Posted on 09/26/2009 9:18:45 PM PDT by thouworm
A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS.
Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.
via Landmark Decision: Massive Relief for Homeowners and Trouble for the Banks. [link below]
This is a potentially gigantic story. It seems that a court has ruled that about half of the mortgage market has been run as a criminal enterprise for years, which would invalidate any potential forelosure proceedings for about, oh, 60 million mortgages. The court ruled that the electronic transfer system used by the private company MERS — a clearing system for mortgages, similar to a depository, that is used for about half the mortgage market — is fundamentally unreliable, and any mortgage sold and/or transferred through MERS can’t be foreclosed upon, at least not in Kansas.
Coincidentally I’d been working on something related to this all day yesterday. All over the country, lawyers are contesting foreclosures because of similar chain-of-custody issues. I have some material about this coming out in my next Rolling Stone story, so I can’t get into this too much, but suffice to say the lenders and the banks were extremely sloppy about their paperwork (at best — there is a fraud angle as well) and jammed up the system with missing and/or mismarked mortgage notes. Since a sale isn’t legal unless there’s full transfer of the physical note, a lot of the sales of mortgage-backed securities were not entirely legal, since the actual notes were often not transferred.
Nothing like waking up in the morning and finding out a whole sector of the economy is completely screwed. Are these good times or what?
Although this particular case pertains to MERS, non-MERS mortgages were often even worse. Anyway I have more on this coming next week. Thanks again to Eric at MonkeyBusiness for the heads-up.
Must Read: http://www.globalresearch.ca/index.php?context=va&aid=15324
That’s what I thought about; the $500 trillion derivative market that can’t be unwound. All these mortgages cut up & sold over & over again.
Well, let’s see here. The banks messed up on their paperwork letting a bunch of mortgages go so Obama will have to bail them out. Finally, some of the American people will get something out of the Great Treasury Bankster Heist. Just kidding; but there is always a silver lining to every cloud.
That was my take on this also. The original note has either been destroyed or is in some file at the originator maked PAID IN FULL. Tough to produce some other document that you signed promising to pay when that original one, the only one you did sign, is either gone forever or satisfied.
IIRC didn’t this all start because a single mortgage was bundled into several packages that were sold to investors? Your mortgage and its dollar amount due belonged to several entities, any one of whom could demand payment from you. By law it could only belong to a single entity so nobody could know who got the house in foreclosure.
Thanks for posting this! All this info never ceases to amaze me.
Thanks; I just linked over there; Researching for that thread was how I found this story
http://www.freerepublic.com/focus/bloggers/2348280/posts
None of that nonsense should allow a mortgagee who has defaulted on the mortgage to foregoe a foreclosure.
This removes all accountability.
It is wrong from a moral standpoint.
In case you had never noticed, legality and morality have absolutely nothing whatsoever to do with one another.
The fact of the matter is the mortgage industry decided to make bad loans, bundle them up and get rid of them. The refinance industry was a money-churn, and they could care less what happened with the loans after they got rid of them and got their money.
But they made a mistake. They did not maintain the legal documentation required to prove their loans.
In the process of churning faulty loans, these companies participated in inflating the value of houses far beyond their actual value because money was artificially cheap.
We need to get back to the old mortgage model, where banks actually have a stake in making good loans.
Having the crooked companies that bundled bad loans together lose their asses is a good start.
Odd how your all-so-concerned about the mortgagees enforcing their legal rights, but you are not the least bit concerned about the immoral practices of the banks that got us into this mess.
Why is that?
Is shoddy paperwork fraud, though? That might be the escape hatch for some of this, anyway.
This in an interesting thought. For the first part, legally, there is the question of whom does the mortgagee pay? Legally? The 'No tickee, no shirtee' clause would seem to apply.
Morally, most would agree with you. I do. Someone should not benefit with our taxpayer dollars. This dichotomy is going to take a while to work out and be the topic of many cover stations.
ITS THE RULE !
My only question is how can I make a killing in all this stuff now?
In posting this story, my mind was not on who may or may not get out of paying on a foreclosed home, but on the vastness of the corruption that has set our whole American financial house on fire.
related thread:
As Subprime Lending Crisis Unfolded, Watchdog Fed Didn’t Bother Barking
http://www.freerepublic.com/focus/news/2349231/posts?page=2
Bumped, bookmarked and glad to see others are figuring this out.
I have no desire to offend you with triviality, as I appreciate the seriousness of your exposition and I learned a lot from it, but I certainly free-associated to the Obama birth certificate/ COLB controversy when I read this.
I’m not attempting to debate you on a level playing field, acknowledge your expertise/understanding of this subject far exceeds mine; but from what little I know, this is not history’s first real estate bubble and crash, even though it may be the first hyper-driven by computerized financial transactions. Why wouldn’t it then be more like past fiascos than different? Further, I can’t see that these mortgages are all that anonymous, there are papers on file at county court houses for every parcel and no doubt someone is managing an escrow account and paying property taxes on them.
Centurion: Have you seen this thread?
The Chicago Ouroboros: Obama, Ayers, Oughton, Dohrn, Minow, Taibbi, Koch, and DARK POOL TRADING
http://www.freerepublic.com/focus/bloggers/2348280/posts
You seem very intelligent so let me ask a hypothetical…
Let’s say I get a home loan and I sign a promissory note and a deed of trust with bank ‘A’.
Not wanting to hold my note for twenty years Bank ‘A’ then sells the loan to bank ‘B’.
Bank ‘A’ marks the promissory note in their records as “PAID IN FULL”, and then transfers the deed of trust to bank ‘B’.
I run into hard times, can’t continue paying my mortgage, and bank ‘B’ decides to foreclose.
I was not a party to any transaction after I signed my original note, which is now marked in bank ‘A’ as “PAID IN FULL”, and since bank ‘B’ doesn’t own any other promissory note signed by me, what legal duty do I have to pay bank ‘B’? None as I see it. In fact I’d consider the payoff of my original loan with bank ‘A’ as a gift to me from bank ‘B’.
Now, can I go after bank ‘A’ for collecting mortgage payments on a loan their records indicate is already paid in full? I get a free house and all prior mortgage payments returned. Not a bad deal.
Your accounting transactions are straw-men that you made up out of whole cloth that have nothing to do with the real accounting transactions in the real world. In the real world, the original loan documents remain intact and in effect.
What you fail to realize is that the banking practices that gave us the first foreclosure bubble are still operative. The Fed is STILL forcing banks to make loans under the Community Reinvestment Act. They are still bundling these bad loans together and selling these fraudulent instruments to investors.
We have no control over our Washington elite. They do as they please. We can only defeat them in the legal arena.
If we can destroy the value of their fraudulent financial instruments, we force them to stop forcing banks to make bad loans in the name of racial fairness, because nobody will buy them.
Tell me the specific "past fiascos" you are referring to, and I will answer your question on specifics.
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