Foreclosuregate is About to Explode

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.

*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.

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.

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.

A lot of these loans were applied for and managed electronically.
I hear tons of people are trying to make their loan go away because of a lack of paper.
There are loans, there are people not paying that have to be foreclosed on, but there are always lawyers willing to make a mess.

Heard on guy say if the Judges ridiculously side with the borrowers on this, the whole economy will be gone.
Basic end of days stuff!

“Have you contacted CitiMortgage concerning this situation? (You haven’t said.) “

Yes, we did. They claim that Fannie has our mortgage as well. I didn’t mention it because I was trying to keep the facts clear. It is a bit out of the norm. And, yes we are still paying, and keeping the records of doing so.

When or if I can get hubby to get a lawyer, do we want to do a quite title? Or just go in and see what is what? The last lawyer we dealt with was, well, it took him two years to file the trust we did with him. Not impressed at all.

We got the same type of letter once. I continued to pay the company as specified on the note but then sent a letter to that address asking for clarification. It turns out the letter we initially received was in gross error. It was a good thing we stuck to the legal document of the note and didn’t send our payments to the address on the letter.

Banks will get the laws they need sometime after election day, and foreclosures will resume.

BINGO! They will just change the rules and override state laws:
The purpose of the “Interstate Recognition of Notarizations (IRON) Act (HR 3808)-- written by Rep. Robert Aderholt, R-Al., and currently sitting on the president’s proverbial desk -- is to streamline the recognition of notarizations across state lines. Aderholt said in a statement that the legislation “will help businesses around the nation by eliminating the confusion which arises when states refuse to acknowledge the integrity of documents notarized out-of-state. This issue continues to be a problem for businesses and individuals who engage in business across state lines.”

This was supposed to have been shot down with Obama's "pocket veto" but if so, like the undead, it will appear again, as you said, after the elections.

So, you were sent a letter to pay a different servicer from what your note said?

I think that is what is strange about this. Fannie wanted us to start paying the very SAME servicer that we had been paying since the original mortgage holder told us to in 2007. The Fannie letter was in spring 2010.

That is not the issue. There is not a major problem with people paying one bank, then another bank coming in and trying to foreclose. I’m not saying that couldn’t happen in an isolated case, but it would get straightened out before foreclosure. It is not a question of who owns the house, but who owns the loan.

So have you called a lawyer yet? Publicity is good, but it needs to be part of a legal strategy.

The fact that you were making payments, and (presumably) have paperwork from Chase indicating a reduced payment should give you some grounds to say you acted in good faith and hold off the foreclosure.

Frankly, I don’t know why Chase would want your house when you are making an effort to pay and taking care of the property. Many banks are avoiding foreclosures even on complete deadbeats because of the glut of them and every house they foreclose on is a tax and insurance liability.
On the other hand, my experience earlier this year convinced me that Chase is a collection of dumb a$$es never to do business with again, so who knows what they would do

No they don’t get the shaft, but they could be fully funded if the funds are behind in payments to them. The type of debt I’m talking about is a car payment or homes or all business debts. All tax liens cancelled. Does a state owe a construction firm, not any more. Does that construction firm owe its creditors...nope! Student loans , all gone! The idea is that all personal and private domestic debt owed by any one to any one, government included, zero’d out. After that, government and banking reforms would be needed to sustain the enourmous economic benefits such a freeing up of capital would unleash. Deadbeats with a history of not paying their bills could be put on a very short leash but it may give many others a new start!

Retirement funds would need special consideration and I haven’t included them. Social Security and medicare type programs, like wise. Social security for example deals with both current ongoing obligations as payed for by pay roll contributions as well as theoretical payouts in the future which will outstrip its intake unless fixed.

I’m also not talking about ongoing obligations such as utilities, rent, or the cable bill. I’m talking about single occurence debt 50 dollars or more subject to interest or penalties when not payed. One would still pay their traffic tickets!

