Guest Post: Houston, We've Got A Problem - Bevilacqua
Submitted by Greg Lemelson of Amvona
Houston, We've Got A Problem - Bevilacqua
On Oct. 18th, 2011 the Massachusetts Supreme Judicial Court handed down their decision in the FRANCIS J. BEVILACQUA, THIRD vs. PABLO RODRIGUEZ – and in a moment, essentially made foreclosure sales in the commonwealth over the last five years wholly void. However, some of the more polite headlines, undoubtedly in the interest of not causing wide spread panic simply put it "SJC puts foreclosure sales in doubt" or "Buyer Can't Sue After Bad Foreclosure Sale"In essence, the ruling upheld that those who had purchased foreclosure properties that had been illegally foreclosed upon (which is virtually all foreclosure sales in the last five years), did not in fact have title to those properties.
Given the fact that more than two-thirds of all real estate transactions in the last five years have also been foreclosed properties, this creates a small problem.
The Massachusetts SJC is one of the most respected high courts in the country, other supreme courts look to these decisions for guidance, and would find it difficult to rule any other way in their own states. It is a precedent. It's an important precedent.
Here are the key components of the Bevilacqua case:
1. In holding that Bevilacqua could not make "something from nothing" (bring an action or even have standing to bring an action, when he had a title worth nothing) the lower land court applied and upheld long-standing principles of conveyance.
2. A foreclosure conducted by a non-mortgagee (which includes basically all of them over the last five years, including the landmark Ibanez case) is wholly void and passes no title to a subsequent transferee (purchasers of foreclosures will be especially pleased to learn of this)
3. Where (as in Bevilacqua) a non-mortgagee records a post-foreclosure assignment, any subsequent transferee has record notice that the foreclosure is simply void.
4. A wholly void foreclosure deed passes no title even to a supposed "bona fide purchaser"
5. The Grantee of an invalid (wholly void) foreclosure deed does not have record title, nor does any person claiming under a wholly void deed, and the decision of the lower land court properly dismissed Bevilacqua's petition.
6. The land court correctly reasoned that the remedy available to Bevilacqua was not against the wrongly foreclosed homeowner but rather against the wrongly foreclosing bank and/or perhaps the servicer (depending on who actually conducted the foreclosure)
When thinking about the implications of Bevilacqua – the importance of point six cannot be overstated.
The re-foreclosure suggestion is not valid
Re-foreclosing on these properties in not likely as has been suggested by bank layers in light of the Bevilacqua ruling. We aren't talking about Donald Trump here and we have a funny feeling he won't be affected either. Mostly it's guys like Bevilacqua who bought single or multi units, in the "hundreds of thousands" range. It seem unlikely that the majority of these folks would have the capital to eat their existing loses, re-foreclose at great expense, and on top of all of that come out as the highest bidder on the very property they formerly thought was their own. In many cases, as was the case in Bevilacqua, the original purchaser of the foreclosure may have already resold the property and moved on, thus leaving in their wake an even more serious problem; the likelihood of a property owner, who had nothing directly to do with a foreclosure, but is left with all the fallout of a post-Bevilacqua world.
Re-bidding on these properties in a re-foreclosure scenario would be done in what is soon to be a new inflationary environment (most originally bid in a deflationary environment for housing), thus making the "re-foreclosure" blank threat all the more unconvincing and unlikely.
However, it should be easy enough for investors similarly situated to Bevilacqua to simply hire fee contingent attorneys who can sue the banks and servicers for conveying fraudulent deeds – that seems like a much easier and logical proposition. When the potentially millions of lawsuits are added to the complaints filed by investors in MBS, we think the banks will finally be revealed as wholly insolvent. The only other way it could happen faster, is if the average American home owner, realizing he may never obtain clear title to his home (short of an indemnity from his bank), finally stops making his monthly payments on his invalid note (which completely lacks a valid security instrument). In this way, the existing insolvency of banks would be recognized in a matter of days rather than months or years.
The act of denial does not actually alter reality
Ostriches are said to have discovered this the hard way. On November 12th, 2010 in our article "Tattoos, Pyramid Schemes and Social Justice" we advocated that home owners, with securitized mortgages, regardless of their ability to pay, consider suspending their mortgage payments, and place those funds into a private escrow account instead. We wrote:
"Radical though it may seem, we believe the only way to stop the chaos of fraud and the breakdown of the rule of law in our courts, and most importantly to ensure that we ourselves are not participants in the fraud, is for homeowners who can afford their mortgage to stop paying it..."
The article goes on to say:
"For example, what is easier; to scorn those who are being foreclosed on because they can no longer afford their mortgage or to accept the possibility that our entire financial, and maybe justice system might be badly corrupted? Across all spectrums of crime, victims are often blamed, just ask attorneys who represent rape victims. This phenomenon is by no means unique to mortgage fraud, or those who have been raped by the institutions who carry out this trade. It has been made to appear as if those who have fallen on hard times are a matter of "incidental" inequalities in an otherwise procedurally just system. However, it is precisely the opposite which is true. Our financial institutions have created deliberate inequalities, through the use of procedurally unjust systems."
We pointed out that suspending such payment might be done for the following reasons, which in light of the recent Bevilacqua decision, and the pending Eaton Decision, are increasingly being proven correct:
"1. They are not sure where or if their payments are going to the true note holder.
