IT'S THE CREDIT BID, STUPID!

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

Special Kudos to Charles “POPPA KOPPA” for bringing the credit bid to my attention and the interesting fact that the minimum bid instruction comes from Wall Street corresponding with securities reports and has nothing to do with the real estate market.

THE CREDIT BID IS THE ACHILLES HEEL OF SECURITIZATION

EDITOR’S ANALYSIS: Sorry to keep throwing terms around that nobody used to talk about but the CREDIT BID is one of the weakest points in the pretender lender game and it should be exploited by those seeking to protect their homes. A Credit Bid is a bid at the auction of a foreclosed home that says “I’m buying this house — with no money.”THE CREDIT BID IS THE ACHILLES HEEL OF SECURITIZATION.

Silly as that sounds it actually usually makes sense in conventional mortgages — because the creditor is the lender and the source of funds and the holder and possessor of the note and mortgage each of which accurately describe the true transaction. So when the Judge says OK this house will be sold on a certain sale date, the bank goes to the auction and bids the amount that the borrower owes, including fees, costs etc. If someone bids higher, the bank is thrilled — it gets paid in full and the whole thing is over. (By the way you are entitled to ask for the original note after the sale.)

But now we have something far different. It is a sleight of hand trick in which the wool is pulled over the eyes of everyone and the result is that a free house goes to a bidder who never offered or paid a penny for the house, the loan, the obligation, the note or the mortgage. By pointing out that the case needs to be either bifurcated into the right to foreclose and the right to submit a credit bid OR that the Plaintiff must prove that they are a real bona fide creditor to begin with, the Judge is more likely to see where you are heading. It underscores the point that you are not seeking a free house, you are looking to clean house, and prevent a completely disinterested party from taking title.

You can point out, accurately that the the parties who actually advanced the money are not being represented and that their interests are adverse to the party seeking foreclosure. You can cite to the many lawsuits of investors (now joined by Trustees) against the investment bankers and servicers. You can further point out that when the investors are done with the investment banks they still will have the option of coming after the homeowner whether he is dispossessed of the house or not.

And you can get a little high brow by pointing out that it is against public policy to allow the Court’s ruling on the right to INITIATE  foreclosures is being misinterpreted as a finding that the would-be forecloser is a real creditor with money and risk in the game. Because that leads to corrupting the county’s title system.

Thus the non-creditor who manages to get by the Judge with artful argument on the issue of whether they can BRING suit, sidesteps the essential question of what can and should happen if an auction date is set. It is essentially the same as when a pretender convinces a Judge in a non-judicial state that they can start the foreclosure proceedings, and they use that innocuous order to bootstrap themselves into being perceived as the creditor who can submit a credit bid. Your answer to a Judge who is hostile to your position should be something like this “If you want to let them order the foreclosure sale date to go forward, fine Judge. But are you willing to let them say you specifically found that they are a creditor who could submit a credit bid instead of cash at the auction? Because if you want that, then you need something in the record here that shows they are a true creditor with risk on the table.” (make sure the proceedings are recorded)

If that party wants to submit a credit bid, the foreclosure judgment needs to say that they are the creditor and not that the borrower failed to pay and the house is subject to forced sale. And if the Judge wants to put that in the FINAL Judgment or Order, then he/she needs to have something in the record that shows that the forecloser is the creditor — or else when they show up at auction they have to bid with MONEY like everyone else. Check your state statutes and you’ll see what I’m talking about.

The current status quo is corrupting title every day there is another “sale” at auction that goes to a party submitting a “credit bid.” That sale is NOT subject to the issuance of title and is either voidable or void depending upon which state the property is located in. Either way title is clouded or defective. AND THAT means title IS unmarketable.

It all comes down to the same thing no matter how you approach it. The origination of the transaction was defective if it was intended to be treated as a secured mortgage loan transaction. Each document produced that was based upon the faulty origination simply compounded the stupidity of the process further. By piling up the paper the pretenders gave the appearance that they had done their homework and that everything was in order. In fact they had been engaged in monkey business with fraudulent notaries (18 notaries took the fifth Amendment in Maryland recently), robo-signed documents and otherwise defective affidavits that cannot be fixed.

And THAT brings us to the political decision that needs to be made. If justice takes its course, it is obvious that most courts are going to overturn the foreclosures and stop the rest that are in the pipeline. If the legislature pushes the reset the button then they are giving a legislative pardon to the perpetrators of the worst fraud in human history.

LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL

The Market Ticker – Counties Engaged In Tax Fraud?

 

The Market Ticker – Counties Engaged In Tax Fraud?

Today, February 07, 2011, 7 hours ago | genesis

So alleges a new lawsuit…

Last spring, Morris filed suit against the Fulton County Board of Tax Assessors, alleging the county inflated values in scores of neighborhoods by using foreclosures seizures as comparable sales. The seizures, termed credit-bid sales, represent not money changing hands, but unpaid mortgages when a bank takes over a house. He also says appraisers are disregarding valid sales and arbitrarily setting neighborhoods’ average prices.

These “credit-bid” sales are frauds.  They should not be permitted in the first place, and are a big part of the scam that is going on with bank balance sheets.

Here’s how it works:

You lose your house to foreclosure.  You owe $300,000 on the house at the time, but the only reasonable comparables in your area have sold for $150,000.  You either have lost your job or walked off, it doesn’t really matter in this instance.

The bank puts the property up for auction.  But it refuses to take less than the balance owed, because doing so causes an immediate mark-to-market on the property and hits their balance sheet.  So it “bids” the entire outstanding balance – in this case, $300,000.

The bank obviously gets the house back.  It shouldn’t be able to bid at all, as this is not an “arms length” transaction, but the counties don’t care.  A bid is a bid, even if its a sham bid.  The problem is that no money changes hands, because the actual holder of the note did the bidding (the proper way to do this, incidentally, is to set a reserve price and refuse to sell at less.)

The county folks have been counting this sham transaction as a “sale” for tax purposes.  The banks have been counting this sham transaction for balance sheet valuation purposes.  The county residents have been getting royally screwed, as the actual sales that subsequently take place are being ignored as comparables and thus the correct tax base against which property taxes are set.

This is yet another example of the perversity in allowing shams and scams in our financial system and how it screws the common man.  You can be entirely innocent of anything in this case – you never overextended yourself, you bought the house in the 1990s before it all went nuts, you didn’t play HELOC ATM games, and yet your property tax bill is several times what it should be based on actual comparable sales.

How long will this sort of screwing continue before the people rise en-masse and say ENOUGH DAMNIT!

Posted in bubble, Corruption, Eviction, securities fraud |