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Sep. 22 2009 - 11:16 am | 1,284 views | 5 recommendations | 60 comments

Waking up to discover the mortgage market was a giant criminal enterprise

A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.

via Landmark Decision: Massive Relief for Homeowners and Trouble for the Banks.

This is a potentially gigantic story. It seems that a court has ruled that about half of the mortgage market has been run as a criminal enterprise for years, which would invalidate any potential forelosure proceedings for about, oh, 60 million mortgages. The court ruled that the electronic transfer system used by the private company MERS — a clearing system for mortgages, similar to a depository, that is used for about half the mortgage market — is fundamentally unreliable, and any mortgage sold and/or transferred through MERS can’t be foreclosed upon, at least not in Kansas.

Coincidentally I’d been working on something related to this all day yesterday. All over the country, lawyers are contesting foreclosures because of similar chain-of-custody issues. I have some material about this coming out in my next Rolling Stone story, so I can’t get into this too much, but suffice to say the lenders and the banks were extremely sloppy about their paperwork (at best — there is a fraud angle as well) and jammed up the system with missing and/or mismarked mortgage notes. Since a sale isn’t legal unless there’s full transfer of the physical note, a lot of the sales of mortgage-backed securities were not entirely legal, since the actual notes were often not transferred.

Nothing like waking up in the morning and finding out a whole sector of the economy is completely screwed. Are these good times or what?

Although this particular case pertains to MERS, non-MERS mortgages were often even worse. Anyway I have more on this coming next week. Thanks again to Eric at MonkeyBusiness for the heads-up.


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  1. collapse expand

    Wow, completely uncovered by the MSM. The decision heppened almost a month ago and has only been picked up by mortgage company blogs. Admittedly, it will be a while before this decision works its way into every lawyer’s bag of tricks, but we can count on a quiet push for a silent law that will fix the precedent in favor of big money.

  2. collapse expand

    Hey Matt –

    I’ve been reading you avidly for a good while, but this story reaches into the depth of my experience and understanding.

    I’ve been a lawyer focusing on real estate and financial matters and in the retail mortgage business.

    More than two years ago, I was saying that this wave of foreclosures was unsustainable because of the problems facing the purported “holders” – MERS not being a valid endorsement and transfer of a note under the UCC.

    To my understanding, as your research is undoubtedly showing you, cases are working their way to the Supreme Courts in Ohio and Missouri on the identical issue. A number of people have suggested that Federal legislation will be introduced shortly to give a Federal standard for presentment and transfer, but I cannot see that being done ex post facto.

    If (or more appropriately when) this legal reasoning starts to take hold, foreclosures going back a few years can be successfully challenged after the fact. Even more damaging to the financial world is your point that MBS transactions were all based on these non-UCC transfers and themselves were likely unenforceable ab initio.

    If this trend takes hold, it could easily make the tulip bulb mania of 1637 appear to be a failed bake sale.

    Makes me feel like one of the sole observers of a giant tsunami warning the rest of the people that it’s coming being validated. It’s nice to have been right, but it really sucks to be that.

  3. collapse expand

    Take a look at Tanta’s post from Calculated Risk. There is a lot worth reading in the post, including this:

    “But if consumer attorneys want to create a situation in which the simple fact of loss of or irreparable damage to an original note vacates the debt, I can promise you you will not like the consequences of that. If it turns into Total War here, don’t ever lose an original cancelled check. You should know that there is actually one fairly respectable reason for doing FC filings with note copies, besides servicer laziness or loan sale screw-ups: taking your original note out of the custodian’s vault to send to some local attorney to attach to a court filing creates several more opportunities for it to get lost. If it becomes a requirement that FC can proceed only with the original note in the courtroom, and the presence of an LNA always means dismissal, then the things are going to have to be handled and shipped and received with the same level of security as a million-dollar bearer bond. Like, a Brink’s truck and a bonded courier carrying a briefcase handcuffed to his wrist. You want to pay the cost of that? No. You don’t. But you will.”

