WATCH DYLAN RATIGAN TODAY MSNBC: But Dylan still doesn't quite get it

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

“When you rob the bank you pay for the crime. When you ARE the Bank, you still do the time.”

It’s good that Dylan is highlighting the mortgage mess. He had Matt Weidner on yesterday who did his best in answering a bad question. Ratigan asked Matt why homeowners shouldn’t get off on a technicality when criminals do that all the time. Weidner correctly pointed out that this was about real property rights and stability of the real estate market as a whole and the entire economy without saying that Ratigan had asked the wrong question. He was diplomatic since he was being given a national audience and he didn’t want to offend the host of the show. And getting into it with Dylan over the question would have diluted Weidner’s message so he wisely stuck to his point.

It’s true that there are widespread “technical” deficiencies. Starting with the solicitation of mortgage business from consumers, to the execution of questionable documents and the entirely absent documentation supporting what we all thought was securitization of loans, the deficiencies and defects are many. It is increasingly apparent that the pools are empty and can’t be filled which means the investors received nothing for their purchase of RMBS except occasional distributions that were not the subject of a proper accounting or payments. And it is equally true that those deficiencies are not the fault of the borrower and they are entirely the fault of whoever put these documents together, whoever was supposed to record them, and whoever decided to dispense with legal transfers of loans, notes, mortgages, receivables and obligations.

What is bothering the megabanks now, and increasingly those financial and economic analysts who are finally doing the due diligence that should have been done 10-15 years ago as this scheme was being put together, is not the technical deficiencies that could be papered over or corrected, but the fundamental flaws in the basis of the transactions which were, for the most part, fraudulent. We don’t need new laws to invalidate these mortgages and notes and we don’t need new laws to offset the amount of the obligation. Those laws are already on the books. And THAT is the problem — not some technicality.

The fundamental problem facing the country is that some 60 million+ real estate transactions are fatally defective, meaning they don’t comply with the laws governing transfers of real property. That means we not only have a credit crisis, we have a title crisis that is already screwing up the entire real estate market — both residential and commercial — as well as the financial markets. Weidner explained this quite well but it was not truly understood by Ratigan and he and Weidner are basically on the same side of this issue. This is not some problem that can be resolved by allowing the foreclosures to proceed, because there is no right to foreclose under any scenario and there might not be any obligation left after set-offs and deductions. So the lesson for all lawyers and all homeowners is that if you are looking for relief, you need to make your points short and sweet and not lengthy analyses like the articles on this blog.

Those 60+ million transactions must be settled and we are not headed in any direction yet that will do so. The only way they are going to be resolved is case by case as each one ends up in court or homeowners who have long since sold or been foreclosed out of their property are suddenly asked to sign off on some paper that when the smoke clears admits that they still own the property and could demand money for their signature or even demand the current residents move  out as they take possession of the property they thought they had sold or lost.

This was intentionally created by a financial industry that was interested in keeping its options open so they  could move around the receivables and, they thought, the right to enforce those receivables to whomever they designated. In their heads they were the ultimate arbiters on the law of real property, commercial transactions and negotiable instruments. That is how it was when societies were governed by the rule of men but in our society we are governed by the rule of law. If you break it and you can’t fix it you pay for it. The banks broke this system and now they must take responsibility for the corrections required in a manner that affects all of the 60+ million transactions they so gleefully spawned in the first place.

The simple truth is that the fraud backfired and now the homeowners are sitting with all the power. The investors are coming in droves claiming their money back because they recognize this simple fact. And the perpetrators of the fraud are trying to get the law changed to somehow legalize what they did because, understandably, they don’t want to be liable for trillions of dollars, and they don’t want their licenses revoked and the individuals don’t want to  go to jail. When you rob the bank you pay for the crime. When you ARE the Bank, you still do the time.

Tags: Dylan ratigan, Florida, foreclosures, Matt Weidner, MSNBC
Posted in bubble, Corruption, Eviction, securities fraud |