2. They no longer know who the true note holder is.
3. They have a legitimate concern that they may not be able to ever obtain clear title and/or title insurance (in the event of a sale) given what we now know about improperly conveyed titles and the illegitimacy of "MERS".
4. They do not want to be an unwitting or passive participant in fraud.
5. They care about America, want our culture to be healed and recognize the dignity of every human being."
Long before the Ibanez decision was handed down we wrote the following (taken from the same article):
"If these legitimate reasons are the cause to suspend mortgage payments, then what attack on these "non-co-operators" character can be levelled? In these cases, Judge's will have to allow for proper civil procedure to take place in order for the legitimate inquiries of concerned Americans to come to light. Since banks virtually never produce adequate documentation (which appears to be by design), chances are things will escalate."
We went on to discuss the unique risks of apathy and denial in the following:
"...Americans have a duty to ask critical questions about the operations of their financial institutions, and if evidence has been presented that a deal was made, but not everyone was playing by the rules, than those deals need to be looked at again. It is not good enough any longer to say, if it doesn't affect "me" than, I'm not getting involved. We have a duty to one another as Americans, and more importantly as human beings, to care about truth and justice. What's more, apathy, so long as we are not affected, is a short lived consolation. Ultimately, this crisis will affect everyone sooner or later."
Certainly when the SJC handed down their opinion affirming Bevilacqua, perhaps hundreds of thousands, and ultimately millions of people who previously thought they were not affected, were suddenly well, affected. That is because there has been about six million foreclosures since the current economic crisis began, and those foreclosures may have resulted in many more interested parties, as was the case in Bevilacqua, who sold the subject property to four new owners, thus multiplying the number of parties involved, and ultimately the number of legal actions which could be brought. It is not hard to see where six million voided foreclosures might well result in new lawsuits in excess of that number – and if the courts advice is taken, these complaints would be directed, and properly so, at banks and servicers.
We expanded greatly on the themes of fraud, denial, and the likely economic consequences in our articles "Ibanez – Denying the Antecedent, Suppressing the Evidence and one big fat Red Herring" and "Eaton – Dividing the Mortgage Loan and Affirming the Consequent" which covered the other two recent landmark SJC cases - these may be worth reading in tandem with the present article in order to understand the full breadth of the problem.
In the Ibanez article, which was written in January of this year we wrote the following:
"If you live in Massachusetts and your mortgage has been securitized, or if you have purchased a foreclosure property, we think it would be wise to consider suspending your mortgage payments if you haven't already."
We believe these particular words have become incredibly relevant given the implications of Bevilacqua.
Finally, In our article "On the ethics of mortgage loan default" we tried to cover any outstanding inhibitions homeowners might have about the advice we were giving.
A few phone calls opens a whole new world
We decided to call a few title insurance companies to get their "take" on it all. We made the mistake of identifying ourselves as "bloggers" in the first phone call – that call may well have set a new land speed record for the fastest time from answering to hanging up. Thinking there might be a smarter approach, we decided to identify ourselves as homeowners (equally true) on the next call – the results were a little better, but only slightly.
The underwriters and title examiners we spoke to kept asking if we were attorneys, or if we represented the home owner as "council". We thought this was curious because we kept pointing out that we were ourselves just homeowners. Then it hit us, they have never actually spoken to a real, live, breathing customer on the policy origination side, they had only ever spoken to lawyer-brokers. We thought; what an interesting confluence of incentives this must create, and why is the buyer of the policy necessarily so far removed from the seller?
Follow the money trail – that's what they say. Looking for answers, follow the money trail. What is the one piece of the equation upon which all else hinges? It's not the lawyers, it's not the judiciary, the answer lies in the investment banks – but they must first pass through the gatekeepers of real estate; title insurance companies. To understand the problem does require some understand of law, but really mostly it's an understanding of finance and of business that is required above all else. Money in this case, cannot pass from bank depositor, to banker, to bank borrower in real estate transactions without the all-important "title insurance policy".
So maybe there will be a happy ending after all, for once upon a time didn't the likes of AIG insure a whole lot of CDS's for Goldman Sachs who was then paid 100 cents on the dollar (in a 43 cents on the dollar world)? That worked out well – just think of the benefits of insurance - AIG is still around, Goldman's stock price went on to quadruple in the following 18 months. The cost was relatively low, and mostly out of sight - voluntary shareholders in AIG were emancipated from their money-investment in AIG stock, and were swiftly replaced with involuntary shareholders – also known as; tax payers. It's the bankrupt companies definition of "preferred" shareholder – although it veers slightly from the traditional one.
So does it matter what lawyers, bankers, bloggers and judges think? This is America and America is all about business, and in this case, business cannot be transacted without title insurance companies, and the good thing about insurances companies is they have actuaries, and actuaries calculate risk, this is especially important since the banking community has proven that they either cannot calculate risk or are not interested in doing so. Actuaries are not exciting people, they are number crunchers, they don't do bridge jumping and they would never take inordinate risk, right?