  4. collapse expand

    I always wondered when this shoe would drop…it’s hard to evict when the owner of the property is chopped into bits and sold worldwide and is now referred to as a toxic asset.

  5. collapse expand

    So glad you’re writing about this, Matt, and I really look forward to your piece.

    I recently read that even judges are standing up to the banksters and their sloppy paperwork and disregard for the court in bankruptcy, foreclosure, and credit card collection practices.

    Good times indeed. Good times.

  6. collapse expand

    “Since a sale isn’t legal unless there’s full transfer of the physical note, a lot of the sales of mortgage-backed securities were not entirely legal, since the actual notes were often not transferred.Since a sale isn’t legal unless there’s full transfer of the physical note, a lot of the sales of mortgage-backed securities were not entirely legal, since the actual notes were often not transferred.”

    Matt, tell us how we can research this ourselves. Thanks.

  7. collapse expand

    Matt,
    Fascinating post. Look forward to the RS piece.
    How can someone (like myself, for instance) find out if their loan is one of those that got chopped up into bits and sold off? Is my mortgage company required to send me any of this on demand? It’s funny, I’ve had this realization over the last few months that most people, myself included, make one of the biggest financial decisions of their lives without having any idea what their rights are.

  8. collapse expand
    deleted account

    Have you gone to any of the press screenings of Moore’s new flick? There’s a section about countrywide great term loans being given out to well-connected politicos and celebrities that just is disgusting in light of how much countrywide screwed poor people over at the same time.

    My dad, who grew up in Pakistan, told me it reminded me of the developing world countries, when I told him about it. You’d have to wonder if we didn’t have so much wealth overall, if what we’d see over here wouldn’t look too much different than Indonesia with the well-connected bilking the nation’s wealth.

  9. collapse expand

    Due respect, Mr. Taibbi, many, MANY people, borrowers especially, have been absolutely SCREAMING that the mortgage industry – at least specific players and specific sectors – are giant criminal enterprises for at LEAST the last decade without exaggeration. As one of 281,1000 FTC-certified victims of Fairbanks Capital Corp. n/k/a Select Portfolio Servicing, I’ve been at it for more than 8 years personally. I know other Mortgage Servicing Fraud victims who have been at it for close to 15 years.

    MSF victims have been jumping up and down telling anyone who would even feign interest that many of these mortgage servicers and/or “nominees” (like MERS) have NEVER had any legal standing to foreclose. I’m currently watching a local foreclosure take place by Ocwen where the assignment of mortgage being used to foreclose was supposedly created 11/01/07 and recorded 08/21/09. The only problem is that the PREVIOUS assignment of mortgage states that IT was created 04/03/08 and was recorded 04/24/08.

    Mortgage Servicing Fraud is, by many accounts, running rampant in the U.S. and absolutely NO one of any regulatory capacity appears to be at all interested in stopping/prosecuting it criminally for what it is – attempted/grand theft larceny. Period. It is organized. Note holders/depositors, trustees, servicers all know what is going on. In fact, grab any foreclosure out of your local public notices. If it the note has been securitized pull the trust info up from the SEC. I would be willing to bet that not a single trust that is researched will have reported to the SEC beyond 18 months from inception. Not ONE. On average, they all appear to file 15-15Ds (suspension of duty to report) within 12 to 18 months of origination. That effectively obscures a trust’s financials and allows them to operate well under the radar – not that too many regulatory agencies are watching to begin with…

    Separately, while I have the chance, I’d like to thank you for continuing to bring attention to issues such as this. People have been losing their homes to fraudulent foreclosures for literally decades. More than a quarter of a million (367,100) homeowners were affected by only two class actions, USA/Curry v. Fairbanks and FTC v. EMC/Bear. Many of them will never come close to being made whole again. But maybe, just maybe we can bring enough attention to this problem so that blatant, fraudulent foreclosures due to Mortgage Servicing Fraud will be a thing of the past before too many more families lose their homes through little or no fault of their own.

