Note: This is a long post, so I have bifurcated it - placing part two with the heavy graphics and the financial stuff on by blog. The intro and legal theory suggested by readers is here in part one. I would suggest one read it in its entirety before dismissing any one part of it, though.
Is it possible for the US Government to choose to forgive mortgage
debt? Sounds outrageous? Read on for the legal theory behind this claim
and let me know what you think? I thought it was little esoteric as
well, but as I looked deeper… Well, I’ll let you be the judge.
A lot of attention accrued to Representative Grayson’s calling out of
foreclosure fraud, and for good reason. The story is absolutely
amazing, and kudos to a member of congress that defends his
constituency.
It’s not as if other entities have failed to take notice. ZeroHedge has its usual witty commentary regarding the possibility of foreclosure transactions potentially being unwound due to fraudulent foreclosure activity. The NYT
ran an article stating that Fitch will look into lowering the credit
rating of companies that participated in the submission of inappropriate
foreclosure paperwork, which apparently seems to include an awful lot
of companies. It goes on to state (as excerpted by Zerohedge):
Fitch Ratings said that Wednesday
it was asking mortgage companies about their internal processes for
executing foreclosure affidavits. If it finds the processes lacking,
Fitch will consider downgrading the company’s rating.
The agency also said if the
issue is widespread, the resulting delays and extra costs to
foreclose could increase losses related to residential mortgage-backed
securities.
Here’s the twist. A lawyer who happens to have
followed my writings over the years has suggested that most are missing
the big picture in focusing on fraudulent foreclosure documents. He
contends (and I’m paraphrasing here, these are not my words, per se) “that
since the U.S. has ownership interest in many (if not most) delinquent
and distressed mortgages, this fact will be counted as policy in
litigation. As a consequence it matters A LOT if you can
say that your client has a Fifth Amendment Due Process right (or third
party beneficiary Federal common law right) to a HAMP modification
which is in FACT a minimization of the risk of default (not that flaky
31% number) BECAUSE, among other things, the U.S. has no economic
incentive to foreclose”. Now, I am no lawyer and thus the legal
issues are beyond my domain, but I must admit I found the theory
interesting. So, I’ve decided to crowdsource this one in anticipation
that some of the more astute legal minds can shed some light on the
validity of the theory. I’ll supply the financial stuff in this post,
and I’ll rely on the legal eagles to peer review the theory.
This all stemmed from a chart and “what if”
scenario I post on the 23rd of September in which showed the increasing
decline in recoveries from gross charge-offs from banks.
As a matter of fact, things are so
bad that I believe banks will have a perverse incentive to actually
walk away. Now wouldn’t that be something??? Next, we take a look into
the home builder that makes more money doing distressed investing
than it does building and selling homes.
The legal argument from the BoomBustBlogger in question is as follows:
Things are
moving pretty fast now, especially since so many states are moving to
ban home foreclosures, and since your comments on the lack of economic
incentive to foreclose is coming to the fore. It’s becoming
a question of, Hey Uncle Sam, what is your policy? This may result in
actions to quiet title, against the banks and the United States. The basis will be that in fact, the United States has forgiven home mortgage indebtedness. Your own observation of the economics of foreclosure is part of the mix. But the entire argument that the U.S., has in FACT (no matter what it CLAIMS) forgiven home mortgage indebtedness, is this:
Through its
1. ownership
stake in banks (creating Fifth Amendment Due Process rights to what is
in FACT–not the arbitrary 31%–minimization of the risk of housing loss:
see Huxtable v. Geithner Order on this (not the Order to Dismiss, sounds
like a settlement was reached since Huxtable filed no opposition); 2.
contracts with servicers (creating third party contract rights in
borrowers–see Marques v. Wells Fargo); 3. mortgage principal reduction; 4. adjustments to gross income for principal reduction; and 5. loss of economic incentive to foreclose,
the United States has in fact forgiven home mortgage indebtedness.
And here is more on the topic…
The
big divide in the United States District Courts, with regard to HAMP,
is the language of HAMP which seems to give the Government discretion as
to whether to modify or not. Here is typical language from a court
decision saying there is no right to a modification:
“Notably, the statute provides that loans may be modified “where
appropriate” – a phrase that limits the Secretary’s obligation and
evinces a Congressional intent to afford discretion in the decision
whether to modify loans in certain circumstances.”
The way
to defeat this (as was done in Huxtable v. Geithner, before the case was
settled or abandoned) is to show FACTS which demonstrate that the
Government is actually enforcing a different policy. In that case, it
doesn’t matter what the enabling language says, what decides the policy
is what the government is DOING. What OTHER facts show that the
Government is pursuing this different policy? That is where your
observation comes in.
One of
those facts is the factual conclusions the government ITSELF has come
to. What has it really concluded in the secret, back rooms?
This is
why I was interested in your analysis of the returns on taking title to
defaulting properties (the link being the Government ownership stake in
these properties). If the Government ITSELF has decided there is no
further economic incentive to foreclose, then its policy can ONLY be to
prevent foreclosures, because economics shows no facts in favor of going
forward with foreclosing and taking title. Government policy must be
based on facts–if it is not, then the policy is simply prejudice, and
the courts will not uphold factless prejudice. It’s a matter of
determining what policy the Government is pursuing, as a process of
eliminating all those policy options for which there is no factual
basis. Weeding out one prejudice after another. One such prejudice, I
submit, is the idea that there is an economic incentive for the
Government NOT to grant HAMP modification. If there is no economic
incentive to foreclose, then this supposed economic incentive is
revealed to be a prejudice, and unenforceable. A right to HAMP
modification follows as a matter of elimination of other options.
That is
where you come in. It would greatly help if, on your site, you would
give an estimate of the month/year on which the data clearly show that
the economic incentive to foreclose is ZERO. Once it became clear that
the U.S. had no further economic incentive to foreclose, it would be
very clear that the U.S. has in FACT forgiven home mortgage debt. That
is what zero incentive to foreclose, means. It means that, in FACT, the
debt has been forgiven.
I get
the feeling that, privately, the U.S. is racing ahead based on this
knowledge. I would not be at all surprised to see Obama simply ban home
foreclosures nationwide.
But we are still in limbo, because there is still this notion that
robo-affidavits are the only problem with foreclosure documents, and
once that is “cleared up” it’s full speed ahead with foreclosures.
That
is certainly not the case, and people need to realize that that is not
the case. Above all, their lawyers need more ammo, and the best ammo
would be a detailed examination of the rapidly declining economic
incentive to foreclose.
