Posted on 06/10/2011 12:41:30 PM PDT by Palter
Truly moronic if you ask me. It is business. I suppose business was booming so they hired a bunch of people who didn’t really know what they were doing. But of all things, if you are going to trade hundreds of billions of dollars you would think that the simplest things like making sure you got title would be taken care of...
I suppose it was so “obvious” that nobody thought to put it into the contracts? It’s inexplicably stupid of them.
Truly moronic if you ask me. It is business. I suppose business was booming so they hired a bunch of people who didn’t really know what they were doing. But of all things, if you are going to trade hundreds of billions of dollars you would think that the simplest things like making sure you got title would be taken care of...
I suppose it was so “obvious” that nobody thought to put it into the contracts? It’s inexplicably stupid of them.
So, basically this was all just a way to avoid filing fees?
Those people were some of NY's highest paid legal firms if it is any comfort to you.
Isn’t that why you have title insurance?
Until the banks get their act together, this will happen. Is this morally any wronger than declaring a bankruptcy when a risky (but not fraudulent) venture fails?
” the original mortgage holder still holds the rights to foreclose and I suppose ultimately they just unwind these transactions and then foreclose. “
Not quite - the original Mortgage Holder ***has already been paid***, and therefore has no reason, or standing, to foreclose....
In effect, the position of the investors who bought the mortgage from your original lender, would be like if your brother-in-law hit the lottery and paid your mortgage off for you...
Just say “thank you”, and collect your clear title....
That, and to accelerate how quickly the banks could peddle mortgages between themselves.
When the mortgages had to be recorded, worst case, it might take a couple weeks before the sale of mortgages was done. With MERS, they wanted these transfers down to a couple/three days, worst case.
When one peels back the nonsense involved in the real estate scams of the last 10 to 15 years, one sees that the banks have screwed themselves. The issue of low to no down payments? That was the doing of Countrywide Finance lobbying DC, and bankers got what they wanted. The collapse of firewalls between deposit banks and investment banks and insurance companies? Also their own doing, via lobbying. Wickedly absurd leverage ratios? Banks got that because they (Hank Paulson, before he was Treasury Secretary) asked for it.
The accelerate of defaults on mortgages? A consequence of the 2005 bankruptcy law, which the banks wanted.
The consequences of MERS? The whole edifice was created by banks. No one forced the banks to create MERS, no one is forcing them to use it.
The banks are getting what they asked for. They just didn’t realize that they were going to get it so good and hard....
Remember the bank sold off the loan to some other entity and made money on it. Do you expect that same bank to foreclose and get the house back to resell it and make money again?
Except that’s not why the courts are doing it, they’re doing it as a loophole to let people who don’t pay their mortgage keep their homes.
No the courts are not doing to let people keep their homes. It is to keep the title clean. Let’s say to go buy a house with a loan with bank A. Then three years later Bank B shows up and says we never got paid from the last loan on the house and foreclose on YOUR home even though to have been paying Bank A. You would be HOT wanting to know who to sue. With this type of crap going on you can’t get title insurance for your future home. It has nothing to do with the deadbeats staying in the house.
You can read a Court's mind?
I’m not debating that there is a problem here with the way these transfers are done.
You just want to ignore those problems and toss about 300 years of well established real estate law out the window because you don't like the outcome.
I’m simply asking in an age of economic turmoil what it will ACCOMPLISH.
I accomplishes the reinforcement of about 300 years of well settled real estate law and forbids a bunch of bankers and Wall Street types from making an end run around it. That's what it accomplishes.
The RESULT of applying this carte blanche would be CHAOS.
TFB. They took the risk, now they get to pay. Unless you're one of those "it's too big to fail" types.
Why not just declare every mortgage using MERS null and void,
That's probably exactly what's going to happen. Which is as it should be. There's no legal basis for MERS anyway.
“So, basically this was a way to avoid filing fees?”
Well there was that, but it was chickenfeed.
Of course it would facilitate a single mortage on a single property to be sold multiple times, to the Bank of China ,the Colorado Volunteer Firemens Pension Fund, the German Central Bank, the Tennessee Walking Horse Fanciers Endowment, the Bank of Japan, the...well you get the idea.
This is why I’ve been advocating that the GOP get their head out of their plump posteriors and start learning about this stuff. Someone needs to take charge of this situation before it snowballs.
But nooooo. The GOP wants to keep parroting their focus-group talking points. “Less regulation. Free markets. Blah, blah, blah.”
In short, the DNC are the evil party, because they helped set the stage for this with their idiotic destruction of lending requirements for minority borrowers. The GOP, being the Stupid Party, went along with it, then doubled down with “less regulation, tastes great.”
The only way to get control of the financial situation in the US now is to re-regulate the markets. Get the crap out into the open, and DEAL with it.
Instead, right now, we’re copying Japan’s lost two decades of “extend and pretend.” Extend sovereign credit to prop up the banks as the turds hit the turbine blades, and pretend that it is all OK. This is also being done in Greece right now too. It won’t work in either place. The Japanese had enough wealth in their society to not need to borrow externally to cover up their banking fiasco. Both the US and Greece depend on external borrowing to prop their messes up.
