Obama and the AGs still balk at the only solution to the housing-driven recession
Salon-
There is $700 billion in negative equity in the U.S. housing market. That means Americans owe $700 billion more than their homes are worth. Any plan for the housing sector or the U.S. economy, that doesn’t take a serious bite out of negative equity isn’t serious.
Yet un-serious is what we continue to get from elected officials. This week the Obama Administration announced a new plan to help underwater homeowners refinance their mortgages to lower rates. The plan, really an expansion of an existing program, is the latest in a series of programs designed to deal with the moribund housing market. Each has proven a more dismal disappointment than the next.
So too with the latest version of the proposed settlement between the state Attorneys General, led by Iowa’s Tom Miller, and the mortgage servicing industry. Yes, the deal has been sweetened by the addition of some interest rate reductions for underwater homeowners who are current on their payments. But that’s small potatoes.
By now, I hope you fully understand, if your AG has yet to join The State AG’s that are holding the bankers feet to the fire, than they’re working hand by hand with the bankers against you.
AG’s are there to serve the peoples interest not those that commit fraud on a massive level.
NYTimes-
Cutting to the chase: if you thought this was the deal that would hold banks accountable for filing phony documents in courts, foreclosing without showing they had the legal right to do so and generally running roughshod over anyone who opposed them, you are likely to be disappointed.
Delaware Attorney General Beau Biden sued the private national mortgage registry MERS, alleging a slew of deceptive trade practices that prevent homeowners from staving off foreclosure.
so they decided to privitize it, on their own. and in doing so, they did two things. they avoided millions upon millions of fees, and are able to more nimbly secure ties to mortgage backed securities. but they forgot to keep track of mortgages. and in Delaware, in 72% of the cases we’ve investigated, and this is just the beginning, they’ve literally foreclosed on behalf of the wrong entity. so they exercise the right to foreclosure on an entity, and in one case in Delaware that we have, they foreclosed on behalf of an entity that no longer existed. so that’s how screwed up this has become. they don’t follow their own rules, and that’s why we think they violated the Delaware deceptive trade practices act.
MERSCORP, Inc., a Delaware corporation, and Mortgage Electronic Registration Systems, Inc., a Delaware Corporation, Defendants.
VERIFIED COMPLAINT
Excerpt:
17. Since January 1, 2008, MERS has filed over 1,600 foreclosure actions in Delaware. Thousands more foreclosures on MERS-registered mortgages have been filed in Delaware after assignments out of the MERS System that were based on the unreliable data in MERS’ records. Many more thousands of mortgages associated with outstanding loans remain recorded in the Delaware county land records in the name of MERS without appropriate indications or avenues to ascertain the identity of the true mortgagee in interest.
[…]
51. Many foreclosed-upon mortgage loans have previously been securitized and are purportedly owned at the time of foreclosure by a securitization trust. Under the law governing the creation of many securitization trusts, the contractual arrangements setting forth the manner and conditions under which mortgage loans were to be sold into a securitization is crucial to whether the securitization succeeded in owning the mortgages it purportedly bought.
[…]
C. Defendants committed and continue to commit deceptive trade practices by assigning or foreclosing upon mortgages for which MERS did not possess authority to act because the mortgage loan was never properly transferred to the purported beneficial owner.
55. The MERS System is designed to reflect the intended transfer of the beneficial ownership of a mortgage loan, but does not have adequate safeguards to ensure that the transfer recorded in MERS System accurately reflects an actual transfer of ownership. Where MERS seeks to assign a mortgage or foreclose on a mortgage loan on behalf of a securitization trust that, despite being registered as the mortgage owner in the MERS System, does not own the loan, MERS acts without authority. This is a deceptive trade practice within the meaning of 6 Del. C. § 2532(a)(2), (3), (5) and (12).
I think MERS’ Janice Spokeswoman needs to be updated on all that happened from 1998-2002 before she comments.
Just like the others who have resigned when the company is on the brink of exposure. Wait until they get a hold of those who were involved from the beginning (X-CEO and X-VP/Treasurer)… who know what’s up.
But they will be reeled back in because they knew all along this was bound to happen. You ain’t so smart now… are you?
New York’s attorney general has subpoenaed MERS, the electronic registry of mortgages used by the banking industry, seeking information about how it is used by major banks, a person familiar with the matter said.
Delaware also took action by filing a lawsuit on Thursday that accuses MERS of taking unlawful shortcuts in dealing with the foreclosure crisis.
