The Foreclosure Mess Could Last for Years

[sabrina 1]

The rush to foreclose on millions of American home-owners by banks who many times did not have proper documentation to prove they had the standing to foreclose, has only added to the already inconceivable disaster that already existed.

Stopping foreclosures could have minimized some of that damage, but greed was the driver of this catastrophe from the beginning and it wasn't about to stop until someone finally stopped it.

The Foreclosure Mess Could Last for Years

The dimensions of the foreclosure crisis keep expanding. Lenders and loan servicers including JPMorgan Chase (JPM) and Ally Financial are facing an explosion in homeowner lawsuits and state attorney general investigations of claims of falsified mortgage documents. Lawmakers in both houses of Congress have called for investigations. And procedural mistakes in the handling of mortgage documents have clouded titles establishing ownership of the homes, a problem that could plague both buyers and sellers for years. "This is going to become a hydra," says Peter J. Henning, a professor at Wayne State University Law School in Detroit. "You've got so many potential avenues of liability. You don't even know the parameters of this yet."

Is anyone who is aware of these problems going to buy a home that was foreclosed on, knowing that in the future, someone may come knocking on their door to tell them they are not the legitimate owner of that house?

Two years ago, before this was even being talked about on the MSM, I remember reading that when this documentation problem began to explode, it could cause another melt-down of the economy.

JPMorgan and Ally's GMAC Mortgage unit have delayed foreclosures in 23 states where courts have jurisdiction over home seizures. Bank of America (BAC) suspended foreclosures as well, pending a review of documents. In December 2009, a GMAC employee said in a deposition that his team of 13 people signed about 10,000 documents a month without verifying their accuracy.

Class action and individual lawsuits are being filed by homeowners across the country claiming that lenders and servicers used falsified documents to foreclose on homes and that sometimes banks didn't even hold the titles to homes they foreclosed on.

"You're going to see a tremendous amount of activity with all the AGs in the U.S.," says Ohio Attorney General Richard Cordray, who has sued Ally over foreclosures. "We have a high degree of skepticism that the corners that were cut are truly legal."

MERS

Mers, (The Mortgage Electronic Registration Systems) which the mortgage banking industry created to handle mortgage transfers is now being sued in Louisville, Kentucky. The suit is on behalf of all Kentucky homeowners who are claiming that:

"MERS was part of a conspiracy to create false promissory notes, affidavits, and mortgage assignments to be used in mortgage foreclosures. Similar class actions have been filed on behalf of homeowners in Florida and New York."



DEFECTIVE TITLES

People who bought homes in foreclosure face their own worries, as paperwork errors raise questions about the validity of the titles needed to prove ownership. "Defective documentation has created millions of blighted titles that will plague the nation for the next decade," says Richard Kessler, an attorney in Sarasota, Fla., who conducted a study that found errors in about three-fourths of court filings related to home repossessions.

A defective title means the person who paid for and moved into a house may not be the legal owner. "This is the most important issue of the whole mortgage mess," says Glenn Russell, a Fall River (Mass.) real estate attorney who won a case last year that reversed a foreclosure because of faulty paperwork. "Families are being thrown out of their homes by people who may not have the right to do that."

Millions have lost their homes to foreclosure. Banks have consistently refused to renegotiate mortgages even though as part of their bailout agreement, they were asked by Congress and President Obama to try to help keep people in their homes.

This summer, Elizabeth Warren addressed the foreclosure problems and the program that was meant to help homeowners stay in their homes. In this interview, she talks to Judy Woodruff about the exchanges she had with Timothy Geithner about that program.



TARP Watchdog Elizabeth Warren: Foreclosure Program 'Too Small, Too Slow', Warns Banks are Still Dangerously Exposed

JUDY WOODRUFF: Well, let me ask you about the home mortgage foreclosures. You had a very animated exchange with the secretary over that question.

ELIZABETH WARREN: We did.

JUDY WOODRUFF: He says the success, as we heard him say, can be measured family by family, that it was never intended to help everybody.

ELIZABETH WARREN: Well, you know, no one disputes that. Of course it was never intended to help everybody. But it was intended to help somebody.

The problem we have got -- let me put it this way. This is a program that is saving a tiny number of people, ultimately, by getting them into affordable mortgages that the estimates are they will be able to sustain over time.

And for every one of those families that goes in, there are many, many more families who never make it. And the kinds of numbers we're looking at, we're looking at mortgage foreclosures that stay well over a million families this year, next year, the year after that, the year after that.

That has implications, not only for those families, but for the financial institutions that are holding those mortgages, for the construction industry, for our overall economy. We have a serious problem and a limited amount of time to get ahead of it. HAMP is not getting ahead of it.

