Posted on 11/12/2010 6:04:54 AM PST by em2vn
The expected litigation frenzy against mortgage lenders that used "robo-signing" tactics — mass signing and approval of foreclosure documents without verification — has launched, with class actions in Florida and Maine and a lawsuit by Ohio's attorney general filed this month, all against GMAC Mortgage.
Other purported class actions involving robo-signing have been filed in federal courts in Indiana, Kentucky, Maryland and New Jersey in recent weeks. Lawyers expect many more to follow
(Excerpt) Read more at law.com ...
The MERS thing is what scares me. Essentially, to save a buck by not paying countys what they were owed to file documents and to be able to “bundle” mortgage loans as financial instruments the lenders created MERS out of whole clothe. This was insane.
It would be as if google today decided that they were going to handle all the vehicle liens in the country and the lenders agreed that was a good idea and started using a new database product called “google liens”. “google liens” would be their new electronic database for handling vehicle liens, not the state systems. Then, “google liens” via Goldman Sachs would start “bundling” all the vehicle loans in to financial instruments and sell them to investors. Keep in mind, these are just the “liens” and not the actual vehicle title itself. The state would show the lienholder as “google liens” and not the actual lenders name. “google liens” would then merrily track the bank handling the loan and watch as the loan was transferred from bank to bank. All the while never actually putting the lenders name on the state title because our generated out of nothing “google liens” company would do that. Even though it was not legal.
Starting something like “google liens” would be a big risk and likely not something they would even do because there is no foundation in law for such a system. The states would tear their heads off if they tried this but MERS got away with doing the same kind of thing because the counties were unable to fight the MERS system. There was no foundation in law for MERS and like my pretend “google liens” MERS was an illegal system from day one.
MERS essentially disconnected the deed from the mortgage because the lenders used MERS to get around filing the proper paperwork with the county. Again, to save a buck and to bundle the loans so they could be resold as financial instruments. In my pretend “google liens” analogy it would be like having a title through the state that had no or the wrong lienholder on it. Technically, you would own the vehicle free and clear subject to a supposed lien through “google liens”. The problem with this and MERS is that you cannot legally disconnect the two things at the county level or the state level in the case of vehicle liens. Because of this MERS may cause the total financial meltdown of the American economy and the destruction of the chain of title to real property. It is possibly real estate and real property ownership Armageddon in America.
You see TV stories about people, lawyers in tow, moving back in to their forclosed houses. How can this be? Well, due to MERS they may have a deed to the property that has no legally filed note against it at the county level. Only paperwork through MERS. “Lenders” may not be able to prove they actually had the note. Because of that they have made false statements (robo-signing) so they could “foreclose”. Even though the “homeowner” did not pay those lenders may be legally liable for money damages because they committed fraud. Or, and I’m waiting for this, the lenders may be subject to criminal prosecution.
The legal weight of the MERS mess is substantial. The damages from false affadavits, illegal foreclosures (technically illegal) and the loss of income by the counties is more than any economy can bear. More than the government can bail out. Much more. On top of this what happens when people figure out they can default on their “loan” and own their house free and clear? Or maybe they just reduce their “mortgage” payments because they can without losing their house.
And what about the “homeowners” credit report and credit score? If indeed the foreclosure was technically illegal and the loan was a mess due to MERS what happens when a court case makes the credit reporting agencies purge the adverse hit on the homeowners credit report report because their is no proof they owe the mortgage entity on the credit report. In essence, the “lender” provided adverse information to the credit bureaus based upon false information. If Bank of America, for example, does not really hold a legally valid mortgage because it went through MERS then what kind of legal damages does that create? A mess. A big mess!
You can read more about MERS all over the Internet. Here is a good link:
To save a few bucks some big lenders constructed an entity, MERS, from whole clothe to save a few bucks. I predict that action will come back to bite them and all of us.
Good post.
The whole robosigning thing has been blown out of proportion and used as a smokescreen to shelter deadbeats and enrich lawyers. And as a vehicle for cranks to attack banks. Not that the incestual relationship between government and banks isn’t unhealthy, but it’s a different problem.
The comparison that I made to stock trading in my post #18 gets to the heart of the problem: record keeping for stock trading is done by private entities and trusted, while real estate records are handled by government agencies and is a mess. Just as one would expect.
What is needed is a one-time (gigantic) effort to identify each parcel and its components (mineral rights, water rights, easements, etc.) and get it right. Have the database be accessible electronically so that there is no tedium in determining ownership, and so that processing it is efficient. Unlike the laborious system that we have now, where lawyers and judges only make things worse.
So is ok with you if they bypass the law as written? And make up their own laws? What other laws will you allow them to bypass and make their own?
