Kiss The Foreclosure Settlement Goodbye: Bank of America, Wells And JP Morgan Are Sued Over Use Of MERS

Tyler Durden's picture




 

A little over a year since the day that the world first learned about robosigning and the broader problem of fraudclosure, which is merely the functional equivalent of infinite rehypothecation of an underlying asset between a daisy-chain of lien holders, we get the first legal incursion into this farce. From Bloomberg we learn that:

  • BANK OF AMERICA, WELLS FARGO, JPMORGAN SUED BY NEW YORK OVER MERS
  • NY AG SUIT CITES FRAUDULENT FORECLOSURE FILINGS

In other words, kiss that foreclosure settlement goodbye. In the meantime, the  electronic momos keep taking BAC ever higher even as this news confirms that the bank is about to suffer a multi-billion impairment shortly.

From the AG office:

A.G. SCHNEIDERMAN ANNOUNCES MAJOR LAWSUIT AGAINST NATION’S LARGEST BANKS FOR DECEPTIVE & FRAUDULENT USE OF ELECTRONIC MORTGAGE REGISTRY

Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings 
Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable
 
Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process

NEW YORK – Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as "MERS certifying officers," have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.

The lawsuit further asserts that the MERS System has effectively eliminated homeowners' and the public's ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.

Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the "nominal" mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a "nominee" (or agent) for most major lenders, it remains the "mortgagee" in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.

MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.

MERS' conduct, as well as the servicers’ use of the MERS System, has resulted in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially clouded titles on properties throughout the State of New York. In fact, several New York judges have questioned the standing of the foreclosing party in cases involving MERS loans and the validity of mortgage assignments executed by MERS certifying officers.

The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:

  • MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.
  • MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and "robosigned" by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party's inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.
  • MERS' indiscriminate use of non-employee "certifying officers" to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an "Assistant Secretary," "Vice President," or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer's own employer. Moreover, as a result of the defendants' failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.
  • MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS' role with respect to their loan by providing inadequate disclosures.
  • The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.

The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices.

The matter is being handled by Deputy Bureau Chief of the Bureau of Consumer Frauds & Protection Jeffrey K. Powell, Assistant Attorney General Clare Norins, and Assistant Solicitor General Steven C. Wu, under the supervision of First Deputy Attorney General Harlan Levy.

 

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Fri, 02/03/2012 - 12:59 | 2123635 knight99
knight99's picture

GPAP AND THIS. Today shuold mark the top of all risk assets for awhile.

Fri, 02/03/2012 - 13:01 | 2123648 nope-1004
nope-1004's picture

Good-bye BAC!  LOL.

 

Fri, 02/03/2012 - 13:04 | 2123662 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

BAC's up 5%.  This is either the last act of desperate pigmen, or we are now flat footed in the final stage of the hyperinflation of the dollar.

Everyone knows the dollar has lost 98% of its purchasing power over the course of its life, the last 99 years.  The question you should ask yourself is, "If we are on an exponential curve, and we have 2% left to lose, how fast will it go?"

Aannd....it's gone!

Fri, 02/03/2012 - 13:57 | 2123925 Troll Magnet
Troll Magnet's picture

i guess obama is miffed at wall street now that they're pouring their $ to mitten's campaign?

Fri, 02/03/2012 - 14:13 | 2124010 Stax Edwards
Stax Edwards's picture

Good on Schneiderman, I think we all know Holder's justice department will never challenge the big banks.  He knows where his bread is buttered.

Fri, 02/03/2012 - 22:44 | 2125774 Problem Is
Problem Is's picture

Eric "Empty Suit" Holder???

Has that worthless cock sucker even shown up for work yet??

Fri, 02/03/2012 - 22:11 | 2125718 holdbuysell
holdbuysell's picture

An article in the MSM on gold and silver and a dollar collapse that approaches alarmist. That's ZH talk for the people that get it.

Seriously, what's the agenda here. I'm skeptical.

Notwithstanding the above, it's a great find and post. Thanks for sharing.

Fri, 02/03/2012 - 13:09 | 2123680 HoofHearted
HoofHearted's picture

So time to short the hell out of it. All my love to our local heroes, from Hoofy here in CLT.

Fri, 02/03/2012 - 13:18 | 2123731 Silver Pullet
Silver Pullet's picture

I threw a grand at that over a dollar ago. It may defy gravity forever...

Fri, 02/03/2012 - 21:54 | 2125684 DeadFred
DeadFred's picture

Short it at $12.

