Showing posts with label MERS. Show all posts
Showing posts with label MERS. Show all posts
Sunday, June 23, 2013
Monday, June 20, 2011
Friday, March 4, 2011
Friday, October 29, 2010
Mortgage Crisis: The Six Trillion Dollar Problem
USA Watchdog
When I was an investigative reporter at the networks, the first question we would ask when trying to decide if we wanted to do a story was: How many? How many people have been hurt by a defective product? How many defective products of a certain kind were in use? How many dollars will it take to fix the problem? In the case of the recent mortgage crisis – “Foreclosuregate,” the question of how many has been answered.It has been widely reported that there are a little more than 60 million home mortgages in the Mortgage Electronic Registry System (MERS). If every one of the 60 million mortgages are worth $100,000, that would mean a total of at least $6 trillion in home mortgages that are electronically filed. In MERS, there is no physical written record of a “Promissory Note.” In almost all states, you need that original “Note” to prove ownership of a home. That means in almost every single state, the banks cannot legally foreclose on your home without this document. Some say the loan documents were lost on purpose because the bankers did not want their massive fraud to see the light of day. Whether or not the “Notes” were lost on purpose or accident, the fact is the original “Notes” are nowhere to be found. That is what the “Robo Signing” part of the story is all about. It has been widely reported that “foreclosure mills” were creating massive amounts of counterfeit Promissory Notes so banks could legally foreclose on homeowners.
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Tuesday, October 19, 2010
Welcome to the Machine: MERS and The Shadow Banking System
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| 4closurefraud.org |
A story is breaking upon the nation as I write this. It is a story I have been forced to live for the last year and a half. In that year and a half I have come to learn a lot of confusing truths about the way the money in this world really works. The mainstream media is talking more and more about the foreclosure scandal and at the heart of it all is MERS. Mortgage Electronic Registry Service. It’s the biggest littlest company you have never heard of before and in the thirteen years of its existence, it has utterly destroyed the real property ownership records system in every county in the United States.
The purpose of The Working Joe’s Guide to MERS & Mortgage Banking is to provide the every day average Joe & Joie the information they need to understand this tremendous scandal unfolding ahead. More importantly, use this information to arm yourself with truth so you can cry BULL---- when the talking heads try to spin the story for you. And they will.
Be warned. The story has so many facets that to sit down and take it from one end to the other leaves one a bit befuddled. Smoke comes out of your ears, if you know what I mean. Thinking and operating in the world of MERS is a testament to the infinite adaptability of the human condition. I recall when I first came to the realization of the Meaning of MERS and the smoke started to pour from my ears. It was late at night and I had been researching what had happened to me about a week earlier.
I had just invoked the “Produce the Note” defense in court and had won a stay on the sale in the foreclosure of my house. After the euphoria wore off, I really started to wonder what had just happened. I was geeking out trying to understand. It was late at night. I had been finding and reading court cases for about a week, the lights were out except for the screen, the kids were all asleep, and I sat bolt upright in my chair when the realization struck. “My God, they can’t deliver clear title!” I blinked into the darkness for about five minutes as the full impact of that washed over me. That was almost a year ago and I have managed to withstand the MERS monster’s siege upon my castle since then (not to worry, still plenty of food & water).
Living and thinking in a MERS world is common for me now. Newcomers look at their surroundings as if it were their first foray into Toon Town, the refuge of Roger Rabbit when he was running from the law. I’ve been here for a while and I’m used to it. "Oh, yeah," I tell them, "that happens all the time."
In order to really get into what is going on, you have to pile through a lot of boring mundane stuff. PJ O’Rourke calls it "Dictatorship by Tedium." Any time regular people try to figure out what’s going on they feel like they are back in High School Algebra class and not having a clue as to what is going on. That’s how “they” get away with it. It’s not that you can’t understand. You can. It’s that they make it so boring, you don’t want to. In today’s specialized world, to a certain extent, you have to trust that “they” who are “the experts” are as well studied in their subject matter as you are in yours. Leave all that to people who are interested.
This is a complicated story. It is actually six stories interwoven into a larger narrative. Part of the problem is it is so easy to get caught up with one or two pieces of the story and miss the real story. It goes deeply into the arcane runes of the financial world. To tell it in detail would leave you glassy eyed and wondering what you were doing for lunch. So I leave a lot of details out and as a result, it may seem overly simple. That’s because it is. But it’s not.
This is a quick tour so you can understand the big picture. You will, no doubt, find various aspects of it curious and you will want to go back to explore more. All the subjects in here are available for further study through the internet. That’s what I did. This whole story is pulled together from late night google searches.