JUDY WOODRUFF: The government's current -- that's the name of the program.

ELIZABETH WARREN: The program.

JUDY WOODRUFF: And what's your understanding of why the government -- why the administration, why the Treasury Department isn't doing more?

ELIZABETH WARREN: It is -- it's as if we had a boat that's taking on gallons of water, and they're trying to bail it with a teaspoon.

And, actually, I will give you an example of that. This program has now been in effect for 15 months. It has an allocation to try to deal with a very large problem. The allocation is $50 billion. And, so far, they have actually spent less than $200 million on mortgage foreclosure relief.

It is a -- it is a badly designed program that, from the beginning, was too small, too slow, couldn't be scaled up.

Emphasis mine.

Why were they so unwilling to spend the money allocated to help with the foreclosure crisis? I don't think anyone got an answer to that question. But even if the banks HAD modified more mortgages to help people stay in their homes, there would still be the problem of who actually owned those mortgages. It is a mess.

From the Businessweek article, a conclusion:

The bottom line: Faulty foreclosures will lead to a flood of lawsuits that may haunt lenders, title insurers, and home buyers for years to come.

I am very glad that President Obama appointed Elizabeth Warren to lead the Consumer Financial Protection Agency. She seems to be one of the few people in DC who can be trusted with the people's business.

[DJ13]

1. KICK!

[denbot]

2. K&R

Just wait until the public gets wind of how these bad mortgages have been chopped up and seeded through out the U.S. and the worlds economy's as "A" rated bonds. These worthless bonds, often in the from of CDO's are being treated as assets for companies, funds, cities, states, and country's.. This is just the beginning.

[sabrina 1]

3. Yes, and those rating agencies who rubber stamped those

worthless bonds, have also gotten off without even a slap on the wrist. Will anyone trust a triple A rating anymore?

Warren Buffet defended them btw. Incompetence, corruption, greed, stupidity. So long as you are part of the ruling class, there are no consequences no how big you fail.

I remember the statement regarding why those Triple A ratings were given 'we were under pressure not to upset the investment bankers'. So they knew what they were doing. Where were the heroes, the whistle-blowers? As one of them said when asked 'I don't think we did anything wrong'! And that seems to be the problem. There is no longer any concept of right and wrong. The country has lost its moral compass.

[flyarm]

4. Obama Calls the Question on Geithner

Robert KuttnerCo-founder and co-editor of The American Prospect

Posted: October 10, 2010 08:07 PM

http://www.huffingtonpost.com/robert-kuttner/obama-calls-the-question-_b_757475.html



Obama Calls the Question on Geithner


snip:

Most of the underwater homeowners, now almost one in three, are not speculators or people who took out sub-prime loans. They are simply ordinary Americans whose houses are suddenly worth less than the mortgages on them, because of the general collapse in housing prices.

The lame HAMP program, the joint creation of Treasury and HUD, is another part of Geithner's grand design to disguise just how bad things are at the big banks and prevent an honest accounting or a serious reckoning.

Meanwhile, housing prices are declining again, despite record low mortgage interest rates (available only to blue chip borrowers), which creates another serious drag on the economy. And the housing market won't return to normal until the mortgage mess is resolved.
But the belated recognition that millions of mortgages are inadequately documented could be a blessing in disguise. It could force the administration to come up with stronger medicine both to clean up the banks and to help distressed homeowners.

The Dodd-Frank Act gives the Treasury the tools to do an honest accounting of the big banks, and shut down or break up zombie banks that are insolvent -- so that successor banks can get on with the business of lending. With a serious strategy for both the banks and the mortgage mess, we could remove two of the main drags on the economy.

White House political chief David Axelrod, speaking on CBS's Face the Nation Sunday, tried to back-pedal from the significance of Obama's action. (Heaven forbid that three weeks before a crucial election Obama should sound like he is siding with consumers against bankers.) Meanwhile, the indispensable Rep. Alan Grayson of Florida called for a national moratorium on foreclosures.

Read more: http://www.huffingtonpost.com/robert-kuttner/obama-calls-the-question-_b_757475.html

[sabrina 1]

7. Please let this be true:

From your link:

"By pocket-vetoing the bill that sailed through Congress to expedite mortgage foreclosures, President Obama may have begun a chain reaction that will blow up Treasury Secretary Tim Geithner's confidence game with the banks."

Geithner is such a snake. I hope that Obama has finally decided not to go down with him, as he surely will if they do not place a moratorium on foreclosures before even more people get drawn into this mess, ie, buyers of these foreclosed on properties.