By the
way, if you assume that the Government already knows we are fast
approaching zero incentive to take title, what signs tell you that the
Government is already acting on the idea that there is zero incentive to
take title? That is, what actions of the U.S. Government tell you that
it has in FACT forgiven home mortgage debt, that it has ALREADY written
it all off as a loss, and is now acting in the AFTERMATH of that
writeoff. Because I think that’s where we are. The United States is
ahead of ALL of us on this. They know how bad. What I’m asking you is,
where is evidence that they know there is nothing to be gained from
foreclosure, and have moved ahead and have IMPLEMENTED that conclusion?
So if you
could deal with that in some big public way, that would be best… That
would attract the attention of every lawyer, judge and investor in the
country–it would immediately resolve every legal question surrounding
home foreclosures, and it would provide an opportunity to get more of
the truth into court cases. Even from the analysis you provided on
9/23, it is clear to me that it’s game over for home mortgages. They
are simply not a part of the economy any more–they’re social policy and
the U.S. is dealing with them as social policy: but what IS the
Government’s new policy? Well, what do the FACTS show it is?
Since you’re not a lawyer, you greatly underestimate the importance of this observation. When the United States has a stake in a matter, facts relating to that matter are imputed to it as United States POLICY.
Well, he’s right. I am not a lawyer. Actually
far from it, but it does appear he is on to some creative legal theory. I
invite any and all competent legal type to weigh in on this. There is
even more on this topic, which at first sounds a bit far fetched, but
actually congeals into a cogent argument as you read on…
It is a BIG mistake to read this as just a matter of cleaning up a few documents. These phony affidavits [as referenced above]
were part of an effort to hide bad debt on banks’ books. It is also
hiding something else, which is that the United States has forgiven home
mortgage indebtedness. Look:
1. ownership
stake in banks (creating Fifth Amendment Due Process rights to what is
in FACT–not the arbitrary 31%–minimization of the risk of housing
loss(on this prong, please see online the Huxtable v. Geithner Order
(not the Order to Dismiss–sounds like a settlement was reached since
Huxtable filed no opposition). The reasoning of Huxtable is sound and is
pretty generally accepted now. There IS a Fifth Amendment Due Process
right based on U.S. ownership of banks, and this Due Process right is a
right to a modification based on what is in FACT the minimization of
risk of default–this means that the 31% is simply the Government’s
assertion on this point–it is LITIGABLE;
2. contracts
with servicers (creating the same rights as above, but on a third party
beneficiary theory–see Marques v. Wells Fargo–online). The reasoning of
Judge Lorenz is also sound and is simply another basis for claiming a
factual minimization of the risk of default, rather than simply
accepting the Government’s 31%. Again, the 31% is going to be litigated.
People have to get used to that–it’s not off limits anymore;
3. mortgage principal reduction through HAMP;
4. adjustments to gross income for principal reduction through HAMP; and
5. loss of
economic incentive to foreclose (this is Reggie Middleton’s analysis on
his blog). The Middleton analysis is new (it’s at www.boombustblog.com, the September 23 story on housing prices). The return/chargeoff is rapidly hitting 0.
Litigants in
HAMP will certainly have the right to civil discovery as to what the
United States has concluded with respect to the economics of
foreclosure.
It will
probably turn out to be just what the facts show: that the policy is in
FACT to minimize the risk of default because there is no economic
incentive to foreclose.
Of course this
seems impossible, unacceptable, blah blah blah. But if the economic
facts bear it out, then the economic facts bear it out and you just have
to wrap your head around it. What will happen next/is happening now:
1. litigants
will sue to quiet title (among other causes of action such as fraud,
conspiracy, Civil Rights violations, etc., naming Tiny Tim, the IRS
commissioner and the United States, among others); and
2. the U.S. is
scrambling right now to decide what to do if people who have a gazillion
dollars and are sitting in a house which is soaring in value,
nevertheless decide to simply stop paying on their mortgages.
Of course, the
first instinct of Uncle Sam will be some sort of coercion. When that
fails in court, the next gambit will be to try to provide some incentive
to people to keep paying those damned mortgages. Who knows how this
will end?
In any event,
it’s Reggie Middleton’s analysis which broke the back of this. Indeed,
I’m sure his analysis was already made in the dark of night at the
Treasury Department.
some things need to be re-read..
Mark E Hoffer Says:
September 23rd, 2010 at 11:04 am
QOTD:
The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds. —John Maynard Keynes, The General Theory of Employment, Interest and Money (13 December 1935)
Robespierre Says:
September 23rd, 2010 at 11:11 am
@constantnormal Says:
September 23rd, 2010 at 10:36 am
“This is where we are heading, in our journey to reshape the US into the world’s largest banana republic.”
I think it is becoming more like a feudal system than a banana republic.
Arequipa01 Says:
September 23rd, 2010 at 11:14 am
The De Soto interview is interesting and embedded in it is an interesting tidbit:
“Fink: This is how the de Soto model works. Property ownership allows poor people to obtain credit, amass capital, and climb out of poverty. Legal reforms make all of that possible. Right now in most developing countries, a morass of laws and bureaucracy keeps the poor from being able to gain title to their property, register their businesses and secure loans.
But de Soto’s ideas have run up against some hard realities. Governments have tended to implement only some of the reforms he champions. And few Peruvian shanty dwellers have been able or willing to borrow against their homes. Most banks don’t extend credit to owners of straw huts and rickety wooden shacks. And taking out a loan is risky for the poor. The owners of the garment factory de Soto and I visited have taken on considerable debt.
De Soto: “About $114,000.”
Fink: They’re paying a high interest rate.
De Soto: “Their interest rates are 2% per month.”
Fink: And they’re worried about keeping up with the payments. Less than a year ago, the factory operated at full capacity. Now it’s at just a quarter of that. As we drive away from the factory, de Soto questions what the future holds for these entrepreneurs.
De Soto: “They may have gone in over their heads. We don’t know.”
The other side of that coin is indebtedness. “obtain credit, amass capital” It’s just that easy! why didn’t I think of that.
You see, while I am very much in favor of improving the titling of property in Peru*, but the assumption that there is a liquid market for properties in an area like Huaycán is unwarranted. There is not. So, you secure a loan with a bank and pledge your property in an illiquid market. Hmmm, would any of you all be interested in that?
* This is a fascinating reality to study and some bright United Statesian kid in CRE should be figuring out how his/her organization can participate in the CRE boom in Lima.
rktbrkr Says:
September 23rd, 2010 at 11:19 am
Real systemic risk!
“We’re not just talking about isolated incidents of problems with foreclosures, we’re talking systemic,”
GMAC suspends foreclosure evictions and sales of seized property
By KIMBERLY MILLER
Palm Beach Post Staff Writer
Foreclosure evictions and homeowner lockouts have been halted by Ally Financial Inc.’s GMAC Mortgage in 23 states including Florida as the nation’s fifth-largest home loan servicer addresses legal challenges to its foreclosure procedures.