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Wednesday, August 25, 2010
Axing the Bankers’ Money Tree: Homeowners' Rebellion against Wall Street Recent Rulings Could Shield 62 Million Homes from Foreclosure
By Ellen Brown | |
URL of this article: www.globalresearch.ca/index. | |
Global Research, August 19, 2010 | |
webofdebt.com - 2010-08-18 | |
Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for the convenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions, recently held that this electronic shortcut breaks the chain of title, voiding foreclosure. The logical result could be 62 million homes that are foreclosure-proof. In a Newsweek article a year ago called "Too Big to Jail: Why Prosecutors Won’t Hit Wall Street Hard in the Subprime Scandal," Michael Hirsch wrote that we were unlikely to see trials and convictions like those in the savings and loan scandals of the 1980s, because fraud and blame have been so widespread that there is no one to single out and jail. Said Hirsch: “The sad irony is that in pleading collective guilt, most of Wall Street will escape whipping for a scheme that makes Bernie Madoff's shenanigans look like pickpocketing. At the crest of the real-estate bubble, fraud was systemic and Wall Street had essentially gone into the loan-sharking business.” “Unfortunately,” he added, “prosecution of fraud is the only way you're going to get reform on Wall Street.” Sure enough, a year later we got a banking reform bill that was so watered down that Wall Street got nearly everything it wanted. The too-big-to-fails, rather than being whittled down to size, have grown even bigger, circumventing antitrust laws; and they are being allowed to carry on pretty much as before. The Federal Reserve, rather than being called on the carpet, has been given even more power; and the Consumer Protection Agency -- the main part of the bill with teeth – has been put under the Fed’s watchful eye. Congress and the Justice Department seem to have bowed out, leaving no one to hold the finance industry to account. But the best laid plans even of Wall Street can sometimes go awry. In an ironic twist, the industry may wind up tripping over its own Achilles heel, the Mortgage Electronic Registration Systems or MERS. An online computer software program for tracking mortgage ownership and rights, MERS is, according to its website, “an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.” Or as Karl Denninger puts it, “MERS own website claims that it exists for the purpose of circumventing assignments and documenting ownership!” MERS was developed in the early 1990s by a number of financial entities, including Bank of America, Countrywide, Fannie Mae, and Freddie Mac, allegedly to allow consumers to pay less for mortgage loans. That did not actually happen, but what MERS did allow was the securitization and shuffling around of mortgages behind a veil of anonymity. The result was not only to cheat local governments out of their recording fees but to defeat the purpose of the recording laws, which was to guarantee purchasers clean title. Worse, MERS facilitated an explosion of predatory lending in which lenders could not be held to account because they could not be identified, either by the preyed-upon borrowers or by the investors seduced into buying bundles of worthless mortgages. As alleged in a Nevada class action called Lopez vs. Executive Trustee Services, et al.: “Before MERS, it would not have been possible for mortgages with no market value . . . to be sold at a profit or collateralized and sold as mortgage-backed securities. Before MERS, it would not have been possible for the Defendant banks and AIG to conceal from government regulators the extent of risk of financial losses those entities faced from the predatory origination of residential loans and the fraudulent re-sale and securitization of those otherwise non-marketable loans. Before MERS, the actual beneficiary of every Deed of Trust on every parcel in the United States and the State of Nevada could be readily ascertained by merely reviewing the public records at the local recorder’s office where documents reflecting any ownership interest in real property are kept. . . . “After MERS, . . . the servicing rights were transferred after the origination of the loan to an entity so large that communication with the servicer became difficult if not impossible. . . . The servicer was interested in only one thing – making a profit from the foreclosure of the borrower’s residence – so that the entire predatory cycle of fraudulent origination, resale, and securitization of yet another predatory loan could occur again. This is the legacy of MERS, and the entire scheme was predicated upon the fraudulent designation of MERS as the ‘beneficiary’ under millions of deeds of trust in Nevada and other states.” MERS now holds over 62 million mortgages in its name, including over half of all new U.S. residential mortgage loans. But courts are increasingly ruling that MERS is merely a nominee, without standing to foreclose on the collateral that makes up a major portion of the portfolios of some very large banks. It seems the banks claiming to be the real parties in interest may have short-circuited themselves out of the chain of title entitling them to the collateral. Technicality or Fatal Flaw? To foreclose on real property, the plaintiff must be able to produce a promissory note or assignment establishing title. Early cases focused on MERS’ inability to produce such a note, but most courts continued to consider the note a mere technicality and ignored it. Landmark newer opinions, however, stress that this defect is not just a procedural but a substantive failure, one that is fatal to the plaintiff’s case. The latest of these decisions came down in California on May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E–11. The court held that MERS could not foreclosebecause it was a mere nominee, and that as a result plaintiff Citibank could not collect on its claim. The judge opined: “Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.” In support, the judge cited In Re Vargas (California Bankruptcy Court); Landmark v. Kesler(Kansas Supreme Court); LaSalle Bank v. Lamy (a New York case); and In Re Foreclosure Cases (the “Boyko” decision from Ohio Federal Court). (For more on these earlier cases, seehere, here and here.) The court concluded: “Since the claimant, Citibank, has not established that it is the owner of the promissory note secured by the trust deed, Citibank is unable to assert a claim for payment in this case.” The broad impact the case could have on California foreclosures is suggested by attorney Jeff Barnes, who writes: “This