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Wiping out property law and destroying counties to save the banks

2010 November 14
by Ian Welsh

Bmaz:

There are rapidly emerging signs the Obama Administration and Congress may be actively, quickly and covertly working furiously on a plan to retroactively legitimize and ratify the shoddy, fraudulent and non-conforming conduct by MERS on literally millions of mortgages.

From CNBC:

When Congress comes back into session next week, it may consider measures intended to bolster the legal status of a controversial bank owned electronic mortgage registration system that contains three out of every five mortgages in the country.

The system is known as MERS, the acronym for a private company called Mortgage Electronic Registry Systems. Set up by banks in the 1997, MERS is a system for tracking ownership of home loans as they move from mortgage originator through the financial pipeline to the trusts set up when mortgage securities are sold.

Just to make clear the implications of this craven action, the White House and Congress are conspiring to give a get out of jail free bailout card to the biggest banks and finance companies in the country to cover up and mask their illegal behavior and behavior that did not conform with state, county and local laws throughout the United States. On at least sixty (60%) percent of the existing mortgages in America.

There are dozens of implications to individuals and both private and public entities. At a root minimum, it will likely decimate, if not bankrupt, most counties in every state of the union.

If courts rule against MERS, the damage could be catastrophic. Here’s how the AP tallies up the potential damage:

Assuming each mortgage it tracks had been resold, and re-recorded, just once, MERS would have saved the industry $2.4 billion in recording costs, R.K. Arnold, the firm’s chief executive officer, testified in 2009. It’s not unusual for a mortgage to be resold a dozen times or more.

The California suit alone could cost MERS $60 billion to $120 billion in damages and penalties from unpaid recording fees.

The liabilities are astronomical because, according to laws in California and many other states, penalties between $5,000 and $10,000 can be imposed each time a recording fee went unpaid. Because the suits are filed as false claims, the law stipulates that the penalties can then be tripled.

Perhaps even more devastatingly, some critics say that sloppiness at MERS—which has just 40 full-time employees—may have botched chain of title for many mortgages. They say that MERS lacks standing to bring foreclosure actions, and the botched chain of title may cast doubts on whether anyone has clear enough ownership of some mortgages to foreclose on a defaulting borrower.

Why would the Obama Administration and Congress be doing this? Because the foreclosure fraud suits and other challenges to the mass production slice, dice and securitize lifestyle on the American finance sector, the very same activity that wrecked the economy and put the nation in the depression it is either still in, or barely recovering from, depending on your point of view, have left the root balance sheets and stability of the largest financial institutions on the wrong side of the credibility and, likely, the legal auditory line. And that affects not only our economy, but that of the world who is all chips in on the American real estate and financial products markets.

You should read the rest. I’ll spell out some of it here: the major banks are bankrupt.  Bankrupt.  Still.  This is a massive giveaway to the banks if it occurs, and it will bankrupt most American counties, permanently, as well as putting record keeping on who owns and owes what not in the hands of a third party, but in the hands of MERS, a creation of the lenders.  Given how the lenders have relentlessly engaged in fraud to try and foreclose on houses they do not have title to, this seems… unwise.

As an aside, Marcy Wheeler (Emptywheel) and BMaz have become two of the better nuts and bolts financial bloggers in the last year.

Oh, and Obama, bought and paid for servant of the banking industry.  Always has been.

45 Responses
  1. November 14, 2010

    I guess I don’t understand your point — so the solution is for Obama to NOT fix MERS? Should his administration just leave things as a mess for individual courts and judges to try to sort out here, there and everywhere, so no one can get clear title to a property anymore or qualify for a new mortgage on it?
    You can call it “conspiring to give a get out of jail free card to the biggest banks and finance companies” or you can call it “doing something about a problem that, if it is not fixed, will bankrupt counties in every state.”
    It would be irresponsible of Obama or any president not to try to do something to fix this.

  2. Ian Welsh permalink*
    November 14, 2010

    MERS has broken the law. Repeatedly. They have also been proven, repeatedly, to have shoddy record keeping. Just saying “oh, we’ll go with MERS” would mean tons of people losing their houses who shouldn’t lose their houses.

    If you make MERS the recorder, it will bankrupt counties in every state, because they will lose a huge source of income.

