Matt Weidner – Fighting For The American People

Posts Tagged ‘Mortgage Electronic Registration System’

“… Defendants systematically broke chains of land title throughout Ohio counties’ public land records by creating gaps due to missing mortgage assignments they failed to record, or by recording patently false and/or misleading mortgage assignments,” Joyce stated in the suit.

“… Defendants’ purposeful failure to record each and every mortgage assignment has resulted in far-reaching, devastating consequences for Ohio counties and their public land records — damage to public records that may never be entirely remedied.”

NEWSPRESS

There are some rumblings that the Department of Justice is putting the pressure on state attorneys general to sign onto the controversial $20 billion mortgage settlement deal this week that could release banks from legal claims in state investigations and law suits.

Monday, Massachusetts Attorney General Martha Coakley joined a handful of dissenters in announcing that she will oppose the inclusion of the issues surrounding MERS in any deal.

MERS (Mortgage Electronic Registration System) as pointed out by Abigail Field in a recent post on Reality Check:

HuffingtonPost

MERS also made it easy to run the foreclosure frauds — banksters could doctor the electronic entries whenever they wanted, and could claim that all paperwork including the notes had been lost. The servicers then hired Burger King robo-signers to manufacture new documents, and handed out notary stamps so they could certify the validity of whatever false information might enable swift passage through “rocket docket” courts. Banksters could take any home they desired — and responded to the opportunity by stealing millions of homes, throwing owners out onto the streets, aided and abetted by a US justice system that was both overwhelmed by the caseload but also underwhelmed by the plight of dispossessed homeowners.

And that’s just the opening paragraph….read the full article below…

HuffingtonPost Here

This is all madness on such a grand scale that the biggest and brightest minds in our country are still struggling to wrap their heads around it.  No one has yet to provide any credible explanations that suggests this is anything other than absolute and complete MADNESS. The article is terrifying…

Here’s the deal. This financial crisis is like Shrek’s onion. As you peel back layer after layer of sleaze, you find that the whole damn thing is fraud. We are talking about tens of trillions of dollars of it. Tens of thousands of individuals were involved. It was thorough. It was blatant. It was even transparent, right under the noses of regulators and supervisors. It was normal business practice. It never had any fear of prosecution or punishment. Even today, it taunts the impotent administration, daring President Obama to do anything.

And it expects to win. The fraudsters have Congress in their back pocket and plan to rush through legislation to validate ex post all of their illegal activity. It is almost a foregone conclusion that Congress will pass a law early next year to legalize everything MERS and the big banks did — lending fraud, recording fraud, tax fraud, securities fraud, and foreclosure fraud. There will be no rule of law to protect private property in the United States.

Anatomy of Mortgage Fraud

BAC-Home-Loans-v-White-Decision-OK-Court-of-Appeals-03-Dec-2010

The text below could have been lifted directly off my page–or that of any one of the handful of advocates, attorneys or bloggers out there that have been warning about the problems in the foreclosure process for months now–but it’s not, it comes directly from the editorial page of the New York Times.  We would all do well to listen to the warnings and take action, but our elected and appointed officials seem content to just fritter away and pretend that none of this is true.  The most staggering thing is that our judges must be aware of these issues now right? I mean there cannot be a judge in the entire country who would generally dispute any of the information contained herein or the statements made.  If this is indeed true, how can any of these judges proceed with cases before them in this environment?

In Congressional hearings last week, Obama administration officials acknowledged that uncertainty over foreclosures could delay the recovery of the housing market. The implications for the economy are serious. For instance, the International Monetary Fund found that the persistently high unemployment in the United States is largely the result of foreclosures and underwater mortgages, rather than widely cited causes like mismatches between job requirements and worker skills.

This chapter of the financial crisis is a self-inflicted wound. The major banks and their agents have for years taken shortcuts with their mortgage securitization documents — and not due to a momentary lack of attention, but as part of a systematic approach to save money and increase profits. The result can be seen in the stream of reports of colossal foreclosure mistakes: multiple banks foreclosing on the same borrower; banks trying to seize the homes of people who never had a mortgage or who had already entered into a refinancing program.

Banks are claiming that these are just accidents. But suppose that while absent-mindedly paying a bill, you wrote a check from a bank account that you had already closed. No one would have much sympathy with excuses that you were in a hurry and didn’t mean to do it, and it really was just a technicality.

The most visible symptoms of cutting corners have come up in the foreclosure process, but the roots lie much deeper. As has been widely documented in recent weeks, to speed up foreclosures, some banks hired low-level workers, including hair stylists and teenagers, to sign or simply stamp documents like affidavits — a job known as being a “robo-signer.”

Such documents were improper, since the person signing an affidavit is attesting that he has personal knowledge of the matters at issue, which was clearly impossible for people simply stamping hundreds of documents a day. As a result, several major financial firms froze foreclosures in many states, and attorneys general in all 50 states started an investigation.

However, the problems in the mortgage securitization market run much wider and deeper than robo-signing, and started much earlier than the foreclosure process.

