Posts Tagged ‘courts’

Foreclosure Fraud For Dummies, Part 2: What’s a Note, Who’s a Servicer, and Why They Matter

Foreclosure Fraud For Dummies, Part 2: What’s a Note, Who’s a Servicer, and Why They Matter

Mike Konczal defines the key players in the foreclosure fraud mess. **This is Part 2 in a series giving a basic explanation of the current foreclosure fraud crisis. You can find Part 1 here.

By Mike Konczal, courtesy of New Deal 2.

What is the note?

The SEIU has a campaign: Where’s the Note? Demand to see your mortgage note. It’s worth checking out. But first, what is this note? And why would its existence be important to struggling homeowners, homeowners in foreclosure, and investors in mortgage backed securities?

There’s going to be a campaign to convince you that having the note correctly filed and produced isn’t that important (see, to start, this WSJ editorial from the weekend). It will argue that this is some sort of useless cover sheet for a TPS form that someone forgot to fill out. That is profoundly incorrect.

Independent of the fraud that was committed on our courts, the current crisis is important because the note is a crucial document for every party to a mortgage. But first, let’s define what a mortgage is. A mortgage consists of two documents, a note and a lien:

mortgage, foreclosures

The note is the IOU; it’s the borrower’s promise to pay. The mortgage, or the lien, is just the enforcement right to take the property if the note goes unpaid. The note is crucial.

Why does this matter? Three reasons, reasons that even the Wall Street Journal op-ed page needs to take into account. The first is that the note is the evidence of the debt. If it isn’t properly in the trust, then there isn’t clear evidence of the debt existing.

And it can’t be a matter of “let’s go find it now!” REMIC law, which governs the securitization, is really specific here.  The securitization can’t get new assets after 90 days without a tax penalty, and it can’t get defaulted assets at all without a major tax penalty. Most of these notes are way past 90 days and will be in a defaulted state.

This is because these parts of the mortgage-backed security were supposed to be passive entities. They are supposed to take in money through mortgage payments on one end and pay it out to bondholders on the other end — hence their exemption from lots…
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Homeowners’ Rebellion

Homeowners’ Rebellion:

COULD 62 MILLION HOMES BE FORECLOSURE-PROOF? 

Courtesy of ELLEN BROWN, at Web of Debt 

Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for the convenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions, recently held that this electronic shortcut makes it impossible for banks to establish their ownership of property titles—and therefore to foreclose on mortgaged properties. The logical result could be 62 million homes that are foreclosure-proof.

Mortgages bundled into securities were a favorite investment of speculators at the height of the financial bubble leading up to the crash of 2008. The securities changed hands frequently, and the companies profiting from mortgage payments were often not the same parties that negotiated the loans. At the heart of this disconnect was the Mortgage Electronic Registration System, or MERS, a company that serves as the mortgagee of record for lenders, allowing properties to change hands without the necessity of recording each transfer.

MERS was convenient for the mortgage industry, but courts are now questioning the impact of all of this financial juggling when it comes to mortgage ownership. To foreclose on real property, the plaintiff must be able to establish the chain of title entitling it to relief. But MERS has acknowledged, and recent cases have held, that MERS is a mere “nominee”—an entity appointed by the true owner simply for the purpose of holding property in order to facilitate transactions. Recent court opinions stress that this defect is not just a procedural but is a substantive failure, one that is fatal to the plaintiff’s legal ability to foreclose.

That means hordes of victims of predatory lending could end up owning their homes free and clear—while the financial industry could end up skewered on its own sword.

California Precedent

The latest of these court decisions came down in California on May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E–11. The court held that MERS could not foreclose because it was a mere nominee; and that as a result, plaintiff Citibank could not collect on its claim. The judge opined:

Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no


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Brokedown Palace: The Undermining of Property Rights in America

Courtesy of Client 9

ZeroHedge recently highlighted the TPG raid on CDOs.  This action puts into focus the alarming trend of the undermining of creditor rights.  When even the Courts are in on the gang bang, what hope do we have?

 

The battlefield: CDOs, mortgages, corporate debt
The players: hedge funds, management teams, elected officials, lobbyists, unions
The weapons: loopholes, new precedents, bankruptcy court, political pressure

 

 

The Chrysler debacle was stink enough, but the trend of collateral tampering is an outright stench today.  Property rights have allowed the U.S. to flourish.  They are bedrock of our economy.  They allow facilitate the spread of credit and economic growth that some other countries cannot match.

 

In Chrysler we saw legal precedent created where a *secured creditor* received less on its contracted collateral than unsecured creditors.  In one fell swoop, we saw fiduciaries abscond, “disinterested” advisors incented to rubber-stamp, and the Courts join in on the rubber stamping party (more on this later).  Most importantly, we witnessed a government that not only sanctioned this egregious behavior but astonishingly pushed for it.  The Government actually labeled those who filed objects to the deal as “terrorists” (you can’t make this up).  The Government actually vetoed Chrysler’s offer to give secured creditors additional consideration.  Our lawmakers were so involved that Chrysler’s own attorneys tried to block discovery of their communications with Washington (the attorney’s clients were Chrysler, not Washington).  We must never forget Obama’s alleged threat of using the “White House Press Core” to weaken what little opposition remained (who exactly were the terrorists?).

