Canadian Buyers Beware!!!

Many Canadians and U.S. investors are causing a buying “spike” that is creating the illusion that the market has hit bottom in some places and even going up. This illusion is self-perpetuating until it becomes clear that the buyers of these properties have bought into problems that they never knew existed. This is not the 1980’s. In a previous post I wrote about the 14 things Canadian buyers should know before committing to purchase property in the U.S. See 14 Things Canadians Need to Know Before Buying

The list is enlarging practically daily. In addition to to the items mentioned in that article, Forbes and the Wall Street Journal are advising buyers to get a complete title record and NOT rely on the title company. We offer such a service here at Loan Specific title Search and Commentary.

Starting with bad title at the start (origination) of the “loan” that was foreclosed, the banks and servicers are compounding the problem with the complicity of the title companies. The title companies when confronted with a claim for payment or to fix the title are pointing to language buried deep within the title policy that specifically excludes title issues arising from securitization, assignment or sale of the loan into the secondary markets which means that practically no title policy covers the most common title problem to be encountered today.

The list now has been enlarged. The revelation that Libor (London InterBank Offered rate) has been manipulated since 2005 for the trading profit and pleasure of the banks reporting to the index managers, means that the “former” homeowner was not presented with the correct amount for redemption or reinstatement. This alone might be grounds to overturn the eviction, the foreclosure, the notice of default and probably even the substitution of trustee in non-judicial states. The result is that the buyer gets nothing — he is dispossessed from title, right to possession and his tenant, who might now sue him, is kicked out as the homeowner is restored to ownership and possession.

But wait there is more! The cities and counties are getting closer and closer to saving their cities by use of the power of eminent domain in which the city seizes the mortgage, pays the fair market value of what it is worth and potentially ends up with the property as well. These risks to buyers have not as yet been quantified but are present and should be accounted for in the negotiations between the buyer and the title insurance company.

And add to that the fact that because the first “foreclosure” was illegal, and based upon debt that was not reported properly or possibly even paid by third parties, the junior lienholders — homeowner associations, HELOC lenders, and others  have the power to foreclose on both the new “owner/buyer” and the bank that sold them the property.

During the break of an interview I had this morning with Saint Johns 103.5 they told me a story about a mortgage fraud up there where it is cool. The mortgage broker and lawyer involved conspired to put the property in their own names. The surprised borrower is in the process of being evicted from a home in which he did nothing wrong.

This might seem off-track but it isn’t. The banks deliberately put in the name of a third party as lender when it wasn’t the lender. There was no financial transaction between the named lender and the named borrower. The funds for closing came from an undisclosed third party.

This creates an immediate title problem for the mortgage. It secures a transaction between the named lender and the named borrower that never occurred. The note, being unenforceable is thus secured by a mortgage that is equally worthless. With no actual financial transaction between THOSE PARTIES, the mortgage secures nothing. Any foreclosure on that mortgage also results in nothing. Any buyer from such a pretender lender is getting the same — nothing.

Some of these issues can be ascertained through title analysis, but many required a title and securitization analysis. See Title and Securitization Analysis and Commentary. The extra cost is a pittance compared to the cost of defending your investment or defending a lawsuit from a tenant who feels misled about your ability to rent the property.

16 Responses

  1. For anyone who’s been jumping up and down about Oregon’s new law…

    This is a farce. Listen to Mandelman to understand why and why it will not help anyone. It’s only a way of buying some time.

  2. It is not over yet. We think it’s not going fast enough and we want to see the same happening here. It will. just a question of being patient.

    Italian Police Raid Barclays Over Rate-Fixing

    Police take documents from Barclays in Milan, as they investigate possible rate-fixing of the euro version of Libor.
    11:20am UK, Tuesday 31 July 2012

    Italian police have taken documents from a Barclays office in Milan as part of a probe into possible Euribor rate manipulation, according to Reuters.

    It said the raid occurred as regulators investigated fixing fears of the eurozone equivalent of the scandal-hit, London-based Libor inter-bank lending rate.