A two-page memo dated Sept. 17 and marked “urgent” told brokers to immediately stop evictions, cash-for-key transactions, lockouts and to suspend sales of properties already taken back by the bank in foreclosure.
The memo, first reported by Bloomberg news service, comes at the same time the Tampa-based Florida Default Law Group has been withdrawing legal affidavits in its GMAC foreclosure cases under “candor to the court” rules acknowledging previously submitted information may have been inaccurate.
St. Petersburg defense attorney Matt Weidner, who is handling a case in which a GMAC affidavit was withdrawn last week, called the freeze “staggering.”
“I suspect they are recognizing they have a really big problem,” Weidner said. “I think they are afraid the foreclosure judgments may be voidable.”
If that’s the case, Weidner said it won’t be just GMAC redoing their foreclosure procedures.
“We’re not just talking about isolated incidents of problems with foreclosures, we’re talking systemic,” he said.
rktbrkr Says:
September 23rd, 2010 at 11:21 am
It sounds like these courts are malfunctioning and need to call a “time out”
ashpelham2 Says:
September 23rd, 2010 at 11:25 am
Look, I work at a fairly large regional bank in the Southern US. What happened with this guy started out as someone just blindly pushing buttons and paper, and then morphed into a complete failure of all possible safeguards to make sure something like this couldn’t happen. So, there is a lot of blame to go around, and yeah, this guy is probably owed some kind of restitution for the hassle and crap he’s been through. Should he, or any lawyer, be made wealthy because of it? No, but the courts failed to protect this guy in the original foreclosure process. Why should we expect the courts to get it right when he sues the hell out of B of A?
Banking has been dumbed down to the lowest common denominator at this level. All the brains are making huge bucks in the stuff that got us in the toilet to begin with.
Darkness Says:
September 23rd, 2010 at 11:29 am
I didn’t get what the title company was doing in all this. I can see the courts processing the foreclosures out of order, there is a long tradition of courts barely glancing at foreclosure orders and really, no one expects them to do otherwise, but the title company really screwed up here royally. All of these parties are getting paid their cut to provide a double check on the process and are doing squat. Parasites, the lot of them.
WFTA Says:
September 23rd, 2010 at 11:37 am
BR,
There you go encouraging those pesky plaintiffs’ attorneys again when I’ve been told for the last twenty years that’s why healthcare is unaffordable. Think what this will do for foreclosure inflation!
Matt SF Says:
September 23rd, 2010 at 12:10 pm
One word: Pillory.
Sentence any and all of these corrupt morons to 1 year of mandatory public shame. Only way this nonsense is going to stop is if the anger of the masses is correctly harnessed and directed at those who are propagating the crimes. Letting them pay a fine and *not* admit wrongdoing will only perpetuate the cycle.
Oh, and the afflicted home owner(s) should be given the option of flinging rotten eggs and tomatoes if he or she chooses.
louis Says:
September 23rd, 2010 at 12:36 pm
This just shows what you are dealing with and why none of the programs for housing are working.
jjay Says:
September 23rd, 2010 at 12:40 pm
“Suck it up, Grodensky!’
All my love,
Charlie Munger
bergsten Says:
September 23rd, 2010 at 12:43 pm
That’s it. I’m starting my own bank. It isn’t all that hard, you just have to fill out some state form or another.
Brendan Says:
September 23rd, 2010 at 12:57 pm
I love the irony that we have comments on this blog by people who are screaming about how it’s just unacceptable that the banking industry isn’t doing its due diligence before foreclosing… and then making completely false statements because they haven’t done their own due diligence.
ACORN’s “flunkies” were acquitted of “cooperating with a prostitution scheme” as the videos were shown to be “severely edited” by investigators (for lack of a better resource I’ll use Wikipedia):
http://en.wikipedia.org/wiki/ACORN_2009_undercover_videos_controversy
And also healthcare is not unaffordable due to litigation costs, as has been shown time and time again. Here’s a very recent study pegging the cost at 2.4% of total costs; see:
http://www.medicalnewstoday.com/articles/200462.php
I don’t think you can reasonably say that is to blame for the high cost of healthcare.
Pot meet kettle! You’re entitled to your own opinion, but not your own facts!
contrabandista13 Says:
September 23rd, 2010 at 1:01 pm
Sounds to me like… “ALL BETS ARE OFF….”
I have a good friend that got even for all of you, with BoA to the tune of 3 million….
He legally scammed them for over 3 million…. He told me that it was like shooting fish in a barrel and they cooperated all the way to the gallows…. Two of their VPs got their asses canned for it….
Bravo to my friend Tim B…..
Best regards,
Econolicious
Brendan Says:
September 23rd, 2010 at 1:01 pm
P.S. I recognize that the health-care comment may have been tongue-in-cheek, but it wasn’t really made very clear…
poppysmic Says:
September 23rd, 2010 at 1:45 pm
That’s brilliant by the Bank. They made/ will make money on the deal. Have you ever had a bank error in YOUR favor? Of course not. All credit card fraud can be stopped in almost an instant but they make money on the float. The vendor eats the loss, you make payment on the error until it clears, then they pass on the cost to Ins. or consumer. It sucks for honest citizens, but it’s the bottom line that matters….What’s the line? ” Greed is God’?
Space_Cowboy_NW Says:
September 23rd, 2010 at 1:45 pm
TX Capitial Punishment is to ____________ as FL Foreclosure Mills are to ______________
SOP in the Legal environment: ”Win some, lose some, bill ‘em early & often”
Only guilty people go to prison so remember:” Admit Nothing, Deny Everything, and promptly call your counsel.”
Your mileage may vary…..
APBERUSDISVET Says:
September 23rd, 2010 at 1:50 pm
Where was the title company in this mess? Or were they the corrupt instigator?
WFTA Says:
September 23rd, 2010 at 1:57 pm
Brendan, buddy. Lighten up. I’m on your side.
We need a sense of humor, cause I’m afeared it a hard rain gonna fall.
willid3 Says:
September 23rd, 2010 at 2:07 pm
and i thought many were big on property rights. oh i forgot, its property rights for corporations, TBTF and others. just not for the people
MinnItMan Says:
September 23rd, 2010 at 2:53 pm
A title company should have closed the cash purchase. If the buyer (Grodensky) didn’t use one, his bad. Penny-wise, pound-foolishness.
It’s worth pointing out that cash purchasers usually mean prospective slum-lords, but I don’t know that here. Alsos, his credit should not be affected. The loan was in the name of the former owner.
Not excusing anything, but I suspect the facts would show some strange bedfellows in this story in a fuller reporting.
bergsten Says:
September 23rd, 2010 at 2:58 pm
This box just popped up, asking if I wanted to participate in a TBP survey.
