How to Make Banks Really Mad: Occupy Foreclosures

[marmar]

from NewDeal2.0:



How to Make Banks Really Mad: Occupy Foreclosures
Wednesday, 10/19/2011 - 3:11 pm by Mike Konczal


Could the next step after camping in Zuccotti Park be camping out in homes facing foreclosure?

As people think a bit more critically about what it means to “occupy” contested spaces that blur the public and the private and the boundaries between the 99% and the 1%, and as they also think through what Occupy Wall Street might do next, I would humbly suggest they check out the activism model of Project: No One Leaves. It exists in many places, especially in Massachusetts — check out this Springfield version of it — and grows out of activism pioneered by City Life Vida Urbana. It is similar to activism done by the group New Bottom Line and other foreclosure fighters. Here is PBS NewsHour’s coverage of the movement.

The major goal of Project: No One Leaves is to mobilize as many resources as possible to protect those going through foreclosure and keep them in their homes as long as possible in order to give them maximum bargaining power against the banks. For those focused on “weapons of the weak,” this moment — with banks and creditors using state power to conduct massive amounts of foreclosures, thus impoverishing poor neighborhoods through a financialized rationality — is a crucial opportunity for resistance. From the webpage:

Post-Foreclosure Eviction Defense. We mobilize tenants and former homeowners living in recently or about to be foreclosed homes (bank tenants) to stop evictions, protect Springfield’s housing and communities, and mobilize bank tenants to fight back against major lending institutions and banks that are tearing our communities apart.

..........(more)

The complete piece is at: http://www.newdeal20.org/2011/10/19/how-to-make-banks-really-mad-occupy-foreclosures-62167/

[meow2u3]

1. I liked what the Occupy Chicago ladies did to BoA

They made a deposit to the bank--consisting of all the trash and garbage from their foreclosed-upon homes!! It may have gotten them arrested, but the message is crystal clear.

[Fire Walk With Me]

2. Woohoo! FIGHT BACK!

[LadyInAZ]

3. right on!

[TheKentuckian]

4. We can end homelessness tomorrow, by declaring it so.

Cut the banks out.

[customerserviceguy]

5. If any courts actually supported this

Yes, you would cut the banks out, they'd never make a home loan again. See what that does to the economy.

[ms.smiler]

6. Customerserviceguy, the banks don’t make home loans now

They use investor money and government money to fund loans. They don’t put their own money at risk so why should they care?

What do you suppose an epidemic of mortgage fraud, securities fraud and foreclosure fraud has done to our economy? Restoring the wealth of Americans will only improve our economy.

Now, I’ll get excited when homeowners really start challenging their foreclosures at the onset, even beating the banks to the punch and filing suits against the banks prior to foreclosure.

I was so pleased to see the Class Action suit filed in Ohio recently against MERS and many banks on behalf of all their counties. The suit states that MERS broke the chain of Title to the properties in its database and that it owes millions of dollars to the counties in Ohio for filing fees. Such a successful suit would be reason to reopen their foreclosures or possibly even void them.

If banks are going to foreclosure, shouldn’t they do it legally?

[customerserviceguy]

7. And you think that investors would make loans that were not foreclosable?

The only reason you don't have to pay 100% of the purchase price in cash to buy a house is because it can be secured as collateral for a loan. Without that, only those rich enough to not need to borrow would get home loans.

Yes, MERS seems to be a giant mess, and I suppose the home lending industry will either get away from it, or fix it greatly. But my point is the same, no meaningful collateral, no home loans. The person I was responding to did not mention the MERS fiasco.

[ms.smiler]

8. But the investors never had collateral.

The loans were not properly or legally pledged to the Trusts. Since Wall Street crashed our economy, why would the investors want to foreclosure on properties that may have lost 60% or so of their value? Why would they want to wind up responsible for the fraud at loan origination?

The investors are much better off suing the banks for fraud because the security they purchased was not as represented to them. Here on Main Street, homeowners with securitized mortgages are better off suing to obtain a valid Deed and clear their Title.

For decades, we were quite capable of funding mortgage loans without securitizing mortgages and with very few Title problems. The old system worked just fine. The Wall Street banks though thought it a much better idea to put other people's money at risk to fund mortgage loans. With no skin in the game, how did that approach work out?

Now we have millions of homeowners being wrongfully foreclosed. Millions more are dutifully making their mortgage payments completely unaware of any problems, despite the fact they'll never receive a valid Deed upon completion of their payments. I'm in the small but growing number of homeowners filing suit and heading for court. The banks and the servicing companies they own, as well as MERS, should be held accountable for their fraud.

[customerserviceguy]

10. They thought they did

They might be better off suing the banks, but banks usually can afford to hire really expensive lawyers. If an investor owns a tiny fractional share of a portfolio of loans, it might not be worth their while. We'll see what they do.

Yes, the way that the mortgage lending business sought to securitize loans was sloppy as hell. However, nobody objected until the real estate market started crashing, then everybody looked for a deep pocket to blame.

[ms.smiler]

9. customerserviceguy, oh you are the individual with years of

experience in the Title industry. I'll remember your name now. If you don't mind, I have a few questions.

A Title policy has points or areas that provide coverage, correct? They aren't simply policies that cover any and every type of Title problem.

The policy would have an amount of coverage to basically cover the value of the property, correct? The policy wouldn't cover damage that was done to the homeowner by wrongful foreclosure or slander of Title, correct?

There's the recent ruling in Massachusetts where the court determined an investor didn't receive clear Title after a wrongful foreclosure. I would think that individual would turn to their Title company. I also suspect that individual should sue the bank that sold him the property.