  10. collapse expand

    MWales@5:38, NJ@9:41 and anyone else wondering, a trip to your county recorder or registry of deeds MIGHT uncover whether or not your note has been securitized. One problem is that borrowers don’t have to be notified when the note itself is sold/assigned/transferred. Borrowers only need to be notified when the SERVICING RIGHTS to their note are sold/assigned/transferred. You might be fortunate enough to have internet access to your county recorder/registry so check online or make a phone call to them before physically trekking there.

    The issue here is that, unless the state that you’re in has some kind of RSA on the books giving note holders, servicers, etc. a finite amount of time to record mortgages and subsequent assignments – and the state actually ENFORCES the RSA – you may never know who your note holder is beyond the originator of the note, especially if MERS is involved.

    You can try sending a Qualified Written Request to your servicer. They may answer it, they may ignore it despite RESPA, I believe, mandating that QWRs must be acknowledged within 20 days of receipt and answered within 60 days thereafter. The industry simply doesn’t care about them at all.

    Mike Dillon
    Manchester, NH
    http://www.getdshirtz.com

  11. collapse expand

    It’s interesting that Ellen’s piece mentions no one knows who owns these mortgages, as MERS has wrapped that information behind a cloak of secrecy.

    For many years the reason mortgage companies existed was because of the profit they generated from their loan servicing department. It was an easy system: in exchange for collecting the payments and making interest disbursements, those companies were paid a small percentage on their entire servicing portfolio.

    But as the “innovative” new loan products entered the market, lenders began transferring the servicing amongst themselves as quickly as they originated new loans.

    I frankly find it hard to believe these developments were all spontaneous and coincidental. These mortgages had to have been created with an unspoken understanding that they were destined to default. There is no other reason for the lenders to have created such an intricate system involving rapid transfer of servicing rights combined with ownership cloaked in secrecy.

  12. collapse expand

    All of this is really something, for lack of a better term. The 1st time I became aware of this, I was actually home on a Saturday afternoon listening to This American Life.

    The story is titled “The Giant Pool of Money” (May 2008)
    and the link is here: (http://www.thislife.org/Radio_Episode.aspx?episode=355).

    The transcript can be linked from that page, but you can find it here as well: (http://www.thislife.org/extras/radio/355_transcript.pdf)

    There are things on the periphery of the MERS issue. The part that has always stuck with me is on pp6-7 of the transcript, starting with

    “There are problems. Individual mortgages are too big a hassle for the global pool of
    money. They don’t wanna get mixed up with actual people and their catastrophic
    health problems or debilitating divorces, and all the reasons which might stop them
    from paying their mortgages.
    So what Mike and his peers on Wall Street did, was to figure out how to give the
    global pool of money all the benefits of a mortgage – basically higher yield – without
    the hassle or the risk.
    So picture the whole chain. You have Clarence. He gets a mortgage from a broker.
    The broker sells the mortgage to a small bank, the small bank sells the mortgage to
    a guy like Mike at a big investment firm on Wall Street.
    Then Mike takes a few thousand mortgages he’s bought this way, he puts them in
    one big pile. Now he’s got thousands of mortgage checks coming to him every
    month. It’s a huge monthly stream of money, which is expected to come in for the
    next thirty years, the life of a mortgage.”

    continuing through

    “Actually that pulse thing. Also optional. Like the case in Ohio where 23 dead people were approved for mortgages.”

    For those of you who haven’t heard the story, it’s a worth-while read.

