This is starting to get interesting. Having achieved the creation of special courts to whittle down a backlog of foreclosures, called the “rocket docket” due to the propensity of many of its judges to operate on an accelerated timetable that too often led to a refusal to hear borrower objections and evidence, servicers are now withdrawing foreclosure cases in Southwest Florida en masse.
It is not yet clear whether these cases are being abandoned or whether the banks will refile once they find a way to argue their action is valid. However, reading between the lines, one has to question whether they will succeed. From the Fort Myers News-Press:
Banks in recent weeks have been dropping hundreds of their Southwest Florida foreclosure lawsuits instead of facing defendants at trial, according to local attorneys and court records….
Some foreclosures at large law firms were never actually read by the attorneys who filed them here and elsewhere, and some of the mortgages that ended up in mortgage-backed securities sold to investors were never legally transferred by the banks, defense attorneys have alleged.
“We think they’re going to come back and refile,” Lee County Clerk of Court Charlie Green said.
That’s an expensive proposition, he said, noting foreclosure suits carry a hefty filing fee: about $1,900 for a $250,000 house, for example…
But eight voluntary dismissals were filed Tuesday alone by seven different banks including Bank of America, one of the largest filers of foreclosures in this area. Bank of America did not reply to a request for comment Tuesday.
At one court hearing alone, attorney Kevin Jursinski said, one of his associates watched as “50 in a row” were withdrawn.
“Can they re-litigate?” Fort Myers-based attorney Carmen Dellutri asked. “I don’t think so.”
To be blunt, whether these cases resurface will in large measure depend on the servicer or foreclosure mill’s willingness to create bogus documents. I’ve seen this happen even in my limited direct contact with foreclosure cases. The bank’s law firm presented an allonge an attachment to the borrower’s note to allow space for additional signatures which magically showed that the note had indeed gone through all the parties as stipulated in the pooling & servicing agreement for that deal. Per the Uniform Commercial Code, an allonge is supposed to be so firmly attached to the original note as to be inseparable, yet the bank’s team claimed to have miraculously found it. In addition, it bore signs of being a forgery (pixtillated signatures on a “wet ink” document; signatures reproportioned to fit signature lines).
But the use of this sort of forgery raises the bar to consumer challenges. They are fairly easy to creates, and to challenge them, a homeowner would need to hire a document expert to challenge its validity. And despite the growing skepticism among judges of documentation submitted by banks, to side with a borrower on the grounds of document forgery might be a bridge some judges are not willing to cross.
Either way, this development signals that banks are coming to recognize that the pushback in the court system against poor securitization practices is only going to become more concerted.
It’s gotta be bad if they feel they’re not ready for prime time even on the rocket docket. “If I can’t make it there, I can’t make it anywhere…”
Or maybe the forgeries are so inept that even these crooked judges are feeling the heat.
If it really is true that the MBS are fraudulently sold unsecured non-mortgage-backed securities, and the banks reached the point of fearing full revelation of this, to what extent would they prefer to stop foreclosing completely (to stanch the burgeoning evidence flow from these contested foreclosure cases) even though they still had to keep advancing the cash flow to the investors? I guess if it came to that they’d ask for that federal moratorium Obama’s rejected so far, to make it look like the government was forcing them. And in the meantime they’d desperately lobby for some unconstitutional congressional fix for all this.
I read where the judges were going to be personally liable for fraud if they accepted perjured robo-crap.
Private property lies at the core of capitalism, yet these banks can’t seem to sort out what property they have on their books as assets, or have sold 20 times to various CDOs?
The importance of correct, precise property records goes back to the Babylonians, yet the Internet arrived and suddenly these banks couldn’t maintain thousands of years of human documenting standards…? Mind boggling.
I’m still adapting to the realization that some of the biggest institutions in the US are basically gigantic forgery machines. Breathtaking.
It looks like laissez faire capitalism is doing a lot better job destroying the institution of property than the communists ever did.
No system can maintain it’s integrity without defending it’s laws. I know that Capitalism is out of favor, but Capitaism didn’t break the laws. Greedy people did.
I am so happy for the forclosure targets getting even these perhaps temporary repreives.
Does anyone know the current number of homes at risk to forclosure?
“…Capitaism (sic) didn’t break the laws. Greedy people did.”