    The question is not “should something be done to fix this?” The question is “what should be done to fix this?”

    Simply making MERS the central clearing house is enabling and rewarding massive fraud, both in the past and the future.

    The simplest thing to do is just say that if title can’t be proven, a judge should assign it to the current occupant. This doesn’t wipe out debts (especially under America’s punitive bankruptcy laws) it just means the house can’t be seized. Then it someone wants to sell, do it properly at the county registrar, not through MERS, which has no, zero, statutory authority.

    There are more complicated (and better) solutions than that, but that would still be better than MERS.

    All this is, is another way of wiping out bank debts. Among other things, virtually all, if not all of the CDO mortgage bundles have violated the terms of their trust. Which means the banks, legally, have to buy them back. Which would bankrupt them again.

    There isn’t enough money on the planet to wipe out bank losses, but that isn’t stopping Obama from trying.

  3. November 14, 2010

    The counterargument I hear to this is that if the banksters get “retroactive legitimacy” from Congress, pre-empting state law, there would be immediate court challenges, creating even more uncertainty, lack of confidence, etc.

    Ian, care to comment?

  4. November 14, 2010

    Here’s what I commented over at emptywheel:

    Welcome to the National Insecurity State. If you think they will not go ahead and retroactively digitize the foundation of the concept of property, kindly remind yourself that they already made electronically malleable the concept of voting.

    Computers are bureaucrazy multipliers, sustaining the unsustainable on both ends – computerized process cannot be trusted, and opens the floodgates for profitable systemic fraud as well as hacking attacks, but computerized surveillance and coercion offer staggering amounts of revenue from “securing” that “critical” electronic infrastructure. It is the self-licking ice-cream cone, with wires. That’s why “identity theft” will not be solved, and that’s why :retroactive MERS immunity” is a logical step for the minds that conceived FISA “reform”.

    As for capable bloggers, here’s an earlier comment in the DailyD
    http://news.firedoglake.com/2010/11/12/let-me-welcome-matt-taibbi-to-the-foreclosure-fraud-crisis/#comment-65140

    I agree that the banks and speculation-giants-refitted-as-banks are still “underwater”. The whole point of a “Japanese Decade” (which won’t happen for a nation that exports mostly weapons) is to let inflation and time erode the bad debt, propping up inflated prices at taxpayer expense until reality had a chance to catch up. The waste in productivity and human “resources” – in lives – is of no interest to those whose power rests on paper wealth. In that sense, the MERS kerfuffle is mostly a footnote – the unlegislated and plainly illegal mortgage laundry that has the Fed collude with the Treasury to use the GSE’s as dumping ground for toxic collateral to the tune of trillions is the hinge from which every other aspect of TBTF hangs.

  5. November 14, 2010

    I wonder if perhaps the tea partiers will come out against this–property rights are one of their core values. Heck, even the Kochs might oppose it–they’re really big on property rights.

  6. November 14, 2010

    “if title can’t be proven, a judge should assign it to the current occupant. This doesn’t wipe out debts (especially under America’s punitive bankruptcy laws) it just means the house can’t be seized.”
    Not sure if I understand this, but do you mean that if a title hasn’t been recorded properly, then the courts should let the debt stand but the property would be owned outright by the individual or the building company and the debt would not be secured by the property anymore?
    If so, this sounds contrary to natural justice — an undeserved windfall for the titular owner, while being profoundly unfair to the mortgage holder(s) who lent their money in good faith that the value of the property would secure the debt.
    I know they’re all just awful, lousy, dirty, scummy banks, and everybody hates them but still….
    So I guess I’m saying that I can understand why the Obama administration would want to develop a law to fix this.
    That said, given the history, I do recognize the concern that any fix this group of politicians proposes might well turn out to be profoundly unjust to the homeowners who are caught in these foreclosure actions.
    I will look forward to reading your analysis of this in the future.

  7. Bernard permalink
    November 14, 2010

    yes , make bad assets worth less as time passes, by simply by never owning up to the real value. pretend bad assets are worth something and say it will all get better if we wait long enough. and do nothing right now. this destroys the good assets real value as well as ignore the bad assets.
    more spreading of the costs of cleaning up the Banksters con to the taxpayer rather than have the banksters lose up front “our” money on their bad investments. deflate values on everything so the values depreciate low enough so only those who can wait/ride the roller coaster/ for the actual values to settle. if you can hang around long enough, you can get everything up cheaper than paying real value. like a fire sale.