I like Barry, so I figured, “why not”?
The first question asked for my age. Fine. The second asked for (something along the lines of) my interests.
The first choice was “pet care.”
Sorry, but that’s when I bailed on the survey.
Is this legitimate or another ad that’s taken over the site?
formerlawyer Says:
September 23rd, 2010 at 3:58 pm
In my former jurisdiction and others, fraudsters would often take out a mortgage using forged identity. The process involved looking for (preferably vacant) properties without mortgages which was easily done from public records.
From that, forged identity for the owner would be obtained and a mortgage placed on the land with the fraudsters seeing a lawyer to finalize the documents. The fraudsters would set up a bank account from which payments could be withdrawn and place just enough money (ie. 6 months mortgage payments) to fund the mortgage. Often they would then move the address for service of record to a fictional address so that notification of the true owner would be forestalled. Thereafter, the mortgage proceeds would be laundered – usually by way of casinos on Indian lands or other mechanisms.
While personal service would be preferred, substitutional service on the lands or in a newspaper was commonly allowed in foreclosures. Voila – foreclosure once the money ran out.
While that is not the case here from my understanding this is not unknown.
willid3 Says:
September 23rd, 2010 at 4:05 pm
and foreclosure is controlled by the states. Fed have nothing to do with it (short of bankruptcy being involved).
Casual Onlooker Says:
September 23rd, 2010 at 5:10 pm
I find the arguments that mistakes like BofA are just simple oversight, and one off errors that did little harm. From a lot of the various stories out there, from banks that “lose paperwork” to people getting lost in voice mail hell just trying to find a real person, much less a person a person that is not reading a script off his computer, speaks volumes as to the increasing chaos in the system.
To add to GMAC story, NPR yesterday aired a segment on this, and some of the details are rather troubling. http://www.npr.org/templates/transcript/transcript.php?storyId=130052495
From the story…
————
Chris Immel is an attorney at Ice Legal, a foreclosure defense firm in West Palm Beach, Florida. He conducted a deposition with a GMAC employee named Jeffrey Stephan. Immel says his job was to sign foreclosure documents.
Mr. CHRISTOPHER IMMEL (Attorney, Ice Legal): We took his deposition. And in taking it, he pretty much admitted to signing, you know, he said approximately 10,000 documents a month.
KEITH: Attorneys like Immel have taken to calling these employees at loan servicing firms robo-signers.
———
I mean really, 10,000 documents a month by a single person… where is the due diligence in that? How does this not rise to the level of a endemic problem that needs addressing? That’s 62.5 documents signed an hour, or one a minute.
Brady Dennis Says:
September 23rd, 2010 at 5:47 pm
Robo-signer’ played quiet role in huge number of foreclosures
The robo-signer lives on a quiet street in this small town an hour’s drive northwest of Philadelphia.
His modest two-story house, for which he paid $118,000, sits on a corner lot just down the street from the local Moose Lodge and an all-night diner. A weathered Chrysler Concorde is parked in the driveway, and a Toyota Camry sits by the curb.
Many large mortgage lenders have come to rely on a relative handful of so-called robo-signers such as Jeffrey Stephan, 41, to attest to the accuracy of thousands of home foreclosure documents across the country. These workers are not the Wall Street masterminds who created ever more complex mortgage-backed securities and fueled the subprime mortgage boom, but rather “affidavit slaves” with modest incomes and mountainous workloads.
Their actions are leading lawyers representing foreclosed homeowners to claim that lenders have no legal standing if the filings weren’t reviewed and verified, and to argue that the cases should be thrown out.
Herb2 Says:
September 23rd, 2010 at 7:42 pm
In the Philippines when Marcos declared martial law, I noticed that much more attention and money flowed into elections of judges than into elections of senators, which was contrary to my experience in the US. Subsequently I learned that judges decided which phony paperwork was authentic when title to a property was contested.
The particulars are different, but we drift in a similar direction.
Home buying on a Saturday « Tim Hedden's Blog Says:
September 25th, 2010 at 7:01 pm
other day I read a fairly enthusiastic Barry Ritholtz post entitled Man without Mortgage Loses Home in Foreclosure. Basically, the Florida court system is so in the groove of foreclosing on properties, they are
doloresflynn Says:
September 26th, 2010 at 3:45 pm
Please set a standard here !
As soon as you uthrow out the f-bomb, everyone thinks it is their cue to trash the place.
Morality belongs to the financial sector as well as personal, and if you are educated, you can get your point across very well without vulgar puctuations.
Florida’s Foreclosures Nightmare | The Big Picture Says:
September 29th, 2010 at 2:53 pm
Man without Mortgage Loses Home in Foreclosure (September 23rd,
BofA’s unfunny foreclosure tricks | Anne-Marie Wurzel, P.A., Real Estate Agent - Winter Springs, FL Real Estate Office Says:
September 30th, 2010 at 11:05 am
seems. Barry Ritholtz says at his blog that the only way the banks will ever learn is if they lose big judgments in court – a notion that seems to be borne out by another aspect of the Schroit
stopGOVTwaste Says:
October 2nd, 2010 at 1:16 am
So if they come once with fake documents, do they have free reign to come back and try again with NEW fake docs? The mortgage MUST remain together with the note but MERS prevents that from happening. Bifurcation =’s off book securities transactions.
What they don’t want to tell you is that the insurance taken out on the loan pool at 30x value of pool (conservatively) has paid off – EXTINGUISHED – the loans in the underlying pool, many times over (AIG, AMBAC, MGIC, TARP, ETC). But wait a second, weren’t these the same loans that were supposed to be “recorded” in public land records per the terms of the Pooling & Servicing Agreement (PSA) and the Mortgage “contract” (see section 20 of the standard Fannie/Freddie instrument).
So if the chain of custody was never recorded, then the trusts set up to hold the loan pools actually held “nothing but air” – if they even existed at all.
You can’t collect on a debt that has been paid off, that is fraud. Plus, the controlling aspects of the PSA void the sale of the asset under FAS 140, in addition the REMIC will lose it’s tax deferred status under IRS Code. You cannot commit securities fraud, tax fraud, violate a plethora of federal and state lending and consumers laws and get away with it scott free… can you? The crime is mortgage backed securities and the crime scene is our public land records.
Enjoy the video (below) and have a great weekend!
Slowing the Runaway Foreclosure Train | The Big Picture Says:
October 4th, 2010 at 7:26 am
we have seen, homeowners without mortgages have lost their home to foreclosure. That this legal impossibility actually occurred reveals the
Boston Real Estate Blog : Blog Archive : Slowing down the foreclosure assembly line Says:
October 4th, 2010 at 9:53 am
we have seen, homeowners without mortgages have lost their home to foreclosure. That this legal impossibility actually occurred reveals the
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Note: This is a long post, so I have bifurcated it - placing part two with the heavy graphics and the financial stuff on by blog. The intro and legal theory suggested by readers is here in part one. I would suggest one read it in its entirety before dismissing any one part of it, though.