opinion . . . serves as a legal basis to challenge any foreclosure in California based on a MERS assignment; to seek to void any MERS assignment of the Deed of Trust or the note to a third party for purposes of foreclosure; and should be sufficient for a borrower to not only obtain a TRO [temporary restraining order] against a Trustee’s Sale, but also a Preliminary Injunction barring any sale pending any litigation filed by the borrower challenging a foreclosure based on a MERS assignment.” While not binding on courts in other jurisdictions, the ruling could serve as persuasive precedent there as well, because the court cited non-bankruptcy cases related to the lack of authority of MERS, and because the opinion is consistent with prior rulings in Idaho and Nevada Bankruptcy courts on the same issue. RICO and Fraud Charges Other suits go beyond merely challenging title to alleging criminal activity. On July 26, 2010, a class action was filed in Florida seeking relief against MERS and an associated legal firm for racketeering and mail fraud. It alleges that the defendants used “the artifice of MERS to sabotage the judicial process to the detriment of borrowers;” that “to perpetuate the scheme, MERS was and is used in a way so that the average consumer, or even legal professional, can never determine who or what was or is ultimately receiving the benefits of any mortgage payments;” that the scheme depended on “the MERS artifice and the ability to generate any necessary ‘assignment’ which flowed from it;” and that “by engaging in a pattern of racketeering activity, specifically ‘mail or wire fraud,’ the Defendants . . . participated in a criminal enterprise affecting interstate commerce.” Local governments deprived of filing fees may also be getting into the act, at least through representatives suing on their behalf. Qui tam actions allow for a private party or “whistle blower” to bring suit on behalf of the government for a past or present fraud on it. In State of California ex rel. Barrett R. Bates, filed May 10, 2010, the plaintiff qui tam sued on behalf of a long list of local governments in California against MERS and a number of lenders, including Bank of America, JPMorgan Chase and Wells Fargo, for “wrongfully bypass[ing] the counties’ recording requirements; divest[ing] the borrowers of the right to know who owned the promissory note . . .; and record[ing] false documents to initiate and pursue non-judicial foreclosures, and to otherwise decrease or avoid payment of fees to the Counties and the Cities where the real estate is located.” The complaint notes that “MERS claims to have ‘saved’ at least $2.4 billion dollars in recording costs,” meaning it has helped avoid billions of dollars in fees otherwise accruing to local governments. The plaintiff sues for treble damages for all recording fees not paid during the past ten years, and for civil penalties of between $5,000 and $10,000 for each unpaid or underpaid recording fee and each false document recorded during that period, potentially a hefty sum. Similar suits have been filed by the same plaintiff qui tam in Nevada and Tennessee. Axing the Bankers’ Money Tree Most courts continue to look the other way on MERS’ lack of standing to sue, but the argument has picked up enough steam to consider the rather stunning implications. If MERS is not the title holder of properties held in its name, the chain of title has been broken, andno one may have standing to sue. In MERS v. Nebaska Department of Banking and Finance, MERS insisted that it had no actionable interest in title, and the court agreed. An August 2010 article in Mother Jones titled “Fannie and Freddie’s Foreclosure Barons” exposes a widespread practice of “foreclosure mills” in backdating assignments after foreclosures have been filed. Not only is this perjury, a prosecutable offense, but if MERS was never the title holder, there is nothing to assign. The defaulting homeowners could wind up with free and clear title. In Florida, Jacksonville Area Legal Aid attorney April Charney has been using the missing-note argument ever since she first identified that weakness in the lenders’ case in 2004. Five years later, she says, some of those homeowners are still in their homes. According to aHuffington Post article titled “‘Produce the Note’ Movement Helps Stall Foreclosures”: “Because of the missing ownership documentation, Charney is now starting to file quiet title actions, hoping to get her homeowner clients full title to their homes (a quiet title action ‘quiets’ all other claims). Charney says she’s helped thousands of homeowners delay or prevent foreclosure, and trained thousands of lawyers across the country on how to protect homeowners and battle in court.” If courts overwhelmed with foreclosures decide to take up the cause, the result could be millions of struggling homeowners with the banks off their backs, and millions of homes no longer on the books of some too-big-to-fail banks. Without those assets, the banks could again be looking at bankruptcy. As was pointed out in a San Francisco Chronicle article by attorney Sean Olender following the October 2007 Boyko decision: “The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process. “. . . The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail . . . .” Nationalization of these giant banks might be the next logical step – a step that some commentators said should have been taken in the first place. When the banking system ofSweden collapsed following a housing bubble in the 1990s, nationalization of the banks worked out very well for that country. The Swedish banks were largely privatized again when they got back on their feet, but it might be a good idea to keep some banks as publicly-owned entities, on the model of theCommonwealth Bank of Australia. For most of the 20th century it served as a “people’s bank,” making low interest loans to consumers and businesses through branches all over the country. With the strengthened position of Wall Street following the 2008 bailout and the tepid 2010 banking reform bill, the U.S. is far from nationalizing its mega-banks now. But a committed homeowner movement to tear off the predatory mask called MERS could yet turn the tide. While courts are not likely to let 62 million homeowners off scot free, the defect in title created by MERS could give them significant new leverage at the bargaining table. Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest of eleven books, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are www.webofdebt.com, www. READ ELLEN BROWN  IN NEW BOOK FROM GLOBAL RESEARCHThe Global Economic Crisis  | |
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