The adult thing to do is admit that the situation needs to be cleaned up. There are banks that will go under. Quit pretending that the crap on their balance sheets is serviceable debt. It isn’t, so quit pretending that it is worth something. There are bankers who committed mail and wire fraud in selling bogus mortgage “backed” securities. There are banks committing frauds upon the courts in these foreclosure proceedings. Indict them and send a message. As they say in French: “Pour l’encouragement d’ les autres.” They used this when they’d shoot deserters from the FFL. Likewise, the best way to get bankers to adhere to the law is make a few bankers truly miserable. Make them into paupers, wipe out their families, destroy their lives by convicting them of the frauds they committed and put them in prison. Why should Bernie Madoff be in prison for only $50B in fraud when there are bankers out there who have committed at least five times that in mortgage security fraud?
Look, we had a huge problem in the S&L scandal. We came through it, right? Want to know why? Because bankers went to prison as a result of it. The fraudsters got wiped out, a whole bunch of debt was peddled off through the RTC to speculative investors, we closed up a whole bunch of banks, etc. We cleaned up the mess. It was painful, but we did it, and we got through it.
The GOP could do much worse than to take a lesson from those days.
Every read the “fine print” on title insurance?
Go do that.
“Is this morally any wronger than declaring a bankruptcy when a risky (but not fraudulent) venture fails?”
Yes. It is.
A bankruptcy court process of a business does not allow the owners or the business to simply walk away from all their creditors. In fact, certain creditors can be required to be paid by the sale or confiscation of the owners/businesses assets, and certain creditors have top pick at converting debt to an equity stake, and certain creditors may be awarded payment from future revenue of the business after it is re-organized - and many other possibilities as well.
But, in almost every state in the U.S., a homeowner can just walk away and the mortgage-holder has “no recourse” because in almost every state all mortgages are by law “no recourse” mortgages. That is not the case in most other countries.
In most other countries if a mortgage holder forecloses on a mortgagee who is in default, the mortgagee will still owe whatever principal remains on the mortgage after the property is auctioned. Why? Because that is the amount of money the mortgage holder gave to the mortgagee.
In the U.S., they can never come after you for that loss. They can give you a million dollars and you can give them a few years of payments that (in the early years) just pay interest and no principal; and then you can walk away, “Scott free”, no matter how much of that million ever gets repaid to the people that gave it to you. Sorry; that’s immoral.
I would be a perspective landlord.
But I’m not going to spend thousands of dollars per house to quiet the title.
ESPECIALLY when I’d be buying some of these properties for cash. When it is 100% my money on the line, you can bet your buttcheeks that I want that title to say that I own it, period, full stop.
It prices fall another, oh, 10 to 20% ... then it might make sense to start buying residential real estate and hire a lawyer to quiet titles for me. But at current prices, no, it isn’t cheap enough yet. Understand, I’m in a residential market that is going down more slowly than many other markets. If I were in some places, eg, Reno NV, I might well be buying right now and have a lawyer on retainer to handle it.
This is all about expected returns in the future. Real estate will continue to go down until there is organic wage growth to put a bottom under real estate prices, and in some places, real estate will continue to go down as bankers start putting more and more property into the market. Only in Nevada do I see that prices are getting close(r) to a real bottom. In other markets (eg, Floriduh), they’re in for a bunch more pain. In California, they’re in for a bunch more pain.
The only residential market where valuations aren’t and haven’t been going down is the area around Washington DC. And that’s an indication of the larger problem in this country.
Julius Caesar
Works every time...and the hour is very late my friends.
You’re quite simply wrong.
First, In all states, a person who simply walks away from a mortgage will have a tax liability with the IRS for getting out from under the debt without going through BK. So there ain’t a free lunch out of this. If you walk away from a $500K mortgage on which you had nothing down and you hand in the keys on a house now worth $250K, and the bank lets you, guess what? You have a $$250K income event which you must report to the IRS.
Here are the non-recourse states: Alaska, Arizona, California, Connecticut, Florida, Idaho, Minnesota, North Carolina, North Dakota, Texas, Utah, Washington. There are other states where a creditor can bring only one legal action against a debtor - ie, they’d better get it correct on the first crack.
In California, only the first loan to purchase a home is non-recourse, seconds and HELOCs can come after you for deficiency.
Now, as to bankruptcy, which you have egregiously incorrect:
There are multiple forms of bankruptcy. In the US code, there are four chapters that are applicable to individuals, not only businesses.
OK, one is a hybrid - Chapter 12 - for farmers and fishermen. Let’s put that aside.
Chapter 7 is a declaration of insolvency. Your assets are liquidated, and the court distributes the results to your creditors, who have to take what they can get. You are flat busted broke, but get your debts discharged (aside from student debt) and you get to start over.
Chapter 13 is used to get your debts restructured. Your creditors might have to reduce what you owe, or they have to get it back over a longer period of time. You do NOT get to walk away from everything.
Chapter 15 is a new chapter of the US BK code, and is designed to deal with debtors who had money loaned to them from within and *outside* the US, where there are claims of debt across international boundaries. That’s probably not going to come into play for most homeowners.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.