Daniel Pennell: Mortgage Shenanigans in Virginia (The Wall Street – Washington – Richmond Axes)

Today, January 28, 2011, 4 hours ago | Yves SmithGo to full article

By Daniel Pennell, a systems expert who has testified before the Virginia House of Representatives on MERS

This week demonstrated how financial special interests have created an obscene and incestuous relationship with the leadership in the state legislature and the Governor’s office in Virginia. This cabal managed to kill off a bill (HB-1506) proposed by Delegate Bob Marshall, a bill designed to protect the integrity of the county property records and preserve the integrity of home owner’s title to their property. Simultaneously they attempted to alter the Uniform Commercial Code (UCC) with HB-1718, such that any “record” (the previous version said document) signed or unsigned by a person they claim owed a debt would be good enough for the banks to win a legal judgment against a person. In other words a spreadsheet from a bank would be good enough to take someone’s home or report someone to a credit bureau. This was in direct response to a Supreme Judicial Court decision in Massachusetts, Ibanez, where the court said that a bank had to have proof it owned a mortgage before it could foreclose.

The problem that HB-1506 addresses originated in 1995 when Wall Street banks took upon themselves the authority to replace the existing public land title recordation system with its 300+ years of successful history, with a member’s only private system. This system called the Mortgage Electronic Registration System (MERS) gutted the public property records and left millions of homes with questionable titles. This was done without any government approval and against the recommendations of the title industry and the county recorders. MERS has been found by 10 state supreme courts to be acting illegally and is currently being sued by CA, NV, TN and 14 other states. The Federal Reserve, Office of the Comptroller of the Currency (OCC), regulator of the national banks and the FDIC are investigating MERS for questionable business practices and for the systemic risk it poses to the nation’s financial system. The CEO resigned last week. Speculation in Washington has the OCC taking over MERS and nationalizing our land records, a clear violation of states’ rights.

Delegate Merricks submitted HB-1718. Bills to change the UCC are rare because the implications of unintended consequences are usually substantial and unforeseeable. The bill summary on the Legislative Information System (LIS) says the bill is intended to address recent court decisions and changes in technology. There is no question that the bill was targeted at both protecting MERS and avoiding a court decision in VA similar to that in MA. Delegate Merricks, member of a bank board and a former vice president of a bank, seems to suggest that take the home first and then figure out who actually is entitled to do so later. Never mind the risk to title that a future buyer of a foreclosed home faces or that we have situations in VA where multiple banks are foreclosing at the same time on the same person. In that fight the winner gets the house and the loser the right to sue the borrower for the loan amount.

The banks wanted HB-1506 killed and HB-1718 passed to protect MERS and, I believe, to avoid providing proof to mortgage investors that they were defrauded. The requirement to record would have provided evidence to investors in mortgage backed securities (MBS) that what they bought was empty; the mortgages were never legally transferred to the MBS. In my humble opinion if you sell someone a security that you claim is backed by collateral when it is not then that would be securities fraud. Among these investors are Fannie Mae and Freddie Mac whose losses are being paid for with tax dollars to the tune of billion of dollars. Other investors include state and private pension funds. The total exposure to the banks exceeds $1.5 trillion. You can see why they would fight so to avoid a $21 fee and the right to use their own “records”.

HB-1506 was killed by the Speaker of the house (Delegate Howell), the Chairman of the Courts Committee (Delegate Albo), the Chairman of the Civil Subcommittee (Delegate Athey) and the governor’s office.

Delegate Howell, the Speaker, sits on the board of Virginia Heartland Bank.

Courts Chairman Albo received 13% of his campaign funds from the VA Bankers Association and more from two major bank servicers.

The lobbyist representing the bankers, Matt Bruning, at the hearing of the Civil Subcommittee was a former aide to the chairman of the subcommittee, Delegate Athey, and an aid to the governor.

A reason given by Delegate Athey for not passing HB-1506 on was that the governor’s office in the person of Terri Suit, head of the governor’s foreclosure task force sent a letter asking the subcommittee to hold off and let the task force work on it. The Virginia Public Access Project reports that Terri Suit, ,chair of the Foreclosure Task Force, was a paid lobbyist for the Mortgage Lenders Association and the “private” members of the Task Force largely comprise representatives of the mortgage industry.