    Kick out the homeowner, charge endless fees up to the sale, and ensure the home values fall. the whole while the note stays the same, so the house is worth less and less. Dare use bankruptcy, which insures the Banksters get the full loan amount, plus extras, and get to re sell the house. Beside extraction of blood money from both the homeowner and the taxpayer funded court sale, the Banksters will have hidden legal fees and other “costs” associated with all throughout this scam. The better to screw us with.

    Since the Bankruptcy laws were re-written a few years ago by the Banksters themselves, debtors are permanently screwed if i read Joseph Stiglitz correctly. in any case, the bankruptcy laws were tightened so starting over is nigh impossible. Starting over is only for the banks, not debtors. that was the major push when the Banksters had their Congress thieves re-wrote those laws. Joe Biden comes to mind.

    burn enough of the house down so the Banksters can write off the bad “side” and devalue the remaining good assets so low enough that real values plummet so only Banksters have the money and financial capacity to wait for the market to revalue itself.. Bankster will say, “Woe is me” and wait till Congress passes a bill whereby the taxpayer pays for “getting this “asset”re-evaluated. The Banksters get our money plus those same assets. Banksters get us, via Congress/Courts, to pay for their mistakes and get “recapitalized,” plus carry on like before. the Banksters never have to admit they screwed the market, and the taxpayer. These “irresponsible” homeowners, who can’t pay are blamed all way around.

    Shift the blame and attack others for being “losers” is the tactic of the Banksters. “Weak” people deserved to die, lose if they can’t beat the Banksters at this game. further plays into the Republican meme of “Real Americans” vs “losers”. bootstrap crap redefined.

    that funny feeling something is amiss here. just another way to take taxpayer money.

    what a scam. and it is working. this is such a vast interwoven plan, seeing how all these parts are designed to complement and function so well together. this leads to that and so forth. Capture this part and then that part will follow, and so on and so on.

  8. John permalink
    November 14, 2010

    Cathy, the debt doesn’t go away. Bad, confused or fraudulent title just means that the property can not be used for collateral and thus can not be foreclosed upon. And I find it interesting that so many people are concerned that the ‘little people’ might get away with something from the poor big corporate institutions.

    What I find most amusing is that these banksters have driven a stake into the heart of orderly transfer of private property in the USA. This was a huge issue three and four hundred years ago as English common law developed the transition from feudal property rights to private property rights.

    It is quite ironic that all the little con(servative) weasels spouted John Locke and life, liberty and the pursuit of property(which became happiness in the American 18th Century). Locke was all about wresting control of property rights from the crown and feudal lords and asserting them for the individual. Part of the system we developed to empower this was orderly recording of property ownership at the local level.
    That is what effing George Washington did as a surveyor as a young man.

    People should be on fire about this, left or right.
    The corporations are quickly reclaiming all the old prerogatives of the crown.
    But as Matt Taibbi writes, the peasant mentality is alive and well in America.
    http://trueslant.com/matttaibbi/2009/04/14/americas-peasant-mentality/

  9. November 14, 2010

    OT: this one is beautiful – Greenwald calling out “career progressives” on Obama’s latest lawless rulings…
    http://www.salon.com/news/opinion/glenn_greenwald/2010/11/14/trials/index.html

  10. S Brennan permalink
    November 14, 2010

    This type of whoredom is Obama all the way, when will his deluded followers own up the disaster they have brought this nation to?

  11. anon2525 permalink
    November 14, 2010

    Not sure if I understand this, but do you mean that if a title hasn’t been recorded properly, then the courts should let the debt stand but the property would be owned outright by the individual or the building company and the debt would not be secured by the property anymore?

    If so, this sounds contrary to natural justice — an undeserved windfall for the titular owner, while being profoundly unfair to the mortgage holder(s) who lent their money in good faith that the value of the property would secure the debt.

    Yes, you do not understand it (your suppositions about the facts stated in your questions are false, and so your conclusions are false). Unfortunately, we’re all — once again — being forced to learn the details of yet another crime because of a corrupt and incompetent gov’t.