This site and many others conclusively prove that the system is captured by and set up to reward the greediest: how do you propose to resolve that?
Paul Repstock said: “…Capitaism didn’t break the laws. Greedy people did.”
Well yes, but do you remember that little part from Adam Smith about “the butcher, the brewer, or the baker”?
There’s just a little bit of irony in a situation where you construct a financial structure on greed, and then condemn the greedy.
butcher, the brewer, or the baker
recent AP story: over 1 million defaults expected in 2011:
october amherst mortgage insight report featured on NC 1/4/11:
11.5 million at risk:
“Does anyone know the current number of homes at risk to forclosure?”
Here’s the end of 2010 number. Then after foreclosure the bank still needs to sell the property, which is critical to everyone’s accounting because the servicers front the payments to the RMBS Trusts during foreclosure, then deduct the fronted payments from cash recovered from the foreclosure to recover the fronted payments for the servicer. The remains(after all other costs) are then shipped off as the mortgage backed part of your RMBS investment. Not so good if you just recently purchased it from the guy whom had the interest fronted to him.
“A record 2.16 million first-lien mortgages were in some stage of the foreclosure process at the end of November, LPS said — the fifth consecutive monthly increase.”
Thanks Alethia and Cedric:
The scale is mindnumbing. I have doubts that the small number touted as halted will be extended to cover these millions. I fear the news is only window dressing for whatever reason.
The LPS numbers and the mortgage bankers association numbers differ substantially. LPS is in the foreclosure service providing business as mentioned many times at this web site and others.
The quality of their services such as providing allonges for sale is questioned by some.
The mortgage bankers association reports about 4.3 percent of about 58 million mortgages are in the notice of default/foreclosure stage. Another 11 percent or late one or more payments. About 1.3 percent of mortgages a quarter enter the “foreclosure” stage.
If we _had_ capitalism, AIG, major European and US banks, and Wall Street would have been allowed to fail in 2008, and foreign banks with a better business model would have been able to purchase their assets for pennies on the dollar. Savers would have received the benefit of the FDIC insurance that was protecting their accounts. The elites who run Wall Street and DC, OTOH, would have lost most of their financial and political power. The result would have been a severe and painful, but relatively brief, downturn that would have purged the system of bad debt and ended the global and domestic hegemony of Wall Street.
This is exactly the model that the US, via the IMF, pushed on Asia during the 1997 Asian economic crisis:
What we have, instead, is crony capitalism where Americans and Europeans are being forced into austerity programs to rescue insolvent banks and the elites who run the banking system. Why? Because the banksters, and the politicians who work for them, do not want to lose their privileged positions, either domestically or internationally. Average Americans losing their homes, dying in impoverished old age, or being permanently unemployed, is, to the banksters, a small price to pay for preserving the banksters’ class- and group-privileges. Average Europeans losing their pensions or government-funded health-care is, to the banksters, just the cost of ensuring that the banksters’ (irresponsible and predatory) loans to countries such as Greece and Ireland are repaid in full rather than restructured.
Why isn’t anyone talking about the REAL FRAUD?? Just what you spoke of….these notes were sold multiple times. Why else would the banks not want to legitimize the note transfer???
Precisely. Why admit the fraud by allowing anyone to see the books, eh?
Can anyone comment on that k&L gates post on Housing Wire where mr Platt claims fighting MERS would cause mortgage rates to climb to credit card rates because they would be unsecured debts? I am tired and not sure I read that correctly…it actually seems to me that someone at the MBA is acknowledging that 31 million mortgages are no longer secured debts…
“it actually seems to me that someone at the MBA is acknowledging that 31 million mortgages are no longer secured debts…”
his statements do seem to constitute an indirect acknowledgment that 31 million mortgages MAY NOT BE any longer secured debts.
is does appear that he recognizes this outcome as a threat and is trying to prevent it by creating fear in his audience. doesn’t seem quite the same as acknowledging a fait accompli.
new (to this reader) doublespeak alert: he says MERS was set up to solve problems of “antiquated property law”, but then says that the states now passing new foreclosee protection legislation are “turning real property law on its head”.
is he in favor of the rule of law, or not? well…. it depends!