The registry used by the banking industry is “unreliable” and “frequently inaccurate,” Beau Biden, the state’s attorney general said in the lawsuit, which seeks penalties of $10,000 per violation.
New York Attorney General Eric Schneiderman issued a subpoena earlier this week demanding documents from MERS about how it is used by major banks, a source told Reuters.
The subpoena is part of a joint New York-Delaware mortgage probe, the source said.
On October 27, 2011 Attorney General Beau Biden filed a lawsuit against the mortgage registry MERS that is at the center of the housing crisis. The suit charges that MERS has repeatedly violated the Delaware’s Deceptive Trade Practices Act.
If you are a Delaware resident and believe you have been harmed by MERS, contact the Attorney General’s Office by e-mail at mortgage@state.de.us or call the Attorney General’s Mortgage Hotline at 800-220-5424.
What is MERS: In 1995, banks and others in the mortgage lending industry created the Mortgage Electronic Registration System (“MERS”) – a national registry to track ownership and servicing rights for residential mortgages. This system is designed to facilitate mortgage securitizations and circumvent the traditional county Recorders of Deeds offices. The rapid rise in popularity of mortgage backed securities and their subsequent decline in value is a major cause of the housing crisis that sent America’s economy into the largest collapse since the Great Depression.
Foreclosure crisis in Delaware: Delaware is experiencing a record rate of foreclosures. The foreclosure rate tripled from 2008 to 2009, rising from 2,000 homes annually to 6,000. A record 6,457 homes were foreclosed on in 2010.
Who owns/uses MERS: There are more than 5,500 members representing the most significant players in the mortgage industry, including: mortgage lenders and servicers (Bank of America, CitiMortgage, Inc., GMAC Residential Funding Corporation, and Wells Fargo Bank, N.A.); government-sponsored entities (e.g., Fannie Mae and Freddie Mac); insurance and title companies and the Mortgage Bankers Association.
MERS in Delaware: MERS purports to hold more than 30% of Delaware mortgages. Since January 1, 2008, MERS has filed more than 1,600 foreclosure actions in its own name against Delaware homeowners. Additionally, thousands of other homeowners whose mortgages have been tracked in the MERS system were foreclosed on by entities whose right to the property was unclear because of the unreliability of MERS’ records. Thousands more Delaware homeowners currently hold mortgages with MERS listed as the owner, but with no way to actually determine the true owner.
What is Attorney General Biden alleging: MERS violated Delaware’s Deceptive Trade Practices Act by creating an unregulated shadowy registry that is unreliable and inaccurate and blocks homeowners from learning which entity truly owns their mortgage. The complaint highlights three major deficiencies:
• MERS obscures important information from borrowers and what is available to borrowers is frequently inaccurate. • MERS acts without authority • MERS is a “front” organization that does not enforce its own rules
How the mortgage industry works: A mortgage loan taken out by a homeowner is really two documents – the first is a promissory note requiring the borrower to repay the holder of the note. The second document (the mortgage instrument) allows the holder to foreclose on the property if the loan is not repaid. The person or entity holding the note receives the money from the borrower’s monthly mortgage payments.
How securitization works: Banks that make the mortgage loans to homeowners sell the mortgage notes to other financial institutions. Several times over, the loans are bundled into investments known as mortgage-backed securities and the notes are sold to large investment groups, such as pension funds.
Where MERS comes in: As the notes are sold in the securitization process, someone has to service the loans and hold legal title to the mortgage instrument. Servicers do all the work involved with a mortgage loan on the lender side – physically collecting and distributing payments, answering borrowers’ questions, etc. MERS acts as passive place-holder on the County Recorder of Deeds public registry. Additionally, MERS can also file foreclosure actions on behalf of the note-holders in foreclosure proceedings. MERS allows its members to sell mortgages many times over without recording the transactions at the local Recorders of Deeds offices, thereby avoiding fees, eliminating any official paper trail and creating significant confusion that has led to improper foreclosures.
What the lawsuit seeks: The suit asks the Court of Chancery to impose various sanctions on MERS, including requiring it to audit its records to ensure accuracy, stop foreclosing on homes without divulging the true owner of the mortgage, and correct records filed with county Recorder of Deeds that do not list the entity that owns the mortgage. The suit seeks a civil penalty against MERS of up to $10,000 for each willful violation of the Deceptive Trade Practices Act, as well as restitution to borrowers who were harmed by these violations. The exact amount will be determined during trial.
