades.
I'm not so concerned about the taxing of expats, as if it comes to that, I won't be one.
This is interesting, and important to many, but I have reached a place where I no longer care about such things in the same way I used to - As it misses the big picture.
The market is broken, the regulatory morass of the federal government, states, counties and municipalities is unnavigable (except by the moneyed or the connected), the judicial system is for sale to the highest bidder, our money is debased at will by the press of a button, our Constitution and Civil Liberties are ignored or flouted... Our country is on a fast track to fascism.
My only goal now is to help bring a peaceful revolution in which Liberty (and sanity) is restored to our Republic - or expatriate if it nosedives to fascism.
I will work to restore The Republic while it seems there is still hope, but I will not live in a high-tech North Korea. If Liberty is eventually restored, I will bask in it. If it is not, you who choose to remain are welcome to it.
Since fascism is ubiquitous and inevitable, let us have Compassionate Fascism. Please.
There's no such thing.
imho.
You might as well expatriate now then. There is nothing in history or prophecy that leads to the conclusion that the restoration from fascism to Liberty can be done peacefully.
India did it (relatively). I think it's easier with an empire in decline.
expatriate to where?
Anyplace that is remote, and preferably sparsly populated.
Do some looking, there are places to "escape" to. Dimitri Orlov is planning on spending the collapse on a sailboat.
Got a list of places because right now I don't see a single viable expatriation destination.
Paraguay, Gran Chaco region can be a good choice if you want to 'get lost'. Sparsely populated, cheap land with largest in the world fresh water wetlands (shared with Brazil and Bolivia). The Bush family purchased nearly 100,000 acres ranch there back in 2006. The downside is that it is a kind of a frontier Wild West environment and thus not for everyone.
US$5,500 equivalent in Paraguayan currency (guarani) deposited in a Paraguayan bank and a clean criminal record from your country of expatriation, makes you eligible to get a residence there. More info available here, too. Last year over 5,700 Americans immigrated to Paraguay, in addition to 17,000+ Poles, 15,000+ Germans. The country has very low taxes. More on Paraguay here.
There are plenty if you don't require them to speak English.
facism has been on the rise for 30+ years. Really it has been on the rise since the inception and passage of the federal reserve when your rights as a citizen were replaced with weaker rights as a tenant of the Corporation of the United States. One of the reasons this was allowed was because the banking class and government promised to maintain a gold standard. Implying that at least some level of law and value would be maintained (no banker would secretly steal your wealth via printing).
I travel around the country and world a fair amount and see a clear move by most people to aquire physical assets of all kinds. The bottom line is simple; Unless you are in that 0.1 % that is close to the "free money" your liberty and wealth are being confiscated at an alarming rate. Basically if you can not put your hands on all your "wealth", it isn't real and has probably already been stolen. Possession is the law now.
With so many people at the top and bottom having a vested interest in keeping the ponzi going (notice that folks in the middle are really the ones who get screwed and don't have a private island to go to when the end game comes) I don't see it ended anytime soon. Great opportunity, but you had better hedge accordingly. No way the standard of living for most (energy flux prevents this, period - the Fed can not suspend physical laws). Eat your peas and your pink slime, because unless you are growing the damn peas and producing the meat yourself, you are damn lucky to even have access to them.
...GET OUT OF MY HEAD!
Seriously though, that's my thinking almost exactly.
Prepare accordingly, and have a plan "B". For me "A" is be in real assets (beans, bullion, bullets, bandages, tools, etc.), gardening, off-grid technology, community networks, stockpling commodities useful for barter, etc.. "B" is expatriation. "A" makes "B" possible.
That makes me optimistic, thanks.
So far so good for me and mine. Good luck.
great posts
Ps. I planted 200 pea plants