This disaster is so out of control already that to continue doing the same thing over and over again, digging deeper and deeper, is pure insanity. It needs to be stopped first before anything can be done to begin trying to recover from it.

Thank you for all the work you have done on this, Flyarm. You should be writing OPs on a daily basis. I am trying to read through the links you provided in the other thread.

What gets to me is how long it took before this exploded finally. Did they really think they treat millions of people like dirt and just get away with it?

Obama should fire Geithner NOW. The arrogance of that man is beyond belief. Watching him during the hearings with Elizabeth Warren refusing to accept his lame responses to her questions, made me realize that we need hundreds like Warren in government, but we appear to have none, and that is why they got away with their crimes.

I really do appreciate the time and effort you have put into this. It is a very complex situation and requires a lot of time and effort to try to sort it out. It's not my thing either, economics, but I KNOW they want us to remain ignorant, and that is why I spend time figuring out what exactly they did to this country.

[flyarm]

9. The truly pathetic thing is the Media is sugar coating this ..if they mention it at all.

and that bastard Axelrod today..I wanted to slap!

He is a lying sack of horse shit!

People are suffering and that bastard can go on TV and say we need to speed this stuff up and stop the moratorium??????? What a piece of garbage that guy is!

This is going to quickly go into a major crisis in this country..it could collapse our entire country..and this guy is passing out roses this morning????????

They treat us like we don't see this disaster in our neighborhoods..and our communities..they send their little hoods to all the Dem boards all over the internet to try to shut up truth..do they think we were all born yesterday????????

They are treating us all like children..well I have a news flash for them..they better grow their own asses up and start to tell the American people the damn truth..or they are going to have chaos on our streets!
And they damn sure better start investigations and arrest the MTF'ers responsible for this shit!

We the people are watching mothers and father with their children being ripped from their homes ..how long will we sit and watch the destruction of our fellow Americans????????

Anybody besides me remember the Rodney King Riots? ..well they had little to do with Rodney King..they had to do with 12 years of Reagan and Bush 1 .. and suppression of the poor, and lower middle class.
That will look like a walk in the park compared to this..if someone doesn't start telling the American people the truth!
And they damn well better keep these moratoriums on ..until they get this really straightened out..not another cover up or white wash!

And This white house better damn sure Fire that fucker Geithner!

Heads need to roll..immediately!

and bankers need to start getting investigated ..freeze them and not allow them any Bonus's..and start charging their asses.

This is going to destroy pensions in this country..and investors..big and small..we are fucked unless some real heart to heart truth starts getting told to the American People! And Pronto!

[sabrina 1]

32. I meant to say, I can't find anything to disagree with you on

in this comment. They appear to be immune to the suffering of the American people. As if they believe we are a lesser species. The can blithely write off a few million foreclosures and talk about how their program is working because a 'small number of people have been helped' and the program 'was never meant to help everyone'. As if the people are mere pawns in their game.

They are not nice people and that is putting it mildly. We did not vote for Geithner or Axelrod, or Rahm, Gibbs, Gates et al. I have definitely learned that this is a question to ask any future candidates: 'Who do you intend to appoint to your cabinet'? Those appointments told us more about Obama than anything he said in the campaign.

[chervilant]

44. First

and foremost, thank you for an essential glimpse at what is happening to our economy, even as I type this.

I encourage you to correct your verb tense about this major crisis that IS collapsing our economy (albeit as just one of MANY detrimental issues du jour). In this era of exponential change (which is most difficult to comprehend), the changes we decry are happening faster than we can blog about it.

Our economy is grinding to a halt (lo, these many years after St. Ronnie's corporatist-driven disaster). And, since ours is a global economy, the fallout will be global.

The uber wealthy elites labor on under the delusion that their wealth will protect them, since--historically--this has been true. However, the ravages of radical income inequity have motivated a burgeoning number of the hoi polloi to say "WTF?!" and "I'm mad as hell, and I'm not going to take this anymore!!!". The less than 400 corporatists who own and control more than 45% of the world's resources--and the 1,011 billionaires who jockey each year to grab the brass ring of membership in that inner circle--will be defenseless against the billions of people worldwide who FINALLY recognize that it's time for catastrophic change.

The uber wealthy elites' fundamental mistake has been to underestimate the hoi polloi. We have both the courage and the fortitude to pursue an equitable alternative to the giant ponzi scheme known as capitalism.