    As for news, it seems that the only place the curious can find good information is from sources that allow full exploration of a subject, without tons of concern for word count. Even with that option, the audience has to be smart enough to know what a good and bad source is. Not only has the inability to make this distinction paved the way for mass amounts of crappy media (often controlled by large corporate entities), but it’s led to practices that have damaged the economy, such as this housing loan SNAFU. So in this long winded way, thank you Matt for bringing Ellen Brown’s writing to a wider audience (please credit her as you did your reference Eric Salzman). I’m not sure where else I might have caught wind of this. Give us a heads up when your RS article is about to hit.

  13. collapse expand

    “Foreclosures will continue to come as long as the job market does not get better. Also, borrowers who have Alt-A loan products will have those coming due in the next couple of years and many of the loans will not qualify for the current values resulting in their homes being foreclosed on. The result is that the market will be flooded with new supply, and without artificially increased demand, prices will continue to drop.”
    Read more.
    http://www.housingnewslive.com/us-housing-news-articles.php

  14. collapse expand

    That’s it. I’m recommending Matt Taibbi for Sainthood. Sorry, just my funny way of saying thank you Matt. From the bottom of my heart and about 60 million other people’s — THANK YOU!

  15. collapse expand

    Thank you for covering this. I saw the Global Research article yesterday, and googled the KS case. It delivered just a handful of references, one of which was Ellen Brown’s article. I cited it on by blog.

    Looking forward to your next post on this.

  16. collapse expand

    Sounds like another little bit of leverage for the “produce the note” movement I recently read about on huffingtonpost. The Consumer Warning Network has posted a how to section on “produce the note” legal strategies, if anyone is interested. Keep up the good work Mr. Taibbi, we need real investigative journalism now more that ever.

  17. collapse expand

    From the “News from 2010″:

    “In it’s most recent ruling, the US Supreme Court has overturned Kansas Supreme Court ruling, by 6:3…

  18. collapse expand

    The Taibbi strikes again! Great article/blog, and looking forward to the next RS.

    Didn’t Nomi Prins publish a timeline detailing something similar, citing the OCC (during Bush reign) stopping state agencies from bringing legal action against predatory lending practices while mentioning that S&P threatened to lower the rating on state and local government bonds should they interfere with them? I’d call that surely criminal.

  19. collapse expand

    As an attorney representing homeowners in Arizona, I can tell you that it is a true clusterf*ck, to use a scientific term. I’m thrilled that you may do a piece on this, Matt.

  20. collapse expand

    Matt,

    I have been doing extensive research on MERS, Mortgage Electronic Registration Systems, and have discovered employees of a Major Lending Institution have been acting as MERS nominees signing their names as “vice president” on hundreds, if not thousands, of mortgage assignments assigning mortgages over to the same Major Lending Institution while employed at that Major Lending Institution. In other words, they are assinging the mortgages to themselves. The assignments are from many different “lenders” that no longer exist. In all instances, it looks like they are doing this for the sole purpose of foreclosing on a home that they had no prior interest in, ie. never lent a dime in the transaction. How can a homeowner negotiate with an entity that can not modify a loan it does not own, and only profits from the foreclosure of the home? They are literally stealing homes from the people. I can not see how this could not be at least a conflict of interest or total blatant fraud. Not sure if this is something you would want to look into, but if you do let me know and I can send you all the info…

    4closureFraud

    • collapse expand

      I’m guessing that this would be the Scott Anderson/Laura Hescott issues that NY Supreme Court Judge Arthur Schack has been questioning for some time now?

      Scott Anderson is apparently an employee of Ocwen in W Palm Beach. He repeatedly shows up on assignments of mortgages as either a VP or Assistant Secretary of either MERS, Ocwen or whatever entity purports to hold the note being sold/assigned/transferred.

      Same basic premise goes for Laura Hescott, except Ms. Hescott is apparently an employee of Fidelity National Information Systems/Foreclosure Solutions or another of the FNIS subsidiaries.

      I’ve noticed similar and repeated filings by a Bill Koch of Select Portfolio Servicing. He pops up as either an Asst Secretary or VP of MERS on many assignments involving SPS. SPS, for those not familiar, was formerly known as Fairbanks Capital Corp. of USA/Curry v. Fairbanks infamy.

