TITLE COMPANIES REFUSE TO ISSUE POLICIES ON SECURITIZED MORTGAGES

REPUBLIC TITLE ANNOUNCEMENT: The Company will not insure title to any property which has been foreclosed by Ally Financial, Ally Bank or GMAC until further notice.

This follows a series of similar announcements over the past year from smaller title companies who, recognizing the enormous liability that the banks were attempting to shift to them, simply refused to issue the policies either issuing a “letter of declination” or issuing a policy that includes EXCEPTIONS for any claim arising out of the mortgage, the securitization of the mortgage, or the perfection of the lien.

We have reports now from people who have gone to the trouble of going to title companies and asking for a title commitment so that they would know whether they could sell or refinance their home. The title agents are flatly refusing (letter of declination) or issuing a commitment to get the fee from the homeowner WITH exceptions for the securitized mortgages. Of course what this means is what I have been saying for three years — title is either clouded or fatally defective.

And THAT means that there are facts supporting a claim to quiet title and remove the mortgage or deed of trust from the property, or even remove the trustee or clerk’s deed if the property was “sold” at auction. It also means that the claims for wrongful foreclosure, slander of title, predatory lending, violations of TILA, RESPA, HOEPA etc., are coming up to the front burner. If people make their claims and the lawyers do their job, the great theft of wealth from the middle class can be partially reversed, saving both the housing market and the economy.

TENT CITY, California While Vacant Houses Deteriorate

TENT CITY, California While Vacant Houses Deteriorate

From watergatesummer.blogspot.com we have this post on the moronic ideology that misuses our natural and creative resources. It can be said that conservatives do not conserve and liberals do not liberate. I coined that because it is obvious that politics in this country is degrading even while some try to revive it.

Out of pure ideology and ignorance, people are being ejected from homes they own on the pretense that they don’t own the home. This sleight of hand is accomplished by “bridge to nowhere” logic — the pretender lender merely pretends to be authorized to initiate foreclosure proceedings.  They come into court with a pile of  inconsistent documents with little or no REAL connection with the originating papers and zero connection with the REAL lender.

So we end up with hundreds of thousands of homes that are empty, subject to vandalism and decay from lack of mainteance and lack of anyone living in them, combined with nobody paying utility bills etc that would help take the edge off the crisis. Instead, we choose to allow TENT CITY where there are no decent facilities, where people are living in tents literally, resulting in a greater drain on social services, police, fire, health, schools etc.

Why because some ideologue and people who mindlessly subscribe to such ideology has already played Judge and Jury and convicted these victims of Wall Street fraud. They are certain that these are deadbeats that don’t pay thier bills and won’t listen when someone points out that many of these people had nearly perfect credit scores before tragedy hit. That means the victims were generally considered to have been better credit risks based upon an excellent record of paying their bills, than their ideological detractors.

Someone of this ideology will tell us or anyone who will listen that the victims should have read what they were signing. The is fact that NOBODY reads those closing documents, not even lawyers, not even the ideological (don’t confuse me with the facts) conservatives. So the same people who say you should have read those documents, didn’t read their own.

And now everyone who is NOT in foreclosure or who has already lost possession of their home and who signed a securitized loan package is “underwater” an average of 25% , which means that they are, on average around $70,000 in debt that will never be covered by equity in their lifetime — so they can’t move without coming to the table with the shortfall.

Such ideologues fall short of helping their fellow citizens to be sure. What is astonishing is that they fall short of helping themselves, which means they subject their life partners, spouses, children and other dependents to the same mindless mind-numbing shoot myself in the foot political theology.  And somehow it is THESE people who are controlling the pace of the recovery, controlling the correction in housing and social services who are claiming to be angry about their country being taken away from them!

Let them fall: AIG, AMBAC, Investment Banks

While my editorial opinion has been fairly obvious in these articles, I feel the need to express them directly.

The fundamental truth that is missed in the media and those in government and finance close to the microphones is that this did not start with the borrowers — it started with the investors who bought securities backed by non-existent mortgages and non-existent and/or non-negotiable notes.

The world credit market froze up not because of a some bad loans in the United States or a decline in property values, but because the paper — nearly all of it — was bad paper. It wasn’t bad risk management or even lack of regulation that caused the meltdown, it was the investment banking community’s boldness in violating every law, rule and regulation known to State and Federal regulators.

They forged documents, destroyed documents and “lost” documents, because to produce them would have been an admission of criminal fraud. The reason the credit markets have frozen up is that bankers, who will tolerate stupidity and bad judgment in each other, will not tolerate outright dishonesty and lying.

Investors will not come to the table to buy securities from the thieves who stole from them so recently. Paulson’s “bailout” package was ridiculous. He has no idea how to apply the money and rightfully so — the package was designed to help the thieves instead of the victims. The statement intended was that the U.S. government will not let the infrastructure fall. The statement was heard as a government that was owned and controlled by the thieves dipping into taxpayer money under cover of scare tactics. IT WAS A MESSAGE THAT SAYS THIS BEHAVIOR WILL BE TOLERATED IF IT IS BIG ENOUGH, AND THAT IT COULD HAPPEN AGAIN.