When mortgage securitization took off in the 1980s, the contracts to govern these transactions were written carefully to satisfy not just well-settled, state-based real estate law, but other state and federal considerations. These included each state’s Uniform Commercial Code, which governed “secured” transactions that involve property with loans against them, and state trust law, since the packaged loans are put into a trust to protect investors. On the federal side, these deals needed to satisfy securities agencies and the Internal Revenue Service.

This process worked well enough until roughly 2004, when the volume of transactions exploded. Fee-hungry bankers broke the origination end of the machine. One problem is well known: many lenders ceased to be concerned about the quality of the loans they were creating, since if they turned bad, someone else (the investors in the securities) would suffer.

A second, potentially more significant, failure lay in how the rush to speed up the securitization process trampled traditional property rights protections for mortgages.

The procedures stipulated for these securitizations are labor-intensive. Each loan has to be signed over several times, first by the originator, then by typically at least two other parties, before it gets to the trust, “endorsed” the same way you might endorse a check to another party. In general, this process has to be completed within 90 days after a trust is closed.

Evidence is mounting that these requirements were widely ignored. Judges are noticing: more are finding that banks cannot prove that they have the standing to foreclose on the properties that were bundled into securities. If this were a mere procedural problem, the banks could foreclose once they marshaled their evidence. But banks who are challenged in many cases do not resume these foreclosures, indicating that their lapses go well beyond minor paperwork.

Increasingly, homeowners being foreclosed on are correctly demanding that servicers prove that the trust that is trying to foreclose actually has the right to do so. Problems with the mishandling of the loans have been compounded by the Mortgage Electronic Registration System, an electronic lien-registry service that was set up by the banks. While a standardized, centralized database was a good idea in theory, MERS has been widely accused of sloppy practices and is increasingly facing legal challenges.

As a result, investors are becoming concerned that the value of their securities will suffer if it becomes difficult and costly to foreclose; this uncertainty in turn puts a cloud over the value of mortgage-backed securities, which are the biggest asset class in the world.

Other serious abuses are coming to light. Consider a company called Lender Processing Services, which acts as a middleman for mortgage servicers and says it oversees more than half the foreclosures in the United States. To assist foreclosure law firms in its network, a subsidiary of the company offered a menu of services it provided for a fee.

The list showed prices for “creating” — that is, conjuring from thin air — various documents that the trust owning the loan should already have on hand. The firm even offered to create a “collateral file,” which contained all the documents needed to establish ownership of a particular real estate loan. Equipped with a collateral file, you could likely persuade a court that you were entitled to foreclose on a house even if you had never owned the loan.

That there was even a market for such fabricated documents among the law firms involved in foreclosures shows just how hard it is going to be to fix the problems caused by the lapses of the mortgage boom. No one would resort to such dubious behavior if there were an easier remedy.

The banks and other players in the securitization industry now seem to be looking to Congress to snap its fingers to make the whole problem go away, preferably with a law that relieves them of liability for their bad behavior. But any such legislative fiat would bulldoze regions of state laws on real estate and trusts, not to mention the Uniform Commercial Code. A challenge on constitutional grounds would be inevitable.

Asking for Congress’s help would also require the banks to tacitly admit that they routinely broke their own contracts and made misrepresentations to investors in their Securities and Exchange Commission filings. Would Congress dare shield them from well-deserved litigation when the banks themselves use every minor customer deviation from incomprehensible contracts as an excuse to charge a fee?

There are alternatives. One measure that both homeowners and investors in mortgage-backed securities would probably support is a process for major principal modifications for viable borrowers; that is, to forgive a portion of their debt and lower their monthly payments. This could come about through either coordinated state action or a state-federal effort.

The large banks, no doubt, would resist; they would be forced to write down the mortgage exposures they carry on their books, which some banking experts contend would force them back into the Troubled Asset Relief Program. However, allowing significant principal modifications would stem the flood of foreclosures and reduce uncertainty about the housing market and mortgage securities, giving the authorities time to devise approaches to the messy problems of clouded titles and faulty loan conveyance.

The people who so carefully designed the mortgage securitization process unwittingly devised a costly trap for people who ran roughshod over their handiwork. The trap has closed — and unless the mortgage finance industry agrees to a sensible way out of it, the entire economy will be the victim.

Yves Smith is the author of the blog Naked Capitalism and “Econned: How Unenlightened Self-Interest Undermined Democracy and Corrupted Capitalism.”

One of the most important issues in virtually every foreclosure case is trying to identify exactly who owns the note that the Plaintiff is foreclosing on.  This issue is almost never clear in the pleadings filed by the Plaintiff despite the fact that this issue is the central issue in the entire case.  Remember, the servicer is not the proper party in interest if they are not entitled to profit from the foreclosure judgment.

The plaintiffs and their attorneys make it difficult to find this information, but now we have assistance from an unlikely source, MERS or Mortgage Electronic Registration System.

A change on the MERS website that was just published today allows any party to search the MERS site by address of MIN number to gain the identity of the owner or investor in the note.

You can check the MERS website here to access this information.  This is critically important information in every case, especially when the Plaintiff has identified one party and the MERS site identifies yet another!