      As an aside, if I’m not mistaken, FB/SPS has received $660M +/- and Ocwen $750M +/- as part of the HAMP program to date as well.

      I’ll go out on a limb and guess that each servicing entity is going to have their own “MERS” guy or gal on staff. Makes it that much easier to transfer a note from MERS to a trust that a servicer like Ocwen or SPS is already servicing. Kind of like the way that the servicer’s business address shows up on the assignments as both the “Assignor’s” and the “Assignee’s” place of business on an assgignment. How MERS can be conducting business from 3815 SW Temple Salt Lake City UT when they are based, I believe, in Flint, Michigan is a neat trick.

      Of course, the same trick is being pulled at 1270 Northland Rd, Suite 200, Mendota Heights, MN (Fidelity National/Lender Processing Services) and 1661 Worthington Rd # 100
      West Palm Beach, FL 33409-6493 (Ocwen) as well. Deutsche, HSBC, U.S. Bank, Chase, at least one CSFB trust, and I would venture as a somewhat educated guess, at least a dozen other entities all appear to be conducting business from the same/similar business addresses. To prove this to yourself, simply run these addresses through your favorite search engine and see what/who pops up.

      And yet, to the best of my knowledge, no one other than Judge Schack seems to be the least bit concerned. Part of why I am a fan of Judge Schack I guess….

      In response to another comment. See in context »
  21. collapse expand

    The full Kansas Supreme Court Opinion is here:

    http://www.kscourts.org/Cases-and-Opinions/opinions/supct/2009/20090828/98489.htm

    Now I’m not a lawyer but I don’t see anything remotely as sweeping as “the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure.” or “The court ruled that the electronic transfer system used by the private company MERS — a clearing system for mortgages, similar to a depository, that is used for about half the mortgage market — is fundamentally unreliable, and any mortgage sold and/or transferred through MERS can’t be foreclosed upon, at least not in Kansas.” (the second bit – clearly MERS is deeply unreliable). The Kansas Supremes do indeed give MERS a royal spanking in this case and say some very rude things about their conduct and record-keeping in the specific case. They even make it clear that similarly sloppy behaviour will not be supported in law – but where, specifically, is the blanket disqualification from bringing foreclosure actions, especially in concert with a noteowner somewhat more organised than Sovereign?

    Tanta (may she Rest In Peace) used to regularly look at this stuff and the case was usually the same – judges come down hard on specific pieces of incompetence or fraud in individual cases but are notably reluctant to come in with blanket bans.

    yeah there’s some nasty shocks to the mortgage securitisation process in the pipeline, but my read of this case is that it’s still some way from generalisation.

    I mean, does the Global Research website (complete with “Mysterious Collapse of WTC 7″ expose) not at least trigger some scepticism?

    • collapse expand

      These are all fair questions, and the generalization is probably a little extravagant. But I’ve been following a lot of these cases and this is significant, because the decision basically says that MERS has no standing to enforce a foreclosure because it isn’t really the mortgage-lender, just a nominee. This is key because in a lot of these securitized deals the actual ostensible note-holder doesn’t show up in court to enforce the foreclosure and tries to do it through MERS (ie a case in California called Mers v. Vargas), the reason being that if the actual note-holders showed up in court with their crappy paperwork, the judges would usually throw them out of court. By ruling that MERS is not a legit mortgageur and can’t press to have claims enforced, this court dealt the industry a blow, although to be fair it’s been done before, just not in a court this high. The reason for this is that it now forces the actual note-holders to come into court, and they often will turn out to not have the proper paperwork to prove ownership.