HB-1718 was pulled from the floor when Delegate Marshall threatened to attach an amendment excluding mortgages from the language. Had the speaker left it on the floor, the members would have had to record a vote on the amendment and with the amendment there no longer was reason to pass it. Delegate Merricks sits on the board of Virginia Bank & Trust and has 25 years in the banking industry.

The relationships are so inappropriate as to cause any reasonable citizen to question the integrity of the process.

A survey released today in the Financial Times shows that Americans trust of all large institutions is at an all time low with only 25% of American saying that they trust financial institutions.

A survey published last week ranked Virginia as the country’s second most corrupt state only after Tennessee.

The citizens of Virginia appear to be making an accurate assessment based on the shenanigans going on in Richmond this week.

23 Responses

  1. Yusuf Dizicheh
    Which part of Virginia
    Please call me 540-687-0004

  2. Im in VA. Mortgage paperwork full of wholes, Mers on everything, mortgage sold to at least three differant investors as far as I can see. Two letters of default when we were not in default. We have seen 4 lawyers and all have said that we should walk away and that the courts are on the side of the Bankers. I dont know what to do. Who to ask, who to seek, Who to Shoot(kidding). NoVa is full of government employees who are full of themselves and wont stand up for anything. In rural Va people are losing their homes left and right. Burn down the system is all I can think

  3. Assignment recordation bill revived
    February 7th, 2011 · No Comments · General Assembly

    Sen. Chap Petersen, D-Fairfax, won approval this morning in the Senate Courts of Justice Committee of his Senate Bill 838, which would require the recordation of assignments of debts secured by a deed of trust.

    The measure was defeated Thursday night on a 4-3 vote in the committee’s civil subcommittee but passed handily on a 9-4 vote in the full committee. The full committee typically adopts the recommendations of the subcommittee without allowing anyone to speak, but Sen. John Edwards, D-Roanoke, who chairs the subcommittee, said the committee should hear proponents and opponents of the measure because of the closeness of the vote and the extensive discussion in the subcommittee.

    Tom Domonoske, a consumer lawyer from Harrisonburg, said the measure is necessary to “restore some integrity to the process.”

    “People are being placed in foreclosure who are not in default,” but the real issue is fixing a broken process, he said. Much of the concern centers on problems with the Mortgage Electronic Registration Systems, or MERS, which many lenders use to keep track of loans when they are assigned.

    Guy Tower, speaking for the real estate section of the Virginia Bar Association, said, “The system is broken now, we believe, and needs to be fixed.”

    Matt Bruning, a lobbyist for the Virginia Bankers Association, said the measure would change the basic concept of treating the note secured by real estate as a negotiable interest, which is personal property rather than real estate. Travis Hill, a lobbyist for the Virginia Mortgage Lenders Association, said the bill would “make Virginia unique in a market that requires uniformity” and make notes less negotiable. Both Bruning and Hill emphasized that federal law already requires property owners to be notified when notes are reassigned.

    Sen. Fred Quayle, R- Portsmouth said he favored the concept but voted against it because “the danger I see is not fully understanding the consequence.”

    Petersen had the final word before the vote. “This is a bill whose time has come. The mortgage-backed security industry damned near bankrupted this country.”

    He also won approval of SB 837, which would create a civil cause of action against a person who knowingly uses a false document in support of foreclosure.

    Both bills were amended in subcommittee, but the amended bills were not available immediately.

    They still must clear the full Senate before the House of Delegates would consider them. Similar foreclosure reform measures died in committee in the House.

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  5. Being from Texas, I should not be repremanding the Governor of Virginia when in fact, our Governor. Texas Senators and Attorney General, have done absolutely nothing to protect the interest of the people in this State. Just look at the Texas Property TAx Code for the disabled and seniors who have a right to defer their property taxes but are being denied this right by you guessed it – the Banks. And this is a law that has been in effect since 1978 and no Democrat or Republican will address the issue one way or the other and hasn’t since that time that I am aware of. So those Seniors and disabled who are having trouble making their mortgage payments would have had a much easier burden had they been able to reduce their payment by $100 or $200 per month. No modification of the loan was even necessary.