The insurance business is interesting, even if their actuaries aren't'. That's because it's really not about making money off writing policies, anyone who knows the insurance business (or has read a 10Q, an annual report or listened to a conference call of one) knows that insurance companies make their money from investing the "float", that is to say the funds held in trust between the time policy revenue is paid in, and the time claims are paid out. It's a good business, in fact it is so good – almost everyone wants in. this business has become so robust that it even supports its own cottage industry in off-shore jurisdictions where the return on the "float" can even go untaxed - or did you think those insurance executives jets just happened to have Bermuda, The British Virgin Islands, and the Caymans stuck in their GPS just because those places have nice beaches? Although we concede they also have very nice beaches.
Needless to say it's an even better business, when you almost never have to pay out on a policy. Title insurance is unique in that way. Even the SJC conceded in Bevilacqua that this sort of "Try Title" action had not been presented before the SJC in over a hundred years. In fact, business is so good, that there is really no entry on the Profit and Loss statement of these firms for marketing expense – when was the last time you saw a TV ad, or an AD on the Internet for a title insurance company which had a better product at a better price? There is no Geico Gecko for the title insurance business. For that matter, don't hold your breath on finding a deal on title insurance through Groupon either.
This piqued our interest. We were so drawn to the prospect that the answers to a multi-trillion dollar question may lie in this little known, little observed, obscure industry that we decided to pick up the phone and call a few title examiners, underwriters and brokers. What we learned was nothing short of fascinating. First they all clammed up and didn't want to talk SJC cases. Second, they affirmed, after a bit of cajoling, that they will write a policy if any servicer gives them a "pay off" letter – we're talking a one page letter from one perfect stranger to another – insuring ownership in hundreds of thousands if not millions of dollars in real property (per transaction), and of course trillions at the nation level. This one pager could then be recorded at any local registry with precisely zero oversight.
In a world where you can't take hair conditioner on to a flight (even in all your barefoot glory), it turns out anybody can record title to a property worth large sums with absolutely no oversight or security checks. Frankly, we're beginning to feel like we've been in the wrong business all these years.
When pressed on the Eaton case, and the fact, that servicers cannot actually discharge anything (as Green Tree Servicing, LLC admitted in the uber-important Eaton case), certainly not the debt, most hung up the phone quickly – although we were exceedingly polite, professional and even gentle in our approach. These conversations, where something like being in the twilight zone. Just when we thought we had contemplated the last layer of the onion, we couldn't believe it, with just a few phone calls, the matrix of lies came streaming down before our face yet again, like vertical lines of green computer code – apparently the underwrites took the wrong pill.
How hard would it be for the title examiners and underwriters to simply go deeper than one page, or contemplate the importance of the decisions coming out of the land court and the SJC?
The failure to perform risk assessment in the insurance underwriting business really means a lapse in fiduciary responsibility. The Absence of fiduciary responsibility means the possibility of shareholder class action lawsuits.
Conflict of Interest? You think?
So if the insurance business isn't about making money on writing policies (predicated on sound actuarial work), and if an insurance company can even lose money on underwriting as many often do, and still make a profit by investing "the float", then there may be an incentive to write policies, that reflect less than prudent risk management – that is to say losses on the underwriting side of the business would be made up on the investment side. As long as this is successful, shares in these companies can be sold to investors. The best investors are large funds like mutual funds because they buy in large junks of shares, are run by investment managers who are generally not very shrewd, and they hold long enough for insiders to sell. Large mutual funds are also the ideal investors because they have a steady stream of cash from IRA's and 401k's. IRA's and 401k's are steady sources of cash to mutual funds because most of those folks who were wise enough to envision saving, were also determined to buy and own a home (rather than rent one), thinking (perhaps wrongly), that it represented a sound investment. In this way, the loop from policy purchaser, to indirect title insurance company shareholder is complete. It's almost like a double tax on the unsuspecting home purchaser, which is subtle and goes almost entirely undetected. That's is why most homeowners have no clue who their title insurance company is, but can tell you in half a second who insures their car, their health care, or their home.
So what sort of investments are the investment managers at insurance companies making? Well, we know the insurance culture isn't fond of extreme sports, and as it turns out their not very enterprising when it comes to their investments either – let's just say their passive, they like fixed income, you know, a few muni's, maybe some treasuries, but above all, they like commercial bonds for their fixed income (and perceived safety), especially those which are derived from Residential Mortgage Backed Securities, or RMBS's. The feeders of these funds – the mortgage origination and securitization industry, is none other than their very own customers – think of it as one big happy love triangle, or if you happen to live in Utah and prefer their par lance "plural marriage". The title insurance companies, the mortgage origination and securitization industry and policy purchasers are like sister wives. Of course the husbands in these relationships of Asymmetrical Power, are the alchemists of the modern era, they are the engineers of derivatives, and they hide behind curtains in tall shiny buildings in an emerald city called wall street, turning their Copper into Gold. For more on this activity, it might be worth reading the article "Three Card Monte and other efficient ways of parting with your money"
Historically, title insurance companies almost never pay out. When was the last time you heard of a title insurance policy actually being used? Over the decades, it was nothing more than a simple entry on the closing HUD statement when real estate was bought or sold. Homeowners didn't' "shop" the policy, and they had no idea that when it showed up on their closing statement, that their lawyer was also a broker for the title insurance company, collecting some 70% of the premium – if they knew that, than they would know that their attorney might also have a conflict of interest when he oversaw / received the title exam, and the selection of the policy. Finding a defect or cloud on title in this circumstance meant no policy and therefore no commission – so the closing attorney's themselves were incentivized not to scrutinize too much – and why was this agency relationship never revealed? Isn't that in direct opposition to consumer protection laws?