    The search was ordered by prosecutors in the southern city of Trani, who have opened a criminal probe into the possible manipulation of the Euribor rate.

    The move comes after complaints were filed by two consumer groups, Adusbef and Federconsumatori.

    Two judicial sources also confirmed the raid occurred last week, according to Reuters.

    Documents, computer material and emails were seized, the consumer groups said in a joint statement.

    They said the Milan raid occurred “with the aim of looking for evidence that Barclays also manipulated Euribor, as it did with Libor, with a negative impact on mortgage rates paid by Italians”.

  3. Playing with our minds and our sanity… Anyone confused enough?

    FINALLY! A Real Reporter Dissects the Flawed Foreclosure Data….
    July 28th, 2012 | Author: Matthew D. Weidner, Esq.

    There’s a regular ritual that the mainstream press, news and policy makers engage in. Private companies release press releases that suggest DRAMATIC TRENDS IN REAL ESTATE IN…..(PICK YOUR MARKET)! It works like this:






    These press releases are picked up by newspapers all across America where lazy reporters and sloppy editors fail to analyze the data and fail to cross check the assertions made in the press releases. No time anymore to engage in the difficult and time consuming process of actually taking all the data apart and understand exactly what it means….much less determine whether the data is accurate.

    The problem is, the headlines do not accurately capture what is really happening out in neighborhoods all across America….but who cares…after all…


    And while it’s frustrating enough to see bad reporting, it’s positively terrifying to see this data make its way into public policy and legislative debates. Laws made based flawed data produced by industry insiders….what could possibly be wrong with that?

    Well, understand where this data comes from and understand, the data is what it is…the problem is how it is reported and used…..

    While no piece of research is without even a minor flaw, the second part of the equation is where the foreclosure rate calculation may be problematic.

    The total number of housing units in a certain area come from the U.S. Census Bureau, and Thursday’s report was based off of the agency’s 2010 estimates.

    Other than the fact that the property count is two years old, the other issue is using the number of all standing homes.

    If every single-family home in an area had a mortgage, then RealtyTrac’s calculations would be a very accurate depiction of foreclosure activity in an area.

    But especially given the number of distressed homes that have been, and continue to be, snatched up by investors who generally pay in cash, the RealtyTrac report’s accuracy must be called into question.



    How to make all those pesky senior loans dissapear!
    Simple, Just change the LEGAL LOT NUMBER!

    sorry that its upside down, but maybe thats an omen!

    Can anyone tell me why 961 Kingsley in 1971 was lot 157, in 1971 and then less then ten years later (and FOUR LOANS) it’s now lot 392?

    Today at a public trustee sale, parties threatend to have me ARRESTED if I taped them!

    In a public place!
    and I was not even taping them, and could prove it as my ipad was OFF.

    961 Kingsley, LOT 157 in 1971and….. waaaaalaaaa!
    961 Kingsley ,is now LOT 392 in 1978

    Come one, come all to the most corrupted title show on earth!

  5. Here is the link to the article with (some) case law state by state:

  6. Sorry – my computer seems commandeered now and then. John seems to take no position, is reporting, apparently. The article does say:
    “Finding that MERS’ transfers are invalid would have an inconceivable effect as estimates are that MERS holds mortgages on nearly sixty million American homes, or sixty percent of the nation’s residential mortgages.”

  7. On info and belief, he is the same John who co-authored the following which includes a slightly dated rundown of MERS, etc. litigation-outcomes state by state. Don’t forget to take a gander at “C – Foreclosing when MERS is the Mortgagee” (which mechanics were 86’d and imo merely replaced by MERS after Consent Order), wherein it says:

    “Note – owner endorses the note in blank* (making it bearer paper) and turns over possession to a MERS’ certifying officer, making MERS the noteholder”… (the same procedure being implemented today, just with the possessor wearing a different hat)

    jg: really? The “note -owner” now, in preparation for fc and or litigation, does a blank endorsement, not previously part of the note?