(thinking out loud) Doesn’t Platt’s assertion imply that the government is going to charge much higher rates? b/c it’s he govt that is keeping mortgage rates low in the first place to try and reflate home prices. Since I doubt the govt is going to discontinue housing market support, I’ll assume the premise that mortgage rates will get as high as credit card rates is bad from the start. Next, secured or unsecured, I still think there is a big difference between mortgage debt and credit card debt (just look at those ultra low home equity default rates ;-). Given a “normal” set of mortgage criteria (eg. owner occupied, 20% down, 30yr frm, etc), the mortgage still seems like a better credit to me, as I assume the borrower is less likely to bail on their shelter**. Maybe the mortgage rates rise substantially for speculative home purchases, but that strikes me as a positive (even if it won’t help reflate home prices in the short run).
**I realize this is a vulnerable statement during the current “walk-away” era, but how many 20%-down, owner occupied mortgages are abandoned FCs where the borrower is still paying their credit card? I would bet it is less than the same number for poorly underwritten speculative mortgage loans.
There is nothing good about “re-flating home prices.”
He fails to define what he means by ‘antiquated’. Does he mean the hundreds and hundreds of years of case law? The social and historical system of courts, legal documents, systems of recording?
Did the invention of the Internet suddenly make them all ‘antiquated’?
Obviously, with respect to the securitization industry anything with a physical existence based in local recording and local claims is now ‘antiquated’ because they want to abstract it, mince it bits, and toss each bit into a separate CDO (sometimes multiple times, but I digress…)
When did THE LAW become ‘antiquated’?
When did PROPERTY become ‘antiquated’?
He’s making a laughingstock of himself.
(Non-substantively: How K&L Gates Partner Laurence Platt can look himself in the mirror, after spewing his fear-mongering, bullying BS, is a genuine mystery. But I guess these jackals are backed into the corner, now, so we can expect them to attack. Disgusting.)
As for substance, I am still trying to wrap my mind around how and why notes and mortgages packaged into RMBS become unsecured. Other commenters here have mentioned this, but I am missing a link or two. Can someone help explain this, or point me to a resource that breaks it down?
The other thing that occurs to me is, this blaming of local governments sounds like CYA’ing to me – a pre-emptive defense against claims about the banksters’ broken machinery, saying it wasn’t their deals, or executions that were faulty, it was the gov’s that came along and changed the rules after the fact.
prof. adam levitin’s testimony before congress in november gives a pretty clear explanation to my mind:
from the executive summary at the head of the written version:
“The chain of title problems are highly technical, but they pose a potential systemic risk to the US economy. If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever. The chain of title concerns stem from transactions that make assumptions about the resolution of unsettled law. If those legal issues are resolved differently, then there would be a failure of the transfer of mortgages into securitization trusts, which would cloud title to nearly every property in the United States and would create contract rescission/putback liabilities in the trillions of dollars, greatly exceeding the capital of the US’s major financial institutions.”
and i find this statement on p. 3 admirably clarifying:
“Many of the problems in the mortgage securitization market (and thus this testimony) are highly technical, but they are extremely serious.9 At best they present problems of fraud on the court and questionable title to property. At worst, they represent a systemic risk of liabilities in the trillions of dollars, greatly exceeding the capital of the US’s major financial institutions. While understanding the securitization market’s problems involves following a good deal oftechnical issues, it is critical to understand from the get-go that securitization is all about technicalities.
“Securitization is the legal apotheosis of form over substance, and if securitization is to work it must adhere to its proper, prescribed form punctiliously. The rules of the game with securitization, as with real property law and secured credit are, and always have been, that dotting “i’s” and crossing “t’s” matter, in part to ensure the fairness of the system and avoid confusions about conflicting claims to property. Close enough doesn’t do it in securitization; if you don’t do it right, you cannot ensure that securitized assets are bankruptcy remote and thus you cannot get the ratings and opinion letters necessary for securitization to work. Thus, it is important not to dismiss securitization problems as merely “technical;” these issues are no more technicalities than the borrower’s signature on a mortgage. Cutting corners may improve securitization’s economic efficiency, but it undermines its legal viability.”
he provides further detail in the body of his testimony.
That is exactly how I read his statement. MERS has made 31 million mortgages unsecured.
So, now all one has to do is challenge the NOTE chain of title….
“As for substance, I am still trying to wrap my mind around how and why notes and mortgages packaged into RMBS become unsecured. Other commenters here have mentioned this, but I am missing a link or two. Can someone help explain this, or point me to a resource that breaks it down?”