So why were those underwriters so quick to get off the phone, as soon as we "dug a little deeper" into their criteria? Well, it's because their options don't look too good – in fact there are only two:
a) Acknowledge that the titles to 60 mln. plus homes are badly clouded and not insurable. In which case the entire operation of writing policies, taking in premiums, investing the float in MBS's, so that mutual funds can take in funds from various and sundry retirement accounts of home owners and buy your stock suddenly stops.
b) Pretend like your not aware of the problem and deny or use the more complex version "deny, deny, deny". In this operation, business can continue, at least for a while – although when the final reckoning comes, the problems will be many orders of magnitude larger.
We believe plan "B" has been the modus operandi of the industry for sometime now. However, like all parties, and indeed everything which has a beginning, this too must come to an end.
Title insurance underwriters and drug addicts; just likes peas in a pod
Why is the role of insurance companies in all of this not more closely examined? If it was an addiction we were speaking of (and maybe it is), we could think of the insurers as the "enablers", and as any good interventionist, support group, or sponsor will tell you, the enabler is as much of an addict as the addict themselves.
But what is the addiction? In a way it's money, but in another way it's something more than that. It's really power. Money of course, is power, because at the end of the day, its really a redemption slip on society, and when you possess many of these tiny slips of paper, you effectively have much you can ask of the society around you - and that is power. The Alchemist-Engineers know this, so the jig in title insurance is really no different than the funny business that took place during the "Golden Age" of loan origination – they both follow what we might call the "the Mozilo principle".
How could we look at the addicts without looking at the enablers? Where are the insurance regulators? We marveled at the discovery that there may well exist an entire insurance industry that is predicated upon the complete lack of any sort of actuary role in it's calculation of risk, or oversight in it's conduct of business, an entire sub-species of the insurance animal where policy payouts are unheard of. In such an industry it's easy to imagine that there would be total lethargy, apathy, and greed and accordingly there is.
Further to this point, it's important to note that Bevilacqua did not just turn up yesterday, he turned up five years ago - his case was never really a true legal question, it was always a business question. It seems more business is conducted inside a court room than in marketplaces nowadays - we wonder what the chinese must be thinking of the efficiency of this model.
It could all come tumbling down suddenly
The banks settlement negotiations with the 50 states AG has focused on refinancing as a solution; why? Because refinancing ratifies, and puts good paper over bad fraudulent paper. As pointed out in "On the ethics of mortgage loan default" – that's a bad deal for homeowners. Taking an asset with bad pricing, and which had a commensurate and corrupt security interest, and improving and perfecting the security through "refinancing", but leaving the bad pricing in place (which is a direct derivative of fraud) is not a good deal for the homeowner. For a modest decrease in the monthly mortgage payment, the homeowner pays the price of somebody else's fraud (although he may not know it).
Further it may be a mistake to speak of buyers of these foreclosure properties as "innocent third parties" as the banks suddenly (at least since Bevilacqua emerged) are fond of doing. Is this characterization really accurate? We know that about two-thirds of real estate transactions over the years have been foreclosure properties; we also know that a good deal of those transactions were cash deals. Does that sound like "the Joneses"?
The buyer of a foreclosure is somewhat more enterprising than his average home buying family man cousin who buys a home because he happens to like it. The buyer of a foreclosure is by definition more of an investor than someone merely looking for shelter. This is especially true in the case at hand – Bevilacqua – who was a developer, and who turned the subject property into four separate units with four separate buyers – probably at a profit to himself, but at great harm to the buyers. In this way, the banks fraud is magnified, through the buyers of foreclosures who are more often than not, enterprising, investment minded persons, with the ability to move at greater speed than the average homesteader.
Of course nearly all home buyers are functioning in some way as investors, in so far as the overwhelming majority are purchasing the largest investment of their life. So the buyer must do proper due diligence, regardless of their place on the investor spectrum. Where there is a failure to do even basic due diligence, there is at least some accountability. However, it is not as great as the accountability of the title insurers, or the bank-sellers, who maintain superior knowledge about the "back-room dealings" of these transactions.
We only point this out so that prospective buyers of foreclosures (and also all homeowners) will pause for a moment and consider the possibilities that Bevilacqua gives rise to. The buyers of foreclosures at least are not entirely innocent as has been suggested by an industry which seeks to persuade a panel of judges and deflect away from itself the possibility of legal reprisals. Why else would the American Land title Association, and the Mortgage Bankers Associations along with their TBL's (Tall Building Lawyers), spend the time, energy and resources to file lengthy Amici Curiae briefs in Bevilacqua? It was a like a free legal defense for a small-potatoes property developer that no one had ever heard of.
It's worth contemplating before making out that next mortgage payment. Maybe "home ownership" in the very near future simply means staying right where your at – or in the spirit of the protesters which has gripped our world - "occupying" the house your already in.
Can a valid policy be written on securitized mortgage loans in light of Bevilacqua? Without the enablers, no transactions would or could ever get done. Without policies getting written, no real estate would be transacted, and yet another Pyramid would come tumbling down.
