Imagine if ever state participated in setting new laws? C’est la vie to fraudulent documents!
Still shocking that there are settlement talks when an investigation NEVER took place. I’m also surprised that the AG’s going after the banks, are getting absolutely no respect from the other AG’s to follow…
Remember that it’s not just a bunch of AGs at the table here. It’s also the Obama Administration. And therein lies the problem…
Credit Slips-
The NY Times had some details today about the multi-state attorney general mortgage servicing settlement in the works. It looks every bit as awful as one might have feared. Here’s the criticial take-away: this is bupkis. It gives meaningless relief to a meaningless number of randomly or adversely selected homeowners. It doesn’t do justice, even by halves.
First, though, there’s a detail reported in Gretchen Morgenson’s otherwise insightful piece that I have on good source is incorrect. The piece states that the banks would be doing principal write-downs on loans they own or service. That’s gotta be incorrect. The banks can do principal write-downs only on loans that they own. They have no legal authority to pledge write-downs on loans that they service on behalf of investors. (Remember the Greenwich Financial suit against Countrywide for doing just that?)
There’s a critical implication here, then about the scope of the multi-state settlement: at best 20% of the population of underwater mortgagees will be helped by this settlement, say 2.2 million homeowners. The other 8.8 million (and probably 10 million by my reckoning) are SOL. How do you think they’re going to feel about their AGs? About their President? Too many times have American homeowners been promised help without receiving any. It’s getting old.
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?
Michael Hudson takes us inside Countrywide’s subprime mortgage writing machine, where ‘fast and sleazy’ carried the day…
Another installment from ‘The Great Mortgage Cover-Up’
iWATCH-
After she lost her job in the fall of 2007, Cassandra Daniels had a word with a trio of her managers. As she recalls it, she told them she was praying that, someday, they’d learn to use their positions of power “to uplift your staff instead of destroying people.”
She cleaned out her desk and taped a handwritten sign to her computer screen, quoting one of her favorite gospel songs: “GIANTS DO FALL.”
State-level legislation introduced earlier this year proposed that the beneficiary of a trust deed have only 30 days after payoff to deliver a written request to the trustee to reconvey the property back to the grantor.
If the beneficiary delayed delivery of the request and missed the 30-day deadline by even one day, the beneficiary would be liable to the grantor for $500, the legislation stated. This amount would be in addition to all actual damages incurred by the grantor.
Consequently, if a prospective sale of the property was lost because of a delay in following through with the reconveyance, the beneficiary would be held liable for substantial damages.
This can be a real trap if it takes more than 30 days to forward a request for reconveyance. The $500 fine could be just the beginning. In the opinion of George C. Reinmiller Trustee Inc., beneficiaries, loan servicers and trustees will probably see more of this type of legislation around the country, because a limited few have been slow in completing reconveyances.
The penalties and monetary losses don’t stop there.
With the rise in foreclosures and an increase in budget cutbacks, lenders and servicers have been seeing a higher demand to have complete and accurate collateral files to certify their pools of loans.
By completing an audit and ensuring everything is there, servicers will find it easier to close on the sale of the pool and will see a decrease in requests for the repurchase of certain assets in the file. These certified pools of loans are considered more valuable and are, therefore, sold relatively easily.
In today’s market, purchasers of pools look for any number of reasons for a seller to repurchase loans. One such reason – in fact, the most common reason – is incomplete files.
If there are problems within a pool, lenders and servicers can spend huge amounts of money trying to discover the missing pieces. Another possible headache is the time and money involved to go back and forth with the attorney trying to resolve these types of issues should the loan fall into foreclosure. If the issues cannot be resolved quickly, the seller may have to buy back the loans, which is something a struggling company shudders to hear.
What can lenders and loan servicers do to quickly correct these types of problems or keep them from occurring in the first place?
The more time that passes between origination and file verification, the more costly and difficult it becomes to obtain any missing documents. Sometimes, with cutbacks (such as loss of human resources) or, as we see happening more frequently these days, the relocation of offices, documents can be forgotten or misplaced and can end up sitting incomplete in an abandoned filing cabinet that will probably go untouched until someone accidentally comes across it.
Servicers should take aggressive document control and verify they have the documents they need in each file as soon as possible. If documents are missing, there are still strategies that can be employed.
Finding and obtaining missing original documents that have to be publicly recorded (e.g., mortgages, assignments and assumptions) are fairly easy to retrive. For instance, you can get a certified copy from the county recorder where the property is located, as long as the document was originally recorded.
Research can be done to verify whether the document was recorded by searching the county’s Web site or speaking with the recorder’s office. You may obtain a certified copy by phone or by mailing in a certified copy request to the county recorder. However, there are a few recording districts that require an abstractor to physically come in to research and/or request a copy of a document.
Obtaining copies of missing documents that were never recorded on the public record – such as title policies – can get much more complicated. One can always go directly to the title company or title agent that issued the policy, but with current conditions in the economy and mortgage industry, title companies have been closing their doors.
The next step is to contact the underwriter. Most underwriters will not send the original policy, because they normally do not have it. However, they should be able to send a certified copy. Because each purchaser is different and may have a different concept of what is acceptable, specificity is key. Get a clear definition of what a certified copy of a title policy is from the purchaser before obtaining one from the underwriter.
There is a chance that the underwriter may not have the policy, either. In that case, the underwriter might have to re-issue it, which can get pretty costly. To re-issue the policy, the underwriter will normally require a complete chain of assignments. Most underwriters will only reissue a title policy directly from the current beneficiary of the mortgage and will use the assignments on record to verify that person’s identity.
With Mortgage Electronic Registration Systems (MERS), missing assignments have, in recent years, become less of a problem for some, but there are still many mortgages that are not registered with MERS. With the countless number of banks and mortgage companies being sold or closing, it can become a Sherlock Holmes case trying to find an entity that can sign and, therefore, complete the assignment chain. It usually starts with searching various Web sites and tracking down the current holder or entity of the company.
When all else fails Then the phone calls start in an attempt to find the right person to sign the document. What happens if you can’t find anyone to sign? In many cases,when there is no one left that can sign an assignment, a lost assignment affidavit is a possible resolution. But keep in mind that only certain states and/or recording jurisdictions allow these affidavits. If all else fails, then it is up to the courts to resolve the problem, which is when the expenses start to increase once again.
By having all loan files complete, one is able to move quickly if a loan is paid in full, as well. Steep penalties can be avoided in certain states by providing a release or reconveyance in a timely manner. This is especially important if Reinmiller’s opinion holds true and the trend of shortened compliance time frames grows further.
Lenders and servicers should take a proactive approach in their daily functions and do whatever it takes to ensure that their files are complete from the start to avoid costly mistakes with unpredictable results.
Jessica Woods is vice president of Richmond Monroe Group Inc., an outsource services provider offering processing and technology solutions to the servicing industry. She can be reached at (417) 447-2931 or jessicaw@richmondmonroe.com.
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