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Citigroup, Ally Sued for Racketeering Over Database [cool things they can do with computers]
bizweek bberg via Forbes.com ^ | 100410 | y Margaret Cronin Fisk and Thom Weidlich

Posted on 10/04/2010 3:05:22 PM PDT by the invisib1e hand

Citigroup Inc. and Ally Financial Inc. units were sued by homeowners in Kentucky for allegedly conspiring with Mortgage Electronic Registration Systems Inc. to falsely foreclose on loans.

The lawsuit, filed as a civil-racketeering class action on behalf all Kentucky homeowners facing foreclosure, also names as a defendant Reston, Virginia-based MERS, the company that handles mortgage transfers among member banks. The suit claims that through MERS the banks are foreclosing on homes even when they don’t hold titles to the properties.

(Excerpt) Read more at billionaires.forbes.com ...


TOPICS: Business/Economy; Crime/Corruption; Government; News/Current Events
KEYWORDS: foreclosure; foreclosuregate; mortgage; rico; suit; title
Attaching a RICO suit to a database sounds like the first important step toward putting a dent in the monolithic information complex that I've read about in a long, long time.

I hope sticks.

1 posted on 10/04/2010 3:05:27 PM PDT by the invisib1e hand
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To: the invisib1e hand
The suit claims that through MERS the banks are foreclosing on homes even when they don’t hold titles to the properties.

He who sells what isn't his'n
must buy it back or go to pris'n.

2 posted on 10/04/2010 3:08:24 PM PDT by the invisib1e hand (after your fifteen minutes are up you get a lifetime of ignominy.)
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To: the invisib1e hand

This is going to freeze a lot of homes out of the market while the matter is wrangled out, maybe clear up to the USSC. Result, possible uptick in home prices (for those lucky enough not to be caught in this web of bungled foreclosures)?


3 posted on 10/04/2010 3:10:21 PM PDT by HiTech RedNeck (I am in America but not of America (per bible: am in the world but not of it))
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To: the invisib1e hand

Would someone please dumb this whole MERS thing down to my level? Is it basically that the title was bought and sold so many times, no one knows who actually owns it?


4 posted on 10/04/2010 3:15:45 PM PDT by mockingbyrd (Remember in November.)
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To: the invisib1e hand
The suit claims that through MERS the banks are foreclosing on homes even when they don’t hold titles to the properties.

Holy crap! If true, the execs need to spend some quality time with Bubba.

5 posted on 10/04/2010 3:16:00 PM PDT by Still Thinking (Freedom is NOT a loophole!)
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To: HiTech RedNeck

Or - will the bottom fall out because people will be afraid to buy ANY house for fear that the title, all titles, are rotten?


6 posted on 10/04/2010 3:16:19 PM PDT by SnuffaBolshevik
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To: the invisib1e hand

That’s a pretty good trick.


7 posted on 10/04/2010 3:22:19 PM PDT by SouthTexas ("Global Climate Disruption" = More bovine excrement)
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To: SnuffaBolshevik
Or - will the bottom fall out because people will be afraid to buy ANY house for fear that the title, all titles, are rotten?


Lawyers and title insurance companies will get out of the business because they can't charge enough for the risk they would take.

They same reason I am getting out of the tax business......

8 posted on 10/04/2010 3:24:24 PM PDT by PeterPrinciple ( Seeking the truth here folks.)
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To: mockingbyrd; SnuffaBolshevik
Is it basically that the title was bought and sold so many times, no one knows who actually owns it?

Or - will the bottom fall out because people will be afraid to buy ANY house for fear that the title, all titles, are rotten?

Yes and yes, imho.

Just imagine what life will be like under obama care when everyone's medical records go into that big government (subcontractor) database!

9 posted on 10/04/2010 3:28:35 PM PDT by the invisib1e hand (after your fifteen minutes are up you get a lifetime of ignominy.)
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To: the invisib1e hand
MERS appears to be vulnerable
10 posted on 10/04/2010 3:29:44 PM PDT by wendy1946
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To: SnuffaBolshevik

For those that have an absolutely clear title, it might make selling their home easier. This will also constrain the supply of acceptable properties for some time to come.


11 posted on 10/04/2010 3:30:28 PM PDT by glorgau
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To: PeterPrinciple
Lawyers and title insurance companies will get out of the business because they can't charge enough for the risk they would take. They same reason I am getting out of the tax business

and/or, prices will rise until....

the government steps in and fixes things, which sort of bolsters my theory (circ the early '90s) that someday the gov't, thanks to mortgage insurance, would be the biggest landlord.