Also you failed to answer my point if the Title Insurers are worried there must be reason.
“while real estate records are handled by government agencies and is a mess. Just as one would expect.”
It’s a mess because the banks aren’t using it! It’s a mess because they didn’t follow the law. The law says when you transfer these things you record the transfer with the County Recorder just to keep a mess like they have made of things. The banks ignore the legal system and make a mess of things and then you blame the system? So the banks need to be above the law? That’s what caused the problem to begin with they on the own decided not to obey the law.
The proper solution is to declare the mortgage invalid but the debt to be an unsecured claim that can only be enforced upon production of the original note.
The county real estate recording system is archaic and a mess. There are more modern ways of doing things rather than klunky contraptions devised 300 years ago. I’ve spent literally years of my time digging through fractured deed and indexes, so I know of what I speak.
American investors trust Brazilian or Chinese stock recording systems more than they do their dinosaur county recorders’ offices. That should tell you something. It amazes me that people (other than shysters) are defending this system, and are proposing a patchwork fix involving MORE lawyers and ADDITIONAL inefficiency. All based on a Cromagnon way of operating. It’s like going back to Windows 3.1.
For every photo of a banker, I could post one of a politician. You want one of Obama?
I don’t want fraudulent paperwork used to dispossess people of their homes. Robo signing creates non-existent paperwork that presents an enity as the note holder when in fact the actual holder of the mortage is lost to time.
I won’t applaud a fraud in any instance, especially one that should be undergoing a massive federal investigation by the F.B.I..
I would also point out that such systems have always been under the control and rules of the State's, so now you wish to subjugate State's Rights farther by turning it over and placing it with the Federal Government, yeah that's always works out fine.
PING!!!!
Actually I fear you more than I fear him, because you would allow him to get by with his fraud.
Stocks differ in real property in more than one way. Real property has a tendency to stay in the exact place it has always been. That would be the on that street, in that particular county, in that particular state.
For the sake of argument let's say you have a mortgage obligation. Let's also assume it's been "securitized" and MERS is the nominee.
Have you read the prospectus (sales pitch) that describes the security that was dangled in front of the investor?
Do you know if your obligation fits within the terms of the prospectus? If not it may have been fraudulently securitized resulting in ownership of the note being invalid.
Have you read the Pooling and Servicing Agreement that defines the relationship between the trustee and servicer/sub-servicer? Do you know if an insurance policy is specified in the PSA? Do you know the trigger that activates the policy and pays the investors? If the insurance policy paid the lien holders in full it could be argued that the obligation is extinguished.
Do you know who issued those insurance policies? Chances are good AIG ($100 Billion recipient) or AMBAC (recently filed BK 11) held the paper..or rather pretended to.
Do you know the status of your trust? Do you know that if it has been satisfied by insurance your "obligation" has likely been "sold" to the servicer who continues to collect your payments on an invalid note at face value? Do you know that you may have a very legitimate cause of action against the servicer for fraud?
I'm not trying to bust your bells but these issues are real.
Another poster made the analogy of an electronic automobile registry that essentially disguises the lien holder. Take that analogy a step further. If you buy a car that's been stolen it's not yours..even if you didn't know. If you crash the car and total it, insurance pays the lien holder and the obligation is extinguished.
In the world of Mortgage Backed Securities those insurance companies grabbed the wildly inflated value of the collateral made by the alleged lender's agent, the property appraiser (to insert into the Credit Default Swaps) and left the taxpayers holding the bag.
I must confess I lost my ping list. I need a robo-pinger.
You are worried about nothing. Where are the supposed mobs of people being screwed by paying the wrong mortgage holder? Or for that matter, the legions of purported mortgage holders demanding payment that they’re not receiving and should be? Shouldn’t there be armies of banker’s lawyers going after competing ones because of title errors or fraud?
There IS a problem here: the FReeper equivalent of truthers making cr@p up in their pinheads.
When you go to an ATM, do you require a signature for every transaction? Or are you lugging your mattress around?
LOL Worried about nothing? With the banks record or fraud colussion and disregard for the rule of law I think there is plenty to worry about. Especially with people like you who are willing to exempt banks from any law that they feel is archaic like fraud, perjury, counterfeiting of legal documentation, nonpayment of required taxes and fees and so on. As I said fear people who would deny the rule of law for some in an effort to punish them for some perceived wrong doing. You would throw away another's right to being treated equally under the law you would give up another's right to a fair and inpartial hearing. I wonder how many more rights that belong to others you are ready to give up? If history teaches us one thing is once you deny rights and the rule of law for some those rights those protections are soon lost by all.
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