      In response to another comment. See in context »
      • collapse expand

        Please tell me you’ve seen this? http://www.dailykos.com/storyonly/2009/9/23/785445/-How-I-am-beating-the-crap-out-of-Countrywide-MERS- It’s not just MERS, it’s Countrywide, and this guy makes a compelling case that Countrywide is committing fraud to force foreclosures in court:

        “Countrywide’s lawsuit was filed in the name of Countrywide as loan servicer, and MERS as mortgagee. I thought it strange that some unknown entity (MERS) was in a fight with me. I started doing research. This is what I found (explained in layman’s terms). Countrywide had sold the note to a trust that had been set up by the gurus on Wall St. There were 16,000 notes in the trust owned by god knows how many investors. They of course could do this because for the first time in the history of world finance, these ‘gurus’ had separated the mortgage (collateral) from the note. MERS holds my mortgage which is recorded per law at my county court house. They don’t and will never be my, or your, note holder. This separation of the note and mortgage gives Wall St. the ability to ‘transfer/sell’ my note at a click of a mouse thus circumventing the age old process of recording the transfer in my county court house. This slight of the hand is the fraud that created the entire secondary mortgage market and eventually the trouble we are in today. Countrywide is my loan servicer…which means they are nothing but a bookkeeper and collection agency. The holder of my note was yet to be determined.” Yet Countrywide represented itself to the court as the holder of the mortgage. Fraud!

        This is the moment I’ve been waiting for — I just could not figure out how a mortgage could be cut into slivers a hundred ways and then bet on for and against by a hundred more folks — how ANYONE could be said to hold the mortgage, and how the hell taxpayers are supposed to materialize all that “lost” fantasy money. There’s no there there, that emperor has no clothes…. yes?

        In response to another comment. See in context »
      • collapse expand

        The only problem now is that we have too many judges who don’t force the supposed note holder to produce the physical note, even when the homeowner asks for it.

        In response to another comment. See in context »
  22. collapse expand

    I’m a homeowner learning from tortuous experience and hoping for this issue to unfold in the major media. So here we go…

    PART ONE: BIG LENDERS’ (Chase anyone?) RAMPANT FORECLOSURE ACTIONS UNDERSTOOD AS A STRATEGY DESIGNED TO FLUSH OUT LOANS THEY NO LONGER WANT TO SERVICE BY USING AGGRESSIVE, PREEMPTIVE FORECLOSURE ATTACKS ON SINCERELY STRUGGLING AND HONEST CUSTOMERS.

    There has been a LITTLE exposure in the media about how very few “mods” have been done through the Administration’s Project HOPE program, which is the banner under which Chase and other lenders are doing their dirty work. But there hasn’t been anything in the media about where these applications GO. In this scheme, the customer cannot discuss their loan with the lender unless they go through the hoops of doing an exhaustive, often impossible to complete, homeowner information package. (For example, if the homeowner is self-employed — and who isn’t nowadays? — it must include a CPA-audited P&L statement to date, or the package is automatically denied. Right.) This buys the lender time to continue accelerating collections during the 90+ days they say it’s taking to process the truckloads of packages they are receiving… until the Call Center script becomes, “Oops, looks like we haven’t processed your packet yet [or it got routed to the wrong department and is suspended in limbo, etc.] and it’s out of date, so you have to start over.” Thus begins the rabbit maze of a carefully designed strategy to flush out legitimate loans with low interest rates and high loan-to-value (but not max’d) ratios which are no longer profitable to service. Hmmm… could this be the very same concept of what’s corrupt in our healthcare system — insurance companies flushing out the good customers when they actually need what they’ve paid for?

    PART TWO: ACCELERATION OF FORECLOSURES IN NON-JUDICIAL STATES.