In the face of this immediate and catastrophic economic collapse, Mr. Obama is a simulacrum, a mere mortal who must struggle to appease a variety of opposing factions, not the least of which are the corporate megalomaniacs whose money and power hold a great deal more sway with our politicians du jour than the eager and often futile machinations of the hoi polloi. When I contemplate Obama's feeble (read 'spineless') efforts, I am reminded of Margaret Mead's observation: "Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has."

Thus, when I hear our contemporary politicians (et tu, Mr. Obama) griping and groaning and saying 'compare us to the alternative,' I say "I am NOT impressed with this vapid excuse!"

I say, "embrace the criticisms you hear and use them to inform your efforts to effect change."

I say, "stop insulting the citizens who are actively involved in our political system, and find ways to partner with us to effect change."

Who am I trying to kid? The Corporate Megalomaniacs are getting far more of Obama's time and energy than we ever will...

[flyarm]

5. Shi$ Hitting Fan: Tavakoli - Biggest Fraud In The History Of Capital Markets

read this entire story!

http://www.dailykos.com/storyonly/2010/10/8/908857/-Shi


Shi$ Hitting Fan: Tavakoli - Biggest Fraud In The History Of Capital Markets

ShareNew 0by Badabing

Fri Oct 08, 2010 at 05:30:39 PM PDT

One of the people that I have admired most during this nation's financial meltdown and clusterfuck has been the great Janet Tavakoli. From the beginning, she has consistently along with Yves Smith, Elizabeth Warren, Brooksley Born, and of course Congressman Alan Grayson hammered relentlessly and sounded the alarm of what would happen to our nation, should be continue to disavow the national 'cover up' of what Grayson rightfully is calling: FRAUD TO COVER UP FRAUD.

These great Americans would not allow companies like Goldman Sachs, JP Morgan, GMAC, Bank of America, Wall Street, the Bankers the Lenders, the illicit and illegal Foreclosure Mills and even our own government to rewrite history with their pitiful public relations propaganda machines.

They all understood that a day or reckoning would come without a doubt in our nation, when the corruption would finally reach a critical mass, and now that day has come.

[sabrina 1]

8. Alan Grayson calls for moratorium on foreclosures.

Grayson Wants Foreclosure Fraud Investigated as Systemic Risk, Calls for National Moratorium

In a letter to the Financial Stability Oversight Council, the board made up of chief regulators of the financial industry, Rep. Alan Grayson has called for a national moratorium on all foreclosures because of the systemic risk of fraudulent practices. Grayson has essentially taken this up a notch, beyond the documentation problems that were the source of the anguish over the now-vetoed HR3808. He thinks, as I do, that the documentation fraud covers a much larger fraud, rooted in the securitization of mortgages and the improper processes in which that slicing and dicing played out.

'He thinks that the documentation fraud covers a much larger fraud'

I think he's 100% right.

A moratorium would be like stopping the bleeding so we can check out the wound and see how deep it is. Fortunately, but only because of the exposure, many of the major banks are doing it themselves. However, they will need to be watched carefully.

As you pointed out in another thread, this will affect more than just mortgages. I thought when I first started reading about this about a year ago, that maybe the bloggers who were the only ones talking about it at the time, were exaggerating. Now, I know, they were not.

I have read that it could decades to sort it all out. And the more I learn, the more that seems possible.

[flyarm]

10. He is right..he is 100% right!..this is huge..bigger than huge! it is fraud that could take this

country down and collapse all our banks and take this country down...in a hurry!

The too big to fail banks need to be broken up..now..

[sabrina 1]

11. Break up the banks, and fire everyone who was involved in this,

Bank CEOs. raters, mortgage lenders, every single one of them needs to go. We have honest and talented people in this country who can replace them.

Maybe there needs to be some education on what honor and decency means. This country appears to be completely lost as far as what is right or wrong. These people didn't seem to think they were doing anything wrong. I saw many of them, including Greenspan who admits now that he was wrong, all saying they didn't see what they did wrong, even when they admitted they had lied to borrowers or investors. It was shocking, and of course, there has been no accountability for them, so why would they think they've done anything wrong?

But you're right, this could take this country down, even further than it is already, and it could affect every single American before it's over, including the next generation who may end up paying for it all.

[chervilant]

52. Well, now,

the extent of the bank fraud du jour greatly overshadows what the corporatist criminals did in the mid-80s. I find it quite interesting how the erudite among us use that criminal event as a frame of reference for what we're currently facing. The difference is exponential. We are well and truly f****d.

[flyarm]

6. 'This is the biggest fraud in the history of the capital markets' : Janet Tavakoli

http://voices.washingtonpost.com/ezra-klein/2010/10/this_is_the_biggest_fraud_in_t.html

'This is the biggest fraud in the history of the capital markets'

Janet Tavakoli is the founder and president of Tavakoli Structured Finance Inc.