Is it possible for the US Government to choose to forgive mortgage
debt? Sounds outrageous? Read on for the legal theory behind this claim
and let me know what you think? I thought it was little esoteric as
well, but as I looked deeper… Well, I’ll let you be the judge.
A lot of attention accrued to Representative Grayson’s calling out of
foreclosure fraud, and for good reason. The story is absolutely
amazing, and kudos to a member of congress that defends his
constituency.
It’s not as if other entities have failed to take notice. ZeroHedge has its usual witty commentary regarding the possibility of foreclosure transactions potentially being unwound due to fraudulent foreclosure activity. The NYT
ran an article stating that Fitch will look into lowering the credit
rating of companies that participated in the submission of inappropriate
foreclosure paperwork, which apparently seems to include an awful lot
of companies. It goes on to state (as excerpted by Zerohedge):
Fitch Ratings said that Wednesday
it was asking mortgage companies about their internal processes for
executing foreclosure affidavits. If it finds the processes lacking,
Fitch will consider downgrading the company’s rating.
The agency also said if the
issue is widespread, the resulting delays and extra costs to
foreclose could increase losses related to residential mortgage-backed
securities.
Here’s the twist. A lawyer who happens to have
followed my writings over the years has suggested that most are missing
the big picture in focusing on fraudulent foreclosure documents. He
contends (and I’m paraphrasing here, these are not my words, per se) “that
since the U.S. has ownership interest in many (if not most) delinquent
and distressed mortgages, this fact will be counted as policy in
litigation. As a consequence it matters A LOT if you can
say that your client has a Fifth Amendment Due Process right (or third
party beneficiary Federal common law right) to a HAMP modification
which is in FACT a minimization of the risk of default (not that flaky
31% number) BECAUSE, among other things, the U.S. has no economic
incentive to foreclose”. Now, I am no lawyer and thus the legal
issues are beyond my domain, but I must admit I found the theory
interesting. So, I’ve decided to crowdsource this one in anticipation
that some of the more astute legal minds can shed some light on the
validity of the theory. I’ll supply the financial stuff in this post,
and I’ll rely on the legal eagles to peer review the theory.
This all stemmed from a chart and “what if”
scenario I post on the 23rd of September in which showed the increasing
decline in recoveries from gross charge-offs from banks.
As a matter of fact, things are so
bad that I believe banks will have a perverse incentive to actually
walk away. Now wouldn’t that be something??? Next, we take a look into
the home builder that makes more money doing distressed investing
than it does building and selling homes.
The legal argument from the BoomBustBlogger in question is as follows:
Things are
moving pretty fast now, especially since so many states are moving to
ban home foreclosures, and since your comments on the lack of economic
incentive to foreclose is coming to the fore. It’s becoming
a question of, Hey Uncle Sam, what is your policy? This may result in
actions to quiet title, against the banks and the United States. The basis will be that in fact, the United States has forgiven home mortgage indebtedness. Your own observation of the economics of foreclosure is part of the mix. But the entire argument that the U.S., has in FACT (no matter what it CLAIMS) forgiven home mortgage indebtedness, is this:
Through its
1. ownership
stake in banks (creating Fifth Amendment Due Process rights to what is
in FACT–not the arbitrary 31%–minimization of the risk of housing loss:
see Huxtable v. Geithner Order on this (not the Order to Dismiss, sounds
like a settlement was reached since Huxtable filed no opposition); 2.
contracts with servicers (creating third party contract rights in
borrowers–see Marques v. Wells Fargo); 3. mortgage principal reduction; 4. adjustments to gross income for principal reduction; and 5. loss of economic incentive to foreclose,
the United States has in fact forgiven home mortgage indebtedness.
And here is more on the topic…
The
big divide in the United States District Courts, with regard to HAMP,
is the language of HAMP which seems to give the Government discretion as
to whether to modify or not. Here is typical language from a court
decision saying there is no right to a modification:
“Notably, the statute provides that loans may be modified “where
appropriate” – a phrase that limits the Secretary’s obligation and
evinces a Congressional intent to afford discretion in the decision
whether to modify loans in certain circumstances.”
The way
to defeat this (as was done in Huxtable v. Geithner, before the case was
settled or abandoned) is to show FACTS which demonstrate that the
Government is actually enforcing a different policy. In that case, it
doesn’t matter what the enabling language says, what decides the policy
is what the government is DOING. What OTHER facts show that the
Government is pursuing this different policy? That is where your
observation comes in.
One of
those facts is the factual conclusions the government ITSELF has come
to. What has it really concluded in the secret, back rooms?
This is
why I was interested in your analysis of the returns on taking title to
defaulting properties (the link being the Government ownership stake in
these properties). If the Government ITSELF has decided there is no
further economic incentive to foreclose, then its policy can ONLY be to
prevent foreclosures, because economics shows no facts in favor of going
forward with foreclosing and taking title. Government policy must be
based on facts–if it is not, then the policy is simply prejudice, and
the courts will not uphold factless prejudice. It’s a matter of
determining what policy the Government is pursuing, as a process of
eliminating all those policy options for which there is no factual
basis. Weeding out one prejudice after another. One such prejudice, I
submit, is the idea that there is an economic incentive for the
Government NOT to grant HAMP modification. If there is no economic
incentive to foreclose, then this supposed economic incentive is
revealed to be a prejudice, and unenforceable. A right to HAMP
modification follows as a matter of elimination of other options.
That is
where you come in. It would greatly help if, on your site, you would
give an estimate of the month/year on which the data clearly show that
the economic incentive to foreclose is ZERO. Once it became clear that
the U.S. had no further economic incentive to foreclose, it would be
very clear that the U.S. has in FACT forgiven home mortgage debt. That
is what zero incentive to foreclose, means. It means that, in FACT, the
debt has been forgiven.
I get
the feeling that, privately, the U.S. is racing ahead based on this
knowledge. I would not be at all surprised to see Obama simply ban home
foreclosures nationwide.
But we are still in limbo, because there is still this notion that
robo-affidavits are the only problem with foreclosure documents, and
once that is “cleared up” it’s full speed ahead with foreclosures.
That
is certainly not the case, and people need to realize that that is not
the case. Above all, their lawyers need more ammo, and the best ammo
would be a detailed examination of the rapidly declining economic
incentive to foreclose.