    “Foreclosure is handled entirely by the MERS certifying officer who typically is an employee in the member institution’s default department.”

    John does not appear to take a position on or endorse these mechanics: his article simply reports them. He and his co-authors dodoes opine:

  8. This is what we’re up against:

    John is Vice Chair for Programs of the Consumer Finance Committee of the ABA Business Law Section, and is a member of the Mortgage Bankers Association, the Conference on Consumer Finance Law, RESPRO, American Land Title Association, the National Association of Dealer’s Counsel, the MAP Division of the ACA, NARCA, the Banking Law Committee of American Bar
    Association Business Section, the Litigation Section of the ABA, and both the Alabama and Mississippi Consumer Finance Associations. He also serves as the Alabama state editor of
    HouseLaw. John has been selected for inclusion in The Best Lawyers in America since 2007.

    John has also been included in the 2008,2009 and 2010 editions of Alabama Super Lawyers in the Class Action/ Mass Tort category and included in 2011 and 2012 of Alabama Super Lawyers
    in the area of Consumer Law.

    John is graduate of Johns Hopkins University (1973) and the University of Alabama School of Law (1978). He is a member of the bar in the states of Alabama, Mississippi, Texas,
    Tennessee, Kentucky, West Virginia, Georgia and Florida and is admitted to practice before
    all U.S. District Courts in Alabama, Mississippi, Florida and Kentucky, the U.S. District Court for the Southern District of West Virginia, the U.S. Courts of Appeals for the Eleventh
    Circuit, Fifth Circuit, Sixth Circuit, and the U.S. Supreme Court.
    J.D., University of Alabama School of Law, 1978
    B.A., Johns Hopkins University, 1973

    Memberships &
    Bar Associations
    American Bar Association
    Alabama State Bar
    Mississippi State Bar
    Texas State Bar
    Tennessee State Bar
    Kentucky State Bar
    West Virginia State Bar
    Florida State Bar
    Birmingham Bar Association

  9. The German: another small fry bites the dust. They’ll just put him in a cell next to Madoff and the two of them can ponder their very bad judgment in not being ‘tbtf’, a misperception of which imo is the only thing to date saving M E R S.


    This is an article dealing with the “OVDP, “Offshore Voluntary Disclosure Program – yep, voluntary – how nice (kind of like entries into MERS’ computer system) reporting of offshore accounts / activites.


    If you have a Fannie or Freddie, this is for you. very short podcast showing how banks hang themselves and how Fannie and Freddie have got to go!!! it’s called a “decoy” assignment. Original loan showing MERS a beneficiary. Originator transfers to Fannie… but not quite. Fannie tells originator to hold on to the unrecorded assignment, as an insurance policy of sort. Until time comes to foreclose. And then…?

    Listen to that and go check your docs.

  12. While Jamie boy makes millions “managing” food stamps, an ever-growing industries in the U.S. of A, other countries are starting to take action. Still, $700 million remains just a drop in a bucket… By the way, where does that fines money go? I still haven’t seen any of of it…

    HSBC discloses $700 million in penalties after getting caught for money laundering

    By Robert Barr Associated Press
    Posted July 30, 2012 at 9:32 a.m., updated July 30, 2012 at 12:04 p.m.

    LONDON — HSBC PLC apologized to shareholders Monday as it disclosed a $700 million charge to cover the cost of U.S. penalties for lapses including its failure to enforce money-laundering controls in Mexico.

    The provision was announced as Europe’s biggest bank reported an 11 percent advance in pretax profit in the first half of the year following $4.3 billion in gains from asset sales. For the six months ending June 30, the bank made a pretax profit of $12.7 billion, up from $11.5 billion a year earlier.

    As well as costs relating to infractions in Mexico, the $700 million provision also takes in possible penalties for violations of the U.S. Bank Secrecy Act in a case going back two years, and any penalties from continuing investigations of possible violations of economic sanctions against Iran and other countries.