EK: And how much danger are the banks themselves in?

JT: When we had the financial crisis, the first thing the banks did was run to Congress and ask for accounting relief. They asked to be able to avoid pricing this stuff at the price where people would buy them. So no one can tell you the size of the hole in these balance sheets. We’ve thrown a lot of money at it. TARP was just the tip of the iceberg. We’ve given them guarantees on debts, low-cost funding from the Fed. But a lot of these mortgages just cannot be saved. Had we acknowledged this problem in 2005, we could’ve cleaned it up for a few hundred billion dollars. But we didn’t. Banks were lying and committing fraud, and our regulators were covering them and so a bad problem has become a hellacious one.

EK: My understanding is that this now pits the banks against the investors they sold these products too. The investors are going to court to argue that the products were flawed and the banks need to take them back.

JT: Many investors now are waking up to the fact that they were defrauded. Even sophisticated investors. If you did your due diligence but material information was withheld, you can recover. It’ll be a case-by-by-case basis.

EK: Given that our financial system is still fragile, isn’t that a disaster for the economy? Will credit freeze again?

JT: I disagree. In order to make the financial system healthy, we need to recognize the extent of our losses and begin facing the fraud. Then the market will be trustworthy again and people will start to participate.

EK: It sounds almost like you’re saying we still need to go through the end of our financial crisis.

JT: Yes, but I wouldn’t say crisis. This can be done with a resolution trust corporation, the way we cleaned up the S&Ls. The system got back on its feet faster because we grappled with the problems. The shareholders would be wiped out and the debt holders would have to take a discount on their debt and they’d get a debt-for-equity swap. Instead we poured TARP money into a pit and meanwhile the banks are paying huge bonuses to some people who should be made accountable for fraud. The financial crisis was a product of our irrational reaction, which protected crony capitalism rather than capitalism. In capitalism, the shareholders who took the risk would be wiped out and the debt holders would take a discount but banking would go on.


By Ezra Klein | October 8, 2010; 1:27 PM ET

[sabrina 1]

13. "TARP was just the tip of the iceberg."

I remember reading that from many economists at the time. And that the bailout would be only a drop in the bucket compared to what was needed.

Instead we poured TARP money into a pit and meanwhile the banks are paying huge bonuses to some people who should be made accountable for fraud

So why did they bail them out? Most economists said that it wouldn't work. And shouldn't they have insisted that they NOT get bonuses considering how lucky they were not to have been prosecuted?

And where did all the money go?

[librechik]

24. The Bush-led TARP engineers didn't want to help people

they needed to strip as much capitol out of their businesses as possible to pay for expected legal fees and escape parachutes.

[sabrina 1]

42. Congress should have passed a law to go along with the

bailouts that the had to cooperate in modifying people's loans. Instead they politely asked them to be good citizens and try to help the people. They passed a 'sense of Congress' that it would be a good thing. But of course there was no enforcement in that, just a request, to people who thumb their nose at the people and at Congress.

[Angry Dragon]

12. Take all the workers, take all the bankers, take all the people involved

and send them down to the Gulf, have them stay in tent cities,
and clean up the oil Ecocide.

[sabrina 1]

14. That would give them something useful to do, but not before

all the money they made has been recovered. I think that would be the biggest punishment of all for them. To have to live like the 'little people' and do actual work to make a living, instead of gambling with other people's money.

[Angry Dragon]

17. I agree with you on that part

[earth mom]

15. Sorry but bankster gangster Geithner is in charge of Warren & he'll make sure to tie her hands.

You can bank on that.

This is what happens when you put criminals in charge of the candy store.

I feel sorry for Elizabeth Warren.

[sabrina 1]

22. He will try, and it's likely she will be treated the same

way Brooksley Born was treated when she dealt with these Goldman Sacks boys in the 'nineties. She warned about this happening, and it's probably even worse than she anticipated. They drove her out of office, but we didn't have so many people watching back then. No one knew who she was or what she was trying to do. Elizabeth Warren is highly respected and well known, so it will be a little more difficult for them this time.

Otoh, I wish Elizabeth Warren and Brooksley Born would run for the Senate. I think they would have a lot more power to influence things from there.

[earth mom]

25. Yes, you are right that Warren is more in the spotlight. But I still worry that they will find

"other" ways to silence her. :scared:

And I totally agree with you that we need people with integrity to take over.

Except that there are not enough heroes/sheroes willing to do it... :(

[sabrina 1]

33. I worry about that too. They are very good at that. Did you ever

watch the Frontline Documentary on Brooksley Born called 'The Warning'? If not, it is well worth watching. What was done to her, by people who are in the current administration along with Greenspan, was a crime, and now that we see how right she was, a crime against this country.