Free markets are free only when there is a referee who blows the whistles, issues penalties, and otherwise disciplines the players. Imagine a basketball, football or baseball game without any referees. Here the regulators were part of the scheme, as were all the participants, because they were creating money and keeping most of it. The fear that letting the big players go down will destroy the infrastructure is a myth and is causing policy decisions to be made that are just plain nonsense.

Like it or not, this was a case of selling securities under false pretenses, intentional misrepresentations, and cover-ups that were worthy of the arrogant Watergate and other scandals. There are thousands of banks, investment banks, and insurers who can step in to fill the void created by the collapse of the major players here who caused this and only by letting them fall can we send the signal to the world that the United States doesn’t tolerate such bad behavior and will let the consequences fall where they may.

There are tens of thousands of insurance policies covering errors and omission, title, and fiduciary responsibilities for the appraisers, mortgage brokers, and lenders that were party to this gigantic fraud. It’s a lawyer’s dream.

The selling of these securities defrauded millions of people, government entities, pension funds, hedge funds, mutual funds and companies who thought they were buying cash equivalent securities when in fact they were buying garbage.

Like it or not, millions of people were solicited into signing up for mortgages they didn’t need or want and where the terms frequently changed at closing. There was no precedent for banks not caring whether the loan worked or not. Everyone assumed that the underwriting departments would reject toxic waste loans. That they effectively closed their underwriting departments because they were not at risk and were paid a fee of around 2.5% to look the other way as they “rented” their charter to unscrupulous unregulated, unregistered players.

In addition to the investors, the victims here are the borrowers, cities and states who were fooled by the apparent increase in prices caused not by demand for homes or mortgages, but by supply of money that was illegally created.

The plain fact is that nearly ALL the paper is worthless, there are no mortgages, there are no notes, and there are no obligations. Nearly every homeowner who took a mortgage between 2001 and 2008 is entitled to have their home declared free and clear of any mortgage encumbrance or debt. That is why the paper is worthless. And in world finance the knowledge of that awesome fact has created doubt and suspicion about the rest of the credit market which is 100 times the size of the mortgage credit market. Nobody trusts anybody in risk management, rating of securities, appraisals, or representations. THAT CAN ONLY BE RESTORED BY COMPLETE TRANSPARENCY AND EASY WAYS TO CHECK THE VALUE AND QUALITY OF SECURITIES.

Over a year ago and several times since I have proposed a “bailout” that required no money from the Federal government, demonstrated our good intentions to make amends, and to restore the investors and borrowers, as much as possible, to their position before the Great Fraud of 2001-2008 took place.

All that is required is an equity appreciation clause or instrument that writes down the mortgages back to real value (i.e., real proceeds from sale if the property were sold) and shares the increase in value that time always provides between the the investors and the borrowers — not the banks and investment banks. The latter already got paid several times over. The “notes” were evidence of obligations that had been satisfied several times over and unilaterally changed at the whim of thieves after the loan closing took place.

AT THE PRESENT TIME, VIRTUALLY EVERY PARTY SEEKING TO FORECLOSE ON HOMEOWNERS IS WITHOUT THE AUTHORITY OR EVEN THE KNOWLEDGE TO ENFORCE OR EVEN KNOW WHETHER A NOTE IS IN DEFAULT BECAUSE OF ALL THE OTHER PARTIES THAT WERE ADDED TO THE REVENUE STREAM AND THE DIRECT BREACH OF EVERY NOTE WHEREIN THE APPLICATION OF PAYMENTS SHOULD ONLY BE MADE TO THE OBLIGATION OF THE BORROWER — NOT SOME OTHER BORROWER OR GROUP OF BORROWERS WHOSE ALLEGED OBLIGATIONS HAVE BEEN COLLATERALIZED BY THE PAYMENTS OF OTHER BORROWERS.

THIS MEANS THAT VIRTUALLY EVERY LAWYER WHO ADVISES OR REPRESENTS A HOMEOWNER IN DISTRESS IS WRONG IF THEY SEEK ONLY TO DELAY OR CREATE A “WORKOUT.” THEY SHOULD SEEK TO WIN.

EVERY BANKRUPTCY LAWYER WHO FILES A SCHEDULE SHOWING THE HOUSE AS ENCUMBERED AND THE CREDITORS AS SECURED IS ALSO WRONG. THOSE BANKRUPTCY LAWYERS ARE GIVING UP A GOLDEN AND NECESSARY OPPORTUNITY TO FILE SCHEDULES THAT DO NOT SHOW THE ALLEGED LENDER AS A SECURED CREDITOR AND THEREFORE BLOCKS THEM AT THE THRESHOLD WHEN THEY SEEK RELIEF FROM STAY.

The government’s attempt to paper over this crisis is dangerous and wrong. It floods the market with even more new money when most of the money out there is declining in value daily. It creates the environment for hyperinflation that could go on for years. If you really want to stop the crisis the answer is to tell the truth and correct the REAL problems. Settling with homeowners with reasonable mortgage terms that they can afford and with equity appreciation clauses of secondary mortgages can restore some if not all of the value of the securities the investors bought and takes the U.S. government out of the business of being the investor of last resort.

Of course this is just my opinion and I can’t offer legal advice to anyone outside of Florida, so check with your local counsel, who probably knows nothing about securitization. My advice is legally without value in any other state so you must seel local lciensed counsel in order to comply with the laws of your state which prevent you from having access to lawyers who really could help.

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