THOUSANDS OF LAWSUITS FILED SEEKING QUIET TITLE ON WRONGFULLY FORECLOSED HOMES

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

Reports are streaming in from all over the country that some offices are filing volumes of wrongful foreclosure or quiet title actions on homes that were previously “sold” at auction on a “credit bid” that was as fraudulent as the foreclosure action that preceded the sale. The absence of responsive pleadings and defaults entered in favor of the homeowners (restoring them to their homes) indicates that the banks know their problems run far deeper than the perjury and robo-signing.

With or without defensive pleadings, there is no hope for the foreclosers. The defects in their position are fatal and simply not correctable. Foreclosures will end with a whimper rather than a bang. The ensuing lawsuits for damages from homeowner and investors will bankrupt the well-known names on Wall Street and in world finance. With $600 trillion in credit derivatives on the world markets and only $50 trillion in actual cash, there literally isn’t enough money in the world to help them out. Fortunately for the United States we have 7,000 community banks and credit unions, a few dozen electronic funds gateways, hundreds of electronic funds processors, and a handful of networks already connecting all banks with each other that can simply move into the spot vacated by the mega banks. The landing will be much softer than Wall Street mega banks would have you believe. We actually don’t need them.

The significance of this goes far beyond the millions of foreclosures that were filed or that were planned. It goes to the root of the securitization scheme and puts the investors and the banks in the rather uncomfortable position of trying to maintain a “business a usual” attitude, while tens of millions of homes that are either underwater or not, but were subject to securitization, may turn out to have obligations in which the security instrument (mortgage or deed of trust) is invalid and where the creditor cannot be found. If these homeowners stop paying or file suit too, the entire apparatus will be turned on its head. Lawyers have reported to me that in some cases, the majority of their fast-growing clientele consists of people who are current on their house payments. The implications of this can be monetized in the trillions of dollars.

Beyond the obvious benefits conferred on homeowners and the obvious stimulus of trillions of dollars of wealth moved back to the middle class, thus re-creating a class thought near extinction, there is the unavoidable punitive measures that are headed with  strong wind at their back against the banks who screwed this up. It will take many years to clear up the title problems created by Wall Street and many more years to straighten out the way Wall Street works. But the probabilities are rising by the hour that the mega banks and all the arrogance and pomposity that went with them, and all the politicians who thought they had a steady cash flow, are going down in history, their fifteen minutes are up. Access to cash, as any pick-pocket knows, is the not the same thing as owning it.

Nobody doubts the impact — foreseen and unforeseen of such changes. But the inevitability of the conclusion here is like an awakening from a deep slumber. The American electorate no doubt will show their rising rage on Tuesday. Investors and borrowers — the ones whose interests came last in this whole scheme now come front and center. It is up to them, collectively to come to agreements that will make this as soft a landing as possible. There are plans that could do that — if the will is there. My observation is that the borrowers are more than happy to accept any settlement that puts them back in the house with an opportunity to stay there. Most homeowners are not looking for the “free house.” In fact, most lawyers report to me that their clients are too easy on the banks when it comes to settlement. Elements of modifications and corrections of principal can be completely off-set by incentives to investors who can hold on for another few years and recover the majority of their investments.

For this to happen, investors, homeowners, media and the politicians are going to have to get their information from Main Street rather than Wall Street. If any sense of of reality has replaced the all-encompassing arrogance that produced such stupid behavior, there is still a chance for the mega-banks to save face — to get out in front of the crowd and make it look like a parade instead of being run out of town. They will need help and we here know where to find it and provide it. If you’re listening, if you’re reading…..

Posted in bubble, Corruption, Eviction, securities fraud |