In case you didn't see it, here is a link http://www.pbs.org/wgbh/pages/frontline/warning/view/

If only they had listened to her. This would be a very different country today.

I would love to see Elizabeth Warren run for the Senate and if they make her job too difficult, that she is what she should do. She has said that she feels compelled to help the working people, sort of like a mission for her.

[flvegan]

16. Simple, if buying a home post-foreclosure, buy an Owners Title Insurance policy.

Someone comes knocking on your door, tell them to pi$$ off and call your underwriter.

That said, yes this problem is going to be around for quite some time, but it isn't the Housing Armageddon some seem to make it out to be.

[sabrina 1]

18. Well, the Mortgage Title Insurance people are part of the problem

I don't think they'll be rushing to cover foreclosed on homes knowing the facts that are now known.

And from the pov of someone who witnessed a fraudulent foreclosure on a friend, who tried to stop it by asking for proper documentation after discovering that two of the banks her mortgage had been transfered to had used MERS for documentation, I would be fully in favor of her filing a suit, which she is planning to do, to get back her home which was illegally foreclosed on.

This foreclosure took place last January. The house is still empty, 'owned' supposedly by Wells Fargo. The 'law mill' that worked for Wells Fargo, owned by a lawyer named Steven Baum, has since been sued in a class action RICO suit. My friend hopes to either join that suit, or file her own as an individual.

We KNEW the foreclosure was illegal but neither the Baum firm or the judge responded to the request for proper documentation.

I hope no one buys that house, because it will be part of a suit, along with tens of thousands of others in NY state, the suit is asking that the homes be returned to the owners and/or that the owners be compensated.

This is just one huge class action suit among many recently filed in many states across the country.

Sorry, but anyone who buys a foreclosed on home at this point, does so knowing, or should, that they may be buying an illegally foreclosed on home.

In a way, this could help the real estate market in the long run. These foreclosures have brought down the value of every other home in the country. But if the are restored to their original owners, rather than sold for a fraction of what the are worth, prices on homes should start to go up.

A great injustice has been done. I doubt any practical insurance co. is going to want to handle these foreclosed homes now, seeing what is going on. And this was all predicted, that homeowners wrongfully foreclosed on would come back later to try to recoup some of what they were entitled to. These foreclosures were rushed through, giving homeowners little time to react legally. But the tide has turned as the greed went too far, involving millions of Americans, and now the chickens have come home to roost.

Unless of course, Congress is persuaded by the fraudulent bankers and mortgage cos to pass laws restricting the amount of money they have to pay out.

Iow, what you propose is hardly a solution for those who purchased homes, many of them take illegally from their previous owners. Nor should it be.
'

[flvegan]

19. Not really, but anyway.

My statement is simply for the benefit of anyone that may have very recently bought or may consider buying a foreclosure with only the best intent. It was for their protection.

[sabrina 1]

26. I am sure many have bought homes with good intentions

That isn't the problem though. And for those who lost those homes illegally and many did, they are going to want restitution. Hopefully that will come from the Bank and people can work things out, but if the legitimate owner, and who even knows WHO owns any home bought over the past decade or so, or at least since 2005, wants their home restored to them, then they should get it.

If someone stole your very expensive car and then sold it to someone else who didn't know it was stolen, what should happen when you find out who has your car?

[flvegan]

29. Anybody who lost anything "illegally" should get restitution.

I'm not saying that anyone that was improperly foreclosed upon should be screwed. I would hope that anyone that had just cause to file suit to regain title to their home would lawyer up and do so. Will they get their home back? That depends on what a judge decides of course. They should get a big fat check though if not, and possibly another big fat check if they sue the law firm for malpractice. Now that, I'd like to see. Very much so.

The car analogy doesn't really work. As that truly is a police issue, and did my auto insurance provider already pay me. If I already got paid, that's between the insurance company, the police and the person in possession. I do see your point though.

[sabrina 1]

34. Thanks for our response, I didn't see it earlier.

I agree with everything you say here, so I'm not sure what we were arguing over? :-)

[sabrina 1]

20. Okay, well, no, it's not simple. It's already begun,

as might be expected given what's happening all over the country now. Owners Title Insurance Corps are refusing to cover foreclosed-on homes:

Massive Mortgage Mess Update: Title Companies Stop Insuring Foreclosed Properties

As more defaulting homeowners become aware of the lenders’ problems, they are expected to hire lawyers and challenge the proceedings against them. And if completed foreclosures were not properly done, families who bought the troubled homes could be vulnerable to claims by the former owners.