Now since the foreclosure wasn't lawful, the Deed belongs to the wrongfully foreclosed party, correct? That individual wouldn't rely on their Title insurance, would they? I'm thinking the wrongfully foreclosed party should sue the company who improperly foreclosed on them.

Basically, my Title insurance is supposed to insure me that I have a Title free of defects and is useful to me should someone come along with some type of claim to my property. Is that correct?

I understand my own situation but since that ruling, I was trying to better understand that situation and hoped to come across you. :-)

[customerserviceguy]

11. Here are some answers, as best I remember them

I haven't worked in the industry for over six years, but I did work in it on and off for about twenty-five of the years from 1976-2005. Also, I only worked in one state (WA) and was only familiar with the real estate practices there, but a lot of what's happened in the national mortgage market occurred there. I certainly haven't worked through a crisis of the level that we've seen in the last few years, although the market from 1980-83 seemed pretty scary at the time. With that in mind, here are your answers:

A title policy provides full coverage subject to its listed exceptions. There are a host of them that are pre-printed on title insurance policy "jackets" that every title policy is stapled into. Further, there are exceptions that are particular to a property, such as the matters that are disclosed by a title examination.

Yes, such a policy covers the value of a property, and many, if not most or all, have an inflation rider attached that includes the rising value of real estate. Clearly, those riders have little value for anything purchased within the last decade.

A title policy covers events that happened BEFORE the date of the policy, any matters that arise after that date are not covered, except to the extent that they come from circumstances (beyond the stated exceptions) before that date. Any questionable transfers of a mortgage that was created on the same or any subsequent date as the date of the transfer would not be covered.

You are correct as to the Massachusetts investor, provided he had owner's title insurance. Any flawed or faulty foreclosure that did not convey title to the bank who deeded him the property is indeed covered. I agree, the individual who bought this property has a claim of action against his title insurer (who would in turn have a claim against the bank to litigate) or in the absence of a policy, would have his own claims against the bank's warranty of clear title.

You make the same mistake of equating "the Deed" with "title". A deed is an instrument of conveyance from one party to another, and a connected string of them is a chain of title. Presuming all deeds in that chain are valid, whoever is at the end of that chain holds "title" even though there are many deeds along the way, including the last one. I blame the game Monopoly for most peoples' poor understanding of the process.

Again, anything that arises from matters prior to the date of a title policy (which is almost always simultaneous with the recording date of the last deed in the chain) is covered, anything that arises from any actions after that date are not.

I hope I've explained this clearly, we have a few other individuals who are frequent posters here at DU who currently work in the industry, and I would defer to their expertise, if they have information that relates more specifically to either recent circumstances, cases, or law in other places that I'm not familiar with, which almost certainly includes where your property is.

[ms.smiler]

12. I feel badly for many of the MBS investors such as pension funds

community banks, municipalities, university endowments & charities. They were sold AAA rated bologna. They were defrauded and as I understand they have to band together to meet a certain threshold of 25% or so in order for the Trust to file suit.

I don’t think people realized that problems existed until the market crashed. I’m a business person so I was at least aware that those CDO’s were probably hinky in some way. I was also aware that many defective mortgage products were being sold to homeowners and I thought I had done my best to purchase a sound mortgage product when I refinanced which was a 30 year fixed rate.

As the banks expected, the mortgages blew up and the banks collected their insurance, the Credit Default Swaps, on the garbage they constructed. The foreclosure crisis commenced and as I see it, it’s in the small 5% of contested foreclosure cases that the problems with securitized mortgages were uncovered.

I’ve read that the 5% has grown to 10%. I was researching and trying to better understand the forces in play that wrecked the economy. That’s when I came to understand that the very same problems that arose in foreclosure cases, existed in my own timely paid mortgage loan.

I’ve also read that there has been an increase in Quiet Title suits. I would think it’s because of other homeowners like me who caught on to securitized mortgages. What are “deep pockets” to you are the responsible wrongdoers to me.

Thank you very much for the answers which make a great deal of sense. I know I paid for Title insurance which was listed on the Settlement sheet. I have copies of many things but I don’t think I was ever given a copy of the Title policy. I have no idea what exceptions are listed. Shouldn’t I have received a copy?

So basically, people purchase homeowners & auto insurance which covers them for possible future events while Title insurance covers events and actions in the past. It appears my attorney is starting with recent events, possibly working her way back. I haven’t asked her but I’m wondering if we’ll reach a point eventually where the Title insurance actually comes into play.

I’m not certain but I think that Massachusetts investor paid cash for the foreclosed property which often happens now. He wouldn’t have been required to purchase Title insurance as I understand but hopefully he did. I also think he obtained a Quit Claim Deed from the bank who sold him the property.

Now, I consider it perfectly fine if I wanted to use a Quit Claim Deed to put my son’s name on this property. Please tell me if you were in that investor’s position, would you have been satisfied with a Quit Claim Deed? Would a Title company have any concerns in that situation with that type of conveyance?

Even though I’m a business person, I never really much liked the Monopoly game, except when I played it with my best friend as a teen. We changed the rules in some way so that we both got rich and the eventual winner was the one who accumulated the larger amount of wealth. Now that I think about it, we were actually rejecting big business and monopolies in favor of finely and properly practiced capitalism.

Today in business, I operate that way because I think everyone should come out ahead in the deal. I abhor the manner in which Wall Street operates. They do little to create wealth; they simply devise schemes to absorb and accumulate it for themselves.

Thank you very much for taking your time to answer my questions.