I’m impressed. A lot of people have hooked onto the MERS bill and the 5% Exemption Bill and they are looking for some help from the main bloggers on this subject. So here is my take on some things to keep in mind:

1. It doesn’t matter which blog you post your information or findings on as long as it is one of the major ones. It all gets spread around like grease through a goose within minutes. Here are some key words you might want to look for:

2. Electronic registry
3. Database
4. electronic registration
5. electronic systems
6. secure database
7. negotiated instruments
8. securities issuance
9. mortgage transfer
10. mortgage assignment
11. mortgage indorsement
12. mortgage endorsement
13. loan transfer
14. loan indorsement
15. loan endorsement
16. loan assignment
17. note transfer
18. note indorsement
19. note endorsement
20. note assignment
21. obligation transfer
22. obligation indorsement
23. obligation endorsement
24. obligation assignment
25. master servicer
26. servicer
27. pool
28. pooling
29. special purpose vehicle
30. trust
31. trustee
32. aggregator
33. loan originator
34. mortgage broker
35. investment banker
36. investment banking
37. depositor
38. foreclosure
39. validity of obligation
40. validity of instruments
41. affidavit of transfer
42. REMIC
43. Real Estate Mortgage Conduit
44. Real Estate Mortgage Investment Conduit
45. Mortgage Bonds
46. tranche
47. credit default swap
48. notarization
49. reserves
50. exemption
51. exempt
52. parole evidence
53. presumption
54. presumption of validity
55. irrebutable presumption
56. burden of proof
57. private right of action
58. administrative agency
59. regulation of banking
60. bank regulator
61. interstate commerce
62. uniform
63. uniform code

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The pretender lenders have lots of problems. But there is one HUGE problem that is floating up to the surface that could cost them somewhere between $650 BILLION and perhaps three time that amount. The Dodd-Frank Bill has a requirement that the pretender lenders keep a 5% interest in the securitized loans. It doesn’t sound like much. The problem they have is that virtually none of the loans have actually been securitized YET. That’s why they have the paperwork mills working so hard. So the securitization of any of these loans might be deemed incomplete until somehow they come up with paperwork scheme that is acceptable to the courts.

The problem is that under the finance reform bill that was passed and is now law the pretenders (investment banks) probably would be required to come up with 5% of the deal on completion of each one. Oops. So instead of concentrating on the individual loan that is in dispute, they have to seal up the deal on all loans that are claimed as part of the pool and relate it (CUSIP) to the issuance of bonds to investors. Let’s forget about the fact that investors are not going to accept loans that do not qualify under the securitization documents. Let’s say they can do it, force it through or slip it by a Judge whose mind is crumpled by the complexity of the scheme times 10 for the complexity of how they varied their practice from the written scheme in the securitization documents.

THAT would mean the pretenders would have to cough up 5% of the deal. “The deal” collectively is estimated at a minimum of $13 trillion. 5% is $650 BILLION. If they don’t complete the deal, they don’t have a loan to enforce and there is no creditor because the loan originator wasn’t the creditor and now neither is anyone else. Remember the bonds were sold first; THEN the loan applications were accepted and the investor money was matched up with homeowner deals.

But the problem is worsens. Only a fraction of the total mortgages are in foreclosure, but the successful conclusion of the securitization process would require 5% from the investment banks on all the loans in every pool that has even one foreclosure in it. So on a $200,000 foreclosure of a loan made from investor funding (i.e., the real lender) the investment bank could be required to cough up 5% of the total deal. Each deal averaging around $2 billion, that would mean that to foreclose on a $200,000 mortgage, their regulator is going to insist they come up with $100 million, accepting 5% of the risk. The effect on their reserve capital will be, well, gargantuan.

Apparently this scenario is not as far fetched as you might think, because along with the MERS initiative, required because a majority of all mortgages name MERS, a non-existent nominee party with no interest in the deal, the pretender lenders are drafting legislation and pushing it on capital hill for an exemption. The exemption would effectively pardon them for their sins, exempt them from the 5% requirement and continue screwing the country by sucking all the capital out of it. The really interesting thing about this is that after all the money the pretenders spent electing people into congress and state houses, some of the bell ringers recognize two problems and are currently back-peddling away from the very proposals they promised when they took Wall Street money.

