Nope, much thanks!
Yup, this is definitely the "Real estate+ Scam+ Economic Holocaust" pattern that popped up about 10 days ago.
Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.
Posted on 10/11/2010 9:13:41 AM PDT by ex-Texan
If you work in the mortgage industry or for a title insurer, you might not want to make any plans for the next six months. Foreclosuregate is about to explode. It is being alleged that many prominent mortgage lenders have been using materially flawed paperwork to evict homeowners. Apparently officials at quite a few of these firms have been signing thousands upon thousands of foreclosure documents without even looking at them. In addition, it is being alleged that much of the documentation for these mortgages that are being foreclosed upon is either "improper" or is actually "missing". As lawyers start to smell blood in the water, lawsuits challenging these foreclosures have already started springing up from coast to coast. In fact, some are already calling Foreclosuregate the biggest fraud in the history of the capital markets. JPMorgan Chase, Ally Bank's GMAC Mortgage and PNC Financial have all suspended foreclosures in the 23 U.S. states where foreclosures must be approved by a judge. Bank of America has actually suspended foreclosures in all 50 states. Now, law enforcement authorities from coast to coast are calling for investigations into this controversy and it could be years before this thing gets unraveled.
This thing just seems to escalate with each passing day. It is being reported that the attorneys general of up to 40 U.S. states will be working together on a joint investigation into this foreclosure crisis. Lawmakers in both houses of the U.S. Congress, including Nancy Pelosi and Christopher Dodd, have called for an investigation to begin on the national level. U.S. Attorney General Eric Holder said last week that he is looking into the issue. Things are certainly getting very serious out there. Never before has there ever been such a national focus on foreclosure paperwork.
But apparently there are good reasons for such scrutiny....
*One GMAC Mortgage official admitted during a December 2009 deposition that his team of 13 people signed approximately 10,000 foreclosure documents a month without reading them.
*One Bank of America employee confessed during a Massachusetts bankruptcy case that she signed up to 8,000 foreclosure documents a month and typically did not look them over "because of the volume".
But the "robo-signing" aspect of Foreclosuregate is just the tip of the iceberg. Apparently there is a whole lot more going on than just a bunch of bad signatures.
Peter J. Henning, a professor at Wayne State University Law School in Detroit, was recently quoted by MSNBC as saying the following about Foreclosuregate....
"You've got so many potential avenues of liability. You don't even know the parameters of this yet."
The sad truth is that potentially millions of foreclosures across the United States could potentially be invalid because the securitization process has muddied the chain of ownership. In fact, an increasing number of judges from coast to coast have been ruling that the "owners" of the mortgage have no right to foreclose on a property because they lack clear title.
At the core of this title controversy is MERS - Mortgage Electronic Registration Systems. MERS is based in Reston, Virginia and it was created by the mortgage industry to enable that big financial firms to securitize and swap mortgages at high speed. MERS allowed these big financial firms to largely avoid the hassle of filling out more forms and submitting new filing fees every time that a mortgage was traded.
But now MERS is facing some very serious legal challenges. A recent article in Businessweek described the situation this way....
A lawsuit filed on September 28th in federal court in Louisville on behalf of all Kentucky homeowners claims that MERS was part of a conspiracy to create false promissory notes, affidavits, and mortgage assignments to be used in mortgage foreclosures. Similar class actions have been filed on behalf of homeowners in Florida and New York. Karmela Lejarde, a MERS spokeswoman, declined to comment on any pending litigation.
The reality is that as millions of U.S. mortgages have been bunched together and traded around the globe at lightning speed, it has become increasingly unclear who actually has title to them and who actually has the right to foreclose on these properties.
Title insurers have backed the titles of millions of these foreclosed properties and now potentially find themselves in a heap of trouble. Some of the biggest title insurers have already begun circling the wagons in an attempt at damage control. For example, one of the biggest title insurance companies in the United States, Old Republic National Title Insurance, has already declared that it will no longer write new policies for homes that have been foreclosed on by JPMorgan Chase and GMAC Mortgage.
So what happens if nearly all title insurers start avoiding foreclosed properties?
Won't that make it much more difficult for the banks to sell the massive backlog of foreclosed properties that they have accumulated?
