How Many Banks Does It Take to Screw America?

Mar 4, 2011

COMBO TITLE AND SECURITIZATION SEARCH, REPORT, ANALYSIS ON LUMINAQ

NOT QUITE THAT SIMPLE

EDITOR’S NOTE: The assumption is that if MERS is screwed we are all saved. I have it on incontrovertible authority that the mega banks already have a plan mapped out for that and in fact they are already putting it into action. Considering their success in kicking the can down the road so far, any singing and dancing should be muted. You see they don’t have to do anything because nothing will happen to them no matter what they do. That is the status quo and it does not seem like that is going to change.

So don’t rely upon the assumption that they are going to be required to give homeowners or borrowers something like the “free house” myth which they turned upside down on borrowers while the banks themselves stole the houses with a “credit bid” instead of cash.

ON THE OTHER HAND, LET’S LOOK AT THE LEGAL STATUS QUO AND YOU’LL SEE WHY THE LAWYERS ON THE OTHER SIDE ARE GETTING NERVOUS. It’s quite possible, even probable now, that in order to perfect the correct loan documents the banks, the pretenders, whoever (watch out for scams here) are going to offer incentives for homeowners to SIGN NEW DOCUMENTS. From what I’ve seen so far, it is pretty obvious and quite definitely confirmed by friends from the dark side that they are not going to sponsor a barbecue where they give out money. A toaster oven maybe, but not the whole mortgage.

BUT THE PEOPLE WHO ARE AS NASTY AS I AM, HAVE VERY LITTLE TO LOSE HOLDING OUT TO THE BITTER END AND REFUSING TO SIGN ANYTHING AND PURSUING QUIET TITLE. So far the number of people I have seen willing to tough out the case until the biter end is less than 3%, which is about half the normal default rate. So even if the number of people willing to fight doubles, the banks still have nothing to lose even if they give up the entire house equity and mortgage and note and even pay attorneys fees and damages. It’s no more than a rounding error.

THE FACT THAT AMERICA IS SCREWED BY THIS SECURITIZATION ILLUSION doesn’t bother anyone on Wall Street — it never did. The only thing Wall Street works for is a trade where something of perceived value moves and a fee is earned. Now here is the surprise for those regular readers of this publication: I don’t think there is anything wrong with Wall Street’s intent. They weren’t out to ruin the country, they just didn’t care. They were doing what they were created to do — improve liquidity to grease the wheels of commerce. I’m not saying that nobody should go to jail, mind you, but the real problem is that the promoters and creators of this so-called securitization scheme that never actually existed were never under any impression that they were breaking any law or that even if they did anything would happen to them. And they were right.

If you think you hate Wall Street, think again. What you really hate is the fact that government didn’t do the job of controlling Wall Street — a lesson we learned in the roaring 20’s, the salad oil scandal, the savings and loan scandal, the Long Term Capital Management Scandal, Enron, World-com, etc. etc. So if someone has you supporting a restriction on government regulation, they are being paid by Wall Street to keep you thinking that way. Think about it.

http://news.firedoglake.com/2011/03/02/mers-tapped-for-federal-investigation/

MERS Tapped for Federal Investigation
By: David Dayen Wednesday March 2, 2011 1:45 pm	Tweet Share5

We have yet another major bank today that fully expects to be dinged by federal and state regulators for sloppy mortgage practices.

PNC Financial Services Group Inc. expects to sign consent orders with U.S. regulators because of allegedly faulty mortgage servicing and foreclosures.

The orders are likely to come from the Federal Reserve and the Office of the Comptroller of the Currency, Pittsburgh-based PNC said today in its annual filing with securities regulators. The actions may include activities tied to the Mortgage Electronic Registration System, the registry designed to track mortgage-servicing rights and ownership of U.S. residential loans, according to the filing.

The MERS piece is interesting. As we know, MERS is basically at the end of its rope, forced to tell servicers to stop foreclosing in its name because of a string of lost court cases. Now, PNC, along with BofA and Citigroup, are saying publicly in regulatory filings that MERS may be ruled essentially invalid for mortgage transfers. Keep in mind that the major banks created MERS and still fund it.

Bank of America said legal challenges against MERS have asserted that use of the system can “cloud ownership” of a loan, according to its filing. The Charlotte, North Carolina- based lender, which ranks second in U.S. home lending and first among mortgage servicers, said it uses MERS for “a substantial portion” of new home loans, including those sold to investors or transferred into securitized trusts.

The process “is based on a well-established body of law that establishes ownership of mortgage loans by the securitization trusts, and we believe that we have substantially executed this process,” Bank of America said in its filing.

The question of MERS’s “legitimacy” drew scrutiny from the U.S. Justice Department and Congress as well as regulators and state attorneys general, Citigroup said in its filing. The bank “has determined that the integrity of its current foreclosure process is sound,” the New York-based firm said.

What does this mean for outstanding loans? Many states are working on legislation that would disallow foreclosures on homes without a full chain of title. California is the latest. If MERS is forced to the sidelines, or their process ruled invalid, what does this mean for the chain of title?

There’s a way out of this for the banks, to clean up the complete mess they’ve made, but they’d have to actually provide homeowners with relief to compensate for their near-destruction of the residential housing market. To those who find this unworkable – the serious ones, not McMegan – I would simply ask them what they believe is the proper relief. Because aside from the fact that investors and not servicers should be able to determine whether they allow principal mods to borrowers in trouble, and that all economic signs point to that as the best way to stop foreclosures and save the economy, allowing yet another massive case of financial fraud to pass without punishment does more damage to the integrity of the country than anything I can think of.