In many cases it cannot be determined who owns the loan. Since thousands if not tens of thousand of loans were sold in bits and pieces around the world AND the original paperwork has been destroyed ownership is sketchy. Many servicers claim that they own the loan but are unable to cough up any original papers for introduction into a court proceeding OR even evidence of a transfer or sale of the loan.

So If I own a construction company, I’d better collect my debts before you gain power or my construction company is gone. If I own a small savings and loan, my business is gone. If I own a car dealership, my employees are now all unemployed.

Cool.

I have contacted a law firm that specializes in this.

Also, Chase has informed me that if I try to make my scheduled payment, that they will return it because I am in the foreclosure process.

I have not missed a payment since we got our mortgage with them seven years ago. October is the first payment I will have ever missed.

Unfortunately, Michigan is a non-judicial review state, meaning that judges do not get to review the foreclosure.

Mine went from Chase, to the lawyers to sheriffs sale in less than 30 days. The sale is scheduled for two and a half weeks.

And btw, I contacted the Attorney General’s office and they are doing nothing. Michigan is one of a handful of states that will NOT be investigating mortgage companies.

Attorney General Mike Cox, who is a conservative Republican and who I voted for last month for governor, has a team of financial advisers for his political campaign. One of them is the owner of Trott and Trott, the Chase selected lawfirm that is suing us.

State investigators has said that they have given him cases “served on a silver platter” and he still would not prosecute those lenders abusing the mortgage process.

There are a lot of home owners in out city who have done the same thing, and paid our entire mortgage. We are all homeowners and despise the moochers who now expect US to pay for their bad decisions.

Other parts of this reply # *** were self censored by Arrowhead1952
I’m going live here forever, be the crazy cat lady of the neighborhood and they’ll have to drag me out of it.

Well, I have to add this, that got a real snicker out of me. Dog was on the bed and looked at me like "WTH was that all about?"

It's a sad state of affairs when FReepers some who even report themselves to be lawyer advocate/approve forgery, perjury and other illegal acts just to make sure the ‘dead beats’ escape the justice they feel they have coming. Seems to me once we allow such to be okay in one legal proceeding what's to prevent them from being introduce into other proceedings It is true that most of these cases are people who are behind and should be foreclosed on, but every day almost ever hour new cases of innocent people getting caught up in the quagmire of lost records/MERS Errors/Multiple Assignments are uncovered. And I ask if lenders are allowed to use perjuried and forged/post dated documents how is someone who has been honest in their mortgage dealings to defend themselves?

If I wanted to type for an hour, I could give FReepers a real inside lesson on what transpired here, but suffice it to say that the major mortgage lenders like WAMU, and Countrywide figured out how to make a fortune on sub-prime mortgages, and Wall Street figured out how to make additional billions securitizing, selling and reselling near worthless mortgages. You and I were there to watch it all unfold, and we tried to warn many FReepers of the bubble which was about to burst.

How can you find out if your mortgage has been affected?

As far as “How do I know the bank will be able to give me clear title once I make my last payment?” There’s no easy way.

As far as “Can I have a heads-up on whether major problems are on my way”, you can look up your house at https://www.mers-servicerid.org/sis/

More than one “active” entry is bad news. Having a serving agent other than what you expect is bad news. So far only people with GMAC, Bank of America, or JPMorgan have had major errors along the lines of foreclosing on the wrong house.

Your debts to creditors owed by you as a construction firm owner would also be cancelled.... as would the mortgage you are paying on the building you are housing your business in...so yeah not only would you have your “debts forgiven others’ debts to you are forgiven as well”(GEEZE, THAT SOUNDS LIKE THE LORD’S PRAYER, doesn’t it!!!) That was the basis of the Hebrew bankruptsy laws which was design to stabilize and unify the various tribes. It is the basis of our current bankrupsy laws right down to the 7 YEAR PERIOD allowed between bankruptsies under our laws. COOL, HUH?

We need a domestic national bakruptsy, a national reset!

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