By the
way, if you assume that the Government already knows we are fast
approaching zero incentive to take title, what signs tell you that the
Government is already acting on the idea that there is zero incentive to
take title? That is, what actions of the U.S. Government tell you that
it has in FACT forgiven home mortgage debt, that it has ALREADY written
it all off as a loss, and is now acting in the AFTERMATH of that
writeoff. Because I think that’s where we are. The United States is
ahead of ALL of us on this. They know how bad. What I’m asking you is,
where is evidence that they know there is nothing to be gained from
foreclosure, and have moved ahead and have IMPLEMENTED that conclusion?
So if you
could deal with that in some big public way, that would be best… That
would attract the attention of every lawyer, judge and investor in the
country–it would immediately resolve every legal question surrounding
home foreclosures, and it would provide an opportunity to get more of
the truth into court cases. Even from the analysis you provided on
9/23, it is clear to me that it’s game over for home mortgages. They
are simply not a part of the economy any more–they’re social policy and
the U.S. is dealing with them as social policy: but what IS the
Government’s new policy? Well, what do the FACTS show it is?
Since you’re not a lawyer, you greatly underestimate the importance of this observation. When the United States has a stake in a matter, facts relating to that matter are imputed to it as United States POLICY.
Well, he’s right. I am not a lawyer. Actually
far from it, but it does appear he is on to some creative legal theory. I
invite any and all competent legal type to weigh in on this. There is
even more on this topic, which at first sounds a bit far fetched, but
actually congeals into a cogent argument as you read on…
It is a BIG mistake to read this as just a matter of cleaning up a few documents. These phony affidavits [as referenced above]
were part of an effort to hide bad debt on banks’ books. It is also
hiding something else, which is that the United States has forgiven home
mortgage indebtedness. Look:
1. ownership
stake in banks (creating Fifth Amendment Due Process rights to what is
in FACT–not the arbitrary 31%–minimization of the risk of housing
loss(on this prong, please see online the Huxtable v. Geithner Order
(not the Order to Dismiss–sounds like a settlement was reached since
Huxtable filed no opposition). The reasoning of Huxtable is sound and is
pretty generally accepted now. There IS a Fifth Amendment Due Process
right based on U.S. ownership of banks, and this Due Process right is a
right to a modification based on what is in FACT the minimization of
risk of default–this means that the 31% is simply the Government’s
assertion on this point–it is LITIGABLE;
2. contracts
with servicers (creating the same rights as above, but on a third party
beneficiary theory–see Marques v. Wells Fargo–online). The reasoning of
Judge Lorenz is also sound and is simply another basis for claiming a
factual minimization of the risk of default, rather than simply
accepting the Government’s 31%. Again, the 31% is going to be litigated.
People have to get used to that–it’s not off limits anymore;
3. mortgage principal reduction through HAMP;
4. adjustments to gross income for principal reduction through HAMP; and
5. loss of
economic incentive to foreclose (this is Reggie Middleton’s analysis on
his blog). The Middleton analysis is new (it’s at www.boombustblog.com, the September 23 story on housing prices). The return/chargeoff is rapidly hitting 0.
Litigants in
HAMP will certainly have the right to civil discovery as to what the
United States has concluded with respect to the economics of
foreclosure.
It will
probably turn out to be just what the facts show: that the policy is in
FACT to minimize the risk of default because there is no economic
incentive to foreclose.
Of course this
seems impossible, unacceptable, blah blah blah. But if the economic
facts bear it out, then the economic facts bear it out and you just have
to wrap your head around it. What will happen next/is happening now:
1. litigants
will sue to quiet title (among other causes of action such as fraud,
conspiracy, Civil Rights violations, etc., naming Tiny Tim, the IRS
commissioner and the United States, among others); and
2. the U.S. is
scrambling right now to decide what to do if people who have a gazillion
dollars and are sitting in a house which is soaring in value,
nevertheless decide to simply stop paying on their mortgages.
Of course, the
first instinct of Uncle Sam will be some sort of coercion. When that
fails in court, the next gambit will be to try to provide some incentive
to people to keep paying those damned mortgages. Who knows how this
will end?
In any event,
it’s Reggie Middleton’s analysis which broke the back of this. Indeed,
I’m sure his analysis was already made in the dark of night at the
Treasury Department.
some things need to be re-read..
Mark E Hoffer Says:
September 23rd, 2010 at 11:04 am
QOTD:
The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds. —John Maynard Keynes, The General Theory of Employment, Interest and Money (13 December 1935)
Robespierre Says:
September 23rd, 2010 at 11:11 am
@constantnormal Says:
September 23rd, 2010 at 10:36 am
“This is where we are heading, in our journey to reshape the US into the world’s largest banana republic.”
I think it is becoming more like a feudal system than a banana republic.
Arequipa01 Says:
September 23rd, 2010 at 11:14 am
The De Soto interview is interesting and embedded in it is an interesting tidbit:
“Fink: This is how the de Soto model works. Property ownership allows poor people to obtain credit, amass capital, and climb out of poverty. Legal reforms make all of that possible. Right now in most developing countries, a morass of laws and bureaucracy keeps the poor from being able to gain title to their property, register their businesses and secure loans.
But de Soto’s ideas have run up against some hard realities. Governments have tended to implement only some of the reforms he champions. And few Peruvian shanty dwellers have been able or willing to borrow against their homes. Most banks don’t extend credit to owners of straw huts and rickety wooden shacks. And taking out a loan is risky for the poor. The owners of the garment factory de Soto and I visited have taken on considerable debt.
De Soto: “About $114,000.”
Fink: They’re paying a high interest rate.
De Soto: “Their interest rates are 2% per month.”
Fink: And they’re worried about keeping up with the payments. Less than a year ago, the factory operated at full capacity. Now it’s at just a quarter of that. As we drive away from the factory, de Soto questions what the future holds for these entrepreneurs.
De Soto: “They may have gone in over their heads. We don’t know.”
The other side of that coin is indebtedness. “obtain credit, amass capital” It’s just that easy! why didn’t I think of that.
You see, while I am very much in favor of improving the titling of property in Peru*, but the assumption that there is a liquid market for properties in an area like Huaycán is unwarranted. There is not. So, you secure a loan with a bank and pledge your property in an illiquid market. Hmmm, would any of you all be interested in that?
* This is a fascinating reality to study and some bright United Statesian kid in CRE should be figuring out how his/her organization can participate in the CRE boom in Lima.
rktbrkr Says:
September 23rd, 2010 at 11:19 am
Real systemic risk!
“We’re not just talking about isolated incidents of problems with foreclosures, we’re talking systemic,”
GMAC suspends foreclosure evictions and sales of seized property
By KIMBERLY MILLER
Palm Beach Post Staff Writer
Foreclosure evictions and homeowner lockouts have been halted by Ally Financial Inc.’s GMAC Mortgage in 23 states including Florida as the nation’s fifth-largest home loan servicer addresses legal challenges to its foreclosure procedures.