Apparently alarmed about such a possibility, one of the major title insurance companies, Old Republic National Title, has sent a bulletin to agents saying that “until further notice” it would not insure title to properties foreclosed upon by GMAC Mortgage, the country’s fourth-largest home lender and one of the two big lenders at the center of the current controversy.

That makes sense. They already are involved because of the homes they have insured. But they will not be rushing to increase the damage they have already sustained.

And this is an illustration of how deep this problem goes and how many businesses and people it has and will effect.

[flvegan]

21. Yes, one "major" underwriter wants no part of it.

They also have money problems and don't have the title plant power to process REO exams, hence their wanting no part of it.

I am enjoying all this attention, thanks!

[sabrina 1]

23. What attention? You made a comment, I responded

If this is not a serious issue for you, you are very much in the minority. Every realtor, every real estate lawyer, every homeowner and potential buyer is and will be affected by this. I will take the word of those economists who predicted exactly what is happening now more than two years ago, and who were right apparently, over yours.

As for the link, that is just the beginning. And there will be more. I did say 'it has just begun'. No scheme to insure against the original owners retaking their homes from the corrupt banks and their agents is going to work now. Any Title Insurance Co. that insures a home that HAS NO TITLE will find themselves part of a RICO suit. That is why the smart ones have already opted out.

[flvegan]

27. Oh, this is a very serious issue to me.

I am a title underwriter (though certainly not for Old Republic). You're not really taking anyone's "word" over mine. All I stated was that *right now* anyone that had recently bought an REO property or was considering buying one (maybe has made a deposit in good faith) should be sure that they bought title insurance. See, there are a lot of good, honest folks out there that without ill will bought a distressed property (post REO) that are likely scared shitless by folks running around all Chicken Little style suggesting they don't own their home and at any point some boogeyman is going to show up and kick them out. I'm their voice of reason. Might other underwriters take the same route Old Republic did? Possibly. Not my choice to make. It won't be out of fear of any RICO suit. That was kind of funny.

Secondly, I don't recall economists delving into the corruption of foreclosure mills and the ineptness of record keeping and its tie-in with a future foreclosure mess and that subsequent problem insuring title. I do however, remember talking about that here right on DU for quite some time. I did major in economics...hmmm, now I'm not sure if that doesn't count.

Anywho...oh, about the "attention" comment, I simply couldn't help but notice my luck in getting *two* responses from you to my one response to your OP. I felt special.

[sabrina 1]

28. Well, I hate to disappont you regarding feeling special.

My first comment was my own opinion that Title Insurance Cos would be reluctant to cover foreclosed-on homes. Then, and I really hate disappointing you like this, but facts are facts. I checked to see if this had begun to happen, and when I found with a very quick search that it had, I posted that information.

But, and here's the sad part for you, it wasn't entirely for our benefit.

As for people buying homes with good intentions, what does that have to do with the fact that they may have bought stolen property? Would you insure something you KNOW was stolen?

Otoh, if they can trace the title, and MERS isn't involved anywhere, then they are home free. If I were in your position, I would want to see absolute proof that I am not covering stolen property, but that's me and apparently I am not alone.

As for the RICO suit, not funny at all. Maybe you should do some research on recent developments regarding these suits, and who are named in them. It isn't just the Banks, or MERS. Anyone who knowingly gets involved in furthering the fraud that has now been uncovered, can be named in a suit. And a few people who never thought they would be, have received quite a shock. And it's only beginning.

[flvegan]

30. Aw, shucks.

Tell you what, I'll send my boss (he's a EVP so he's kinda busy, so I may not hear back right away) an e-mail and I'll ask him if he's reasonably certain that I'm not "covering stolen property" and get back to you, k?

I'll also try to get on that research thing you keep talking about. I mean, what you're talking about IS what I do for a living. You'd think I'd be more up to speed on that.

:eyes:

[sabrina 1]

31. At the risk of making you feel extra, extra special ~

two responses to your post and all. But you never answered my question. What should happen to a stolen car bought with good intentions, once it is found? And would you insure a car if you were not sure about the title? And if you did, would you expect to have to pay when the car was found to be stolen and retrieved by the owner leaving your client with no car? One or two cases like that might be acceptable, but what if it becomes the norm?

As for economists talking about fraudulent titles on homes, some did include that problem as potential disaster when the whole crooked scheme was exposed.

