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.
So I can run up debt like a madman and its’s cancelled every seven years? Awesome!
Thanks for the reply. Will look at that site.
I am with BOA so are three active entries in MERS bad news? :-(
The whole thing can be resolved if they all get together and unravel it, and yes, it can be unraveled.
The mortgage people, the real estate people and those who bought those houses are all to blame, as well as the bank that sold and resold the mortgages. There has to be a solution. There is not sufficient time to allow for the unraveling.
Oh yeah, and just because some business does it does not make it right.
Post #299 has some good info.
Here is another source.
http://4closurefraud.org/2009/10/18/foreclosure-fraud-guide-to-looking-up-public-records-for-fraud
This is how I found out how to look up county records. This is a little more involved because it tells you how to find the fraud. But, it was useful in checking your own county records. Legally, only what is filed there should count.
These days, who knows?
It make me wonder if, twenty years from now for instance, someone pays off their mortgage, are they going to be able to get clear title to their property if it has be mishandled as it was bundled into a security, sold and perhaps resold.
Yep, a different servicer.
Excerpts:
What we call here a Black Swan (and capitalize it) is an event with the following three attributes.
First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.
* * *
Taleb enumerates ten principles for building systems that are robust to Black Swan Events:[10]
It pretty clear to me that this discovery of major, industry-wide fraud and forgery is a significant development. And these kinds of endemic criminal antics are not going to go away quickly regardless of peoples' wishes and fears. These crimes are still being uncovered. Without decisive action by both political parties to investigate and punish wrong doers -- this scandal will only worsen over time.
Frankly, I would like to see some CEOs and CFOs do the perp walk in orange jump suits. The alternative is to let a mob of innocent foreclosure victims arm themselves with large rocks and let whatever happens take place. But waiting for Congress to act fairly and decisively is probably a waste of time.
Especially with all those $$$ Trillions out there for campaign bribes . . .
I'm sure that there are also plenty of people who should go to jail for fraud too. It may look like they are getting away with it for now, but it shouldn't be an excuse for anyone else. I hope that we can come out of this with better character as a nation, because we are going to be suffering for our binge for some time to come.
If I was one of these bankers and I got hauled in front of Congress for signing thousands of documents without reading them I would reply that I was just following Congress’s example of voting on bills that doled out hundreds of billions of dollars without reading them.
You want to find a lawyer who specializes is real property law, not family law. This sounds very confusing and I suspect you haven’t been told the facts concerning the sale of your mortgage. It is definitely in your favor that you’ve kept paying on your mortgage. Never give them ammunition which would aid them to seize your property.
You mentioned a ‘quite title”; I have no idea what that would be.
A ‘quit claim’ however, is something you should discuss with a lawyer, which I am certainly not.
Good luck! These are interesting times and frankly I wish for a quieter time.
Thank you so much for your input. It helps to just know that my fears aren’t unreasonable.
May it help other Freepers who are just lurking!
Of course the same thing happened in the Fannie/Freddie subprime credit default scandle 2 years ago and or conplicitous politicians rode in and bailed them out with your money. Moreover in paying of the bankers the bankers had the brass nutsac to demand, and get multimillion dollar bonuses (paid for by taxpayers) all while they peddled these MBS pieces of crap to your retirement fund. Take a look at what your retirement fund has lost and then ask if it was because your fund bought these MBS from GMAC, Bank America, JPMorgan/Chase, Goldman Sachs. They are getting ready to do it again folks. Bend over the pickle barrel...here it comes.
No fraud here just a bunch of ‘dead beats’ trying to play the system to get free houses. Even if the banks are using forgery and perjury to promote their case for foreclosure these ‘dead beats’ can’t be allowed to win. To hell with the rule of law.
I would find that alarming (assuming you have just a single mortgage), yes. If all three have the same servicing agent, I suggest a letter listing the three, politely expressing your concern, and asking them to investigate and tell you which entry is correct and how you can void the incorrect ones. If they are already accusing you of nonpayment or threatening to foreclose, contact an attorney immediately.
Isn't that the truth
Thank you very much for the link
I might but I trust the banks I am sure all the paperwork is avaialbe and completely correct and seeing how I am not behind and such concerns are only for ‘dead beats’ in the effort to get free house I am sure everything is just fine. (sarc)
Well at least now I know why I can’t get a refi at a lower rate despite a credit score in the mid to upper 800’s and a solid job.
The root cause of this crisis goes as far back as “The
Community Reinvestment Act” of the Carter Administration....
it expands throughout the decades until the Jesse Jackson buses, and the NAACP and other groups are picketing bank president’s homes, who won’t give loans to ghetto people who have no jobs....go figure. Did they really think this would turn out well, or was it all part of the plan to allow community organizing destroy a perfectly good capitilist county.
The new mortgage companies and banks jumped into it with both feet during the upsurge of home values, because they thought they couldn’t lose, as Fannie and Freddie back those bad mortgages, and the US taxpayer got on the hook,,,,but it didn’t start yesterday or 2008, it was started with 1960s SDS, and Saul Alinsky types, who decided to flood the system with whatever would bring this great country down!
The fools who support communism, while their brains are fogged, who took over schools, governement and banks to achieve such a destructive end, those are the culprits...the rest went along for the ride!
bump
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