Robo-Signings Not the Only Issue Facing Housing Industry
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Despite the assurances from the two financial institutions that they feel secure in their right to move forward, the matter will probably not go away any time soon. Attorneys general in all 50 states have announced investigations, affected homeowners have brought suit, and the White House announced Tuesday that an interagency task force on mortgage fraud has launched an investigation as has the Federal Housing Administration.
At the heart of the problem are three apparent issues. Robo-signing, the process of generating thousands of affidavits seeking summary judgment, often by unskilled and unqualified employees who have neither read nor certified the underlying documents, has been well covered by the press including MND. Two other issues, however, have not received much exposure.
The first is the involvement of the Mortgage Electronic Registration System (MERS). This company, formed in 1998 by Fannie Mae, Freddie Mac, and several major lenders, actually is the owner of record of approximately 60 percent of American mortgages. Arguments have been made that MERS does not have the right to foreclose on properties where the note is held by others. However, according to the MERS website, at closing a borrower signs a security instrument – the mortgage or deed of trust – which names MERS as nominee for the lender and its successors. The lien is recorded in the name of MERS and as long as any sale of the note is to a MERS member MERS remains the mortgagee of record and continues to act as a nominee for each subsequent note-holder.
The rights of MERS to act on behalf of the note-holder in foreclosures as well as other actions have been upheld in a number of state court decisions. These decisions have variously recognized MERS’ standing to foreclose and have confirmed the company’s ownership of the security instrument.
The existence of MERS appears to actually correct many of the ownership issues that arose during the savings and loan and banking crises of the 1980s. At that time it was very difficult to track the owners of mortgages loans were sold, servicing rights were transferred, or financial institutions failed. Whether by accident or design, banks had a pervasive tendency to avoid recording assignments. This created an enormous problem, not so much with foreclosures as for attorney’s attempting to backtrack and obtain discharges for long paid notes. This deficiency in assignments was also a problem when interest rates dropped precipitously and homeowners were in serial refinancing mode – moving to a new loan before the last mortgage or even the one before that could be recorded. Having a mortgages assigned permanently to MERS with a unique identifying number makes it possible to track down a current or previous mortgage quickly and inexpensively.
The third issue in the current foreclosure controversy is transfer of trust. According to a research paper produced by BOA, when a note is transferred to a trust, it is endorsed “in blank”, meaning that the owner of the note is not assigned. The note is only endorsed to the trustee or servicer on behalf of the trust if they need to institute foreclosure proceedings. The physical documents are typically delivered and held by the designated custodian for the trust. The existence and validity of the notes should be verified by the seller and the custodian prior to transfer and the loan purchase agreements also requires evidence of ownership of the loans by the trust. That ownership should also be recorded with MERS.
Several of the lawsuits which upheld the rights of MERS as owner of the security agreements also addressed the issue of “in blank” endorsements. In Mortgage Electronic Registration Systems, Inc. v Ventura for example, the court observed that the current practice of bundling and servicing mortgages by third-party companies is now the rule rather than the exception. The note was endorsed in blank and was therefore bearer paper; MERS could therefore bring the action.
Regardless of the outcome of the various investigations that are now starting up, the banks are going to pay dearly for this controversy. They probably have every right to foreclose, but this is a PR disaster that brings to the forefront – and probably to a number of eager committees in the next Congress, not only foreclosure documentation but the debacle surrounding various loan modification programs. It will certainly also remind a lot of people of the malfeasance of the middle decade that led to the mess in the first place.
READ MORE: THE NITTY GRITTY
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: Housing Industry, Robo-Signing |
B StLaurent
Understand.
I posted the proposed rules because sometimes such documents provide leads to references that may be useful that one is not aware of….
Proposed RULES? Let us first go back and ADDRESS what went wrong with the OLD RULES!!! Otherwise – all victims are continued victims – and there are many of us!!.
According to Implode-o-meter 386 Banks went out of business since 2006. A lot of these Banks were the only recorded lender of public record. If the mortgage follows the note and these lenders are no longer in business to assign their notes the mortgage should not be assigned and it should be unenforceble. Sadly, the opposite is true, mortgages has been assigned in a number of cases by robo affiants attesting to the fact that they own the note too! Sadly, some courts have accepted those unacceptable facts!
According to R.K. Arnold, CEO of MERS in an Alabama deposition he stated that MERS does not have any beneficial interest in any mortgage.