In relation to MERS — there are other issues that might result in a note becoming unsecured — basically, what happens when the loan is originated is that the closing docs designate Bank A or Trust B as the holder of the note, but name MERS as the Mortgagee, the entity with the ability to foreclose. This is called “bifircation.”
Problem: The reason you can take someone’s house away is that they have stopped paying you. It is a specific and special remedy to an injury they have cause you, to whom they owe money. You can’t take your neighbor’s house away because he’s stopped paying his mortgage, because he don’t owe you money. Nobody owes MERS money. MERS ownes no debts. Therefore, under the laws of many states they can’t bring a foreclosure — they don’t have “standing;” that is, they don’t have a right to sue/exercise a given legal remedy.
Yet there are all these closing documents specifically saying MERS has the mortgage, Bank A or Trust B or whoever the hell else might have come after them owns the note and is owed the money, but they don’t have the mortgage. It is entirely possible to own a note with no mortgage attached to it — indeed, there are many kinds of notes, e.g., credit card debt, which are like this. They’re just IOUs that don’t give the bearer any right to take your property in order to satisfy them. It’s perfectly legal for the banks to hold an unsecured debt.
So the issue is basically that by delibrately bifurcating the note and the mortgage, lenders have inadvertently destroyed the mortgage by assigning it to an entity which can’t hold it.
To fully understand the MERS mess, read this:
Two Faces: Demystifying the Mortgage Electronic Registration System’s Land Title Theory
Christopher Lewis Peterson University of Utah – S.J. Quinney College of Law Real Property, Probate and Trust Law Journal, Forthcoming
Is there a criminal element in the US in respectable positions or not? Every lawyer that participates in this kind of activity should be disbarred and the Courts should make it clear there will be no more false documents filed, to produce the real stuff or don’t show up. Congress has Roger Clemens charged, based on the statement of some guy who says he gave Clemens a shot in the rear. In comparison, this like armed robbery. They should take one of these crooks out on a skewer and barbecue him as an example.
Is there a criminal element in the US in respectable positions or not?
Simple answers to simple questions:
Assuming that you think being a bankster or a service provider for a bankster is a respectable position.
You guys are way behind the curve on this. This news quite a few weeks old.
and your point is?
perhaps if you are at or ahead of the curve you would like to contribute to our enlightenment? i’m all ears.
the reporter says april charney attributes recent development possibly to ibanez–decided recently. is she, too, “behind the curve”? perhaps you could clarify, if you would like readers to catch up to the curve.
if you’re not really in favor of that happening, then there must be no problem here, for you or us.
When are we going to see some prosecutions of banksters for frauds on the court for all these faked signatures? Senior people must have willingly looked the other way to let this happen, all for the big bonus loot?
Isn’t writing a fraudulent check a crime?
I’ll bet all these bankster cockroaches are running for cover like panicked cockroaches. Time to get out the RAID can and start spraying.
It would be funny if RAID could sponsor that word here, like all these other sponsored double-underlined words. That would be hilarious. Everytime some comment flames the bankster criminals with the RAID analogy, then the doubleunderline can link to a RAID Flash video ad of little banksters running frantically. I’m sure a creative type could come up with something hilarious
Certainly has possibilities. Maybe a spinoff of the Geico gecko crossed with the e-trade baby? A cockroach in an Armani suit pitching negative amortization ARMs, patriotic lender servicing, and financial products guaranteed to make you rich? Then after the pitch the camera zooms out and he disappears back into Ben’s beard or Timmay’s xxxxxxx?
“If we had capitalism, AIG, major European and US banks, and Wall Street would have been allowed to fail in 2008.”
This statement self-evidently proves the opposite. “AIG, major European and US banks” are nothing, if not voice of capital.
Marx was right about this. That free-marketeers systematically fail to distinguish themselves from capitalism is ideologically sloppy and lazy, and looks a helluva lot like false consciousness. You might call it “fascism,” but so would a Marxist. The only difference is that a Marxist would call it “capitalist,” as well.
In other words, “crony capitalism” is redundant.
Too big to fail = too big to follow the rules = capital makes the rules. How is this not a tidy, precise and accurate definition of “capitalism?”
That is an interesting point.
But, is crony capitalism not analogous to the crony Marxism (formally, bureaucratic collectivism) that tends to undermine socialist or communist states? Both are perversions of the underlying idea.