  12. anon2525 permalink
    November 14, 2010

    Oh, and Obama, bought and paid for servant of the banking industry.

    Which is why he appointed Bowles (who is a director with the bank Morgan Stanley and a multi-decade employee in the banking sector) and Simpson (republican “folksy” crackpot) to chair the commission that he, Obama created.

    If a candidate was to “primary” Obama from the left, now (not in Jan. 2012 — I’m looking at you, H. Clinton) would be the time for that candidate to come out with counter-proposals from what Obama’s commission chairs have proposed in their trial balloon this past week. For example, economist James Galbraith has proposed that, contrary to Obama, Bowles, & Simpson, the amount paid to people receiving Social Security should be raised, not cut. This would help the economy because retirees would be able to spend more (a high multiplier) and more people would be able to retire sooner, opening up job positions. Likewise, a candidate from the left should propose that the age at which people are eligible for Medicare be lowered to 55-years old. Again, this would help the economy because it would allow more people to retire, opening up job positions. Many people are not retiring because they cannot afford insurance for medical services.

    Both proposals are counter to what the bankers’ supporters (Obama, Bowles, Simpson) want.

    Instead of presenting defensive positions, trying to slow cutting on social programs, the left should be presenting offensive positions, increasing spending on social programs. It does not matter whether these positions are passed. The population of the country needs to see that there are alternatives to the banks’ positions and see that there are politicians who would vote for these alternatives.

  13. Formerly T-Bear permalink
    November 14, 2010

    Somewhat OT. Link is to The Guardian report on what happens when a property market is in trouble. Although anecdotal and from the perspective of individuals, it clearly shows the effect of systemic failure. The sad is the emigration of the best and brightest to other shores – again.

    http://www.guardian.co.uk/world/2010/nov/14/ireland-economic-crisis

    More OT. Leave it to the beast of Wall St. to usurp and destroy the legal heritage going back to the beginnings of Rome. The lawyers who have engineered this fiasco are examples either of the failure of a good education or the abuse of a good education (a good definition of a Republican lawyer). When such elites fail, there is no time left and recovery is impossible.

  14. Mary Queen of Scots permalink
    November 14, 2010

    A couple of years MERS was popped down in Florida for trying to foreclose on properties. They ran into standing issues. I guess they are now going to try to use MERS as a method of proving ownership. In short, they are trying to cure a lack of a proper record with hearsay testimony. Super.

  15. jo6pac permalink
    November 14, 2010

    You have to admit this wh is just part of the criminals that run the country. On the day they took office and in naming the ones that caused the problems to solve the problems. Oh well crazy ben to the rescue, the rest of the world will be effected of course but they will never listen to us again.

    Everything is on schedule, please move along.

  16. Chris permalink
    November 14, 2010

    Primary Obama. I’ve had it with this adminstration and I don’t care who gets this joker and the three stooges out.

  17. anon2525 permalink
    November 14, 2010

    In short, they are trying to cure a lack of a proper record with hearsay testimony.

    The banks (or “mortgage servicers”) are trying to “cure” their lack of title with forgery (faked documents) and perjury (more faked documents — affidavits: sworn documents that substitute for oral testimony).

    Relatedly, debt collectors are trying to “cure” their problem of collecting debts by setting up fake courtrooms:

    …debt collectors managed to pull off this scam for so long, inventing fake courtrooms, fake attorneys, fake judges, fake subpoenas and fake sheriff deputies to intimidate and bully debtors into giving up assets.

    Laws, like taxes, are for little people only.

  18. November 14, 2010

    Real property is a year-long class in law school. Recording title is one big component, and you learn that failure to properly and timely record title documents is malpractice.

    Title to real property is not a technicality.

    Here is the real issue – if you get your mortgage from GMAC should BofA be allowed to foreclose without proving they now hold the note and that you really are in default?

  19. David H. permalink
    November 14, 2010

    “Instead of presenting defensive positions, trying to slow cutting on social programs, the left should be presenting offensive positions, increasing spending on social programs. It does not matter whether these positions are passed. The population of the country needs to see that there are alternatives to the banks’ positions and see that there are politicians who would vote for these alternatives.”