Delaware joined what is becoming a growing legal battle against the mortgage industry today, charging in a Chancery Court suit that consumers facing foreclosure were purposely misled and deceived by the company that supposedly kept track of their loans’ ownership.
By operating a shadowy and frequently inaccurate private database that obscured the mortgages’ true owners, Merscorp made it difficult for hundreds of Delaware homeowners to fight foreclosure actions in court or negotiate new terms on their loans, the suit filed by the Attorney General’s Office said.
New York Attorney General Eric Schneiderman said he is working with Delaware Attorney General Beau Biden to investigate possible criminal acts by financial institutions tied to the foreclosure crisis in an interview today on the cable news network MSNBC.
Tried to get the video clip off the Rachel Maddow show but it would never work. So until it’s fixed there won’t be a video of his interview.
Imagine that a group of arsonists was terrorizing your town. First they’d buy insurance on a stranger’s home, then they’d show up with a blowtorch and a tanker truck filled with gasoline and burn the place down. Imagine that they’ve burned down a thousand homes this way, ruining the lives of the homeowners — and everyone else’s, too, as real estate values plunged and the local economy collapsed.
Now let’s imagine that the Mayor, the DA, and the Chief of Police said they’ve come up with a great “settlement”: The arsonists will pay a small fine, and they’ll never be prosecuted for arson. Plus, if they’re asked very nicely, they’ll also agree to provide a little help to 27 out of the 1,000 families they made homeless — although they’d control the ‘help’ process and the town might wind up footing the bill anyway.
And one more thing: They get to keep the gasoline truck and the blowtorch. ____________________________
People NEED JOBS ..!! I don’t care if you refi or reduce the mortgage 50%… “people” need jobs.
Do all the math you want and all these mortgages will head back into default. Is anyone paying close attention to the economy? Just because AG’s have security and banker back ups, there are millions who can barely put food on the table. So this refinance plan WILL NOT WORK for all!
Again, if anyone does this… you will create new paper to correct any issues that may exist with the original paper trail.
It’s a trap and no wonder this world is failing.
LA Times-
California is reemerging as a central focus for state attorneys general hoping to reach a nationwide wrongful-foreclosure settlement with major banks, even though the Golden State walked away from talks three weeks ago.
Iowa Atty. Gen. Tom Miller, who is leading the negotiations on behalf of the states and federal agencies, met with representatives of the nation’s five largest mortgage servicers in Washington on Friday to discuss details of a new plan aimed at enticing California back into the fold.
Beau Biden, Attorney General for the State of Delaware, has made it his mission along to hold the banks accountable for their behavior in such a way that we can discipline and encourage our way into a system that actually resurrects a positive future for the people in this country. Here’s his interview.
It’s official now and it’s very clear that the AG’s behind this foreclosure fraud settlement are purposely doing something so insane that it does not surprise us. For example, take the Michael Hudson’s iWatch series that takes us behind the scenes of what really went down in Countrywide.
Now take a look at what Reuters is reporting the AG’s want to include in the settlement
In recent days, the state attorneys general agreed to release major banks from claims that they made legal errors when first originating the loans, such as approving loans for borrowers without verifying any income, according to two people familiar with the talks.
Is there any other reports out there of more fraudulent activity we can post so this also gets included in the settlement before it’s wrapped up in the coming few days?
Will add that by signing “new docs” you will create “new paper”… Banks and The “People” that work for them, doing what comes naturally and secretly going around cutting corners? The Fraudulent Twins – When we’re talking about reducing payments to Freddie and Fannie mortgage holders, we’re really talking about reducing payments to ourselves. Lets not forget the talks about the government rental program… inventions never end.
Like everything else they attempt, these too shall fail.
p.s. Flip Flop BS: What ever happened to “A key objection is the “moral hazard” created by the proposal to reduce homebuyers’ loans because it “rewards those who simply choose not to pay their mortgage”?
REUTERS-
The WSJ has the latest mortgage-settlement trial balloon, and it’s pretty weak tea: under the terms of the deal, if (a) you’re underwater on your mortgage, and (b) you’re current on your mortgage payments, and (c) your mortgage is owned by the bank outright, rather than having been securitized, then you would be given the opportunity to refinance your mortgage at prevailing market rates.
In re: Edward D. Banks and Diane Marie Banks, Debtors.
Edward D. Banks and Diane Marie Banks, Plaintiffs-Appellants, v. Kondaur Capital Corporation, Defendant-Appellee, Shapiro & Zielke, LLP, formerly known as Shapiro Nordmeyer & Zielke, Defendant.