[sabrina 1]

45. Apologies, you DID answer my question above.

[glitch]

35. K & R excellent thread. nt

[laughingliberal]

36. K & R nt

[lutherj]

37. people won't put up with it for years. This is shock doctrine. They are praying

they can get through it fast. Otherwise it will be a revolution. Revolution's coming anyway. Sit tight.

[sabrina 1]

39. They speak about foreclosures in terms of 'market value'

not in terms of human beings, families, children parents being thrown out of their homes. Neighborhoods ruined, the whole structure of society being torn apart.

I read today that those in the housing business are very upset over the moratoriums across the country because the 'foreclosure market' was promising to be profitable. The expected over 41% of all home sales this year to be foreclosures. This should frighten people. Instead they are mourning the fact that people won't be throw out of their homes at a quick enough pace to profit from in the near term.

Something is very, very wrong in this country. And maybe a revolution of some sort, will be needed to straighten it out.

Congress and everyone in DC knew about this corruption for several years, going back to 2005, but the rush to make money prevented them from doing anything about it. If it had not been for judges and lawyers refusing to turn a blind eye to the fraud, which Congress and the Treasury Dept. has been doing, this would never have seen the light of day and the foreclosures would have continued until there was no more profit to be made from them.

[Mojorabbit]

38. Plus there is tthis

which I saved a couple of years ago

[sabrina 1]

40. I am not very good at reading charts. Could you explain this one

one for me?

[creon]

41. This could be real trouble

There are millions who cannot pay the mortgage. That is very serious, as we all know. I hope that most can keep their home.

The banks and financial insitutions who are holding this paper that is worth nothing are in trouble as well. This is a serious matter as well.

[sabrina 1]

43. Yes, and the real problem is that no one knows, in many cases

who actually owns the mortgages because of the fraudulent practices they used on the paperwork when mortgages were transferred from one bank to another. So now, homeowners don't even know if the legally, on paper, own their homes, or if the banks, legally, hold the mortgages. Imagine what that means. People can stop paying their mortgages if they find out that their paperwork is not legal, not in order. And they can stay in their homes because the banks can't prove they are the holders of the mortgages.

Corruption and greed was the cause of this. It is serious and affects probably millions of mortgages. Also it means that many people were foreclosed on illegally. And they will be suing to get their homes back. Those who bought those homes are now worried too that the paperwork doesn't prove them to be the owners.

[creon]

46. True

If the bank cannot produce the paperwork, the bank cannot collect. The paper has been sold so many times, it could be in the files of any previous holder. If the note is still extant. This calls into question prior foreclosures.

Every successful foreclosure puts another property on the market. It is a mess and can get worse.

[sabrina 1]

47. I have read that this improper documentation may go back years

That means that any home purchased from 2005 up to now, may not have been legally transferred and now cannot be sold.

It also means that Banks cannot even modify mortgages, which they were refusing to do anyhow. I think this may be the biggest fraud perpetrated in this country ever, resulting in years of trying to establish how man Americans homeowners and Banks actually legally own their homes.

I don't know how they can fix it. Obviously the country cannot go forward while we wait for millions of mortgages to be verified.

What gets me is that this was known since at least 2006 or earlier, by Congress and the Banks. It is only getting exposure now because the greed drove them to steal so many properties for so long, that a few of those victimized, had the means to fight back and that brought the legal system into it. Shame on Congress for not doing something about it when it was first discovered.

[creon]

48. it can't be fixed

If the paperwork is gone, that is it - if affadavits are not allowed.

It is a massive fraud. If the peoperties cannot be foreclosed upon, the banks have a problem.

If foreclosures do go forward, the banks will have to sell the property at whatever price they can get.

This will take years of litigation.

[sabrina 1]

49. But they can't even sell properties legally without the proper

documentation, probably can't even give them away legally.

And then there are the investors. These mortgages were chopped up and spread around and included in packages with other 'assets', then sold as investments. Those investors are going to want part of any profits that are made, and since for now, it's likely there will be no profits, they will be suing also.

I haven't seen any solutions yet. One suggestion was that they pass a law allowing the rewriting of mortgages, making them legal. I'm not sure how that would work, it seems ripe for even more fraud. The only other thing they could do is to 'grant' a property whose documentation is not legal, to the owner who has been paying for it for x number of years. Iow, of someone has paid their mortgage payments for several years, they can 'claim' the property as theirs. As for the banks, if they have been taking the payments, I suppose they would have to be allowed to 'claim' to own the mortgage. Can't think of any other way they can fix it.

[creon]

50. It is a tough situation all round.

No one has stepped up with solutions yet. Maybe people are working on that. I do not know how it will play out.

[suffragette]

51. K&R

[David Zephyr]

53. Kick.

Great OP.