  6. Deb Wynn

    It is unfortunate that one party or another wins. Quite Frankly, as of last night, I don’t tend to believe in either of these parties to do the right thing. However, when you vote one or the other, you are voting for the lesser of two evils.

    Certainly, everyone on this post believes in justice and if when we vote we are putting those in office that can do us harm. You know that. It matters only to the extent that by some miracle we will put those in office who are less likely to do us the most harm.

    I simply stated what my preference had been this last go round and that I am deeply ashamed of what the Republicans have come up with so far. Certainly, we can only do what we can do and I have been trying to defend homeowners for the past five years without compensation so I feel like I have done what I could, rather than just talking about it.

    Thank you for your comments. You are to a degree correct, but not wholly.

  7. Republican democrat matters not
    if we believe in god, good truth and justice we believe in the constitution and why we have it
    anything else anything less, Then yes we are doomed.

  8. Although I am a Republican, the disappointment of the new Republican Governor in Virginia who appears not to be addressing the situation is overwhelming to me. What does he think he is doing? We have already had 15 years of of wrong doing by the banks and I guess it will continue in Virginia, because I hear nothing from this governor. Why are not the people of Virginia standing up for their own rights and asking the Governor outright. Where do you stand? And what are you going to do about it? And he best have the right answer or the people should know what to do the next election, for whatever good that can bring about. I wish someone would pose this question to John Cristy in New Jersey. Wonder what his thoughts would be? Who gave these people the right to submit such a report based on their ridiculous findings. Do they really believe that the American people are going to accept such nonsense? Well, could be, if someone doesn’t make the Governor of Virginia stand behind them and send the State Legislature packing.

  9. Compares to soviet union during stalins government where a man could be simply carted off to the gulags for any old trumped up reason taken from his home no explaination and forced to work himself to death in prison camps, stalins goal to cheaply develop rural areas.
    no due process no right to a jury trial
    we have come no further if this continues think about it. What has Been clearly demonstrated over the past few years in
    this foreclosure/Bsnk fraud the mother of all frauds is basically the same and will get worse if we don’t protect our laws and courts from this illegal hijacking.I hope the state of Virginia fight this with sll their might. Atty general DO YOUR JOB make it your business please
    frankly anyone that accepted funds from the banksters for gods sake whistle blow your head off . so much damage so little time

  10. What will it take for this country to get the Egyptian Fever?

    Thanks for reminding us. We are on the track.I have sent so much stuff to the authorities who are sitting in the laps of banks. I have talked with so many other people too and watching their input. We will see the results soon.
    Once again thanks a lot.

  12. “MERS has been found by 10 state supreme courts to be acting illegally…”

    What are those 10 states?

  13. Where are the victims of Virginia?? What are they doing to speak out??

    Lobbying and infiltrating of government officials and authorities has been going on for a very long time. Cannot sit back and expect someone else to do the job for you. The job is difficult and hard — but in this case — only Virginia residents can come forward and speak out. Cannot think only of your individual situation — must speak out — loud and clear. Organize your own lobby — you have no other choice – if you do not do — your own individual case will be lost as bank lobbyists win to change the law. .

  14. Look At These:
    The above org. has branches in most states.
    At the bottom of the page: Tell Us About Your Cases

    Fight fire with………It’s a start.

    i’m going to quit posting for now. I don’t want to hijack this blog. Others have things to say, ideas to offer. Do use these links. One or more of these lobbying groups may be open to helping “deadbeats” challenge the usury and criminal conduct of the mortgage/fraud/industry. It may only require a bit of persistence….and we all have tons of that.

  15. “Simples!” as the gecko says. The banks once represented their investors….who are now,….themselves essentially. Think about the mergers, the big guys gobbling the little guys. Like BAC buyng Countrywide and Merrill Lynch…It’s like the ouroboros (the snake who eats it’s tail, representing infinity).They pay baksheesh to the CONgress; we also pay the Congress….hmmm, no longer wondering why those who can’t cut it in the real world run for office?

    And, whilst they are entertaining the idea of whether or not to toady to the lobbies…we, the tax schnooks offer what when they leave office?Perhaps a mention in the local paper, their name on the firehouse?….where as the other side has already told them there’s a desk waiting for them at the Lobby’s headquarters. They’re valuable there. They know where to park on The Hill; they know their way “around” and they just need to go and visit all of their old colleagues. Check out the “revolving door” on that website and count how many lobbyists are former congressional staffers and members. I noted Evan Bayh is one of the newest. It is ever thus.