No. 11-6025.
United States Bankruptcy Appellate Panel, Eighth Circuit.
Submitted: September 13, 2011. Filed: October 11, 2011.
Before VENTERS, FEDERMAN, and SALADINO, Bankruptcy Judges.
VENTERS, Bankruptcy Judge.
The Debtors, Edward and Diane Banks, appeal the bankruptcy court’s entry of summary judgment in favor of Defendant Kondaur Mortgage Corp. in the Debtors’ adversary action seeking, inter alia, to avoid Kondaur’s mortgage lien on the Debtors’ residence. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 158(b). For the reasons stated below, we reverse and remand the matter to bankruptcy court for further proceedings consistent with this opinion.
I. STANDARD OF REVIEW
Findings of fact are reviewed for clear error, and legal conclusions are reviewed de novo.[1] The bankruptcy court’s grant of summary judgment is reviewed de novo.[2]
II. BACKGROUND
A. Uncontroverted Facts
On June 27, 2006, the Bankses purchased a home located at 964 Laurel Avenue, St. Paul, Minnesota 55104. To finance this purchase, the Bankses executed a promissory note and mortgage in favor of New Century Mortgage Corporation (“NCMC”) in the amount of $415,800.00. On April 2, 2007, NCMC filed for Chapter 11 bankruptcy protection in the Bankruptcy Court for the District of Delaware.[3] NCMC’s bankruptcy case was jointly administered with the bankruptcy case filed by its parent company, New Century TRS Holdings, Inc.[4]
On May 2, 2007, New Century Financial Corporation (“New Century”) and certain of its subsidiaries (including NCMC) entered into an Asset Purchase Agreement (“APA”) with Ellington Management Group, LLC.[5] Pursuant to the APA, Ellington purchased all of New Century’s right, title, and interest in numerous notes and mortgages (the “Purchased Assets”), which included the Bankses’ note and mortgage. The Delaware Bankruptcy Court approved the APA on May 7, 2007.
In connection with the APA, New Century also agreed to execute a power of attorney appointing Ellington as its attorney-in-fact, enabling Ellington to execute all documents necessary to assign or foreclose mortgages in the name of New Century. On March 12, 2008, New Century executed and delivered to Ellington a Limited Power of Attorney, which was recorded with the Ramsey County (Minnesota) Recorder on February 25, 2010.
On July 15, 2008, the Delaware Bankruptcy Court approved a plan of liquidation for New Century TRS Holdings, Inc. The remainder of New Century’s assets were transferred to a liquidating trustee pursuant to the plan.[6]
On May 11, 2009, Ellington, as attorney-in-fact for New Century, assigned the Bankses’ mortgage to Elizon LA 2007-2, LLC.[7] The assignment was recorded on June 23, 2009, but according to Kondaur, the assignment to Elizon was a mistake. On February 22, 2010, Ellington executed a “Corrective Assignment Mortgage” purporting to re-assign the Bankses’ mortgage to Kondaur. The Corrective Assignment was recorded on February 25, 2010.[8]
B. Procedural Background
The Bankses filed a Chapter 13 bankruptcy petition on May 17, 2010. On October 12, 2010, they filed a seven-count complaint against Kondaur, seeking a combination of declarative, injunctive, and compensatory relief. At essence, the Bankses challenge Kondaur’s standing as the holder of the promissory note and owner of the mortgage originally executed in favor of NCMC. Attached to the complaint as exhibits were copies of (a) the assignment of mortgage from NCMC to Elizon LA 2007-2, LLC; (b) the “Corrective Assignment,” purporting to assign the mortgage from NCMC to Kondaur; and (c) the limited power of attorney giving Ellington Management Group, LLC the power to endorse and transfer mortgages on NCMC’s behalf.
On November 24, 2010, Kondaur filed a motion to dismiss the lawsuit. Kondaur attached a copy of the APA to the motion and referenced Kondaur’s proof of claim, to which was attached a copy of the original promissory note — endorsed in blank — and the original mortgage to NCMC.
The bankruptcy court held a hearing on Kondaur’s motion to dismiss on December 20, 2010, at which time the court indicated its intent to treat the motion as one for summary judgment since the motion referred to material outside of the pleadings. Counsel for the Debtors reiterated that they were there on a motion to dismiss — not a motion for summary judgment — but they didn’t specifically object to going forward, and they too referred to the APA in their argument.