    Best suggestion I’ve heard in a while. So simple & obvious, but with so many trying to defend the remaining scraps from being cut, this kind of thing tends to get lost in the shuffle. JKG is good at arguing the sensibility of MMT-guided fiscal policy.

  20. anon2525 permalink
    November 14, 2010

    So simple & obvious…

    As Ian Welsh has said in previous posts, many of the solutions are (what was the phrase?) dead simple. We know what the solutions are to many of the problems because these problems have been solved before (Obama’s socioeconomic class is ignoring these solutions because the solutions would not benefit that class).

  21. anon2525 permalink
    November 14, 2010

    Here is the real issue – if you get your mortgage from GMAC should BofA be allowed to foreclose without proving they now hold the note and that you really are in default?

    Other real issues:

    1) In 2004, the FBI testified that there was an “epidemic” of fraud in the mortgage origination. Had that large set of crimes been prosecuted, then the criminals would not have continued to operate at the banks and mortgage-servicing companies, creating the financial circumstances for the $8 trillion housing bubble.

    2) In 2008, when the TARP was proposed, the banks should have been seized under the Prompt Corrective Action law*. Because prompt corrective action was not taken, the management of the banks have been allowed to take even more risky gambles, putting even larger amounts of assets at risk. And because they were not held accountable for the fraud in mortgage origination, they are in place to carry out fraud in mortgage foreclosure

    * PCA: “Prompt Corrective Action is a US federal law mandating progressive penalties against banks that exhibit progressively deteriorating capital ratios.”

  22. Jeff W permalink
    November 14, 2010

    Here is the real issue – if you get your mortgage from GMAC should BofA be allowed to foreclose without proving they now hold the note and that you really are in default?

    Or, if you own your house outright, having paid cash, should B of A be allowed to foreclose without proving, well, much of anything?

    Ah, MERS. “They [banks] simply dispensed with the recording system and have transferred what appears to look like trillions of dollars of real property without recording them,” says U.S. Representative Alan Grayson…, according to the Bloomberg article.

  23. November 14, 2010

    Title to real property is not a technicality.

    how declarations like this one amuse me.

    force is the “technicality” that defines “real property.” wake the hell up. a piece of paper filed in a court in the last century will protect *no one* from whom the state/corporation wishes to repossess. The Rule of Law in amurka? dead, Jim. it’s dead. let’s all just embrace what that really means for us rubes, shall we? i get tired of these “but the middle class in suburban america is sacrosanct and can never be destroyed!” type comments.

  24. anon2525 permalink
    November 14, 2010

    i get tired of these “but the middle class in suburban america is and can never be destroyed!” type comments.

    The banks are attempting to do this (and succeeding in many cases), but it is not a fait accompli. If title becomes a meaningless concept in the U.S., then 1) people will stop paying their mortgages and 2) real estate won’t be able to be bought and sold in the country. U.S. residential real estate is the single largest asset class in the world, so it is not simply a matter of “the middle-class homeowner.” Also, this would have noticeable consequences for the economy (more than there are already) once people can no longer sell their home and move to where their new job is.

  25. beowulf permalink
    November 14, 2010

    Wow, what an astonishingly bad idea. Real property law (and of course property taxes) have been the bailiwick of state governments from the beginning. During the Civil War, with the Lincoln Administration and the Radical Republican Congress (radical in that they were a century ahead of the rest of the country in their ideas of racial equality, both Tsy and Congress balked at levying a federal property tax, they instituted the nation’s first income tax instead. There are just some lines that sane politicians just don’t cross.

    If Congress tries to step on the states on this issue, I would be surprised if the federal courts didn’t take the states’ side. But whether or not they do will depend on district court rulings, appeals to the various Circuit Court of Appeals before the Supreme Court finally weighs in. It would be a trainwreck from start to finish, capped by the Supreme Court (one way or another) blowing up the tracks; either Congress’s MERS bailout goes kaput, with the financial markets right behind it or the losing states get so riled up they call for a Constitutional Convention.

    “The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments…”
    http://en.wikipedia.org/wiki/Article_Five_of_the_United_States_Constitution

  26. anon2525 permalink
    November 14, 2010

    If …

    That big word.

    And how would Congress pass such a change? Well, there was the way that the CFM Act was passed in 2000, after Bush v. Gore: Wait until late December and stick it in a large bill that the public won’t notice.