Now, I should point out, that free enterprise could solve this problem if the government wasn't so irrefutably opposed to it. Meaning, turn out the present administration, and there's hope. Push the reset button, in other words.

12 posted on 10/04/2010 3:32:30 PM PDT by the invisib1e hand (after your fifteen minutes are up you get a lifetime of ignominy.)
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To: wendy1946

b4L.


13 posted on 10/04/2010 3:34:00 PM PDT by the invisib1e hand (after your fifteen minutes are up you get a lifetime of ignominy.)
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To: the invisib1e hand

Outstanding! The mortgage industry takes in billions in “fees” and interest but then wants to act illegally, saying they can’t make money unless they do. Just like the airline industry.


14 posted on 10/04/2010 3:40:30 PM PDT by CodeToad (Islam needs to be banned in the US and treated as a criminal enterprise.)
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To: mockingbyrd

Basically, the banks need to have the title to foreclose on a home. MERS only registers the loan electronically, so there is NO NOTE. Presumably, these notes got lost! The securities(MBS) have been sold and passed around, sliced and diced. It could well be that there is no clear title to alot of these homes. Legally, without a note, they can NOT foreclose. They don’t have the right to foreclose on something that they don’t have PROOF they own.

It will hurt the housing market because any home that had been foreclosed on, may not have clear title. I wonder if our home has clear title, and we have been paying all this time. It could well be if you bought a home past 2000, NONE of those homes have clear title.

This is epic fail. Truly.


15 posted on 10/04/2010 3:41:28 PM PDT by TruthConquers (Delendae sunt publicae scholae)
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To: the invisib1e hand
Any time an individual investor wants to buy or sell stock he has to pay a commission.

This is another case of how large investors have it over the small investor: they create financial entities and instruments that can be traded at no cost.

If they can get the government to cover their losses, then it is pure profit for those who are members of the club.

16 posted on 10/04/2010 3:48:46 PM PDT by who_would_fardels_bear (These fragments I have shored against my ruins)
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To: the invisib1e hand

Push the reset button, in other words.


No one knows how this will play out. It is interesting where and how people are placing their bets. The most interesting observation to me is Principle Finance getting out of the health insurance. The big boys at Principle don’t think there is going to be a reset.


17 posted on 10/04/2010 4:56:13 PM PDT by PeterPrinciple ( Seeking the truth here folks.)
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To: TruthConquers

Ok, so when you say note, you mean the actual IOU that was signed at closing? The paperwork the borrowers filed out is lost now, that’s at least part of the problem?

I’ve heard people say that this will be a nightmare for title insuarance? Why, I thought you only needed title insurance if you didn’t put 20 percent down. And aren’t people required to put more down now?

Sorry for all the questions, I just can’t seem to wrap my head around this.


18 posted on 10/04/2010 5:41:41 PM PDT by mockingbyrd (Remember in November.)
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To: TruthConquers

“I wonder if our home has clear title, and we have been paying all this time.”

That was a thought I had watching this fiasco. We refinanced in 2005 and
pulled a little money out for new carpet, paint ect.
Our loan was sold off to the Mozilo syndicate at Coutrywide, which is now B of A.
I was thinking of requesting copies of the title/loan docs.
If they don’t have title and can’t foreclose, how can they demand payment
on a loan they can’t prove they own.
Not that I would stop making my payments, but anyway I could harass B of A would sure be fun.


19 posted on 10/04/2010 5:53:21 PM PDT by twistedwrench
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To: mockingbyrd

Ok, so when you say note, you mean the actual IOU that was signed at closing?

-Yes.

The paperwork the borrowers filed out is lost now, that’s at least part of the problem?

-Yes. That is a BIG part of the problem. The banks have no legal right to foreclose WITHOUT that title.

I’ve heard people say that this will be a nightmare for title insurance?

-Yes

Why, I thought you only needed title insurance if you didn’t put 20 percent down. And aren’t people required to put more down now?

-This part I don’t know about. But I do know title insurance companies are already saying they will NOT insure these foreclosed on homes. Meaning, if you are buying a foreclosed home, you may not have full title to the home. The Title Insurance companies don’t want to insure something that there is no clear title on. I don’t think the down payment has anything to do with it.

-And questions are good. I have been trying to understand this implosion since 2008, and there is still alot I don’t know. Glad to help out.


20 posted on 10/04/2010 5:56:36 PM PDT by TruthConquers (Delendae sunt publicae scholae)
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To: twistedwrench

“If they don’t have title and can’t foreclose, how can they demand payment on a loan they can’t prove they own.”

I know. I wonder the same thing. Of course the judges wouldn’t be too impressed right now, with real people in trouble losing their homes.