It is therefore impossible for MERS to transfer instruments that they have no beneficial interest in! Missing here is a meaningful assignment of the underlying obligation (note), without the note the mortgage should not be allowed to be assigned!
http://ml-implode.com/fulllist.html#lists
People in France protest the 2 year age for retirement increase, here in America should millions of Americans loose their home they will be looking at NEVER for their retirement age. Yes, there will be some that will not be affected by this in any way, but for the average good people America, our brothers and our sisters who just want the basics to survive will be tossed to the way side!
Housing, Health Care and Education are necessities they shouldn’t be commodities to gamble with!
Hopefully we don’t get to a point where all the government needs to do is dictate and the only choice for us will be to follow!
Like Moses did on behalf of the people, America needs to seek God as to the sins of its past, correct and repent so we can all move on!
God help the U.S.A.
PART 1 – foreclose on the fraudsters
http://www.scribd.com/doc/39916944/FORECLOSE-ON-THE-FRAUDSTERS-PUT-BANK-OF-AMERICAN-IN-RECEIVERSHIP-White-Collar-Expert-calls-for-FDIC-to-Take-Control-of-BofA
http://www.sec.gov/rules/proposed/2010/33-9148.pdf
Proposed rules for ABS and MBS…..
fyi
SEC new proposed rules for ABS and MBS….
fyi
For Pelucheven: You have boiled this mess down nicely: securitization is pyramidization and is a white-collar criminal enterprise. It was definitely in the works for a long time, i.e., since the beginning of the securitization nightmare and the creation of MERS.
The people who created and the people who perpetuated the fraud against America need to be indicted.
What is the AG of the US doing about this predatory lending, mortgage servicing fraud, forgery of assignments and satisfactions, creating illegal documents, notary fraud, extortion, harassment, illegal debt collection practices in every state? The banks have not checked their documents and determined they are correct. That is virtually impossible with the overwhelming number of documents and all the fraud that is going on in the documents.
MERS memo leaked, explains everything
see below. I think this explains in blank as well
http://livinglies.files.wordpress.com/2010/10/mers_rec_foreclosure_proc_after_move.pdf
what does it mean if my note was first blank and at the time of foreclosure endorsed “Without Recourse” Non Judicial state Colrado
The problem here in comparison with Maddoff. I am just wondering are the judges somehow involved with the banks. Pension funds etc…. Covering their salaries? Perks etc…..
What about the politicians are they connected to the banks?
They were’nt connected to Maddoff?
OR ONE BIG PONZI SCHEME? THAT HAS BEEN EXPOSED. What is going on with the title companies?
Are they insuring? and if not why?
we need to start calling things with their proper name
SECURITIZATION=PYRAMIDIZATION
THE RESULT WOULD HAVE BEEN THE SAME SOONER OR LATER
ALL PYRAMID SCHEMES COLLAPSE. ALL PYRAMID SCHEMES ARE TO BE TREATED AS CRIMINAL ENGERPRISES
ALL ITS ACTOR, PROCURERS AND PROMOTERS ARE TO BE INDICTED AS FINANCIAL CRIMMINALS.
WHERE IS THE FBI WHEN YOU NEED THEM
WHERE IS THE LAW WHEN MILLIONS OF AMERICAN FAMILIES HAVE BEEN WRONGED
just remember you must assert your rights and get yourself in a possition where administrativelly you have superior evidence.
QWR, NOTICE OF INSUFICIENT VALIDATION, NOTICE OF DEFAULT, NOTICE TO TRUSTEE, AND SUE THE HELL OUT OF THEM. JUST A COMMENT NOT LEGAL ADVICE
Response to frankylee:
Securitization started back in the mid eighties.
One almost has to laugh at the concept, but securitization is a risk management tool designed to lower the risk of already risky underlying objects.
US Gov fully approved all risk taking in the financial sector, including leverage to 4000%, which was certifiable insanity.
This article is nonsense.
“Whether by accident or design, banks had a pervasive tendency to avoid recording assignments. ”
Try concealment of fraud, that should do.
“Having a mortgages assigned permanently to MERS with a unique identifying number makes it possible to track down a current or previous mortgage quickly and inexpensively.”
At the expense of billions in lost revenue to municipalities across the land.