    Some people are concerned that this will be tried again.

  27. anon2525 permalink
    November 15, 2010

    Here is the real issue – if you get your mortgage from GMAC should BofA be allowed to foreclose without proving they now hold the note and that you really are in default?

    Another (related) issue: If GMAC sells your mortgage to BofA and Citi and JPM — not pieces, but in whole — can BofA foreclose on you one week, and then have Citi come and foreclose on you another week and…? There have been instances of mortgages having been sold more than once by the same bank, because paperwork is just a nuisance that gets in the way of efficiency and profits.

  28. getaclue permalink
    November 15, 2010

    I still don’t see how this could occur without Congress literally federalizing all the property in the USA. The reason the states have always governed laws regarding the transfer of property is that the property is in rem … in the state itself and is comprising part of the state.

    Any effort by congress to wave a magic wand and make MERS recordation/title transfers legal would violate state sovereignty and eviscerate laws as old as the Statute of Frauds itself. Bear in mind, MERS wiped out millions of dollars in debt by destroying promissory instruments and forging title documents.

    I don’t see this flying easily with individual state governments and I think there will be a national shit storm over it if congress and obama try it.

  29. gmanedit permalink
    November 16, 2010

    Bernard: “deflate values on everything so the values depreciate low enough so only those who can wait/ride the roller coaster/ for the actual values to settle. if you can hang around long enough, you can get everything up cheaper than paying real value. like a fire sale. . . . burn enough of the house down so the Banksters can write off the bad “side” and devalue the remaining good assets so low enough that real values plummet so only Banksters have the money and financial capacity to wait for the market to revalue itself. . . .”

    Yes, that’s what depressions are for.

    anon2525: “There have been instances of mortgages having been sold more than once by the same bank. . . .”

    That’s the big secret being covered up.

  30. anon2525 permalink
    November 16, 2010

    That’s the big secret being covered up.

    Only it’s not being covered up. The fraud is plain to see for anyone who shows up in foreclosure court. Lawyers for the banks are collecting their fees, happily subverting the law and helping the criminal banks commit the fraud. And judges simply side with the banks that are committing the forgery and perjury.

    Two scenarios:

    1) The foreclosed-upon homeowner does not show up in court and the bank produces fraudulent documents — Decision: bank gets house.

    2) The foreclosed-upon homeowner shows up in court and the bank’s lawyer doesn’t have the file (that is, the bank does not “show up”) — Decision: bank gets to try again when its lawyer remembers to bring the file.

    3) The foreclosed-upon homeowner shows up in court and the bank produces fraudulent documents. The homeowner / lawyer contests the fraudulent documents. Decision: bank gets to try again with new “documents” in a few weeks.

    “Truth”, “Justice”: “The American Way”

  31. anon2525 permalink
    November 16, 2010

    Here’s Matt Taibbi’s report about his observations of a Florida foreclosure court:

    Courts Helping Banks Screw Over Homeowners

  32. anon2525 permalink
    November 16, 2010

    Here is emptywheel discussing the sheriff in Chicago who has stopped evicting homeowners because the foreclosures are based on fraudulent “documents”:

    Sheriff Dart: 5% of Chicago’s Foreclosures DON’T Have Problems

    The post cites a wapo “news” article that contains this sentence clause:

    While not carrying out evictions could land Dart in trouble if a judge decides to bring contempt-of-court charges…

    The “reporter”:

    1) Speculates about a threat, but his editor found this speculation to be “factual”
    2) Does not investigate the court cases himself to determine whether Dart is correct
    3) Does not name any of the judges that are rendering decisions that support the fraud

    So, not only are judges and lawyers helping banks to commit forgery and perjury, but large corporate media outlets are threatening the people who are opposing it, while saying nothing about whether the judges and lawyers are complicit.

  33. November 16, 2010

    In regards to the story this post references:

    Finally, a word on the “MERS Whitewash bill” floated by John Carney last week. Carney has been bloviating about this for well over a month, based mainly on speculation. He may have the history of Congress making mischief on behalf of the banks on his side, but he really doesn’t have a clue on this issue. Foreclosure operations are state issues governed by state laws, and lawmakers know they would have a difficult go of trying to adjudicate a constitutionally viable solution that would indemnify the banks in this case. They’d have to stick out their necks quite far, and it would almost certainly be challenged all the way up the legal ladder. The outcry that would ensue during that time would be tremendous. I’m not sure it’s something that risk-averse politicians would want to put up with. And Carney certainly has no evidence one way or the other. I’m happy to fight something that exists, but nothing does at the moment.