(24 votes)
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Horry fuck Batman... shit storm ahead!
YES, Terminus, a VERY UGLY problem.
Good catch Tyler!
Well DoChen, I now rent, and my money's in gold and silver in Switzerland so,
'couldn't care less' really...
Seems you couldn't care less about your gold and silver... unless you're living close to the Swiss bank to get it at anytime ;)
It's like I said on another thread. It's a matter of OWNERSHIP...
You tell your son to go to the store to buy a bag of wheat. But you don't have money to pay for it, but you give him a note that says: "Dear store owner, I promise to pay you for this bag of wheat when I get the money". Your son goes to the store, and presents the note to the store owner. He gives the bag of wheat to your son. Half way home, your son puts down the bag of wheat to rest a while. Then he has a thought: "WHO OWNS THIS BAG OF WHEAT?".
1. Who ever is in posession owns it
2. Who ever has paid for it owns it. (does a promisary note connote "paid in full"?)
3. Who ever has produced it and has NOT received just compensation owns it.
There are three owners of the bag of wheat, but only one mouth will eat it.
What a fucking mess. This bankster fraud has got to be stopped. How much longer are we going to have to live with these improperly functioning markets?
Looking forward to the second tsunami wave of foreclosures in prime and jumbo.
Prime-X bitches!
Everyone is going to vote for Ron Paul just to piss off the establishment!
there is nothing more powerful than an idea whose time has come.
Aaahhhh. The banking establishment has not yet imagined what the future might men for them..
http://www.youtube.com/watch?feature=player_embedded&v=gIyOpN6g-zA#!
Agreed. If/when TSHTF, if you don't have your gold/silver/food/whatever in possession, you're too late. Especially if your stuff is overseas lol
Maybe, maybe not. MA SJC is NOT all that highly respected. On their rulings a landlord usually has to go for a year before they can have a non-paying tenant removed from their property. They are a bunch of clowns that continuously make politically active rulings.
While the foreclosure sales and robosignings were atrocious, the vast majority were likely foreclosed on for cause.
While the foreclosure sales and robosignings were atrocious, the vast majority were likely foreclosed on for cause.
Cause isn't the issue. The issue is, does the entity enforcing the foreclosure actually have "interest", i.e. the right to foreclose. In many cases, evidently, no they don't, because the mortgage has been resold and resold again, so the actual owner of the mortgage has been clouded, and conveyence of title has never been properly recorded.
It matters not whether a property was foreclosed "for cause."
If the title was not clear, throughout the entire history of the transaction, the conveyance is fraudulent.
Period.
A fraudulent conveyance is something altogether different... this would be a void conveyance... you're using legal terms of art...
Fuck it.
But, but, but ... Calculated Risk is a blog, and it tells me there is no systemic problem with foreclosures!
Tyler,
You are being misleading. This does set precedent, for "Massachusetts."
You implication that other states have and will follow their lead is, well misleading.
Most states will not follow this precedent. Many states have already ruled this out.
You also ignore the fact the Mass legislature can overule this legislation, and I will not be surprised if they do so very soon.
Normally I agree with what you say, but you are off base with your assertion here. Way off.
Most states will not follow this precedent. Many states have already ruled this out.
I can't agree with that. The foreclosures must first be called illegal and then the sales can be overturned. Mass is way ahead of most states.
You also ignore the fact the Mass legislature can overule this legislation, and I will not be surprised if they do so very soon.
Legalize what the court declared as fraud you mean? I don't think so - do you want riots in the streets?
By who?
The people who took out loans they couldn't afford and didn't make their payments...(who the banks foreclosed on but fucked up the paperwork.)
Or the people who bought their dream house for their family (with the money they saved and busted their asses for) who are now being kicked out of their homes?
Which people are going to riot over this?
There is tons of shit to be pissed off at the banks about. This is not one of them. Almost all of the defective titles were due to minor paperwork mistakes, and everyone foreclosed upon (with a few VERY rare exceptions) were not paying their mortgages and living in their houses payment free for months/years before being foreclosed on.
Lex retro non agit.
They can make new laws, but the new laws cannot go backwards. Contract is a contract.
There a two title theory systems in this country. The Mass precedent will apply to significant part of USA (New York, Illinois, Maryland, Florida, etc.). SHTF now.
Wrong.
I'm not sure who else on this board has won an appeal from their highest state court this year representing the buyer at a foreclosure sale, but I have... I cannot see any difference whatsoever in this Massachussetts decision and well established law in my state... If a judgment is void, then any transactions stemming therefrom are likewise void. A void transaction cannot be cured.
Generally speaking, there is an important decision to make between "void" and merely "voidable" judgments. In the event service was not properly made upon an adverse party, then the judgment would be "void" (due process failure). However, if that same person had notice of the proceeding, then the judgment might be merely "voidable." Generally speaking, in the event a judgment is anything other than void ab initio or fitting into particular categories, then the party seeking to set aside a judgment must show a "meritorious defense." In this case, that would be that the party foreclosing did not have standing. [this requirement is implemented for the policy reason of judicial expediency given there is no reason to over turn a previous judgment so that a party may lose the lawsuit twice].
