Posted on 10/10/2010 5:07:00 PM PDT by An Old Man
Foreclosuregate is rapidly spiraling out of control, and is going to get worse.
As I have repeatedly said since 2007, this is not about bad paperwork. It is about fatally-defective securities sold to investors for half a decade and the fraud up and down the line that enabled those sales.
In no particular order the biggest (but by no means the only) problems are:
There is a template for resolving this sort of problem, and The States can implement it right now. It was used in large part in Florida to resolve the "swampland" mess that arose during the 1920s, and with minor changes we can adapt it to what we face now.
The correct, just, and only way to resolve these problems is to force a clearance of the chain of title, which in turn forces proof of provenance of the indebtedness claimed to be owed by the homeowner.
This is no different than what is required in a bankruptcy or any other civil collection action where the person alleging that you owe a debt, and who wishes to obtain a judgment to collect it through garnishment or seizure, must first prove they are the actual beneficial holder of said debt.
Since there can only be one actual beneficial holder of said debt, this provides the necessary and appropriate judicial determination and forces recordation of the chain of title and security interest that should have been done all along.
To implement this we must do the following:
This process will inevitably cause the paper that was either not conveyed to the MBS Trusts at all or was conveyed in violation of the Representations and Warranties to be forced back up the chain. It will land on the large banking institutions who performed these securitizations. In some cases they will be able to force it further backward onto the originators, but in many cases the originator either was the bank or they're out of business. In those circumstances they're stuck with it.
This will further erase the arguments about servicers and investors over loan modifications, since now the Bank will hold the loan and have an undivided interest in it. As such there's nothing to fight about - if it's in the best interest of the Bank to modify the loan, they will. If it's in their best interest to foreclose, they will. But in either case they will do so lawfully, within the confines of due process and land title law, rather than the outrageously lawless process we have going on now.
The nation is on the edge of anarchy with reports of homes being literally stolen, bank employees breaking into occupied dwellings to change the locks on houses they had not yet foreclosed on, multiple sales of the same property, improper foreclosures on houses where there was no mortgage at all, service of process that never happened and was attested to, literal forgery of court documents (e.g. process service filed that pre-dated the lawsuit itself) and other outrages.
If this is not stopped immediately there is every reason to believe that the people of this nation will come to the conclusion that the bedrock of society - private property ownership - has been intentionally destroyed by a band of brigands with the explicit cooperation and permission of the government. Should that conclusion be reached - that our government has conspired with private parties to expropriate the homes of the citizens - history says that the outcome is likely to be extremely unpleasant and irreversible.
We are running out of time to do the right thing.
If you care about this country and its future you will fax this to your Governor, your State Attorney General, to your Congresspeople (all three) and to The President, and you will demand that they act - not talk - on this before November 2nd.
Words no longer count.
Market Ticker has been on top of this issue - excellent article
Yes, excellent article.
Since Obama is part of the problem, nothing like this will be done until he is out of office. But it will certainly help if we can take congress away from the Democrats in the coming election.
It seems that even if the land title system has been compromised, and that’s a big ‘if’, then judges will just deem the obligations of the lenders as having the full force of law regardless of what system is being used.
It’s foolish for anyone to think that they can get out of their obligation if they bought a home.
WASN’T ANDREW CUOMO IN CHARGE OF HUD WHEN ALL THIS STARTED???
AND NOW THAT BASTARD WANTS TO BE GOVERNOR?????
HIM AND BARNEY FRANK AND CHRIS DODD SHOULD BE IN JAIL - NOT RUNNING FOR OFFICE!!!!!!!!
Much of the legal jargon here is difficult for me to process. But one message I am seeing here is that many legitimate home/land owners may be forced to defend their homes with appropriate force.
When the government has colluded with part of the private sector to deprive citizens of their property, the logical result becomes holding one’s land forcefully.
I am seeing the potential for a total breakdown of the system of private property ownership in this country. i.e. anarchy.
I wonder if the liberals in congress are working up to the notion that the government own/control all the land and we become its tenants?
Yes, excellent article, great ideas and absolutely none of them will be implemented. I think it’s far more likely that Premier Hussein will come up with a fresh way to perpetrate even more fraud through Fannie Mae and Freddie Mac, with the US Taxpayer underwriting it all.
Karl Denninger would do well to start taking bets on how high the debt ceiling is going to be raised between now and the end of the year when this Congress finally goes bye-bye.
We ain’t seen nothing yet.
This is one where both the Government and the Investment Bankers have a lot to answer for. This reminds me a lot of the late 60’s and early 70’s on Wall Street, when rapid growth outstripped the ability of the operational end of Wall Street to keep up.
For those not familiar with this, trading volume in the late 60’s on Wall Street grew so quickly that the exchange actually closed on Wednesdays to allow member firms to catch up on their paperwork from Monday and Tuesday. Staff would also come in on Saturday to repeat the cycle for Thursday and Friday.