    .

    http://news.firedoglake.com/2010/11/15/this-weeks-developments-in-foreclosure-fraud/

    Z

  34. anon2525 permalink
    November 16, 2010

    Carney has been bloviating about this for well over a month, based mainly on speculation.

    Dayen is countering Carney’s speculation with speculation of his own. Carney’s speculation is often how these things are done: float a trial balloon via someone friendly in the corporate media, see what sort of push-back you get, and proceed accordingly. Addington’s trial balloon last week about continuing the tax cuts for the wealthy is the most recent example of this. Whether or not Congress will attempt to do what Carney has suggested depends on how bad it gets for the banks, not on whether there is some legal restriction. Until then, the banks will continue to rely on “robo-judging”* to complement the banks’ “robo-signing.”**

    * definition: mechanically overlooking forgery and perjury
    ** definition: mechanically committing forgery and perjury

  35. anon2525 permalink
    November 16, 2010

    Also, I think that Dayen missed the central or most important point of Fed. Res. Gov. Raskin’s speech. She pointed out the flaw in the mortgage business that, it seems to me, is the reason that all of this fraud with mortgage origination and mortgage foreclosure is possible, namely, the fact the the mortgage originator does not keep the mortgage. Once this is allowed, the mortgage originator no longer had a concern about the risk involved in making the loan.

    …While there may be some specific practices–”robo-signing” among them–that are possible to isolate and eliminate, chronic, uncured problems continue to plague this industry. There is a long track record of actions and cases brought by attorneys general, which some of you in this room have no doubt litigated, demonstrating the harm done to consumers by sloppy or unscrupulous practices. Because consumers cannot choose to hire or fire their servicers (other than by paying off the loan), the industry lacks the level of market discipline imposed in other industries by the working of consumer choice. For this reason, if servicers do not actively maintain adequate and trained staff and do not establish and heed internal controls, if investors do not monitor their servicers’ behavior, if regulators do not conduct meaningful examinations, if courts do not stand guard against unfair practices, both substantive and procedural, then it will be much less likely that a well-functioning housing market will reemerge from this crisis. Because the very structure of the loan servicing industry as it currently operates inevitably leads to misaligned incentives and a propensity to defer costly investments, a more significant re-thinking of the basic business model must also be undertaken if we are to avoid repeating prior mistakes.

  36. November 16, 2010

    anon,

    It’s a different take on it … a different opinion … that’s clear from the text. These sorts of “leaks” or “trial balloons” or whatever are designed to soften up the public to the idea IMO, not necessarily to take the public’s “temperature” on the matter; for, as you say, we don’t matter to them anyway.

    By the way, you’re talking about Axelrod not Addington, right?

    I respect Dayen’s reporting and objectivity, though I don’t completely defer to it. By the way, for what it’s worth, Yves Smith seems to have similar beliefs as Dayen’s:

    Among other things, Dayen dispatches a rumor floated last week by John Carney about lame-duck intervention on behalf of MERS. Some concerned readers had e-mailed us, and we are equally skeptical. The source of Carney’s rumor is Neil Garfield, who has made such wild, unsubstantiated claims in the past that he is virtually a negative indicator.

    http://www.nakedcapitalism.com/2010/11/links-111610.html

    Z

  37. anon2525 permalink
    November 16, 2010

    By the way, you’re talking about Axelrod not Addington, right?

    Oops. Yes.

    By the way, for what it’s worth, Yves Smith seems to have similar beliefs as Dayen’s:

    I’m not saying that Dayen’s opinion is wrong in his judgement of what will happen, just that he is criticizing Carney for offering speculation, which is what Dayen is doing. It would have been better if Dayen had simply said that what Carney speculates will happen is less likely than what Dayen speculates will happen. Dayen and Smith both might be correct, but I have been surprised (“shocked” is more accurate) by what the criminals will do so many times in the past ten years (since at least Bush v. Gore, but even back to the “impeachment for blowjob”) that I won’t say that Dayen & Smith’s prediction is a foregone conclusion, which is what they appear to me to be saying.

