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New Legal Ground: Solving the Local Foreclosure Fraud Crisis Locally

19 Jan

This article addresses what are now finally becoming more well known facts about the depth of the fraud and scandal surrounding the mortgage industry and its securitized mortgage products of the last decade.

Occupy The Neighborhood: How Counties can use Landbanks and Emminent Domain

In the middle of the story, we get a chance to see some real on the ground statistics from Massachusetts:

John O’Brien is register of deeds for Southern Essex County, Massachusetts. He is mad as hell and he isn’t going to take it anymore. He calls his land registry a “crime scene.” A formal forensic audit of the properties for which he is responsible found that:

    Only 16 percent of the mortgage assignments were valid.

    Twenty-seven percent of the invalid assignments were fraudulent, 35 percent were “robo-signed” and 10 percent violated the Massachusetts Mortgage Fraud Statute.

    The identity of financial institutions that are current owners of the mortgages could be determined for only 287 out of 473 (60 percent).

    There were 683 missing assignments for the 287 traced mortgages, representing approximately $180,000 in lost recording fees per 1,000 mortgages whose current ownership could be traced.

At the root of the problem is that title has been recorded in the name of a private entity called MERS as a mere placeholder for the true owners. The owners are a faceless, changing pool of investors owning indeterminate portions of sliced and diced securitized properties. Their identities have been so well hidden that their claims to title are now in doubt. According to the auditor:

    What this means is that … the institutions – including many pension funds – that purchased these mortgages don’t actually own them….

While all of this is bad enough, and it’s really bad; there is another larger issue now surfacing that may even trump the break in the chain of title caused by the negligence and bad acts of M.E.R.S. employees, robosigners and the like, for it seems…

The REMIC Pooling and Servicing Agreement typically states that any transfer after the closing date is invalid. Yet few, if any, properties in foreclosure seem to have been assigned to these REMICs before the closing date, in blatant disregard of legal requirements.

Following this logic, if the property mortgages were never transferred into the REMIC trusts which were the investment vehicles purchased in advance by the retirement funds and other investor buyers, then this evidence of the break in the chain of title is as damning if not more so than all the missing and inaccurate recordings of bad documents at the County.

Why?

Because what it means is that nothing that was supposed to happen that ties the mortgage to the investment sold actually happened and the mortgage simply disappeared into a black hole of death and never arrived at its intended destination.

It’s one thing to have inaccurate reporting of transfers and assignments of interest in mortgage loans; it’s quite another to never have even bothered to complete the paperwork and instead to have destroyed the ‘damning evidennce’; evidence, so it turns out, necessary to enforce a proper legal position as creditor against a debt tied to real property.

To put it another way, it means the entire thing was a ponzi scheme – or a put.

It also means that any foreclosures that do happen are subject to claw back by title suits and legal actions by borrowers who have had no real evidence of any creditor in the fraudulent theft of their properties by banks who have no right to the assets.  Banks, we might add, who have been getting massive insurance payoffs for their ‘positions’ in such transactions as well.

A front job designed to sell everyone the latest and greatest from mortgages to invesments and it was all a sham to make fees and massive bonuses for banksters.

Funny, but we think we’ve heard Bill Black saying something quite like this for a while now.

As counties nationwide gear up to sue for lost revenues, they might do well to read Occupy The Neighborhood: How Counties can use Landbanks and Emminent Domainand take it a step further – to reclaim the abandoned and desintigrating houses in their communities and let the people in those communities work together to restore the home and help rebuild their own neighborhoods.  It’s at least better than letting these millions of American homes rot where they stand from neglect…

For those folks from counties looking for an example to follow, it would do you well to read the web page over at the Southern Essex District Registrar’s Site.

 

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