"the bank is about to suffer a multi-billion impairment shortly" Is 'shortly' measured in nanoseconds? If not I'd wait on the shorting thing. It will tank but likely not until long after you think it should.

Fri, 02/03/2012 - 13:39 | 2123844 spastic_colon
spastic_colon's picture

priced in etc etc....another piece in the propaganda puzzle, this will drag on until Nov. 3rd when we find out that they will collectively pay $3 in settlement money to the lawyers

Fri, 02/03/2012 - 14:24 | 2124076 TheGameIsRigged
TheGameIsRigged's picture

Actually, if you knew anything about mathematics you would know that, with the numbers you just threw out there, in an exponential curve - the money would be worth 0 right now.  Refernce asymptotic lines.

Fri, 02/03/2012 - 14:35 | 2124116 blindfaith
blindfaith's picture

 

 

Ok Here are some fix it numbers...for the banks:

Google 'savings', every click thru costs the named bank $10.00

Google 'structured investiment' every click thru to a bank cost them $50.00

NO JOKE !!!!!

Fri, 02/03/2012 - 18:05 | 2124977 YesWeKahn
YesWeKahn's picture

% has no limit. 99% of the remaining 1% still ha a value.

Fri, 02/03/2012 - 13:07 | 2123674 HedgeAccordingly
HedgeAccordingly's picture

up up and away -http://hedge.ly/zbdijL

Fri, 02/03/2012 - 12:59 | 2123636 chancee
chancee's picture

This is from an article written in 2003:

"Heller had just left the Fed when he gave a speech suggesting that the central bank should step in and take direct action to keep the stock market from collapsing. The Fed had taken action before. It made sure there was enough liquidity during the crash of '87 to keep the system going. It may have even strong-armed a few banks into propping up the market. And it has often lowered interest rates at opportune times.

"But Heller's idea was different. He wanted a more direct approach, especially when the bond and currency markets were becoming uncontrollable [like they are these days]. Heller believed that in an emergency, the Fed should start buying stock index futures contracts until it managed to pull stocks out of their nosedive. Essentially, whenever there is heavy buying of these futures contracts it causes the underlying stock market to rise. The futures contracts can be bought cheaply; they are highly leveraged so you can get more bang for your buck, and they eliminate the need for a rigger to purchase, say, all 30 stocks that make up the Dow. Heller explained that the process was simple.

Here is the whole article...

http://www.gold-eagle.com/editorials_03/hultberg032603.html

Fri, 02/03/2012 - 13:00 | 2123645 Iam Rich
Iam Rich's picture

"....as this news confirms that the taxpayer is about to suffer a multi-billion impairment shortly".

Fixed.

Fri, 02/03/2012 - 13:03 | 2123659 Poetic injustice
Poetic injustice's picture

Any ideas, how Fed will name this help to banks?

Need to find a good, sound acronym.

Fri, 02/03/2012 - 13:21 | 2123756 Silver Pullet
Silver Pullet's picture

How about FUR (Fuck You Reality)

Fri, 02/03/2012 - 13:04 | 2123660 alien-IQ
alien-IQ's picture

this is, naturally, either

a) priced in

b) bullish

c) both

Fri, 02/03/2012 - 13:13 | 2123699 fuu
fuu's picture

C!

Fri, 02/03/2012 - 14:06 | 2123968 resurger
resurger's picture

Can i call a friend?

C

Fri, 02/03/2012 - 20:04 | 2125388 Zero Govt
Zero Govt's picture

D) a farce

you think a NY Attorney General is going to bring down a NY Banker?

check the last 100 years of utterly bent NY justice ...an excellent record as a protection racket

Fri, 02/03/2012 - 22:34 | 2125757 Yes_Questions
Yes_Questions's picture

 

 

This time is different..

 

Electrolytes.

Fri, 02/03/2012 - 13:04 | 2123661 maxmad
maxmad's picture

Free houses, if you didn't foreclose already!

Fri, 02/03/2012 - 13:06 | 2123666 Yen Cross
Yen Cross's picture

 Maybe we can catch a pullback to that 11654 (10%) ish area, over the next couple of weeks?

Fri, 02/03/2012 - 13:06 | 2123671 justanothernerd
justanothernerd's picture

Fuck it all, just buy. BAC is up 50% since hitting 4.99 a little while back. 

 

If banks want QE3, I'm wondering what the hell is going on with the ramp up in the market... 

