Foreclosure-gate ~~ your thoughts?

[Poorhouse64]

Several business news articles I've read describe this foreclosure mess, robo-signers, forged documents, wrongful evictions as just the "tip of the iceberg" in uncovering a massive fraud committed by Banks against American homeowners.

Many investigations are happening in all 50 states and some banks have put a moratorium on foreclosure sales for now.

Do you think a REAL investigation will occur which shines some light on mortgage and securities fraud AND punishes the evil-doers?? ... or do you think this is a temporary thing...to be swept under the rug for the sake of the Banks solvency and economic semi-stability? How bad do think this thing will get?

[ryan]

At this point I am looking at it very selfishly. This will at a minimum add 30 -60, maybe 90 days to my FC timeline....which is good since I need to stay as long as possible.

The larger issue of whether they will really investigate all the fraud is hard to say. They may quickly pass some new laws that allow legal resumption of any FC's and give the title companies some security so they can insure title for new purchases.....or it could all blow up massively and no FC's or sheriffs sales for a year! (but I doubt it)

[justbroke]

Yeah, I don't think they're going to dabble in mortgage fraud. This moratorium is solely to get the foreclosure paperwork correct. Plus it's an election cycle and the politicians, whom all endorsed these loan practices back when the markets were "hot", can now thump their chests and say that they "stood up" against the big banks. Oh my.

In the end, common law will prevail and a mortgage is a security instrument is a security instrument is a security instrument. Let the beatings continue until morale improves!

[Billssuck]

I'm at six months without paying my mortgage, the automatic stay hasn't been lifted, not a peep from the bank, and we're still in the house. I'm saving money to move whenever the foreclosure should happen...I'm hoping this adds a few more months to staying in the house to continue to save. I'm really pessimisstic though; I think any new laws will err in the banks' favor and foreclosure sales will resume without much back lash for their fraudulent ways...

[DeadManCrawling]

Think about the timeline involved here, and who might REALLY benefit the most.

During September, the banks processed more foreclosures than any other month in history. The banks KNEW this was coming. More importantly, they knew that if it continued at that pace, the banks would be bankrupted THEMSELVES, because they would be forced to account for all of this bad debt on their books. Of course, they SHOULD be forced to do so, but they are doing a masterful job of avoiding this.

So, as September closes out, the banks are the ones who disclose there are problems. Some begin to halt foreclosures in SOME states. Then, the scope of the problem becomes more obvious, and MORE banks jump in.

October, and the media machine is in a frenzy. BoA freezes foreclosures on ALL homes, temporarily. Sure, this looks like it benefits homeowners, and it might in the short term, but the winner, as usual, will be the banks.

I look for there to be a change to accounting rules, a one-time "exception" for banks to avoid taking the losses as they usually would. In light of this "unusual and unforeseen circumstance" etc. etc. They will sugar-coat it by saying, "we don't want anyone to benefit who should not, so this new rule or method will be extremely limited in its use." Translation: Allt he big banks get to use it, but not you me or anyone else. Further translation: The big banks win AGAIN.

Then, they will resume foreclosures at a more favorable (to them) pace and environment. And there may well be a further government bailout, "in light of continuing difficulties that, again, no one could have foreseen."

There is more to this than meets the headlines, I think. Perhaps I have always been more dubious, but I don't think this is actually meant to HELP anyone except the banks, who are once again on the ropes and in danger of drowning in their own vomit.

[willsurvive]

I think you're right on DMC! Sadly, this is a big, big, big mess.

[justbroke]

Yeah, but it's the same 'ole same 'ole. Politicians continue to receive their political contributions, and the banks continue business as usual.

[Poorhouse64]

It's interesting to watch to say the least. I think there would be no need for robo-signers and falsified Affidavits if the banks/servicers had the promissory notes to begin with (after they sliced/diced and created the toxic securities MBS which created this whole economic meltdown in the first place !). I don't understand how that would constitute a mere "paperwork problem".... Either the banks/servicers have legal standing to foreclose/re-sell or they don't.... (and faking it/making up legal standing) hopefully won't continue. The cloudy title problem could be a huge huge problem for a long long time. Right? How can that be fixed quickly?

After being treated terribly by my former banks, I look forward to seeing their turn to suffer...... wishful thinking on my part probably .....

[justbroke]

There isn't a cloudy title issue. A bankruptcy judge in the Middle District of Florida wrote an eloquent and well reasoned opinion in a case where the Trustee sought to avoid a lien. This was based on the securitization process and that the note changed hands. The Judge, citing common law upon which much of the UCC and property laws are based, opined that there was notice that there was a mortgage (security instrument) and that the property was encumbered by the recorded mortgage and note. The only issue was... who owns the rights to enforce the provisions of the security instrument (mortgage) and the beneficiary of the terms in the note.