In addition, Americans that have purchased foreclosed homes may now be facing some serious problems themselves. Millions of Americans may now "own" homes that they do not have clear title for. When it comes times to sell those homes, many Americans may find themselves unable to do so.
Needless to say, this is a complete and total mess.
Already, U.S. banks have a record number of foreclosed properties that they need to clear out, and now all of this scrutiny on foreclosure paperwork and all of these lawsuits are going to grind the process of getting these homes sold off to a standstill.
In fact, the true legacy of Foreclosuregate may be the massive amount of bank failures that it causes.
It would be difficult to understate how much of a nightmare Foreclosuregate is going to be for U.S. mortgage lenders. Having to go back through the paperwork of millions of old mortgages is going to be a complete and total disaster. If banks end up being unable to foreclose on a large number of bad mortgages, it could potentially be enough to put many banks out of commission for good. Not only that, but the legal fees that many of these banks will accumulate defending lawsuits related to Foreclosuregate will be astronomical.
The U.S. mortgage industry was already on the verge of death, and Foreclosuregate may just be the straw that broke the camel's back.
The reality is that U.S. banks are drowning in foreclosures and this current crisis is just going to make things a lot worse. Back in 2005, there were approximately 100,000 home repossessions in the United States. In 2009, there were approximately 1 million home repossessions in the U.S. and RealtyTrac is now projecting that there will be an all-time record of 1.2 million home repossessions in the United States this year.
For the U.S. mortgage industry, Foreclosuregate must feel like someone has dropped a bomb on them after they have already been beaten up and doused with gasoline.
Attorney Richard Kessler, who recently conducted a study that found serious errors in approximately three-fourths of court filings related to home repossessions, says that foreclosuregate could haunt the U.S. mortgage industry for the next ten years....
"Defective documentation has created millions of blighted titles that will plague the nation for the next decade."
While it may be easy to beat up U.S. mortgage lenders and say that they deserve all this, let us not forget that this is going to impact a whole lot of other people too.
It is going to become much harder to get a mortgage. It is going to become much harder to buy a home. It is going to become much harder to sell a home. The U.S. housing industry is likely to suffer a significant downturn due to all of this. There is even a good chance that the entire U.S. economy could be dragged down for an extended period of time.
So no, Foreclosuregate is not good news for anyone.
Well, except maybe for lawyers.
But for virtually everyone else this is really bad news. Any hope that the U.S. housing industry would experience a quick recovery is completely and totally gone.
Buying foreclosures is quickly becoming as popular and lucrative public pay phones....
This whole thing is such a joke. First of all the servicer of any mortgage has every right to foreclose on a property and would have all the documentation they need to foreclose on that property. Second, as a servicer any funds they retreive must go back to the note holder so proper documentation or not they know who owns the note. Lastly, are we going to pretend that people didn’t take out these mortgages? People took our mortgages that they didn’t have the resources to pay for or out of bad luck lost their jobs and didn’t have sufficent back up resources to hang on to the property during the recession. Is this not the “bankers” fault. These people that would use lawyers to keep their houses after not making mortgage payments for months and sometimes years are just as scumy. A crook is a crook and I can’t believe anyone would stand up for any sort of crook a billionaire one or a lower class one.
Just more evidence that a crime isn’t a crime and a sin isn’t a sin. I become more discouraged and ashamed of people in this country everyday.
Have you hired a lawyer? I would look into it. When Joe Homeowner tries to call and get help it is treated differently than when a lawyer calls. A lawyer may be able to file some sort of injunction until it can get sorted out.
Crooks & Liars and progressive.org think we need to nationalize the banks!
That would be perfect for their socialist agenda.
There will be a gathering at the cemetary if America croaks, but it won’t be a gathering of friends - it’ll be every Marxist in the world dancing around and pissing on our grave.
You may want to search “Barney Frank” and Chris Dodd” and “CRA”.
I'm amazed to see ACORN’s talking points espoused on a conservative website.
Also, take note that I did NOT use the word “criminal” - you did. I used the word “lawbreaker.” Subtle but important difference.
It *is* a matter of law, otherwise the courts would not be involved. And people who don’t uphold their contractual obligations are lawbreakers.