A two-page memo dated Sept. 17 and marked “urgent” told brokers to immediately stop evictions, cash-for-key transactions, lockouts and to suspend sales of properties already taken back by the bank in foreclosure.
The memo, first reported by Bloomberg news service, comes at the same time the Tampa-based Florida Default Law Group has been withdrawing legal affidavits in its GMAC foreclosure cases under “candor to the court” rules acknowledging previously submitted information may have been inaccurate.
St. Petersburg defense attorney Matt Weidner, who is handling a case in which a GMAC affidavit was withdrawn last week, called the freeze “staggering.”
“I suspect they are recognizing they have a really big problem,” Weidner said. “I think they are afraid the foreclosure judgments may be voidable.”
If that’s the case, Weidner said it won’t be just GMAC redoing their foreclosure procedures.
“We’re not just talking about isolated incidents of problems with foreclosures, we’re talking systemic,” he said.
rktbrkr Says:
September 23rd, 2010 at 11:21 am
It sounds like these courts are malfunctioning and need to call a “time out”
ashpelham2 Says:
September 23rd, 2010 at 11:25 am
Look, I work at a fairly large regional bank in the Southern US. What happened with this guy started out as someone just blindly pushing buttons and paper, and then morphed into a complete failure of all possible safeguards to make sure something like this couldn’t happen. So, there is a lot of blame to go around, and yeah, this guy is probably owed some kind of restitution for the hassle and crap he’s been through. Should he, or any lawyer, be made wealthy because of it? No, but the courts failed to protect this guy in the original foreclosure process. Why should we expect the courts to get it right when he sues the hell out of B of A?
Banking has been dumbed down to the lowest common denominator at this level. All the brains are making huge bucks in the stuff that got us in the toilet to begin with.
Darkness Says:
September 23rd, 2010 at 11:29 am
I didn’t get what the title company was doing in all this. I can see the courts processing the foreclosures out of order, there is a long tradition of courts barely glancing at foreclosure orders and really, no one expects them to do otherwise, but the title company really screwed up here royally. All of these parties are getting paid their cut to provide a double check on the process and are doing squat. Parasites, the lot of them.
WFTA Says:
September 23rd, 2010 at 11:37 am
BR,
There you go encouraging those pesky plaintiffs’ attorneys again when I’ve been told for the last twenty years that’s why healthcare is unaffordable. Think what this will do for foreclosure inflation!
Matt SF Says:
September 23rd, 2010 at 12:10 pm
One word: Pillory.
Sentence any and all of these corrupt morons to 1 year of mandatory public shame. Only way this nonsense is going to stop is if the anger of the masses is correctly harnessed and directed at those who are propagating the crimes. Letting them pay a fine and *not* admit wrongdoing will only perpetuate the cycle.
Oh, and the afflicted home owner(s) should be given the option of flinging rotten eggs and tomatoes if he or she chooses.
louis Says:
September 23rd, 2010 at 12:36 pm
This just shows what you are dealing with and why none of the programs for housing are working.
jjay Says:
September 23rd, 2010 at 12:40 pm
“Suck it up, Grodensky!’
All my love,
Charlie Munger
bergsten Says:
September 23rd, 2010 at 12:43 pm
That’s it. I’m starting my own bank. It isn’t all that hard, you just have to fill out some state form or another.
Brendan Says:
September 23rd, 2010 at 12:57 pm
I love the irony that we have comments on this blog by people who are screaming about how it’s just unacceptable that the banking industry isn’t doing its due diligence before foreclosing… and then making completely false statements because they haven’t done their own due diligence.
ACORN’s “flunkies” were acquitted of “cooperating with a prostitution scheme” as the videos were shown to be “severely edited” by investigators (for lack of a better resource I’ll use Wikipedia):
http://en.wikipedia.org/wiki/ACORN_2009_undercover_videos_controversy
And also healthcare is not unaffordable due to litigation costs, as has been shown time and time again. Here’s a very recent study pegging the cost at 2.4% of total costs; see:
http://www.medicalnewstoday.com/articles/200462.php
I don’t think you can reasonably say that is to blame for the high cost of healthcare.
Pot meet kettle! You’re entitled to your own opinion, but not your own facts!
contrabandista13 Says:
September 23rd, 2010 at 1:01 pm
Sounds to me like… “ALL BETS ARE OFF….”
I have a good friend that got even for all of you, with BoA to the tune of 3 million….
He legally scammed them for over 3 million…. He told me that it was like shooting fish in a barrel and they cooperated all the way to the gallows…. Two of their VPs got their asses canned for it….
Bravo to my friend Tim B…..
Best regards,
Econolicious
Brendan Says:
September 23rd, 2010 at 1:01 pm
P.S. I recognize that the health-care comment may have been tongue-in-cheek, but it wasn’t really made very clear…
poppysmic Says:
September 23rd, 2010 at 1:45 pm
That’s brilliant by the Bank. They made/ will make money on the deal. Have you ever had a bank error in YOUR favor? Of course not. All credit card fraud can be stopped in almost an instant but they make money on the float. The vendor eats the loss, you make payment on the error until it clears, then they pass on the cost to Ins. or consumer. It sucks for honest citizens, but it’s the bottom line that matters….What’s the line? ” Greed is God’?
Space_Cowboy_NW Says:
September 23rd, 2010 at 1:45 pm
TX Capitial Punishment is to ____________ as FL Foreclosure Mills are to ______________
SOP in the Legal environment: ”Win some, lose some, bill ‘em early & often”
Only guilty people go to prison so remember:” Admit Nothing, Deny Everything, and promptly call your counsel.”
Your mileage may vary…..
APBERUSDISVET Says:
September 23rd, 2010 at 1:50 pm
Where was the title company in this mess? Or were they the corrupt instigator?
WFTA Says:
September 23rd, 2010 at 1:57 pm
Brendan, buddy. Lighten up. I’m on your side.
We need a sense of humor, cause I’m afeared it a hard rain gonna fall.
willid3 Says:
September 23rd, 2010 at 2:07 pm
and i thought many were big on property rights. oh i forgot, its property rights for corporations, TBTF and others. just not for the people
MinnItMan Says:
September 23rd, 2010 at 2:53 pm
A title company should have closed the cash purchase. If the buyer (Grodensky) didn’t use one, his bad. Penny-wise, pound-foolishness.
It’s worth pointing out that cash purchasers usually mean prospective slum-lords, but I don’t know that here. Alsos, his credit should not be affected. The loan was in the name of the former owner.
Not excusing anything, but I suspect the facts would show some strange bedfellows in this story in a fuller reporting.
bergsten Says:
September 23rd, 2010 at 2:58 pm
This box just popped up, asking if I wanted to participate in a TBP survey.