In bureaucratic collectivism, a small elite rewrites the “rules” of Marxism as needed to benefit itself and its supporters, at the expense of the workers. The result is what Trotsky called a “degenerated workers’ state under the dictatorship of the bureaucracy” such as the USSR. George Orwell’s book _Animal Farm_ describes a hypothetical descent to crony Marxism.
In the end it apears not one of the “ism’s” is worth the cost of the tons of paper they are expounded upon. Every one is a social ‘theory’ which founders on the rocks of reality because they are all dependant on the flawed integrity of those who would implement them.
Perhaps freedom and justice will remain elusive goals, which will only be enjoyed by a few people at any one point in time.
Banks have got to face their dilemma. There are three prices for houses now. The bubble price is 3 and that is gone forever. The maximum recoverable price is 2 and that depends on finding ( or creating) a qualified buyer. The final price is 1 and that is the recovery value after a foreclosure. Add 5 zeros to 3,2 and 1 and you get a fair dollar value for US home prices.
The only way to keep home prices at or near price 2 is to have enough buyers to make a dent in current inventory both real and shadow. Ruining the credit of millions of former homeowners doesn’t get us there. Cramdowns and forgiveness of a prior loan default do.
While poor securitization leaves bad paper trails and documentation, what about existing mortgage payers who have basically stopped all payment and live rent-free in essentially a rental property. They have a win-win situation. Stay and not pay for as long as possible. If housing prices rise, keep staying and reap the difference. If prices fall, leave and find a new place with all the savings from not paying rent for 2 years (yes, I know plenty of people who have done this).
Perhaps a better way to encourage personal responsibility and sanity in borrowing is to stop treating large mortgages as different from other forms of borrowing. Lend money on tight leashes with a low credit limit as with credit cards. Essentially, banks should say, “we’ll give you a loan no questions asked about your intentions. The interest will be based on your risk profile and credit score.” Make it moderately difficult to discharge debt in bankruptcy (and put a cap on it). This should force people to live prudently and save up more of a down payment before borrowing the rest. Encouraging people to take higher equity stakes in their property will diversify risk instead of concentrating it in a few big banks.
Basically, my thoughts are that borrowing has gotten out of control. Easy credit sloshing around has gotten all irresponsible people used to the idea of planned bankruptcies and relying on the social safety net once they’ve used all that borrowed money on consumer luxuries.
but without extending easy credit, who will continue to buy more and more of the consumer goods that must be sold, just to keep the economy afloat?
and without extending easy credit, how will the banks, those great financial engines that drive our great economy and bring prosperity to all, be able to leverage their trading activities to keep the stock market pumped up so that millions of future retirees can feel confident investing their life savings to ensure they can continue the same level of consumption after they retire? (as we need them to do.)
Look at it this way. The homeowner paid a price that was most likely inflated double over the actual value. The house I live in increased in value 90% in ten years yet my homeowners insurance would only cover a replacement cost that is approximately 15% more than I originally paid. The difference between the value and the price was a ‘tax’ imposed on the market by the banks. So why should the homeowner, who, hasn’t seen a real increase in wages in 10 years, continue to pay this additional tax? (assuming they still have a job) Why should they feel any sympathy for the poor banker that is STILL trying to squeeze that inflated price, by hook or by crook, so they can pay their obscene bonuses?
People are overlooking the most significant issue and problem with MERS.
It begins with this simple question…
WHO grants MERS the power of agency?
The alleged borrower does.
Traditionally the beneficiary of the Deed of Trust is the only party with authority to transfer it’s rights and interests. The beneficiary of the Deed of Trust is the Promissory Note’s owner. There is no evidence that ,whoever that party is, ever assented to have his/her/its security interest “managed” by another party.
Matt Wiedner got screwed by this in his Florida appeals loss. The court used the Deed of Trust as evidence of MERS’s agency As I pointed out to him and he put in his motion for rehearing , the borrower appointed MERS as agent not the holder of the note.
They have created a void trust.
This is no different than if I had a mortgage without MERS and decided to unilaterally to file a substitution of mortgagee in the land records while the prior mortgagee still holds the note.
The case is just shameful. The court uses the words of the mortgage to construe the transfer of the note.
This prime example of torture of the english language is the reason people hate lawyers.