I’m getting tired of this blame the borrower rhetoric. If you don’t have the original documents, you aren’t owed the money. These loans are sold from place to place without the proper documentation and now nobody really knows who is owed what money. If I start paying someone that only has a copy of the documents, what rights do I have when someone else comes with copies of the same documents saying that I owe them?
Blame the banks for this mess, not the borrowers. It’s the bank’s greed that got them into this mess. If the banks had followed the law, they wouldn’t have this problem. Why do so many people here support banks that operate outside the bounds of the law?
Ping
No foolishness there. You can get up and look yourself in the mirror. Can't put a price on that.
Forgive me for saying so, but the time is coming when people like your niece (and many, many others) will need to pay the piper. It may take awhile to get here, but the time will come.
What I foresee happening is that once this mortgage mess sorts itself out - and it will, it just takes time to grind through - the people who gamed the system for all it was worth won't be able to borrow money, anywhere, for a long, long time. No housing, no cars, nothing but Debit, and Pre-paid Credit cards. And forget about anything that requires a credit check (think employment, for one). In the new age of instant credit checks, where cash is secondary and little plastic cards are king, this will be a massive handicap, I think.
Meanwhile, the other 80-90% of the people who played by the rules to the best of their abilities (like you and I) will continue to get along just fine.
Thanks for posting and thanks to all posters. Fascinating story. I’ve been following for several days at zerohedge.
Agreed.
Hey, I got my mortgage from a credit union with an axcellent record that wouldn’t sell the mortgage. I did my homework. I pay my bills.
About the only bad thing is the drop in home values. While I’m still above water I’ve lost well over $60k in value to the point where I can’t even refinance with a credit score of 821.
And that worries me, more than the fact that we are underwater, or that it will be difficult to sell in the future. I'd rather keep making payments to my mortgage company than to the government - a business will never scare me as much as socialism.
There is always legal recourse against business, but government has become bigger than the judicial system.
If the govt. hadn't forced mortgage companies to lend in such a risky manner, they wouldn't have tried to stem potential losses with risky subprime securities. And this presented those who unethical with a huge opportunity to scam millions off investors.
You can't give crooks such opportunities. What we are seeing now is the result of such opportunities created by forced lending and subsequent risky loss mitigation by the mortgage industry.
I could set you up with a nice place rather inexpensively in Daytona Beach...but not free...
Nope, much thanks!
Yup, this is definitely the "Real estate+ Scam+ Economic Holocaust" pattern that popped up about 10 days ago.
++++...”And I believe every bit of this was by design. ...”
No mark to market write-downs (losses).....>
No real buyers (demand) except at market correction/demand.....>
Non-performing assets (diluted bundled property titles securities)......>
No return/ negative returns, ....> Losses ......>
Stop losses on bundled title seizures (non-performing losses)....>
Conduit......> Bank-holding companies;.........>
Govt. guaranteed security payoffs ........>
Taxpayer backstop guarantee.
While I'm sure there are a handful of incidents of out and out foreclosure fraud, I have no doubt that in over 99% of these cases, the borrowers did indeed borrow the money, and have failed to make their agreed upon payments. They deserve to lose their homes, but may escape that fate due to shoddy record keeping and paperwork on the part of the banks.
The problem is that the lenders are having problems proving they own the mortgage and have the right to foreclose.
The banks have shot themselves in the foot (perhaps in the head) with their shoddy practices, but the deadbeat homeowners are the potential beneficiaries, rather than the “victims” of this idiocy.
I do not feel sorry for the banks, as they have created their own nightmare. I also do not think special legislation making it easier to foreclose with materially deficient documentation is appropriate, as this will facilitate real foreclosure fraud.
At the same time, I don't believe any government imposed moratoriums on foreclosures appropriate. Why should the banks with good documentation be forced to suffer for the foolishness of those without it? Each foreclosure should be handled on an individual basis. If the documents are there, it should go through, if not, the bank has a problem.
Not true at all.
“Law” deals with crimes, violations or damages to another persons rights or property. You burn down their house. You steal their pig.
“Equity” deals with fairness and contractual and civil obligations. You buy a new car and it’s a lemon, so you take the dealer to court.
“Admiralty” deals with international contracts and relations.
Just because a person ends up in court does not in any way mean that person was a “lawbreaker”.
50 million divorced people would agree!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.