However, there is also a very important exception to the requirement that a meritorious defense be shown... fraud upon the court. Where in order to foreclose a party has to swear and affirm to the court that it has standing to foreclose, but yet it has no such standing, then you've got a pickle. Where fraud upon the court can be shown, generally speaking, the judgment is void and no meritorious defense need be shown.
Again, I see nothing in the bullet points of this article that lead me to believe this case sets any unique precedent... my guess is that most all states have made similar decisions over the last few decades...
"b-rad-
When you get to your 3rd year of law school, you'll start getting a clue.....
He would be the first law student to get a clue while in school... maybe after about 7-8ish years of practice he'll finally get it... like most lawyers... although some never do. Too bad he isn't going to get a job after graduation...
It doesn't change the fact (according to Massachusetts) that the banks broke the law when they failed to transfer the title correctly.
b-rad-is-rad:
This is not a "paperwork" issue. It is massive fraud, and the MASS SJC won't play along.
While I agree it is a fraud issue. The banks once again took shortcuts to save money and circumvent state law, they are above it after all.. This will be papered over Brad is right, here is no one outside of these digital walls who will do anything. The anesthesia machine reigns in this country..
Don't forget that there are thousands of lawyers who stand to make massive fees litigating the banks.
They will not be turned aside from their rightful rewards.
This isn't a fraud issue.... fraud on the securities side maybe... but, on this side, who is the fraud against exactly? How does a down stream mortgagee defraud a homeowner when there is no privity between the two? Are you alleging a civil conspiracy between creditors to shoot themselves in the feet? [this fact alone is probably enough to get the charge dismissed via 12b6].
Remember, the fraud in order to render a previous judgment void must be ON THE COURT, not on the person.
The court does not prosecute a cause of action of "fraud"... it has no capacity to do so... it has inherent contempt powers... but for any fruitful use of the word fraud, this could only be a cause of action for the homeowner... and none exists.
I know I've harped on it in the past, but people on this site have to learn the difference between a cause of action and a defense... a cause of action is to be used as a sword, in an offensive measure against your opponent... a defense is something you assert as a shield to prohibit or mitigate the effects of the cause of action of another. There is no cause of action for a homeowner for "lack of standing"... this is a defense to a foreclosure action... it's not a doorway, necessarily, to a free house or an unencumbered house, it's simply a stopgap measure to defend against a foreclosure action.
Submitted by Greg Lemelson of Amvona
You also ignore the fact the Mass legislature can overule this legislation...
THIS legislation? It's a court ruling. Strike that, THE SUPREME COURT ruling not only on property rights in the Commonwealth, but everything else at state level.
with legislation*
sorry for the confusion.
love the down vote for correcting my typo. lol. sorry, long day at law school, and I've had some wine.
Well that fuckin explains it all - a fucking law student.
A Constitutional Lawyer, a Communist and a Muslim walk into a bar. The bar tender says "What can I get you Mr. President?"
.
Eh. You got me there. If it makes you feel any better, getting the MBA at the same time, I don't plan on practicing. Just trying to get in on the student loan bubble before, well you know, Pop.
Oh your going to be one of those extra devious fuckers. I may need to hire you in the future.
As someone who has both... I would say you are crazy at this juncture to attempt it on credit. I would not have even started the path so many years ago if I was going to have to borrow to do so... and I was oblivious to many of the ills of the maco economy. Now it is suicide. Hope you have your job lined up already. Also hope your undergrad degree is in something more useful than basket weaving/philosophy... you might need it.
PS, the combo J.D./MBA is not a real MBA... go get a real, stand alone MBA not that truncated bullshit... not that I fault you for diving at the cheapest paper.
Make sure you get the whole big three and secure the CFA to go with...
hehehe
You don't plan on practicing law?
I thought all law abiding citizens practiced law?
Haha you think that this foreclosure ruling will go nowhere yet you seem to think that you won't have to pay your student loans back because the bubble will pop? ROFL. Good luck with that. Sounds to me like you need to study harder in law school.
I never said that dumbass. You need to practice your reading comprehension.
LOL- sorry dude- no decent Law school allows you to "diversify" while you're attending their school-
Why not add Med school next quarter?
Poser.....
None of the Tylers wrote this. It is a re-post from another blog. The article was written by a non-lawyer about legal issues. Pure trash. The Court ruled that you can't sell something that you don't own. What a surprise. What happens in Massachusetts, stays in Massachusetts. The writer claims that other states look to Massachusetts courts for guidance. Laughable!
presedent
Un poco más de palabras y se puede componer una frase.
Stir the pot CW.
good to see yaz
True, each state will handle this mess under it's own laws. Decisions from other states might get looked at, but are not binding. These issues are incredibly complex from a legal standpoint. We are inuncharted waters. That alone hurts the real estate market.
Mass. is judicial, many other states are not.
http://www.realtytrac.com/foreclosure-laws/foreclosure-laws-comparison.asp
Can you blame young people for not wanting to buy a home?
And most of these cases have institutions involved that no longer exist. And we have new, never lived in construction, on ultra pure titles, sitting empty in ghost towns.
Thanks Sen. Dodd and Mr. Mozillo! It was a great Idea to put Dr. Krugman in charge of bartertown!
b-rad quit being such a downer and the let the guy tell his story.