 

Chrysler is not the only company to pervert Chapter 11 for the purpose of disenfranchising creditors.  The briefs filed in Charter Communications are full of shenanigans.  The DIP roll-up drive-bys of 2009 rewarded handsomely those with the means to literally ‘stick up’ a Court.  Case in point: Lyondell.  Ask yourself, does a company with $27BN of assets really only realize at
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Zero Hedge

Rabobank: Is It Possible The Fed Is So Stupid It Doesn't Understand What It Is Doing

Courtesy of ZeroHedge View original post here.

By Michael Every of Rabobank

Warning: May contain crisis

I am lucky in that I don’t have a serious food allergy, such as to peanuts. I fully grasp just how dangerous these can be to those that unfortunately do, and why we need clear food labels to show if there is even a trace of nuts. Having said that, I always find it ironic that when I get given the standard packet of peanuts on a plane, it is labelled: “Warning: may contain nuts”. Are there people who might not know that peanuts contain nuts? Appa...



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Phil's Favorites

The Martian

 

The Martian

Courtesy of Scott Galloway, No Mercy/No Malice@profgalloway

I often write about platforms (iOS, Amazon Marketplace, etc.) as they are a source of value creation and power. The platform of unprecedented wealth creation is the free market of capitalism. The global adoption of markets has corresponded with the greatest expansion of prosperity in human history. But similar to tech platforms, free markets are neither naturally occurring nor immune to collapse. The “free” market can fail.

Live from New York

This Saturday at 11:29 pm ET, we’ll witness the lat...



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Digital Currencies

NFTs are much bigger than an art fad - here's how they could change the world

 

NFTs are much bigger than an art fad – here's how they could change the world

Homes fit for zeroes (and ones). Julien Tromeur

Courtesy of James Bowden, University of Strathclyde and Edward Thomas Jones, Bangor University

Sotheby’s has become the latest establishment name in art to dive into NFTs (non-fungible tokens) through its collaboration with anonymous ...



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Biotech/COVID-19

India COVID crisis: four reasons it will derail the world economy

 

India COVID crisis: four reasons it will derail the world economy

India is the fifth largest economy in the world. Deepak Choudhary/Unsplash

Courtesy of Uma S Kambhampati, University of Reading

The second wave of the pandemic has struck India with a devastating impact. With over 300,000 new cases and 3,000 deaths across the country each day at present, the total number of deaths has just passed the 200,000 mark – that’s about one in 16 of all COVID deaths across the world....



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Chart School

Yellen can not stop the dollar decline

Courtesy of Read the Ticker

Printing money results in a lower currency, so long as the currency does not fall too fast.

Previous Post: US Dollar Forecast - Weakness

Here are the very strong fundamentals for a lower US dollar: 

(a) US inflation exploding.
(b) Massive US twin deficits.
(c) Better conditions in Europe.

However French election worries in 2022 Q1 and Q2 may provide US dollar strength (via European weakness) after Christmas, but this strength may come after a low in the DXY near $84.  

It looks like Yellen knows a down swing in the US dollar is near because ...

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Politics

If China's middle class continues to thrive and grow, what will it mean for the rest of the world?

 

If China's middle class continues to thrive and grow, what will it mean for the rest of the world?

Over the past few decades, hundreds of millions of Chinese citizens have become part of the middle class. AP Photo/Ng Han Guan

Courtesy of Amitrajeet A. Batabyal, Rochester Institute of Technology

China’s large and impressive accomplishments over the past four decades have spurred scholars and politicians to debate whether the decline of the West – including the ...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Kimble Charting Solutions

Will Historic Selloff In Treasury Bonds Turn Into Opportunity?

Courtesy of Chris Kimble

Long-dated treasury bonds have been crushed over the past year, sending ETFs like TLT (20+ Year US Treasury Bond ETF) spiraling over 20%.

Improving economy? Inflation concerns? Perhaps a combination of both… interest rates have risen sharply and thus bond prices have fallen in historic fashion.

Today’s chart looks at $TLT over the past 20 years. As you can see, the recent decline has truly been historic. $TLT’s price has swung from historically overbought highs to oversold lows.

At present, the long-dated bond ETF ($TLT) is trading 7.8% below its 200-...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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Promotions

Phil's Stock World's Weekly Webinar - March 10, 2021

Don't miss our latest weekly webinar! 

Join us at PSW for LIVE Webinars every Wednesday afternoon at 1:00 PM EST.

Phil's Stock World's Weekly Webinar – March 10, 2021

 

Major Topics:

00:00:01 - EIA Petroleum Status Report
00:04:42 - Crude Oil WTI
00:12:52 - COVID-19 Update
00:22:08 - Bonds and Borrowed Funds | S&P 500
00:45:28 - COVID-19 Vaccination
00:48:32 - Trading Techniques
00:50:34 - PBR
00:50:43 - LYG
00:50:48 - More Trading Techniques
00:52:59 - Chinese Hacks Microsoft's E...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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