    So, that was my point when I told “Anonymous” that there’s no help there. The hearings are kabuki theatre that they hold for “face time” so their ardent supporters back in “Niceville” will think they’re actually representing them.

    I realize that this polemic is reeking of cynicism but it’s also stating that this is how I see it and know that we must find another way. At this moment I have no practical suggestions other than to pay attention, and dig through the web to learn and inform.

    And, the one method that still achieves results is “grassroots.” To that end, we all must set aside time to get actually informed with regard to our state laws, code, and put pressure on our state reps. This means not only writing letters but finding the legislature’s website, checking it daily for the current bills proposed and making connections with Legislative Aids of your Representative, Delegate or whatever. The web is our friend. Use it to keep an eye on them and let them know you’re there. If you hit on something like House Bill 1506 in the Va. Legislature, write a letter to the Patron giving support and then write letters to the editors of the local rag. It’s not sexy but it works.

    Also, post information on this site and Naked Capitalism and Market Ticker. The biggest surprise I’ve gotten recently is the phenomenal amount of support we abused borrowers have in the financial sector.

    The honest traders and brokers are incensed by the behaviour of the few. (Remember, Neil Garfield is a retired Wall Streeter who came out of retirement due to his anger at what he observed)They will post your comments and those comments frequently start long threads of supporting suggestions from folks who know how to do things.

    Daniel Pennell had a significant effect on several people in the “business” when his article was posted on Yves Smith’s site. He also checked back and responded to posters who commented. It usually boils down to this. Discussion in the “marketplace” engenders interest and interest usually preceeds action. We need to try to influence that action by starting the discussions. LIke here, like now.

  16. lets us publish those lists!!!!

  17. And we watch CNN with bewilderemnt the news about Egypt. And we have governemwnts like the one in Virhinia and our federal branches that are beyond corruption, they work for the bankster mafia.

    It is so disappointing indeed. Mr. Albo is no only a bankers cronnie but a person completely out of touch.

    For these people to brush way the US Constitution. No due process for you. I can come to court with any document I can create and manipulate and steal your property.


  18. @India, Concerned.

    India, I went thru the sort by states. All 49 states senators received lobby money. I must have missed one. I didn’t check Representatives list.
    As Bob Brinker says – we have the best Government that money can buy.

    Kind of funny, not, but the money given to to the lobbyist to give to our Government actually comes from us, the consumer using financial services/banking, so we fund cutting our own throats. Jeepers, I have awoken.
    No wonder nothing really it’s done in Congress. And if anything good gets done, it’s really the opposite. And maybe CON-gress is the proper way to say it. Who really represents who here?

  19. @ Concerned. Ask and ye shall receive. Here is the link to “Open Secrets”….it has lists upon lists of congresspeople (Reps and Senators) and the amount each received from Commercial Bank Lobby. BTW, Barack Obama heads the list.

    You can also retrieve the names of the lobbying firms, the “revolving door” members of congress and lots of other interesting data. If you can post on other blogs, it will be good.

  20. In Maryland, we have many Bank friendly politicians – my favorite is Jennie Forehand who says that people “should have been more financially responsible when they bought a home”. (!!) The Democratic Gov (OMalley) also hastily passed legislation last year that allowed Banks to easily appoint substitue trustees like Sam White to seize houses. Folks, this type of stuff is unprecedented in our times, and the press is too quiet.

  21. There are still some other voices ,who lost money:

  22. First sentence was meant to say “senators and representatives at the state and federal level plus their staff members who have taken funds from the banksters”.

  23. Has anyone thought of digging up the FULL list of everyone, including influential staff members who have taken funds from the banking or servicing industry? This should be done at the state and federal levels. Also, any board members of state and federal boards should be listed if they have taken funds from this same industry.

    Also to be listed would be FAMILY connections such as we have in California between Jerry Brown and sister Kathleen with Goldman-Sucks.

    Posting such a list of all the ‘players’ with ‘connections’ on a prominent websie would be a very useful tool to help neutralize this effort to ‘buy’ pro-bankster legislation.

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