Just trying to shed some light on a bullshit story/premise. Thought what this site was about, cutting through the bullshit you hear in the media 24-7.
I'm just giving you some shit, it is called love around here.
I shit you too man.
Why don't you two get a room.
It appears that ZH is enjoying the disintegration of the US economy and legal system.
ZH salivates the situation when people who took advantage of the legal system using fraud and misrepresentations and refusing to pay their mortgages will be highly rewarded.
ZH logic is puzzling at least.
Mocking it is all we've got left.
ain't that the truth
The disintegration of the US economy and legal system is a continuing process begun years before ZH was here. Rather than enjoying that, I would suggest TD, and ZHers in general, are actually cheering the transparency we are finally starting to see, the light being shed into the darkest corners of the realm of TBTF/TPTB - wishing that our more ignorant fellows will soon come to realize what is actually happening to our country, and world. And then, we can HOPE...
Shooting the messenger? I see a number of motivated people here shining light on the situation. It is called truth. A group can't ever solve a problem without facts. To me, the ZH people just have some extra confidence in preparation for hard times.
So they take a victory lapse for presciense once in awhile in exhange for a lot of toil at their own expense to provide facts and event based news.
Destroying the rule of law which is a method of escaping with bags of loot and getting off Scott-Free (actually rewarded) creates law of the jungle. If some feel they are afraid of radicalism then you should be. Try starving your 17 year old son by stealing his lunch money every day and see what eventually happens.
Thank you for reporting this piece. Even Jay Rockefeller misses his event-based news and facts these days.
You're 100% clueless dude. The banks are the ones that engineered this fraud so they could sell the same bundles of mortgages over and over. Read my post below. You think it was a coincdence they were giving loans to anyone with a pulse last decade. Use your head.
It is your reply that is misleading! The guest article (not written by Tyler, BTW), does not imply anything beyond what is normal: That other superior courts will either tend to follow this ruling or make a strong case against it. Superior courts take all cited precedents into account, so that they don't make absolute fools of themselves.
Which states have rejected it? And why?
What's to overrule? This is a straightforward application of black letter law. Without a promissory note, the foreclosing plaintiff has no legal injury, i.e., the plaintiff lacks standing. Standing is a requirement for an action to qualify as a "case or controversy" under article III of the constitution. With no case or controversy before it, the court lacks jurisdiction to rule. Without jurisdiction, all of a court's subsequent rulings--including the foreclosure judgment--are void as a matter of law.
If a judgment is void, it's open to subsequent collateral attack as a legal nullity. That's essentially what happened here. This case the logical extension of Ibanez.
A legislature (article I) has no business tinkering with the boundaries of article III under separation of powers.
Article three courts are federal courts. Dumbass.
It's not misleading at all. The state of Utah is the polar opposite of Mass in about every way imaginable, and state judges here have been fighting this fraud / ponzi tooth and nail. No, it's only a matter of time before the money trail has been followed and this thing blows sky high. Everything is a conspiracy until it's not. It's really simple. When MERS was engineered they took land title laws going back to the Old World and tossed them. EVERY mortgagor has the right to know where their money is going when they make a payment for this very reason. Only a fool could not see the reason banks bastardized these mortgages beyond all recognition was to facitilate selling these same bundles of mortgages to different investors over and over. In reality, many of these mortgages have already been paid via the ponzi and then they are going back to the mortgagor for a final round of payment. When will bankers do jail time in this country?
sh*t, meet fan....
its about time....
Title insurers are fuuked.
They've been fucked. Chris Whalen has been writing TONS on that.
This will go directly to servicers for more than 85% of the cases I wonder if they'll try and push it off onto FNM/FRE as much as possible as another bail-out? Or better yet, the fed since they hold more than a trillion in MBS
Smoke 'em if ya got 'em
Just because fraud is not only endemic, but systemic does not make it too deep to root out.
Now we know where QE3 is going
Soverign nations who have no, or weak property rights are usually known as 'banana republics'.
1) No property rights... or, property rights that are now in question.
2) No jobs and no drivers of job creation on the horizon.
3) An economy based on paper issuance based on far too little tax revenue to back up the paper
4) A world reserve currency also based on paper issuance backed by 'the full faith and credit of the government'... but not enough taxes to back it up.
5) A financial system that does little or nothing for the real economy...and, in fact, has now become a burden on the real economy.
6) A justice system that will not prosecute the worlds biggest theives while imprisoning minor criminals for using 'illegal substances'...or, in some instances handing out life terms for 'three misdemeanor strikes'. After the creation of the worlds largest private prison system that has more citizens per capita locked up than any other nation on the planet.
hmmm... Perhaps it's time for a new catagory... 'Super Banana Republic'?
it's called F.R.E.E.D.O.M!
The ironic thing about what Snidley has pointed out, he has now become an enemy of the state for the saying the truth.
We all have, or will, if you are a patriot of course...
Cliff... I would rather die for telling the truth than live under the tyranny that I see now...and, it's only going to get worse.
An enemy of the state? Damn right I'm an enemy of the azz hats that passed the Unpatriot Act, decided we needed continuous wars in multiple countries, decided that torture of citizens and 'terrorists' (now one and the same) is ok, let Wall St bankers wreck the world economy, ad infinum.
