BOA FUNDS MORTGAGE ON STOLEN HOUSE AND BLAMES BORROWER — FIRST AMERICAN TITLE DENIES LIABILITY

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At first blush this story seems like a standard scam story and an unfortunate couple who bought the house, spent money on upgrades, paid all their mortgage payments and are now told they are faced with eviction from a home this is not theirs. But where is the title insurance protection that should be present? It is exactly where I told you it would be. The title companies, this one is First American, are denying coverage. The thief in this case is not a securitization party but the effect is the same. BOA is telling the couple that if they don’t pay the mortgage their credit will be ruined.

So they have a mortgage without a house. How is that possible? I’ll tell you how. The old owner abandoned the house allowing a scam artist to pretend to be the owner because the old owner was not around and didn’t care. Hmmmm. Wait that sounds familiar.

In the securitized mortgages, the investor has abandoned their claim against the “borrowers” and they are suing the investment bankers instead. That creates the same void as this scam. Only in “securitized” loans the scam artist that pretends to own the loan is a bank or some “bankruptcy-remote entity” that was created to serve the bank. Did you even wonder why the Banks went to all the trouble of inserting “bankruptcy remote” straw-men at loan closings? I think it is because they knew from the start this was eventually going to blow up and collapse.

The title company didn’t give a damn as long as they got their fee for the closing so they never did the work they were supposed to do. BOA didn’t care because they were not using their own money or had changed their habits because they usually don’t use their own money or credit. So these people got screwed by the title company and the “lender” who by the way does not have a perfected lien on the property (just like the “securitized” crap they sold to borrowers and investors).

Isn’t this interesting? Now BOA must figure out a way to resolve this without conceding that if the documentation was not in the chain of title as recorded in the title registry, there is no mortgage and thus nothing to foreclose. If this goes to court, BOA has a real problem, doesn’t it. They want to say that the borrower still owes them the money that was in fact funded AND they want to have a lien, but they can’t so they can’t foreclose. Thus this is exactly the same as ALL securitized loans.

The defects in the chain of title and the obvious shell game of names is not merely a technicality — it is the bedrock of a stable marketplace where if you buy something you should be getting clear title to it. The title company now says they are not liable for misrepresenting title. That the contract for insurance merely represents the risks they were willing to take and that if there was fraud in the title chain they are not liable. So what we have here is that no matter how many precautions the buyer-borrower takes he can still get screwed by the big guys. This isn’t caveat emptor (buyer beware) this is buyer be screwed.

And THAT is why the corrupted title mess extending to more than 80 million real estate transactions involving residential swellings cannot be solved — the players don’t want to solve it.

Tags: Bank of America, borrower, countrywide, credit crisis, creditor, disclosure, Eviction, foreclosure, foreclosure defense, foreclosure offense, fraud, Lender Liability, mortgage meltdown, predatory lending, quiet title, rescission, securitization, TILA audit, trustee, Wells Fargo
Posted in bubble, Corruption, Eviction, securities fraud |