As we all know, there is a major philosophical divide in US politics. On the one hand, there are those who think it is the role of government to help ensure that the vast majority of the population can enjoy a decent standard of living. On the other side are those who believe the role of government is to transfer as much money as possible to the rich and powerful. The latter group seems to be calling the shots these days.
This is seen clearly in the "liar lien" scandal: the flood of short-order foreclosures that ignore standard legal procedures. The banks have been overwhelmed by the unprecedented volume of defaulting mortgages in the wake of the housing crash. Even under normal circumstances, foreclosure rates that in some areas exceed ten times normal levels would create an administrative nightmare.
But these were not ordinary loans. The highest rates of foreclosure are on the quick and dirty loans made at the peak of the bubble. These loans were issued to be sold. Almost immediately after the ink was dry, the issuers would sell these loans off to Citigroup, Goldman Sachs or other investment banks to turn them into mortgage-backed securities. The investment banks themselves were running short order operations. More rapid securitization meant more profits.
In this process, the paperwork often came as an afterthought. As a result, necessary documents weren't signed, title transfers weren't properly registered, the notes tying loans to specific properties may not have been properly filed and other paperwork errors went uncorrected.
If the law were being followed, these issues would create serious problems for servicers trying to foreclose on homes where the owner had defaulted. Banks would have to spend the necessary time, paying high cost lawyers for their work, to reconstruct the paper trail needed to establish clear title to the house and the documentation that would allow them to foreclose on a delinquent borrower.
In some cases, this may not even be possible. Many of the issuers that dominated the nonprime mortgage market at the peak of the bubble are no longer in business. They probably did not make sure that all the documentation went to the right place before they closed their doors.
If the Wall Street banks were like the rest of us, the policy response would be simple: follow the frigging law. If banks want to foreclose, then they should have to present the court with the proper documents, end of story. Anyone who has ever bought a house or refinanced a mortgage knows the headaches involved. Everything must be in order, a process that can cost thousands of dollars in fees, as a long sheaf of documents is signed in the presence of a lawyer. This process can easily take two hours.
The banks don't think that they should have to endure the same expensive tedium as the rest of us. For them, these processes are simply formalities that can be circumvented. Hence, the "robo-signers," who are paid to put their names to documents that they know nothing about.
Some people have been wrongly foreclosed in this process, precisely the sort of mistake that the bureaucratic formalities are intended to prevent. More frequently, homeowners have probably been assessed fees and penalties that they do not actually owe. To the banks, this is just another unfortunate error in the high-speed foreclosure process.
In this context, the demand for a foreclosure moratorium makes perfect sense to those who think that it is the responsibility of government to protect the majority of the population. After all, if someone has fallen behind in paying their bills, they still have a right to expect that the law get followed.
A foreclosure moratorium would allow regulators to ensure that the servicers have systems in place that guarantee that the right procedures are followed. A moratorium on foreclosures would serve the same purpose as the moratorium on deep-sea drilling following the BP disaster. The alternative -- that we should trust the banks -- doesn't pass the laugh test.
By contrast, those who believe that government exists to serve the rich and powerful point out that these procedures will raise costs for banks. In some cases, they may not even be able to carry through a foreclosure, since the proper documentation does not exist.
The result could be billions of dollars in losses for the Wall Street banks. That may not put them out of business, but it certainly could knock a few million dollars off the bonuses of some top executives.
So, there you have it: the question of whether the Wall Street banks should have to follow the same rules as the rest of us. It is one of the most central philosophical questions underlying politics today.
This piece originally appeared on Truthout.org
Baker takes the position that government's role to to take money from some and give it to others, with Democrats taking from the rich and giving to the poor, and Republicans of taking from the poor and giving to the rich. Baker's wrong - government's role is to protect our freedom and liberties. To do that it must resolve disputes (via the courts), pursue criminals (who steak/attack others), and protect us from nations and groups that attack us. Redistributing wealth isn't different from what criminals do (except it's legal per "laws" our politicians have passed). People who use government to do this are morally equivalent to criminals. And this especially goes for the politicians who support it (typically for campaign contributions). For if politicians weren't selling our liberties we wouldn't have this problem.
Government created the housing bubble, and now they want to make it worse. They want to take away from those with investments backed by mortgages (that's most everyone with a 401K, pension or money market account) and give it to people not paying their mortgages.