The azz hats are hoping that they can frighten citizens of using their right to free speech. That's what this entire 'terrorism' scare is about. I feel sure that we could all be classified as terrorists now...and if not now then soon.
I've been 'speaking out' since Viet Nam and am not going to stop now.
Go OWS... and occupy DC also! Tell the azz hats 'I'm mad as hell and I'm not gonna take it anymore!'
'Banana Superpower' ? ;=))
'Super Banana Power' is more like it.
"Super Banana Power"... isn't that a frozen protein drink?
Yay!! We're 'special' again. Now let's find us some 'super' friends!!
A banana republic with more nuclear weapons than all other nations on earth. This banana is not to be laughed at.
It's funny but Super Banana is actually the reflection of a Super Pyramid. And that pyramid is a paradigm in how mankind builds any organization. For several hundred years we have been using a mix of 3d pyramid tools and 4d box tools. The innovations created as tools are a direct reflection of mankind's evolutional progress.
The 3d pyramid era has entered its final closing period. Man and religions confuse the ending of this era with the end of the world. Read this if you actually want to 'get it': http://ragingdebate.com/browse-articles/government-and-politics/feeling-...
We are now becoming a banana republic because that is exactly what a few connected parasites, those that get rich off valueless activities, politicos taking bribes, businesses get bloated contracts or govt Sui widows, finacial guys making guaranteed returns on taxpayer lent money etc...those folks want us to be more like a banana republic, it's good for their line of "work"
Listen how they talk, they basically say, plead for us to be more like messed up decking third world nations:
They say we have to lower taxes on rich, and spend less on government functions that serve everyday needs of ordinary people.
They say we should have no govt run social safety net for regular folks that lost money on their retirement savings or are suffering because there is no return on investments whilemthey say we should bail out connected crony businesses and banks, give them 0 interest loands that they can buy tbills with, make guaranteed returns.
They also say we must reduce of labors wages so we can be competitive with third world nations labor, they don't want us to consider how, say, German or Japan manages to massively export, have a robust business economy even while their workers, their middle class makes great wages, has great benefits. Instead they suggest we emulate Vietnam and have our workers make wages lower than Chinese workers.
They want to dismantle public education, just like most third world nations, where kids only go to school, even elementarynschoool, if their parents can afford to pay for private school, so there is little opportunity to break out of poverty.
They want regulations (policing of fraud, risk at taxpayer expense etc) to go away. That way rich can violate contracts, committ fraud, ciliate anti trust laws without being held into account. Meanwhile, the want tough on crime (street crime, petty drug use etc) and massive prison system.
They want taxpayers to fund overpriced wasteful govt programs like massive defense industry, unnecessary wars, massive private prison complexes holding illegal immirpgrants rather than deporting them so that they can make money off of building weapons, prison beds etc, just like a bad banana republic dictator giving his friends and cronies special contracts to build repressive army. They want tax ayes to waste a billion dollars, so they can make million, they don't care how valueless and bloated and hard on the countries finances it is. But they sure don't want to pay taxes to support these wasteful govt contracts.
house of cards , bro, house of cards.
Cards made out of rotten banana skins, Be careful! Don;t slip and fall.
ALCOHOL! TELELVISION! ALL-YOU-CAN EAT-BUFFETS!
but above all....
FAITH IN THE SYSTEM!!!!
This is not news, the court just stated long-standing law. Most people don't pay attention, that's why it seems like it might mean something. For subsequent purchasers of foreclosed properties, it might mean something...might. For title insurers, they may have to charge a little more per policy. Get your shit straight people...also, see the comment from B-rad-is-rad, its spot on.
That read took a bit. I feel like a " Vampire", made a " open ended contract".
With Humanity!
Who negotiated that deal?
blah blah blah
yeah right, We've Got A Problem - you wrote a book on issue that could fit a page.
Spencer. Your a conceptual level thinker but don't have enough consideration to explain the process of how those at the top of the pyramid push the wedge issues down onto the population. Shame on you
Uuuf! Most posts on Zerohedge are good (particularly Tyler D.'s), but this absolute baloney! None of this will hold. What is funny is that while everyone is crying for the poor boob that got foreclosed on, they all seem to forget one little detail: THE GUY WAS NOT PAYING HIS MORTGAGE. Anything else is irrelevant.
It's called THE RULE OF LAW for reason. What the Supreme Court of Massachusetts ruled is that such actions are fraud, hence the remedies.
So it is irrelevant that the banks have commited massive fraud upon the people who purchased homes but also all their investors? They knowingly set up MERS to save themselves billions on transfer fees of which they were charging the homeowners. So I guess, all the bank fraud and illegal activity is okay in your book, so you think "screw the homeowner" or anyone else who signed what they thought was a legal contract that was actually fraud through and through by the banks. So then any contract in your opinion should always be upheld for a bank even if it is not legal and it is based on fraud. That would make all contracts null and void for the individual. Oh, I assume you are saying "screw all the funds, retirement accounts and so on" that invested in MBS. Oh lets not forget this fraud is what is actually causing countries to go under too. So screw all those countries and people who are suffering due to the bank fraud?
Right on. This whole enchillada is an Epic Fucking Fail! All this after the fact shit still never addresses the original fruad that is now taking down countries.