Fri, 02/03/2012 - 13:10 | 2123683 slaughterer
slaughterer's picture

I cannot see how the QE-3 trade can go on with this NFP report today.  Someone clarify how.  

Fri, 02/03/2012 - 13:17 | 2123725 LawsofPhysics
LawsofPhysics's picture

With ZIRP forever and open swap windows working overtime to keep the Euro ponzi going, who needs QE3?  We fucking have infinite-QE already in play!!!

Fri, 02/03/2012 - 13:08 | 2123673 eatthebanksters
eatthebanksters's picture

This is a start...I wonder if Geithner and Obama crapped in their pants?

Fri, 02/03/2012 - 13:07 | 2123675 Freegolder
Freegolder's picture

Phew, thank God for some bad news, all is not lost.

Fri, 02/03/2012 - 13:08 | 2123676 PicassoInActions
PicassoInActions's picture

if hanorble Corzine can walk away, i don't see how NY will get anything out of this bastards

 

Fri, 02/03/2012 - 13:10 | 2123684 Seasmoke
Seasmoke's picture

any day now , Fraudclosure settlement.......Greece settlement........Fraudclosure settlement......Greece settlement........Fraudclosure settlement.......Greece settlement

Fri, 02/03/2012 - 13:12 | 2123687 FreeNewEnergy
FreeNewEnergy's picture

Yippee! MERS is the nominee on my mortgage - the one I inherited from my deceased father in July 2009. In foreclosure since March 2010, BAC (previously Cuntrywide) hasn't made a single move since I answered the complaint.

I've been contemplating filing for quiet title and this is just the news I needed to jump start my efforts.

$82,000 loan on a home valued somewhere less than that, probably, PFFFt!

Hearing that Bank of America is being sued: Good

Living in New York: better

Owning a home with a MERS loan and fraudulent assignment documents: PRICELESS!

Go, Giants. Make my great week complete.

Fri, 02/03/2012 - 13:31 | 2123812 pepperspray
pepperspray's picture

 +

Fri, 02/03/2012 - 16:16 | 2124503 Joseph Jones
Joseph Jones's picture

Here I am, a 9er fan for 50 years...Giants vs. Belicheat...gotta root for the Giants. 

Fri, 02/03/2012 - 13:12 | 2123689 Catman
Catman's picture

The NY AG will suddenly be an mysterious one car accident or his name will end up splashed across the Post's front page because his name is in some madame's little black book.  It worked once already  . . .

Fri, 02/03/2012 - 13:42 | 2123862 pods
pods's picture

For this type of challenge they will up it.  Someone will slip in some childporn on his computer and it will all be fixed as the case is withdrawn by the new DA.

pods

Fri, 02/03/2012 - 13:12 | 2123694 cossack55
cossack55's picture

Isn't it about time to change momos to mofos?

Fri, 02/03/2012 - 13:13 | 2123697 Careless Whisper
Careless Whisper's picture

I hope Linda Green(s) has been placed under the witness protection program.

Fri, 02/03/2012 - 13:17 | 2123728 Gubbmint Cheese
Gubbmint Cheese's picture

Which one?

Fri, 02/03/2012 - 13:19 | 2123734 dick cheneys ghost
dick cheneys ghost's picture

we are all Linda Green

Fri, 02/03/2012 - 15:18 | 2124262 Ying-Yang
Ying-Yang's picture

Soylent Linda Green

Fri, 02/03/2012 - 16:40 | 2124600 Return2Sanity
Return2Sanity's picture

Linda Green is people! Lots of them.

Fri, 02/03/2012 - 13:13 | 2123698 Yen Cross
Yen Cross's picture

 If Europe is so great, why did the euro and gbp just post new HISTORIC lows against the aud today. I can't wait for the RBA 50 bps cut next week.

Fri, 02/03/2012 - 13:15 | 2123707 Atomizer
Atomizer's picture

The return of BAC $5 debit card fee to commence in 3,2,1

Fri, 02/03/2012 - 13:16 | 2123714 Kaiser Sousa
Kaiser Sousa's picture

FUCK ALL BANKERS AND THEIR BITCH OWNED POLITICIANS..........

NY Attorney General excluded for the moment....

Fri, 02/03/2012 - 13:37 | 2123835 Schmuck Raker
Schmuck Raker's picture

NY Attorney General Eric T. SeanOfTheDead?

Fri, 02/03/2012 - 14:08 | 2123984 eatthebanksters
eatthebanksters's picture

Obama's mantra..."I jon't don't want things to get worse"...it doesn't matter if thngs don't get better...

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