I like Barry, so I figured, “why not”?
The first question asked for my age. Fine. The second asked for (something along the lines of) my interests.
The first choice was “pet care.”
Sorry, but that’s when I bailed on the survey.
Is this legitimate or another ad that’s taken over the site?
formerlawyer Says:
September 23rd, 2010 at 3:58 pm
In my former jurisdiction and others, fraudsters would often take out a mortgage using forged identity. The process involved looking for (preferably vacant) properties without mortgages which was easily done from public records.
From that, forged identity for the owner would be obtained and a mortgage placed on the land with the fraudsters seeing a lawyer to finalize the documents. The fraudsters would set up a bank account from which payments could be withdrawn and place just enough money (ie. 6 months mortgage payments) to fund the mortgage. Often they would then move the address for service of record to a fictional address so that notification of the true owner would be forestalled. Thereafter, the mortgage proceeds would be laundered – usually by way of casinos on Indian lands or other mechanisms.
While personal service would be preferred, substitutional service on the lands or in a newspaper was commonly allowed in foreclosures. Voila – foreclosure once the money ran out.
While that is not the case here from my understanding this is not unknown.
willid3 Says:
September 23rd, 2010 at 4:05 pm
and foreclosure is controlled by the states. Fed have nothing to do with it (short of bankruptcy being involved).
Casual Onlooker Says:
September 23rd, 2010 at 5:10 pm
I find the arguments that mistakes like BofA are just simple oversight, and one off errors that did little harm. From a lot of the various stories out there, from banks that “lose paperwork” to people getting lost in voice mail hell just trying to find a real person, much less a person a person that is not reading a script off his computer, speaks volumes as to the increasing chaos in the system.
To add to GMAC story, NPR yesterday aired a segment on this, and some of the details are rather troubling. http://www.npr.org/templates/transcript/transcript.php?storyId=130052495
From the story…
————
Chris Immel is an attorney at Ice Legal, a foreclosure defense firm in West Palm Beach, Florida. He conducted a deposition with a GMAC employee named Jeffrey Stephan. Immel says his job was to sign foreclosure documents.
Mr. CHRISTOPHER IMMEL (Attorney, Ice Legal): We took his deposition. And in taking it, he pretty much admitted to signing, you know, he said approximately 10,000 documents a month.
KEITH: Attorneys like Immel have taken to calling these employees at loan servicing firms robo-signers.
———
I mean really, 10,000 documents a month by a single person… where is the due diligence in that? How does this not rise to the level of a endemic problem that needs addressing? That’s 62.5 documents signed an hour, or one a minute.
Brady Dennis Says:
September 23rd, 2010 at 5:47 pm
Robo-signer’ played quiet role in huge number of foreclosures
The robo-signer lives on a quiet street in this small town an hour’s drive northwest of Philadelphia.
His modest two-story house, for which he paid $118,000, sits on a corner lot just down the street from the local Moose Lodge and an all-night diner. A weathered Chrysler Concorde is parked in the driveway, and a Toyota Camry sits by the curb.
Many large mortgage lenders have come to rely on a relative handful of so-called robo-signers such as Jeffrey Stephan, 41, to attest to the accuracy of thousands of home foreclosure documents across the country. These workers are not the Wall Street masterminds who created ever more complex mortgage-backed securities and fueled the subprime mortgage boom, but rather “affidavit slaves” with modest incomes and mountainous workloads.
Their actions are leading lawyers representing foreclosed homeowners to claim that lenders have no legal standing if the filings weren’t reviewed and verified, and to argue that the cases should be thrown out.
Herb2 Says:
September 23rd, 2010 at 7:42 pm
In the Philippines when Marcos declared martial law, I noticed that much more attention and money flowed into elections of judges than into elections of senators, which was contrary to my experience in the US. Subsequently I learned that judges decided which phony paperwork was authentic when title to a property was contested.
The particulars are different, but we drift in a similar direction.
Home buying on a Saturday « Tim Hedden's Blog Says:
September 25th, 2010 at 7:01 pm
other day I read a fairly enthusiastic Barry Ritholtz post entitled Man without Mortgage Loses Home in Foreclosure. Basically, the Florida court system is so in the groove of foreclosing on properties, they are
doloresflynn Says:
September 26th, 2010 at 3:45 pm
Please set a standard here !
As soon as you uthrow out the f-bomb, everyone thinks it is their cue to trash the place.
Morality belongs to the financial sector as well as personal, and if you are educated, you can get your point across very well without vulgar puctuations.
Florida’s Foreclosures Nightmare | The Big Picture Says:
September 29th, 2010 at 2:53 pm
Man without Mortgage Loses Home in Foreclosure (September 23rd,
BofA’s unfunny foreclosure tricks | Anne-Marie Wurzel, P.A., Real Estate Agent - Winter Springs, FL Real Estate Office Says:
September 30th, 2010 at 11:05 am
seems. Barry Ritholtz says at his blog that the only way the banks will ever learn is if they lose big judgments in court – a notion that seems to be borne out by another aspect of the Schroit
stopGOVTwaste Says:
October 2nd, 2010 at 1:16 am
So if they come once with fake documents, do they have free reign to come back and try again with NEW fake docs? The mortgage MUST remain together with the note but MERS prevents that from happening. Bifurcation =’s off book securities transactions.
What they don’t want to tell you is that the insurance taken out on the loan pool at 30x value of pool (conservatively) has paid off – EXTINGUISHED – the loans in the underlying pool, many times over (AIG, AMBAC, MGIC, TARP, ETC). But wait a second, weren’t these the same loans that were supposed to be “recorded” in public land records per the terms of the Pooling & Servicing Agreement (PSA) and the Mortgage “contract” (see section 20 of the standard Fannie/Freddie instrument).
So if the chain of custody was never recorded, then the trusts set up to hold the loan pools actually held “nothing but air” – if they even existed at all.
You can’t collect on a debt that has been paid off, that is fraud. Plus, the controlling aspects of the PSA void the sale of the asset under FAS 140, in addition the REMIC will lose it’s tax deferred status under IRS Code. You cannot commit securities fraud, tax fraud, violate a plethora of federal and state lending and consumers laws and get away with it scott free… can you? The crime is mortgage backed securities and the crime scene is our public land records.
Enjoy the video (below) and have a great weekend!
Slowing the Runaway Foreclosure Train | The Big Picture Says:
October 4th, 2010 at 7:26 am
we have seen, homeowners without mortgages have lost their home to foreclosure. That this legal impossibility actually occurred reveals the
Boston Real Estate Blog : Blog Archive : Slowing down the foreclosure assembly line Says:
October 4th, 2010 at 9:53 am
we have seen, homeowners without mortgages have lost their home to foreclosure. That this legal impossibility actually occurred reveals the
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