I’m not the only one seeing that the major disturbances coming to light in the foreclosure world are not mere surface tremors, but indicate a deep faultline that, as it keeps opening, just may cause the entire industry to fall into the sea.
Wall Street wants us to move along, nothing to see here. Firms are dropping statements like this from JPMorgan spokesman Tom Kelly reported in the Washington Post:
“While we don’t expect our review to find that consumers were harmed, we will take appropriate action if we find any impact.”
(Oh, the hubris.) Ellen Brown fires back:
“No harm perhaps except the illegal taking of thousands of homes without due process . . . .”
It seems Fed Chairman Ben Bernanke also wants us to move along, minimizing the issue to a “managerial challenge”:
Bernanke said that “it’s been a managerial challenge to the banks to deal with these foreclosure modifications.” And, he added, “they haven’t always met that challenge.”
You’d think the Chairman of the Federal Reserve might be a little more concerned than that about organized, long-term, industry-wide, real-estate fraud by the biggest banks in the nation. I’m guessing the real “managerial challenge” was to keep what was going on hidden / accepted for long enough to get all the bonuses handed out to the appropriate people.
I don’t know about you, but if I’d been bilked of my house by a fraud-pushing organization brazenly scooping up properties all over the country by scamming the system — if evidence I’d presented about this fraud had been routinely dismissed by the courts, as has happened — I’d damn well want my house back, or a hellofa big settlement for all the trauma. I can hear attorneys’ phones ringing now. Greg Clark, a Florida real estate lawyer, told the New York Times:
“You know those billboards that lawyers put up seeking divorcing or bankrupt clients? It’s only a matter of time until they start putting up signs that say, ‘You might be entitled to cash payment for wrongful foreclosure.’ ”
And they may be entitled to mighty big cash payments, I’m thinking.
Ellen Brown once again provides her vastly helpful perspective, calling the mess a box even Houdini couldn’t escape:
All of this is a major headache for the banks, but according to the New York Times, “The companies say they are reviewing their procedures to take care of any violations.” They seem to think they can correct the problem by redoing some paperwork. But if the holdings in recent court decisions are upheld, it will not be just a question of hiring extra staff to clean up some files. For all those mortgages filed in the name of MERS, say these courts, the chain of title has been irretrievably broken. Humpty Dumpty has had a great fall and cannot be put back together again. …
Increasingly, judges are holding that if MERS owns nothing, it cannot foreclose, and it cannot convey title by assignment so that the trustee for the investors can foreclose. MERS breaks the chain of title so that no one has standing to foreclose. The homes are effectively owned free and clear.
That does not mean the homeowners don’t owe money to someone. They do. … The investors are entitled to recover in equity only so much as they are actually out of pocket, not the full amount of the original promissory notes, since they were not parties to those notes and there is no way to re-establish the chain of title.
She also explains that the so-called non-judicial foreclosure states — the 27 states, including here in California, where they allow foreclosures without going to court – also have a real problem on their hands. If the lender signing the original documents is not the party foreclosing on the property, it becomes a judicial issue — a question of fact for the courts: Does the foreclosing party have the authority to proceed? If MERS has broken the chain of title, then the answer would be no.
Ellen quotes foreclosure expert Neil Garfield:
“There will be a head-slapping moment when title carriers, attorneys, judges and administrative agencies and clerks suddenly realize that the monster created on Wall Street has its equivalent in the public records of counties across the nation. I doubt if more than 6-7% of all the foreclosures in the past 10 years have resulted in clear title delivered to anyone. And the only corrective instrument can come from the original owner. That homeowner is sitting in the catbird seat and doesn’t know it. Millions of people who THINK they have lost their homes still own them and if anyone wants a signature from those people to clear title, they are going to be required to pay dearly, which is at it should be. Eventually the purse gets returned to the victim from whom it was snatched.”
Linda M. Tirelli, a lawyer in a Bronx foreclosure case against JP Morgan Chase, explained to the New York Times why the documentation problems are such an issue:
“The servicers have it in their control to get the right documents and do this properly, but it is so much cheaper to run it through a foreclosure mill. This is not about getting a free house for my client. It’s about a level playing field. If I submitted false documents like this to the court, I’d have my license handed to me.”
And so the financial industry may face the equivalent of having their licenses handed to them, as they return the purses to whomever they’ve snatched them from.
More on this tomorrow.
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