    Lenders in these states can foreclose without going through the courts. Meaning, they can take loans that are a few months past due, turn them over to bulk-processing trustee servicing outfits who file each action for $40 with a County Clerk and then set a Sale Date for the home to be auctioned off on the courthouse steps. (And the County gets a few bucks for renting out the steps.) From the date of the filing, they begin mailing copies of the Sale Notice to the customer’s address every day, taping it on their door every day, and the customer from that point on gets no access to the lender except via the trustee servicer who may be hard to reach. The customer is drawn further into the maze when trying to obtain a statement of what is owed to bring the loan current and lift the foreclosure — because the lender has stopped sending statements after the third one which showed any past due amount. To learn about all the fees, unknown costs, and penalties built into the foreclosure notice (PAYDAY for the bulk subcontractors), the customer can only call the trustee servicer and request a statement which will take “several days” to come out of its Legal Department.

    Also on the filing date, the property goes onto the trustee servicer’s website as well as onto all internet foreclosure sites, announced as a HOT PROPERTY. This is occurring while the homeowners, now broken and beaten, may still be living in the lovely home they intend to keep, or have placed on the market in their efforts to downsize and improve their financial circumstances. And, they may be selling their home for much more than what is owed, such as in a desirable area with recent comps at matching prices or higher. But all of the brokers in town now know it’s a foreclosure property, so no reason for their clients to make full or even good offers, just wait for it to hit bottom and snap it up. That is of no concern to the BIG LENDERS: It sounds great on the news to hear home prices leveling and becoming affordable for the unwashed masses. They have gotten cheap ‘n easy payoffs on truckloads of loans, PLUS a gold star for the Economy… and, as if that weren’t fun enough already, they get to look like they’ve cleaned up their act when they apply to Congress for the next bailout.

    Nice little scheme, eh?

  23. collapse expand

    I’m the anonymous homeowner (in OREGON), back with a footnote…

    Realizing my long comment was pretty detailed, prosaic and not at the level of financial/legal sophistication of this string — but I needed to get it SOMEWHERE. It’s not meant to be just a rant. Please run with it, you ladies and guys!!!

    I found myself broken down by this ugly maze, with friends, advisors, even my local bank rep saying, “You’re home is too valuable, why would they ever foreclose on YOU?”, etc. None of what I told anyone computed, until I started doing my homework and woke up. I hired a local prominent attorney yesterday and began putting the pieces together. I may end up needing more of a pit bull attorney, but I’m off to a good start. Found your blog via Huffington, simply on a search for somewhere anywhere people like me can get journalists in major media on this.

    I will sign off now… am really out of my league with you all!

  24. collapse expand

    Have you had a chance to see Moore’s new film yet, Matt? I caught a press screening of it, and he really goes into the whole mortgage scam debacle. We really haven’t addressed this issue at all legislatively, and people around this country continue to be scammed, foreclosed on, and evicted. The links between Chris Dodd, Kent Conrade, Holbrooke, and other power players and the sort of deals they were able to get from Countrywide, too, are abhorrent.

  25. collapse expand

    Matt. Im trying to pass on a tip to you about your upcoming mortgage fraud piece and how I was frauded out of $2mm by Wells Fargo and Bank of America and have evidentiary proof.

    Your “email tips” section isnt working and refers me to “message 211 on this page” whatever that means.

    Matt: go here for my story: http://www.blogofsandiego.com/

  26. collapse expand

    The full extent of the criminal enterprise that inflated the housing bubble in the first place has not been discussed. Inflated home prices start with Realtors and their CMAs (competitive market analysis) which they use to secure listings from potential sellers. In most cases the Realtor is little more than a used car salesman who puffs up the price to make the seller feel good about themselves and their house and to boost the commissions. Then the appraisers (the Times had a piece on appraisers a month or so ago which touched on the crisis from this angle) and home inspectors, both of whom have to please Realtors (who pressure them to find value in the case of appraisers and to not find defects in the case of home inspectors) in order to get business. The crooked lenders don’t get their piece till this trio of conspirators have done their handiwork. Realtors skate by under the radar and have thus far escaped blame. But the housing bubble started with with them from the beginning of the transaction.

