Posted on 09/26/2009 9:18:45 PM PDT by thouworm
The banks arranging these mortgage-backed securities have typically served as trustees for the investors. When the trustees could not present timely written proof of ownership entitling them to foreclose, they would in the past file “lost-note affidavits” with the court; and judges usually let these foreclosures proceed without objection.
But in October 2007, an intrepid federal judge in Cleveland put a halt to the practice. U.S. District Court Judge Christopher Boyko ruled that Deutsche Bank had not filed the proper paperwork to establish its right to foreclose on fourteen homes it was suing to repossess as trustee. Judges in many other states then came out with similar rulings.
Following the Boyko decision, in December 2007 attorney Sean Olender suggested in an article in The San Francisco Chronicle that the real reason for the bailout schemes being proposed by then-Treasury Secretary Henry Paulson was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. Olender wrote:
“The sole goal of the [bailout schemes] is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth. The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.
“. . . The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC . . . .
“What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back.”
Needless to say, however, the banks did not buy back their toxic waste, and no bank officials went to jail. As Olender predicted, in the fall of 2008, massive taxpayer-funded bailouts of Fannie and Freddie were pushed through by Henry Paulson, whose former firm Goldman Sachs was an active player in creating CDOs when he was at its helm as CEO.
Paulson also hastily engineered the $85 billion bailout of insurer American International Group (AIG), a major counterparty to Goldmans’ massive holdings of CDOs. The insolvency of AIG was a huge crisis for Goldman, a principal beneficiary of the AIG bailout.
In a December 2007 New York Times article titled “The Long and Short of It at Goldman Sachs,” Ben Stein wrote:
“For decades now, . . . I have been receiving letters [warning] me about the dangers of a secret government running the world . . . . [T]he closest I have recently seen to such a world-running body would have to be a certain large investment bank, whose alums are routinely Treasury secretaries, high advisers to presidents, and occasionally a governor or United States senator.”
The pirates seem to have captured the ship, and until now there has been no one to stop them. But 60 million mortgages with fatal defects in title could give aggrieved homeowners and securities holders the crowbar they need to exert some serious leverage on Congress – serious enough perhaps even to pry the legislature loose from the powerful banking lobbies that now hold it in thrall.
http://www.globalresearch.ca/index.php?context=va&aid=15324
Thank you for the heads up on this. Here’s a link to the Court’s decision: http://www.kscourts.org/Cases-and-Opinions/opinions/supct/2009/20090828/98489.htm .
Please re-post manana when most normal people are awake and sober, better yet do it again Monday.
Another instance of a judge declaring that contracts, willingly entered into by both parties, are invalid.
Why don't the aggrieved parties just give the money back?
So if I get a foreclosure notice because I could not pay due to unemployment, how would this help me? Just asking as I am not sure I fully understand all of this. I am not in Kansas.
It’s worth noting that the author of this piece, Mike Taibbi, is a hard-left radical anti-capitalist. His byline usually graces Rolling Stone, which tells you everything you need to know when reading this...
The problem, I think, is that to foreclose one must present to the court physical evidence in the form of the recorded instrument. That is what has been thrown out, in willful disregard of the foreclosure statues. It’s hard to believe that stupidity can exist on so grand a scale, but evidently it can.
Ping.
I think this might relate with the Ourobouros thread
Rolling Stone another dying publication. Great idea - take out a mortgage - can’t pay or don’t want to pay - not your fault.
Unreal. I feel sorry for people who are unemployed and adjustable rate mortgages need to be ended. If you took out a debt - pay it back.
Check out the Global Research link; This isn’t Taibbi’s research; apparently that is forthcoming. He is blurbing about the Global Research story on the court decision.
The criminal part was when the Freddie Mac and Fannie May were giving away federal guarantees for loans. That was a promise to engage in theft to further fraud.
Won’t the mods pull it?
The original Promissory Note (agreement to repay) is what is sometimes difficult to produce.
That's actually not the case.
In the old days, a bank that made a mortgage loan was loaning its own money. They made sure that the people they loaned money to could pay it back, because it was their money. The bank would service the loan over the life of the mortgage. They kept the original paperwork with all the signatures and supporting documents in a physical file on site. Twenty years after the loan was made they could produce all the paperwork to prove the money was owed to them.
Nowadays, with the securitization of most mortgages, the originating bank sells loans to Wall Street firms that bundle thousands of mortgages together into bonds and sell them to investors.
Along the way, the original mortgage documents are destroyed and replaced with a few entries in an electronic database.
The bonds are not traceable to source mortgage documents because the source mortgage documents no longer exist.
If somebody gives you a signed, notarized IOU, what would you do with it? Would you make a few entries on a computer file and destroy the IOU, or would you hang on to the IOU to prove that the money was owed to you?
Good luck getting somebody to pay you back without the physical IOU. For one thing, even if you pay them, they can't return the IOU to you for you to destroy. You could pay them, then a year later they might "find" the old IOU and demand you pay them again.
From what I read so far, it is the inability to present the entire chain of title in court as a series of physical, original documents, that creates a problem for foreclosure.
Nah, they’re asleep. Anyway we’ll see.
Well, at least now we know where some of the bailout money is going.
Sixty million free houses.
What a jerk I was!! I probably could have lied my way into a seven figure loan! And then just skated!
“WHY DO PEOPLE POST HEADLINES IN ALL CAPS?”
Silly, they do that so people who post in all caps will know where to be. ; )
Not really. When your bank sold your mortgage to someone else, were you a party to that contract?
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