It seems that any relief granted to the banks would be unpopular across all demographics. These newbies and oldies want to get re-elected. And now they are also running into a second problem which is the ultimate third rail of American politics — states’ rights (remember that thing we call the Civil War or the War of Great Northern Aggression?) Apparently a lot of bell ringers and newcomers are concerned about the effort at federal preemption of property rights within the states, an area that has long been verified, ratified and acknowledged as exclusively subject to state legislatures and state courts.

It remains to be seen how this will all play out — whether Wall Street will maintain its death grip on government or if their 15 minutes is up — AGAIN.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | 15 Comments »

From capecodtoday.com

Obama – The Foreclosure Presidency

Eleven million homes will be foreclosed between today and 2015. Forty-four million men woman and children, more people than reside in most states will lose their homes. Obama has Sided with the Banks and the Republicans on this Issue. In Other Words, the Problem Worsens

By TRB

Barack Obama, despite what he represented to some well-intentioned people back in 2008, has become the king of home foreclosures, the Herbert Hoover of the practice.  He has failed miserably in easing the unemployment problem, mostly because he spent so much of his first two years passing and helping along a Republican health care plan designed by the man who might run against him in 2012, Mitt Romney.

He should have spent those first two years working on the unemployment problem, creating  jobs. He did eventually get around to creating some jobs, but we are stuck at almost 10 percent unemployment. And he has gone to India to find jobs for Americans. Does that mean he will go to China to find jobs for Americans? It’s like my neighbor said when I told him Obama was over in India finding jobs for Americans.

“How will we get there?”he asked.

At the present time,  nearly 10,000 people lose their homes every day, and Obama has done little to help them out. He instituted the Home Affordable Modification Program, otherwise known as HAMP, but it has been a dismal failure according to most participants, many who feel the banks were allowed to steal their homes right from under the government’s nose. Many attorneys general also believe the program isn’t working and at least one federal inspector general is investigating the way it is run.

HAMP was financed with $75 billion in tax payer money. It was supposed to allow homeowners to decrease their monthly mortgage payment to 31 percent of their income. All they had to do was meet certain financial requirements, wait a few months and they were assured of a HAMP mortgage

But a  big problem developed – a problem the president should have seen coming a mile away, especially since he created it. He put the banks completely in charge of  HAMP. Yes, Obama put the fox in the chicken coop.

At the present time the government claims  500,000 people are taking advantage of HAMP. But that is less than 20 percent of the families who were expected to take advantage of it.

Many families have complained to attorneys general across the nation that HAMP is just a way for the banks to “string  them along”  for months, getting every last dollar out of them, before denying their participation. Sometimes they are told of their “pre-approval” for the program, whose ultimate aim is to modify the conditions of their mortgage so they can stay in their homes.

So they continue making monthly payments, but at the pre-approved lower rate. This can be strung out for four or five months, Many have reported receiving foreclosure notification during this period, But, they say, when they have called HAMP officials they’ve been told to ignore the notices. Soon they will be allowed into the HAMP program.

But, more often than not, the exact opposite occurs. After four or five months of waiting and being told they are pre-approved, HAMP officals reject them, telling them they don’t meet income requirements – often when they clearly do.

One family was strung along for nearly 13 months before HAMP sent its letter of denial. Now they don’t qualify for any loan modification program government or private. They will lose their house.

The other day a news person on television said it almost looks like the government is working for the banks to strip the property rights of the people. It does begin to look like that when the government hands large private banks billions in taxpayer money, putting them in charge of a program to ease the numbers of foreclosures. But that number only continues to rise and the banks are doing an awful job of running the HAMP program. How much of that $75 billion is left, for example. And where has it gone? Has HAMP been audited? Further, HAMP should be run by the government and not by the banks who stand to gain if the owner’s home is foreclosed. Shouldn’t that be obvious to the president?

Foreclosures rose 45 percent under Bush’s presidency, and during his eight-year term nearly 2.5 million were foreclosed. Under Obama’s presidency, foreclosures have risen 81 percent. There were three million foreclosures in 2009 and things have just spiked from there. The below-prime people have already lost their homes. These new forclosures are mostly due to unemployment.