Mega-Banks’ Confidence in Shutting Down Foreclosure Fraud Scandal Undermined By Reality
http://news.firedoglake.com/2010/10/20/mega-banks-confidence-in-shutting-down-foreclosure-fraud-scandal-undermined-by-reality/
It's the states attorney generals who are taking theses criminals on. Make sure yours is on your side when you go vote.
I guess the states don't want to see their neighborhoods subjected to disaster capitalism any more than we do.
NOT POSTED.
I've posted it TWICE.
It happens to me all the time!! And I censor myself but I guess very harsh criticisms, coupled with real facts is considered more offensive than f**k. The latter I consider myself to be quite fluent in because it fits so nicely when describing the financial chaos of our Country...oh f**k, I just spilled my water... :)
Leland R. Erickson
Citizen
Why would these lenders risk losing the collateral for these mortgage loans?
Why would lawyers knowingly file fraudulent & false affidavits - commit fraud on the court for their lender-clients?
What could they be hiding about these loans to take such audacious risks?
Why is most every lawsuit involving Investors & these lenders specifically about Mortgage Fraud?
How could these lenders defraud investors and NOT have defrauded the homeowners?
Countrywide admitted to selling 142-billion dollars of mortgage loans to borrowers that Countrywide KNEW could not repay. They created separate Underwriting software to APPROVE loans rejected from their normal system. The used ridiculous rates (1.25%) and 35-40yr tables and deliberately DECEIVED these borrowers. The “special” Underwriting program automatically changed the loan docs of these borrowers to NINA & SISA loans without the borrowers ever knowing it.
These borrowers had NO-IDEA their loans their 700-dollar mortgage would jump to 2-2500 dollars per month. These loans were created in 2005 & 2006 and these families are now facing the consequences.
Using Countrywide’s data - that equates to approx 965-THOUSAND FAMILIES tossed to the street BECAUSE they trusted the loan agent - that so-called professional. How many families are now in divorce - how many addictions now triggered - how many lives & dreams destroyed?
How many CEO’s of these pathetically twisted lenders & Wall Street buddies have been arrested?
Keep the Powder Dry
The consumer is always in the weaker position in a battle with huge banks and mortgage companies. The mortgage industry has gotten away with murder in its ability to dictate the terms of mortgages as well as foreclosures. If a home owner violates any term of their mortgage, even a late payment, s/he pays for it. Lenders must be held to the same standard if they in any way violate the process.
Any foreclosure in any jurisdiction should require a judicial decision to proceed. It's a "taking" and it should be treated as such. Unfortunately consumers don't have the lobbyists and advocates to go head to head against the lobbyists and advocates for the mortgage industry who have greased the machinery in their favor. The same goes for debt collection which is an unbridled scandal in the U.S.
Not as easy as it sounds. Read all of my posts regarding FRAUDCLOSURE.
For the last time, I will point out some of the errors in the above posting, then I will just stop reading posts by people who know nothing or just a little about foreclosure:
MERS doesn't conduct foreclosures. Mortgage servicers do.
Affidavits are used by both plaintiffs and defendants in all cases, not just foreclosure cases. They are signed by the clients, not the lawyers. They are used primarily to enter necessary facts supporting the complaint into the record. Lawyers who submit affidavits signed by their clients which they know to be false can be sanctioned and even disbarred.
If no one representing the borrower shows up, the skids are greased and the case usually proceeds to foreclosure. If the borrower has a lawyer, the whole game changes. The "facts" in the affidavits are disputed (including who owns the note and the amount owing, etc.).
This big bugaboo about "original title being lost" is total hogwash. In 99.9% of the cases, the note is not lost. The problem is that the judge doesn't understand how MERS (the note registry) works. That's the problem, not "lost title"-a nonsense term, legally.
Most of these loans were NOT properly filed by the lenders. They bypassed the Transfer of the Note to the Trustee. The False Assignments now exposed are a direct cause of their illegal act. This negates & severes the collateral (property) from the Note. Meaning, those loans are no longer secured. It does not void the mortgage nor imply the borrowers are not liable. It simply means they cannot "legally" take their homes.
Millions of families have been illegally foreclosed and thrown to the streets. Maybe the judges should be looking more closely at the loan docs to see if these loans were even legal. It is illegal for a federally insured institution to lend more than the borrower can repay.
Keep the Powder Dry
Should the banks follow the laws? But of course! Get the paperwork right, and then proceed. But let's not con ourselves into thinking that banks are stealing homes from people who are up to date on their mortgages. If/when that happens, go after the banks for doing so.