Securitization must end. As if it’s not enough to pay usurious fees to these jerks just to borrow money to live in a home, they feel they have the right to casino up all of our hard earned money and risk everyone’s financial stability. Just exactly when did anyone agree to this business model?
We need that research paper cited above!!!!!!!!!!
“On the last point, signing the note in blank makes it bearer paper. Fine. The note or obligation survives. But what about the deed? What does making a note bearer paper do to the deed if all there is to show is a blank assignment? Are there not prior court decisions saying that if there is not a recorded transfer that specifically states a party being transferred to, that the deed is not transferred?”
Continuing this discussion I had an Atty, who I did not ultiimately hire, tell me that the plaintiff (BOA who is foreclosing) could argue in court that they endorse notes in blank all the time and then keep them, or they endorse in blank to put the notes in storage. I hope they present this argument before a judge in a hearing. I will crush them.
“According to a research paper produced by BOA, when a note is transferred to a trust, it is endorsed “in blank”, ”
Where can I get a copy of this research paper? I’m in foreclosure with BOA.
Please help!
Best……
bstl
There are cases out there where MERS did not prevail. First, MERS was not always registered with the Sec. of State in some states. See ANTHONY MORENO, Plaintiff,
v.
SELECT PORTFOLIO SERVICING, INC., et al., Defendants.
No. CV-F-10-503 OWW/SKO.
United States District Court, E.D. California.
June 23, 2010.
MERS has no standing.
MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC., APPELLANT, VS. SOUTHWEST HOMES OF ARKANSAS, APPELLEE
No. 08-1299
SUPREME COURT OF ARKANSAS
2009 Ark. LEXIS 121
March 19, 2009, Opinion Delivered
More of the same.
2008 NY Slip Op 50247(U)
U.S. BANK NATIONAL ASSOCIATION, as Trustee for CSAB Mortgage-Backed Pass-Through Certificates, SERIES 2006-2 C/O AMERICA’S SERVICING COMPANY, Plaintiff,
v.
SIMONE BERNARD, ET. AL., Defendants.
29003/07.
Supreme Court of the State of New York, Kings County.
Decided February 14, 2008.
In the Bernard case, the very famous Judge Schack talks about MERS lack of standing as well. There are many more cases that put forward the position that MERS has no standing to bring the suit or to bring the foreclosure. The entire MERS system was created to go around the end zone on paying recording fees to the counties in which the real property was located. It should be revealed to all that MERS is bad news and was one of the major players in this gigantic mortgage meltdown.
As to the question of what states BofA is going to resume foreclosures in. Remember, that it is easier to take the vicitim’s house if he resides in a nonjudicial state than a judicial state. Burmese8@yahoo.com
The above article is a bit confursing. Just called the BoA Foreclosure dept. Here is California. 800-669-6560 Still Delay in foreclosures. Here is an latimes article about MERS
http://www.latimes.com/business/la-fi-mortgage-foreclosure-20101021,0,4933760.story
Help
Looked for that paper, too, – cannot find it. Believe it may be tied to “Private Placement Investment Plan” – implemented by government. Anyone have that “research paper??
DOES ANYONE HAVE RESEARCH PAPER PRODUCED BY BofA, mentioned in the article above?
A PDF or link to it.
“The third issue in the current foreclosure controversy is transfer of trust. According to a research paper produced by BOA, when a note is transferred to a trust, it is endorsed “in blank”, meaning that the owner of the note is not assigned.
The author writes – “They probably have every right to foreclose, but this is a PR disaster.”
This is far greater than a PR disaster!!!
See – Economist Joseph Stiglitz: Put Corporate Criminals in Jail by Sam Gustin. These are the types of articles that should get major network media publicity – but they do not.
See full article at http://www.dailyfinance.com/story/investing/joseph-stiglitz-corporate-crooks-to-jail/19684353/
On the last point, signing the note in blank makes it bearer paper. Fine. The note or obligation survives. But what about the deed? What does making a note bearer paper do to the deed if all there is to show is a blank assignment? Are there not prior court decisions saying that if there is not a recorded transfer that specifically states a party being transferred to, that the deed is not transferred?
From all appearance…..”BOA will resume foreclosures on over 100,000 homes in two dozen states”.
I presume these states to also be the Judicial states and Not affect the 27 other Non-Judicial states, does anyone else see this as I do?
If this is the case how does one find out?
Gary