The Titanic that is the U.S. housing market has just sprung its biggest leak, and even some of the largest banks responsible for this mess, like Bank of America and JPMorgan Chase, are now imposing a temporary moratorium on foreclosures. They have done so very reluctantly and only after courts throughout the nation, and the attorneys general of 40 states, questioned the legality of a securitized system of homeownership that has impoverished tens of millions.
How do you foreclose on a home when you can't figure out who owns it because the original mortgage is part of a derivatives package that has been sliced and diced so many ways that its legal ownership is often unrecognizable? You cannot get much help from those who signed off on the process because they turn out to be robot signers acting on automatic pilot. Fully 65 million homes in question are tied to a computerized program, the national Mortgage Electronic Registration Systems (MERS), that is often identified in foreclosure proceedings as the owner of record.
MERS was the result of a partnership formed back during the Clinton years between Fannie Mae, an ostensibly government-sponsored agency that morphed into a very much for-profit mega-Wall Street hustler, and Countrywide, the largest and most rapacious of the private mortgage marketers. The scam of computerized credit approval and mortgage certification they came up with was subsequently embraced by Freddie Mac, the other huge housing agency, and the leading Wall Street banks joined in the feeding frenzy. MERS owners now include Wells Fargo, AIG, GMAC, Citigroup, HSBC, the two housing agencies and Bank of America. But the courts are increasingly challenging MERS claims to the right of foreclosure since this whole racket, which bypasses the power of counties to register property ownership, was never authorized in the law.
Yet the White House on Tuesday once again manifested an indifference to the suffering of victimized homeowners when press secretary Robert Gibbs warned of the "unintended consequences to a broader moratorium." Which presumably would be worse in his view than the intended consequence of evicting people from their homes, which has already affected some 20 million Americans and threatens many more. What arrogance for an administration featuring Timothy Geithner and Lawrence Summers, who created this mess back in the Clinton era, to evidence such slight compassion for the victims of their folly.
The disastrous disarray in the housing industry is a direct result of decisions taken during the deregulation frenzy of the Clinton presidency when the securitization of mortgage and other debts was removed from any regulatory supervision. Instead of mortgages being between customers and banks and then being properly recorded by local government agencies, they became poker chips in the Wall Street casino. Tens of millions of home mortgages were recklessly issued with scant reference to their true values and bundled into securities to be sold on the unregulated derivatives market. But in order for there to be sufficient fluidity in the rapid-fire swapping of stock bundles of individual homes, those mortgages had to be unhinged from the valid legal restraints that had governed their issuance throughout most of human history.
To engage in the recklessness of turning people's homes -- their castles and nest eggs -- into playthings of Wall Street market hustlers, or securitization of the assets, as it was termed, homeownership record-keeping had to be mangled beyond recognition. Throughout the preceding centuries of this nation's history the origination of housing loans was between the homebuyer and a lender, both of whom expected to be connected through decades of payments. Until the nuttiness that began in the 1990s when homes became ciphers in a marketable security, the verification of homeownership was a straightforward transaction dutifully recorded by local county governments. If the house was sold, the physical records were changed and available for all to see.
But that didn't suit the newfangled collateralized debt obligations based on collections of mortgages to be cut in tranches as to their expected risk and sold as securities in an unregulated futures market. To facilitate the scam, the records of homeownership came to be largely maintained without its traditional local paper trail in a new computerized national database. The ensuing difficulty in tracing such ownership is now at the heart of the courts' objections and the compelling argument for a government-enforced national moratorium on home foreclosures to provide sufficient time to sort this mess out.
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Theres definitely an incestuous relationship between the two in this matter.
Call a moratorium, then force the banks to renegotiate terms with every homeowner capable of making a reasonable payment.
Our tax dollars should benefit homeowners, not Banksters.
Key Major culprits: Phil Graham, Alan Greenspan, Christopher Cox and the Republicans' "You;re on your Ownnership Society" They were still defending those chopped up mortgage "products" in
January of 2009, and which Greespan in 2006 was baffeled that more people where not getting into.
In 2007 Hillary Clinton called for freezing those variable Mortgage rates at 5% for 5 years which
the Republicans and their leaders in the White House wanted nothing to do with.
Mistakes on the Democratic side was to work with the Republicans and their lunatic ideologies
who forgot to leave Ayan Rand behind in Junior High School..
And why do the banks have the right to kick people out of their home because they're behind in the payments and owe, say, $5,000 on a home worth $170,000 (but only half that if placed in foreclosure)? They own the mortgage - they have a legal lien on the home securing the loan. Without that then they, just like any other regular creditor such as a credit card company or cable provider, can't seize someone's house merely because they owed them money. What we're discovering now is that the banks, knowing they don't have the necessary proof of ownership readily at hand, are forging them. We certainly wouldn't want to inconvenience the banks would
In Florida the original note must be presented as proof of the mortgage. If there is no note there is no mortgage. Electronic copies are not the original note. There is nothing generational about it. It is not a matter of opinion. It is not a new phenomenon. It is the law.
:-]
Scheer's "truthdig" is a serious antidote....
-what collateral exactly backs this instrument? ---can you prove it.?
racket.....scam ....wall street hustlers......... indifference to the suffering
If one bank fails to prove that it owns your note and mortgage, that doesn't prevent another bank from bringing a foreclosure case the very next day. Moreover, there are statutes that take into consideration that the original documents sometimes get lost, so the fact that a note and mortgage have been lost along the way doesn't mean you have your house free and clear. There is still a mortgage recorded on the land records. Until that mortgage gets released somehow, you won't be able to sell your home.
Thats what is being discussed here. You on the other hand are advocating for the loansharks and their crooked businesses, against honest people who have been taken to the cleaners.
Not true, at least not in my state. There are statutes that cover sitatuations where an original note and mortgage have been lost but the parties in the chain of title attest to transfer of ownership.
"What part of, "if you can't show that you own it", then you can't possibly take it from the occupant. After all you could be giving the property to a person who has no right to it."
I agree, but that doesn't mean that the mortgage disappears if it has been lost. At the very least, there is the bank whose interest is recorded on the land records and that bank's interest in the loan (at least at some point in the life of the loan) is undisputed. In order to clear up the title, banks that have made a mess of the ownership of the loan may simply make deals to say who has the right to enforce the loan.
"You on the other hand are advocating for the loansharks and their crooked businesses, against honest people who have been taken to the cleaners."
Not at all. I am not advocating for anyone; I am presenting what is a possible outcome to the mess the banks have made. The idea that someone gets a free house because the bank screwed up the paperwork is simply implausible.
Because it's not like conservatives have been pushing deregulation for decades...
Read a little history. Clinton was undoubtedly the best President of our lifetimes. It's both sad and pathetic that liberals want to give conservatives credit for our greatest success.
Gibbs' comments simply pave the way for legislation making the necessary changes to prevent those "unintended consequences." After all, the administration doesn't want something bad to happen to those too-big-to fail institutions.
Cynical? You betcha! Wait and see if this doesn't come about after the first of the year.
another crisis may not come sooner rather than later. If there is someone to blame, perhaps the regulators
failed and failed badly.