The main stream media has been unusually quiet about, and is downplaying the latest "glitch" in the gittyup of the foreclosure crisis. It's no surprise, but it could easily become a black swan for the banks. Many of our elected officials are finally starting to cry foul and raise questions about the legality of the whole mortgage securitaztion ponzi scheme that has become the housing market of the United States. Major banks, and several states attorney generals are now on the cusp of a pissing contest:
"On September 29, the Washington Post reported that a top federal bank regulator had directed seven of the nation’s largest lenders to review their foreclosure processes, after learning about widespread mishandling of homeowner evictions. Besides JPMorgan Chase, they included Bank of America, Citibank, HSBC, PNC Bank, U.S. Bank and Wells Fargo. The Washington Post noted:
"The paperwork problems range from potentially forged documents to bank employees who never read borrowers' files before signing off on an eviction. . . ."While we don't expect our review to find that consumers were harmed, we will take appropriate action if we find any impact," JP Morgan spokesman Tom Kelly said."No harm perhaps except the illegal taking of thousands of homes without due process". Most elected officials looked the other way when loans were brokered, underwitten/funded/serviced, sold, repackaged, and sold again from 2003-2008. We all knew fraud was pervasive. Now that banks are once again on the take, they are taking advantage of the mess by foreclosing on and selling houses they do not own, and have no legal right (or proof thereof) to bring proceedings to seize the property."
WORSE YET - banks have been caught red handed for forgery, and presenting false evidence. Of course -no convictions (yet). Watch this 8 minute video from US Senator Grayson:
Those who think this will turn into a free house bonanza where judges give away houses to delinquent owners -don't hold your breath. The free house bonanza is for the banks. Due to securitization, ownership of the title/note is spread far and wide. Banks have limited resources with which to obtain this information. MERS has become a crime scene, and 60% of US mortgages are now in the MERS system.
If the mortgage servicer cannot establish legal ownership of the note -what makes anyone think that the banks are going to see that the "note holders" get paid when the house is sold in foreclosure? Are banks servicing and seizing delinquent properties with no legal right to do so, and KEEPING the profit from the sale?
Will the "toxic mortgage backed securities" be dumped on the tax payers via Frannie/Freddie, while banks that never held the full loan seize, foreclose, and profit from the massive legal mess made by securitization gone wild?
It sure looks that way to me...this is a backdoor bailout of the banks that is just now being seen for the theft that it truly is. The battle between the banks, congress, the executive, and judicial branches of government will be epic. In the mean time, my advice is to stay far far away from any further leveraging into the real estate market, pop some popcorn, and enjoy the shit show!
Below is more reading, and note that Oregon is not a judicial foreclosure state. How many homes is Wells Fargo seizing/foreclosing on here that go uncontested? How many counties have title insurable legal records showing exactly what entity has the right to foreclose?
What does all this mean for title insurers? They don't like it one bit and many of the larger players are already backing away from insuring titles on REO/foreclosed deals. How many REO/short sales/foreclosure sales have happened that are about to be unwound as a result of this news? Foreclosures were 25% of sales nationwide last quarter. They are about to be a LOT lower percentage going forward.
The housing bubble is now taking on a whole new meaning, and with 60% of the mortgages out there already lost in the electronic blender of MERS - how long will be until we hear the Federal Government call for centralized control of registering deeds/titles for all real estate?
If you hear of such a call, I strongly recommend you work with your local township/county where deeds/titles are recorded and fight to keep that authority held locally.
Keep your ears/eyes on this developing story. Will there be prosecutions, or will the whole thing just quietly go away? With election season here and now, and voters from both parties having no love lost for banks, congress and the Obama administration might actually have to act and put a bansker/insurer/broker/realtor or two in jail!
Can you say "class action RICO charges"?