We found out that back in 2007 when we did a refinance that our loan was sold to Fannie. We didn’t know that. We thought that Citibank owned our loan. This spring, Fannie sends us a letter that says that BofA owns our loan, and please make payments to CitiMortgage now. What??? So, we called Fannie and they said “No, BofA doesn’t own your loan and the loan number on Fannie’s letterhead was bogus.” Uh???

So now it seems both Fannie and BofA think that our loan is theirs, and CitiMortgage says it is Fannies. Who knows?

That is what the problem is. THEY DON’T KNOW EITHER!!!!

They both keep trying to send us, “Refinance Now” deals. I smell a rat. Nothing doing. They just want to get paperwork on our home. They lost it, too bad for them. They have already stolen our money with TARP. #$&*&$@#@!!


21 posted on 10/04/2010 6:10:36 PM PDT by TruthConquers (Delendae sunt publicae scholae)
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To: mockingbyrd

As best I can make out is that the mortgages were bundled into new paper in various tranches, sort of homogenized into super paper (CMOs), that could be given an investment rating depending on the proportion of safe, somewhat safe, average, poor, and garbage (no-doc) mortgages in the tranche. It may be that one mortgage was split to numerous instruments - perhaps in an anonymous fashion, so the nominal servicer of the mortgage has passed the paper on to the bundler, and remits most of the payments to the bundler, which entity splits and forwards it on in turn to the various CMO owners. Probably a one-to-many problem. Many own a piece of the defaulted mortgage, perhaps unknowingly.
Where’s the nut? The servicer doesn’t own the mortgage, the bundler doesn’t own the mortgage, the CMO holders don’t own the mortgage. I cannot think that sophisticated financiers could build themselves this trap - but looks like they did.


22 posted on 10/04/2010 6:43:32 PM PDT by GregoryFul
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To: GregoryFul

Oh, but it doesn’t ultimately matter, because the US taxpayer, will eat the dirty end of the stick - courtesy of our most estimable representatives.


23 posted on 10/04/2010 6:45:50 PM PDT by GregoryFul
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To: SnuffaBolshevik

If title can be traced to the building of the home and there were no foreclosures in its history (or at least during the era of the go-go financing), it ought to be OK.


24 posted on 10/05/2010 2:26:37 AM PDT by HiTech RedNeck (I am in America but not of America (per bible: am in the world but not of it))
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To: the invisib1e hand

Hooray! A loophole for the deadbeats. Free houses!
Taxpayers, bend over.


25 posted on 10/05/2010 2:34:42 AM PDT by Lancey Howard
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To: wendy1946; All
MERS appears to be vulnerable

There is some bathwater to be thrown out, and precious little baby. The author's viewpoint seems to border on anarchist (the financial reform bill is "tepid;") and she seems almost aglee that ownership may be rescinded upon a technicality.

On the face of it, MERS is analogous to DTCC, which nobody has ever heard of but without which (or without something quite like it) the cost of trading stocks would be incalculable. Now, if there is some difference between "real property" and "corporate equity" that is rooted in something other than archaic law, perhaps there is a good reason that MERS is portrayed as a nefarious "front" operation. And given that big money is, in fact, a lot more nefarious these days than it was when DTCC was being set up, perhaps, again, the suspicion is somewhat justified.

But the piece reads like a standard bogey-man story that is getting heavy rotation in all victim classes these days.

And speaking of DTCC, if you buy stock in another person's name to hide your ownership, a court will, if it can, point to you as the "beneficial owner" and the other individual as the nominee. And liabilities associated with ownership will be, naturally, the concern of the "beneficial owner." This is merely just.

So, then, if Citi is the beneficial owner of a mortgage, and MERS is a mere nominee, then Citi in fact owns the liabilities (or assets) associated with that mortgage -- in principal, at least. The suits mentioned in the article seem to only want the "beneficial owner" precedent to apply when there's liability involved, not assets. No fair on that.

Finally, however, the owner of the mortgage(s) is(are) the owner(s) of the bonds that own them. It's that simple. And somewhere, there is a record of who owns what bond and mortgage that bond owns.

And those owners deserve recourse.

Free and clear title thanks to some slimy lawyers' ambitious class action? Maybe it'll fly, but it won't be good for anyone. Except lawyers.

I posted this article, completely unaware of the recent MERS buzzes -- I posted it because I want to see the Impenetrable Death Star known as the Information Complex be blown to bits and I felt that any suit that targets database activity would be a helpful step along the way.

26 posted on 10/05/2010 4:21:03 PM PDT by the invisib1e hand (after your fifteen minutes are up you get a lifetime of ignominy.)
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