  38. November 16, 2010

    anon,

    I won’t say that Dayen & Smith’s prediction is a foregone conclusion, which is what they appear to me to be saying.

    Me neither. I’m surprised at how cock sure they appear to be when there hasn’t been any bounds to what the banks have gotten away with. Especially since they are so knowledgeable about it. Smith herself has opined that she wouldn’t be the least bit surprised to see the obama administration and congress come up with some sort of legislation or scheme to protect the banks in this matter. Perhaps she just sees this particular method as being implausible. And, again, it’s not like Smith is 100% right about everything; though, to her credit, she is not another milty freidmann bobble head doll like so many in her profession.

    Z

  39. anon2525 permalink
    November 16, 2010

    It appears to me that there are two opposed viewpoints of what will happen expressed in the comments:

    Viewpoint 1: The banks and their lackeys in Congress&Obama will definitely do this, that is, pass legislation that overrides centuries-old laws.

    force is the “technicality” that defines “real property.” wake the hell up. a piece of paper filed in a court in the last century will protect *no one* from whom the state/corporation wishes to repossess.

    Viewpoint 2: The banks and their lackeys will definitely fail to do this because, although they have used and will use force, they will be opposed by a greater force.

    They’d have to stick out their necks quite far, and it would almost certainly be challenged all the way up the legal ladder. The outcry that would ensue during that time would be tremendous. I’m not sure it’s something that risk-averse politicians would want to put up with.

    In many, many instances in the past decade (and, of course, even longer), viewpoint 1 has been correct. What makes the current circumstances interesting is that, unlike most times in the past, the force of the gov’t&corps. will be resisted by other forces in the gov’t&corps. This contrasts with, for instance, the forces that passed the unconstitutional FISA revisions, the TARP, or the medical-services companies protection ac

  40. anon2525 permalink
    November 16, 2010

    … protection ac was cut off. It should read … protection act.

  41. anon2525 permalink
    November 16, 2010

    Oh, what a tangled web we weave…

    If that example is typical of the mortgage origination and “securitization” process, then “securitization” is not a practical business. (h/t zerohedge by way of huffington post)

  42. Formerly T-Bear permalink
    November 17, 2010

    This is going to be a beaut, maybe of all time, adding to the bank’s closure fraud the infinite, exquisite capability of Congressional Political Fraud. How better to flush the country, add congressional ignorance to bankster agenda; get to like the tubes, the country will be there for a long long time.

    This will not end well.

  43. Bernard permalink
    November 17, 2010

    yes, all these trial balloons to see what they can get away with. astounding.

    so this is the end times. lol. for the American dream/middle class.

  44. Celsius 233 permalink
    November 18, 2010

    Well, if one is in the “right” position; everything is going splendidly. The plan is probably ahead of schedule.
    With the end of the ownership class (formerly the middle class; but they never really owned anything after 1960) the true ownership class can now implement “neo-serfdom” (neo differentiates it from the 9th century) which is where this has all been going for years.
    But with adversity comes opportunity; the thinkers and the doers will now figure a way to avoid this trap through innovative life styles and a tacit rejection of materialism. There won’t be an easy way to control those completely outside the system. Not advocating rejecting technology; just advocating innovative ways to make it work to avoid the traps of the fascists. Cheers.

  45. November 18, 2010

    The way I am looking at this wouldn’t local and States have a say in this, especially the State Attorney General. I would have to say Obama would have to sweeten the pot for the states not to take this to court, they are the ones that are gonna lose a hunk of revenue, either with the fines and with what the banks and or MERS owes in filing fees. Even if Congress passed a bill to save MERS and the Banks, if the states bring suits, and this ends up in the court system it could be years before things are figured out. So, in the mean time, would the judges demand the proper paper work to prove the bank can foreclose, or would this have to be settled law? I would just be surprised if the state would just let this go especially that it was fraud against them. I don’t know maybe I am allowing that the state has some rights against fraud, maybe the Federal Govt. won’t allow it, but couldn’t the states then ban the bank from doing business in their state, and couldn’t the state not recognize MERS? I know nothing of real estate or law, so I might just be way off base.

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