Twenty-three states have stopped foreclosures all together because the banks were found to be falsifying the paperwork, not in possesion of the true mortgage, and other discrepancies. Now all 50 state’s attorney’s general are investigating and are getting set to issue large fines against the banking industry and to make changes in the manner in which homes can be foreclosed.

Barack Obama, former community organizer, could also do his part beyond the controversial HAMP program. He could, for example call a moratorium on all home foreclosures, while some of these mortgages are studied for illegalities. But in these matters Obama might as well be one of the banks that issued the mortgages.

Obama believes that a moratorium on foreclosures would reduce the supply of home loans and increase the costs to future borrowers. These are almost the exact words used by editors of the St. Louis Federal Reserve Review – in other words, the banking industry.

Unemployment and foreclosures should have been the first problems on Obama’s plate when he gained the presidency. Instead he spent all of that time working on a health care bill that could have waited. And Bush and he threw all that money at the failing banks and investment houses, when it could have gone into repairing the nation’s infastructure and putting people back to work.

Instead Obama will go down in history as the president who put the most families out of  their jobs and out of their homes. Americans will have the decision on whether to foreclose on the family in the White House in two more years.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | 28 Comments »

BY RUTH SIMON, ROBIN SIDEL AND NICK TIMIRAOS

The push by mortgage companies to accelerate the snarled foreclosure process is running into resistance from judges who are cracking down on sloppy paperwork.

In Florida, a state-court judge has begun forcing lawyers to defend fees charged to borrowers by law firms. Maryland’s state appeals court told judges that they can hire experts to scrutinize paperwork filed in foreclosure proceedings—and make lawyers swear that the documents are accurate.

Since last month, New York has threatened to use “penalties of perjury” against lawyers caught filing bad documents, even if they didn’t know about the problems when the foreclosure process began.

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“Assuming each mortgage it tracks had been resold, and re-recorded, just once, MERS would have saved the industry $2.4 billion in recording costs, R.K. Arnold, the firm’s chief executive officer, testified in 2009. It’s not unusual for a mortgage to be resold a dozen times or more.

The California suit alone could cost MERS $60 billion to $120 billion in damages and penalties from unpaid recording fees.”

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11.10.10 B OF NY MELLON AZ BK -Fourth-Amended-Complaint[1]

see also HEAD BKR JUDGE IN AZ JUST RULED BONY MEL

One of the interesting things about this particular litigant is that he has a combination of factors in which the pretender lender side has everything to lose and almost nothing to gain by proceeding with their attempt to foreclose. If the good Judge here continues to apply the law, BONY is screwed. And THAT will affect other foreclosures that were wrongfully done against this same litigant. The wrongful foreclosures against this individual give rise to some pretty big actions for damages. They might also give rise to administrative Federal and State action against the pretender lenders, not to speak of potential criminal actions, for which investigations are underway. Despite the deep color red, politically speaking, Arizona has a very aggressive Attorney General (Terry Goddard), who apparently gets it. So this case bears watching, not just for the drama of David and Goliath, but for the eventual outcome.

It’s the story of a very talented film maker who has been knocked down so many times he can’t count them. But he keeps getting up and throwing some pretty effective punches. Reminds me of the Rocky scenario. But my guess is that this Judge, who is still opposed (not just skeptical) to defenses and claims based upon securitization, splitting the obligation, note and mortgage etc., is going to turn the corner like dozens of other Judges are doing across the country, which means that unlike Rocky who considered himself a success for surviving 15 rounds in which he lost on points, Mr.Bailey may end up a big, even huge winner in all of his cases starting with a favorable ruling in this particular case.

BONY and the other pretender lenders are getting increasingly uncomfortable and so are the investors, and those hedge funds “hunting for bargains” that the entire foreclosure process for the past few years might be rolled back on reset by the courts and that they are running out of options to stop it. So this pro se litigant, if he wins this round, may very well roll back the other foreclosures and file actions for damages that will be very sizable indeed. He might even find a clever lawyer who sees the potential NOW that will help him. A smart lawyer with knowledge of bankruptcy rules, adversary proceedings and securitization, lending laws etc., could land himself a mighty fine fee on contingency now that the litigant has already done all of the heavy lifting. What seemed like a hopeless case is now a genuine threat to the Wall Street oligopoly, as unlikely as that seemed when the battle started more than 2 years ago.

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