    Earlier this month, HSBC paid a fine of $28 million — 379 million Mexican pesos — to Mexican authorities for noncompliance with money laundering controls.

    A U.S. Senate investigative committee reported that in 2007 and 2008 HSBC Mexico sent to the United States about $7 billion in cash. “Bulk cash shipments could reach that volume only if they included illegal drug proceeds,” the committee concluded.

    HSBC Mexico acknowledged in a statement that it failed to report 39 suspicious transactions and had been late in reporting 1,729 others.

  13. Oops! That German crook had gone after German investors… Not too swift and greedy as hell!

  14. German investors caught in alleged Ponzi scheme
    Mon, 07/30/2012 – 13:43 EDT story from in RDF10

    Arrested in Las Vegas, fugitive Ulrich Engler to be turned over to German authorities

    (Reuters) – Prosecutors in Mannheim, Germany said they have evidence that 1,295 investors from Germany, Austria and Switzerland lost at least $37 million in a pyramid scheme allegedly run by a German man arrested in Las Vegas last week.

    “The actual damages are expected to be higher,” the Mannheim prosecutor’s office said in a statement on Monday.

    Ulrich Felix Anton Engler, 51, was arrested in Las Vegas on Wednesday for violating U.S. immigration law.

    Looks to me like American investors are not too swift. Or greedy as hell! Yep. None of that crap happened in a vacuum.


    on July 30, 2012 at 00:55
    Posted In: Arrest Bankers, Bankers

    Youtube Intro:


    The former Chief Executive and Chairman of Anglo Irish Bank has appeared in court in Dublin charged in connection with financial irregularities at the bank.

    Seán FitzPatrick was charged with 16 offences under Section 60 of the Companies Act.

    He is accused of permitting Anglo Irish Bank to give financial assistance to Patricia Quinn, her five children and ten senior clients of the bank who became known as the ‘Maple 10?, to enable the 16 to buy shares in the bank.

    He was granted bail to appear in court again on 8 October for service of the book of evidence.
    Mr FitzPatrick was arrested by arrangement at 5.37am this morning after getting off a flight at Dublin Airport.

  16. Should we take up a collection to fly our crooks there? From what i see, Iran is doing something we ought to have done years ago… then again, it will need to be a hell of a collection! Half of congress needs to be sent on vacation too…

    Iran Sentences 4 To Death In $2.6B Banking Fraud Case
    Iran sentences 4 to death in $2.6B fraud case

    By NASSER KARIMI | Associated Press – 2 hrs 34 mins ago

    TEHRAN, Iran (AP) — An Iranian court has sentenced four people to death and given two more life sentences on charges linked to a $2.6 billion bank fraud described as the biggest financial scam in the country’s history, an official said Monday.

    The trial, which began in February, involved some of the country’s largest financial institutions and raised uncomfortable questions about corruption at senior levels in Iran’s tightly controlled economy.

    But few specific details have been released, possibly to avoid exposing too much internal scandal while Iran’s leaders seek to assure the country it can ride out tightening sanctions over Tehran’s nuclear program.

    Prosecutors have only referred to the linchpin defendant by a nickname and have provided just general information about his purported business empire. The main charges included using forged documents to get credit at one of Iran’s top bank to purchase assets, including major state-owned companies.

    The official IRNA news agency gave no names at all for most of the other defendants in the Revolutionary Court, which deals with cases involving security and organized crime. The report did not say when the verdicts were issued.

    The report quoted state prosecutor Gholam Hossein Mohseni Ejehei as saying a total of 39 defendants received sentences, including four death sentences, two life terms and the rest of up to 25 years in prison. He said officials including deputy ministers in the government were among those sentenced, but did not identify any of them.

    The main defendant, referred to by a nickname “Amir Mansour Aria,” was among those charged with a potential capital offense. In February, state TV said he was accused of being “corrupt on earth,” an Iranian legal term that means that the defendant is an enemy of God, and which in practice is a catch-all term for a variety of offenses. The charge carries the death penalty.

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