  27. collapse expand

    There was an interesting post over at DailyKos last night (http://www.dailykos.com/storyonly/2009/9/23/93055/2130) about one guy’s fight with Countrywide over a mortgage that reads like a RICO case. He was in real estate, so he was better equipped than some to deal with the legal issues (and of course their cost).

    Bottom line is that the MERS angle in general will only stall the foreclosure for so long. Eventually they will find the person who holds the note….but an angle in his case (as per his state law) was that it was illegal for someone who didn’t ‘hold the note’ to initiate the foreclosure proceedings. This means that Countrywide was guilty of filing false claims in court. tsk tsk tsk.

  28. collapse expand

    Much as I agree with the general thrust of the assault upon the corporatist citadel, I feel compelled to disagree here.
    This was a case about setting aside a default judgment on a second mortgage. MERS had to show that the outcome would be different if it had been joined as a party in the default judgement and the court found that it made no difference, in part because MERS lacked an enforceable interest. So this case is really quite limited because this case says nothing about MERS’ standing in a case where it is a party to the initial foreclosure. The case is also limited to the words in the specific documents: if any other banks/shops had slightly better lawyers the whole issue might be irrelevant. Sorry, but this case really has no broad meaning, though other state courts may take notice of the characterization of MERS. Moral: One failing doesn’t invalidate all mortgages. It would really be better for people to concentrate on regulating the system than grasping at straws, or straw men.

    • collapse expand

      No, whether MERS had been on the first or second mortgage, the court found that it was only a nominee with no financial interest at all in the property itself. For MERS to be able to foreclose, it had to have skin in the game. And it doesn’t, and it never will. Someone called it a phone book, or a privatized county clerk’s office — and you’d never expect a county clerk to foreclose. The court also quoted decisions by several other state courts to get to this definition of MERS.

      One other thing I think is worth noting is that the Daily Kos diarist referred to a FEDERAL law: “Under the United States Fair Debt Collection Practices Act, every foreclosure in the United States is required to file a statement with the foreclosure that states that the entity filing the suit is the note holder.” MERS is NEVER the note holder. So all these foreclosures by MERS have to be null or fraudulent, regardless of state, no? That seems to be what this Florida judge is pondering:

      http://www.doctorhousingbubble.com/mortgage-electronic-registration-systems-mers-a-system-designed-to-create-the-mortgage-back-security-bubble/

      “I’m not certain with the satisfaction of mortgages that have been filed on behalf of MERS how good those are and I am not certain how good title to property is that people bought at these foreclosure sales if it turns or becomes established that MERS was indeed not only not the right party but misrepresented by way of their pleadings and affidavits that they held something they didn’t own, so I’m not certain of the consequences but it seems vast.” – Florida circuit court Judge Jon Gordon

      In response to another comment. See in context »
  29. collapse expand

    The Arkansas Supreme Court also ruled in a similar fashion back in March.

  30. collapse expand

    Hi Matt,
    Excellent article in the latest RS on Goldman Sacs!!!
    Back in Sept. you talked about MERS and mentioned that in Rolling Stone you would be discussing it further. Did you ever write more on it? I have a huge mortgage and would love to determine if I am one of the 60 million.
    Any other sources of info you could point me to would be great appreciated.
    Thank you!
    Rob

  31. collapse expand

    Matt:

    MERS is even more disasterous than you thought. The reason MERS can’t foreclose is that they fought at the Nebraska state appellate level for the right to have no actionable interest in any mortgage. Not only can they not foreclose, they can’t deliver clear title either. Imagine, working your keester off for 30 years only to find out you have bought … nothing. Over 50MM mortgages affected; that’s over $12T.

    Don’t believe? Go to http://www.chinkinthearmor.net and read the first two stories. A little further down the page is a complete listing of all MERS Member Banks. Quite informative. Understand John Weil @ Bloomburg & Gretchen @ the Times are sniffing pretty hard at this one.

    Got MERS on your Mortgage? Only way to find out is to go to the recorder’s office at the county courthouse.

    Investigate MERS

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