Basically, the Judge wrote, that unless there's a satisfaction of mortgage recorded, the fact that there is an "unsatisfied" mortgage in the public record should put everyone on record -- including the Trustee -- that the property is encumbered by a mortgage.

Quite a good opinion, and if I find it, I'll post it.

[DeadManCrawling]

JB,

You and I are, as usual, on the same rhythm.

Nice to see you again, and I hope to be around here more often.

Conspiracy ideas aside, this promises to be quite interesting.

All the best to you,

--DMC

[justbroke]

Hope to see you around more, DMC!

[lookinupn09]

It seems to me that the banks have a problem when they don't own both the note and the mortgage. They have no standing to foreclose if they can't prove that they own both. (according to court cases in California, NY and Ohio) This could pose a problem in the looming foreclosure mess going forward as more and more cases use this defense where applicable. JMO

[justbroke]

It seems to me that the banks have a problem when they don't own both the note and the mortgage. They have no standing to foreclose if they can't prove that they own both. (according to court cases in California, NY and Ohio) This could pose a problem in the looming foreclosure mess going forward as more and more cases use this defense where applicable. JMO

Foreclosure is about "holding" the note, and the note is either endorsed in blank or endorsed to the foreclosing entity (or simply, the foreclosing entity is named in the Note and Mortgage). The current thinking came from some major foreclosure cases, which summed it up pretty well if you ask me.

[T]he note and the mortgage are inseparable, with the former being essential while the latter is “an incident”, and that an assignment of the note carries the mortgage with it, “while an assignment of the latter alone is a nullity.

That means, you only need to "own" the Promissory Note. (This is because the Mortgage is never separated from the Note (Promissory Note), because if that ever occurred, the Mortgage would be a worthless piece of paper.)

While this may hurt banks financially in the future, having to deal with the paperwork, the fact is that there is a Mortgage and Note and "someone" owns the Note (and hence the right to enforce the provisions in the Mortgage). The problem, for now, is that there are questions about who really has the "right" to foreclose.

There's no question as to whether the Mortgage can be foreclosed. Case in point, one Judge in Florida published his thoughts about how these (older) Floridians would attend the foreclosure hearing and plead to keep the home. The Judge only asked them if they were current on payments. As soon as they say "no" (which is always the case), the Judge has no other choice but to allow the judgment of foreclosure. The only issue being brought up, is whether the plaintiff in the case seeking a judgment of foreclosure, is the person who is entitled to bring forth such a case and request such a judgment. It's never that there can't be any judgment or that the defendant(s) (homeowners) don't owe anything under the terms of the note.

Tricky stuff. This is why the "show me the note" defense stopped working. Now we've moved to "prove that you (plaintiff) have a beneficiary interest" in the Note and that your paperwork indicates such.

This is a paperwork problem.

[lookinupn09]

Foreclosure is about "holding" the note, and the note is either endorsed in blank or endorsed to the foreclosing entity (or simply, the foreclosing entity is named in the Note and Mortgage). The current thinking came from some major foreclosure cases, which summed it up pretty well if you ask me.

That means, you only need to "own" the Promissory Note. (This is because the Mortgage is never separated from the Note (Promissory Note), because if that ever occurred, the Mortgage would be a worthless piece of paper.)

While this may hurt banks financially in the future, having to deal with the paperwork, the fact is that there is a Mortgage and Note and "someone" owns the Note (and hence the right to enforce the provisions in the Mortgage). The problem, for now, is that there are questions about who really has the "right" to foreclose.

There's no question as to whether the Mortgage can be foreclosed. Case in point, one Judge in Florida published his thoughts about how these (older) Floridians would attend the foreclosure hearing and plead to keep the home. The Judge only asked them if they were current on payments. As soon as they say "no" (which is always the case), the Judge has no other choice but to allow the judgment of foreclosure. The only issue being brought up, is whether the plaintiff in the case seeking a judgment of foreclosure, is the person who is entitled to bring forth such a case and request such a judgment. It's never that there can't be any judgment or that the defendant(s) (homeowners) don't owe anything under the terms of the note.

Tricky stuff. This is why the "show me the note" defense stopped working. Now we've moved to "prove that you (plaintiff) have a beneficiary interest" in the Note and that your paperwork indicates such.

This is a paperwork problem.

Right, and if the Plaintiff can not show that they are the holders of the note, then they don't have 'standing' to foreclose. This is only going to get more interesting.

[justbroke]

Right, and if the Plaintiff can not show that they are the holders of the note, then they don't have 'standing' to foreclose. This is only going to get more interesting.

Yes, the crux of the current "problem" is what they call locus standi. I actually argued that in an answer to relief from the automatic stay, but then I gave up, as my "modification" came through anyhow and I was current. Standing is always something that the movant/plaintiff should have and if they don't, you can actually get a foreclosure that has been completed through the sale and even a new deed issued, rescinded and void.