There are some rumblings that the Department of Justice is putting the pressure on state attorneys general to sign onto the controversial $20 billion mortgage settlement deal this week that could release banks from legal claims in state investigations and law suits.
Monday, Massachusetts Attorney General Martha Coakley joined a handful of dissenters in announcing that she will oppose the inclusion of the issues surrounding MERS in any deal.
MERS (Mortgage Electronic Registration System) as pointed out by Abigail Field in a recent post on Reality Check:
... was set up thoughtlessly, without regard to its basic legality, and designed with only two objectives: lowering the mortgage industry's costs and maximizing its convenience. As a result, MERS has none of the advantages of the centuries-old system it was intend to replace, and largely has. MERS is not accurate, not transparent, and not accountable to the public. To let MERS continue simply allows it to continue wreaking havoc on property records and the legal morass it's created to continue tangling foreclosure and bankruptcy cases nationwide.
Homeowner advocates and activists have long argued that mortgages transferred via the MERS system but not recorded with local registries of deeds are invalid and that land titles on thousands of homes are "clouded". Homeowners with clouded titles could find it impossible to sell or refinance their properties without going to court to clean up problems.
Register John O'Brien, of the Southern Essex County Registry of Deeds has been pushing Coakley to investigate these issues and asked that she not agree to settle with the big banks.
Once again I am asking Attorney General Martha Coakley and the other state Attorney's General to follow the lead of New York Attorney General Eric Schneiderman and stop any settlement talks with the banks. The results of this report are only for my registry, but I can assure you that this type of criminal fraud is rampant across the nation. This leaves me to question why anyone would consider settling with these banks until we know the full extent of the damage that they have caused to the homeowners chain of title across this country and the amount of money they have bilked the taxpayers for their failure to pay recording fees.
New York Attorney General Eric Schneiderman launched his own investigation in April. He said he was "stunned" to find the multi-state probe so lacking that no documents or witness depositions had been obtained.
"We have no leverage," Schneiderman said in an interview with the Democrat and Chronicle.
Elizabeth Warren, a senior adviser to President Barack Obama agrees. She recently told a congressional panel that government agencies may not have fully investigated claims that borrowers' homes were illegally seized by banks.
"I think there's a real question about whether there's been adequate investigation," said Warren, also the temporary custodian of the Bureau of Consumer Financial Protection at the time - a new federal agency created to protect borrowers from abusive lenders.
In addition to O'Brien's communications with Coakley, Massachusetts residents have also been active in voicing their concerns. In a letter, signed by 24 Massachusetts homeowners, Senka Huskic, a Peabody MA resident and a blogger at Home Preservation Network wrote on behalf of Massachusetts homeowners:
The results of Wall Street's fraud are numerous foreclosures, topped with the ignorance that works well for those who committed the biggest financial crime in the history of the world. Nothing will change until those responsible for this scam are prosecuted! We must do that, and we should not rest until the truth is out and the correct people are held responsible. We have had enough of being robbed blind, of paying inflated mortgages, of rescuing criminals with our tax money! We have to stand up for our kids, and Register O'Brien is there to stand up for us and with us!
Monday, we finally decided to stop being a statistic, to stop being just a number in the books of the rich and powerful. Monday, we stood up and realized that the future of our lives lies in our hands and no one else's. Our search for American Dream is becoming an all-out battle for our basic needs. The big dream is dispersing before our eyes and we're left to face the biggest financial disaster ever.
We would like to use this opportunity to ask you to join Register O'Brien, New York Attorney General Eric Schneiderman, and many others who stood up to the "too big to fail," realizing that only the American people are too big to fail. We would like to ask you to immediately cease negotiations with the perpetrators of the mortgage fraud securitization who are not able to prove that they own the houses on which they are foreclosing upon. The only way for a homeowner to prove that is to sue the bank. We all know that this means if you don't have money, very soon you won't have your house either.You, as the state's chief legal prosecutor, must stand up for us and demand answers, demand justice. The very word NEGOTIATION describes communication between at least two sides with the intent to achieve an agreement among everyone involved. So how can we expect that the side which created, implemented, and is still proceeding with the biggest financial crime in the history of this country could have anyone's best interest in mind, other than their own?
Fortunately for us, here in Massachusetts, Martha Coakley has no problem going after banks and mortgage servicers.
Coakley slammed MERS in a Boston Herald interview on Tuesday.
"From predatory loans to 'robo-signing' to servicing fraud, the banks continue to go merrily on their way while consumers, the real estate industry and the commonwealth of Massachusetts are being cheated," Coakley said.
"The inability to get a handle on the instability in the real estate market continues to affect Massachusetts and the entire national economy," she said.
Massachusetts, once again is leading the charge and forging ahead into uncharted waters. From the Supreme Judicial Court having handed down an important decision in the Ibanez case to O'Brien relentlessly advocating for homeowners, the securitization industry's argument that the pooling and servicing agreement was sufficient grounds to transfer of the mortgages to the trust has suffered some significant blows in Massachusetts.
Taking into consideration that the Massachusetts Supreme Court is widely considered one of the best courts in the country, these are not insignificant acts.
Coakley promised to exclude the MERS issue from any deal until she fully investigates the problem's scope.
"Massachusetts will not sign on to any global agreement with the banks if it includes a comprehensive liability release regarding securitization and the MERS conduct," she wrote in a letter Monday to all 21 Massachusetts county registers of deeds.
O'Brien, who spearheaded the drive against the paperwork flaws, was pleased with the announcement.
"I think this sends a message loud and clear to MERS and their shareholder banks that Massachusetts will hold them accountable," O'Brien said.
In the wake of the scandal in Florida (one of the hardest hit areas in the country), whose Attorney General, Pam Bondi, fired two investigators for actually doing their job and going after foreclosure mills, it gives me hope to live in a state where public officials take their job of protecting and defending the public seriously.