On December 23, 2010, the bankruptcy court entered an order granting Kondaur summary judgment on all counts of the Debtors’ complaint.[9] The Debtors timely appealed.
DISCUSSION
Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law.[10] We view the summary judgment record in the light most favorable to the nonmoving party and afford that party all reasonable inferences.[11] An issue of fact must be based on specific factual allegations.[12]
Summary judgment was improper in this case because there was a material issue of fact regarding whether Kondaur has possession of the original promissory note.
As Kondaur admits, and is apparent from the copy of the note attached to its proof of claim, the promissory note the Debtors executed in favor of NCMC has not been specifically endorsed to Kondaur; it is endorsed in blank. Accordingly, it is a “bearer” note, which requires actual possession of the note to enforce or negotiate it.[13] The Debtors raised the issue of whether Kondaur is the proper party to enforce the note and cast further doubt on Kondaur’s standing by introduction of the Corrective Assignment. Unfortunately, there is nothing in the record evidencing the location of the note. Kondaur’s counsel represented at oral argument before this Court that Kondaur has possession of the note, but its failure to produce the note prior to or at the hearing on its motion to dismiss (treated as a motion for summary judgment) precluded a determination that Kondaur has the right, as a matter of law, to enforce the promissory note.
At oral argument, Debtors’ counsel conceded that there is a valid mortgage on the property and that production of the note most likely will remove the final hurdle to Kondaur’s pending motion for relief and Kondaur’s motion to dismiss the adversary proceeding.[14]
CONCLUSION
For the reasons stated above, the bankruptcy court’s order entering summary judgment in favor of Kondaur is reversed and remanded for proceedings consistent with this opinion.
[4] In re New Century TRS Holdings, Inc., Case No. 07-10416.
[5] The relationship between NCMC and New Century Financial Corp. is not clear from the record, but it is not the basis of any challenge here.
[6] The Bankses’ argument that Ellington lacked the authority to assign the Banksees’ mortgage to Kondaur because the assignment took place some time after New Century’s assets were transferred to a liquidating trustee under New Century TRS Holdings, Inc.’s plan is without merit. Although New Century might have remained the titular owner of the mortgage, its substantive rights therein had already been transferred to Ellington pursuant to the APA.
[7] Inexplicably, the date on the assignment indicates that it was signed on May 11, 2009, but the notarization indicates that it was signed on May 11, 2007.
[8] Although we reverse on other grounds, we have serious concerns about the validity and effect of the “Corrective Assignment.” At oral argument, Kondaur represented that it was common practice in the mortgage industry. Considering the current state of the mortgage industry, this gives us little comfort. At the least, the Corrective Assignment would appear to create a cloud on Kondaur’s right to foreclose, necessitating a judicial foreclosure.
[9] The order did not include a judgment on Count VII of the complaint, which alleged that Kondaur’s attorneys violated the Fair Debt Collection Practices Act, because the reference had been withdrawn on that count on April 14, 2011.
This can only mean one thing. Are your mark, get set, go! The settlement is about to be signed, sealed and delivered!
The new wave will also mean more fraud and more title defects America. You continue to get sold out and tossed for the bankers who are too big too fail. Get your money out of these banks immediately. Don’t complain, don’t explain when you continue to get screwed….now, you’re doing this to yourself.
REUTERS-
The paralyzed U.S. housing market is once again up against an obstacle it has seen before — mounting foreclosures.
And a fresh drop in home prices is likely to result.
Banks have stepped up the pace of home seizures after a year-long slowdown brought on by the “robo-signing” scandal in which banks were accused of seizing properties without a proper review of loan documents.
The Obama Administration has finally found something it can agree on with the nation’s big banks: The need for the 50 state attorneys general to finally reach a deal to end the year-long investigation into faulty mortgage foreclosure practices and reach a long-awaited settlement, the FOX Business Network has learned.
People at the big banks say the Obama Administration is prodding the state AGs, led by Iowa’s Tom Miller, to agree on a deal that is currently on the table that calls for fines and revised mortgage foreclosure practices — but also limits banks’ liability on legal action.
Excellent video clip. Watch this and tell me if he doesn’t get the fraud. Delaware, Mass., Nevada and NY should be very proud of their AG’s. We are waiting for the rest to show a bit more strength.
Not Done Until The Core of Mortgage Back Securities Is Investigated.
Bloomberg is reporting this breaking news, saying she “lost confidence” that they will present an agreement to adequately resolve foreclosure disputes.
As soon as more info develops, it shall be posted.
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