Many firms went bankrupt (they were all partnerships back then) because they lost control of the physical stock certificates. This was called FTD - Fails to Deliver and FTR - Fails to Receive. The member firms ended up having to make good on the missing certificates out of their own pockets. These levels actually reached into the billions, and this is back in the 60’s, not now!
Funny how history is now repeating itself. Operations is ALWAYS the bastard stepchild of the financial industry, and it looks like once again it grew beyond the capability of internal processes to keep up.
By the way - the man chosen by the SEC to study this issue in the mid 70’s was Bill Casey, the future head of the CIA under Reagan.
We can start with Franklin Raines, Barney Frnak, Chris Dodd, and Bill Clinton sine they are the heads of the snake.
Is he a tort lawyer?
Excellent article, and one worth passing along. I emailed it to my whole list.
Thanks.
While there will always be those who will try such a scheme, that's NOT the intent of the article, nor the apparently real danger to the rest of us.
The point of the article is that the title procedures & legal chain of title has been seriously compromised and that this could render a lot of properties unmarketable. So who here really knows something about this issue and how real is the problem?
Lately, I’ve been hearing some talk to that effect, that’s all. You are right, it wasn’t the intent of the article. Some people get carried away in their conspiracies. I understand that these properties will become unmarketable because of the situation, it just seems to me that suspending foreclosures would have the same effect. Why would banks lend money if they have no recourse? I know it would only be temporary, but if even for just a month, it seems this would cause severe harm to our economy. A housing market that’s completely frozen? Not my idea of economic recovery.
The legitimate homeowner is not threatened. It is only those recipients of the government social engineering efforts who are unqualified for the homes they obtain. The banks and other lending institutions that were coerced by combinations of agencies, Acorn, and activists organizations into qualifying people who really are not able to afford the mortgage.
Remember CRA? From Wikipedia: "The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII of the Housing and Community Development Act of 1977, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining."
Because of the extreme risks, these institutions were anxious to pass them off to other "investors" namely mutual fund owners who unknowingly have been given shares of those bad security instruments.
When the government has colluded with part of the private sector to deprive citizens of their property, the logical result becomes holding one’s land forcefully.<\i>
Yes, there was collusion. But it is the security instrument purchasers that were victimized. The problem is international in scope. Even foreign governments got into serious bind because they had innocently bought those shares (in the Billions of dollars).
I am seeing the potential for a total breakdown of the system of private property ownership in this country. i.e. anarchy.<\i>
True. But not among qualified homeowners. It is the mutual fund owners who have been sold down the river. Also, those businesses that were and still are being forced to go along with insane policies of social engineering govt agencies (namely Barney Frank and Freddie Mac and Fannie Mae and other cohorts).
When the "housing bubble" finally burst in 2008, there was widespread panic. But the American public was not savvy enough to know who to hold accountable, unfortunately.
I just want to really understand what's going on here, because when a company the size of BoA suspends all foreclosures in all 50 states, there's something big wrong.
The problem lies in the fact that no one in his right mind would be willing to insure that a future claimant to the "Title" in fact has the one and only claim on the land.
Currently most sales are insured by the "Title Company" (which is really just an insurance company) and a policy is issued that the person vested is the one who owns the property subject to certain exceptions contained in the policy.
In order to issues such a policy, the Title Company must assure its underwriters that the chain of title is unbroken from the first to the last person who claims ownership.
That chain was broken several times during the process of securitising the mortgages. Because of the broken chain of title, the title companies can no longer issue their insurance policies.
The fix, is as outlined above. The reason the banks balked at the process is because it takes time, and costs a lot of money to get the evidence of ownership.
I have skipped a lot of detail about what constitutes evidence of title and how it is evaluated. Just keep in mind that you can only get title from someone who own it, not from some clerk who just handles the paperwork.
Bank Of America did that? Whoa. I heard about these title issues and illegal foreclosures several months ago, I thought the problem had been overstated. I guess not.
This statement by Denninger is apocalyptic:
“If this is not stopped immediately there is every reason to believe that the people of this nation will come to the conclusion that the bedrock of society - private property ownership - has been intentionally destroyed by a band of brigands with the explicit cooperation and permission of the government. Should that conclusion be reached - that our government has conspired with private parties to expropriate the homes of the citizens - history says that the outcome is likely to be extremely unpleasant and irreversible.”
I already loathe Bankers almost as much as Attorneys, and I’m caught up on my Mortgage. I’m not the only one. I’m just for starters, I guess you could say. The level of distrust is high, he’s right about that.
Not to forget Jamie Gorelick & Obama’s new Nat’l Security man, both of whom profited mightily from Fannie/Freddie.
I read elsewhere that the clouded title problems effectively screw up the resale home market until cleared.
Sounds like thousands deserve prosecution but I bet we never see it.
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