Skip to comments.Court: Busted Securitization Prevents Foreclosure
Posted on 04/18/2011 3:40:01 AM PDT by Neidermeyer
On March 30, an Alabama judge issued a short, conclusory order that stopped foreclosure on the home of a beleaguered family, and also prevents the same bank in the case from trying to foreclose against that couple, ever again. This may not seem like big news -- but upon review of the underlying documents, the extraordinarily important nature of the decision and the case becomes obvious.
No Securitization, No Foreclosure
The couple involved, the Horaces, took out a predatory mortgage with Encore Credit Corp in November, 2005. Apparently Encore sold their loan to EMC Mortgage Corp, who then tried to securitize it in a Bear Stearns deal. If the securitization had been done properly, in February 2006 the trust created to hold the loans would have acquired the Horace loan. Once the Horaces defaulted, as they did in 2007, the trustee would have been able to foreclose on the Horaces.
And that's why this case is so big: the judge found the securitization of the Horace loan wasn't done properly, so the trustee -- LaSalle National Bank Association, now part of Bank of America (BAC) -- couldn't foreclose. In making that decision, the judge is the first to really address the issue, head-on: If a screwed-up securitization process meant a loan never got securitized, can a bank foreclose under the state versions of the Uniform Commercial Code anyway? This judge says no, finding that since the securitization was busted, the trust didn't have the right to foreclose, period.
If the home values the homes were assessed at were somewhat aligned with the values the homes have and will have for the next twenty years there was no fraud.
I and many others, however have asserted for over a decade now that the assessment system was corrupted - and that eventually the real estate house of cards would collapse.
If, as we have been asserting all this time the real estate values are down and staying down then yes, there absolutely was fraud against the home owners. We aren't prophets and don't have psychic powers - which would be the only way the Banks and appraisors were not defrauding the public against out warnings all these years.
So what is it, Triple?
If home prices don't go back up - or are you going to try to say those of us who were warning America with our little presentations and pictures and charts were psychics?
You don't have a third option.
I do not believe in either party receiving windfall profits.
(1) If the occupants did not pay off the amount of the mortgage they entered into, with the agreed upon interest, then they should not get the house. Period. It should be foreclosed and sold.
(2) If the bank received TARP money to cover the bad loan, then any proceeds from selling the foreclosed house should go to the federal treasury.
You are making a paper work foul up in to something it is not.
It’s not a “paperwork foulup” It’s organized crime.
It starts with the homeowner tricked by signing a contract that doesn’t name the counterparty ..
The hidden financier/lender thinks they are getting an income stream...
The Wall Street bank that sold the mortgage keeps (on purpose) the note , never actually funds the trust (which they control). They wanted crap loans so they would get a higher rate ... told investors loans were high quality ... In other words they lied to the investors and kept HUGE amounts of their capital ... for example the “trust” may have shown $1B of loans averaging 6.5% but because the investors were unable to see the actual loans they didn’t know they were getting $600M at 8% ... and Lehman or GS or Morgan Stanley sent $400M to their account in the Caymens..
Now with the investment vehicle “broken” they collect on many times the face value in insurance ... THE INVESTORS GET NOTHING ,, SCREWED AGAIN ...
Today we have loans that are documented to have been in a trust but never went there and they are in default .. According to the PSA rules it is IMPOSSIBLE to unscramble the egg as a Trust cannot accept a bad loan ,, especially YEARS after the cutoff date ...
The “banks” (straw man of the wall streeters) are foreclosing through their servicers although they lost NOTHING , have no interest in the loan ...
The real investors that put up money have taken years to maneuver into a position where they can fight back ,, they are there now ... don’t doubt me...
there was no fraud against the homeowner
Homes aren’t a “want” a place to live is a need ... in my area the monsoon of cash thrown at the market had average 4/2/2 houses that used to sell for $110 going for $300+ , in my area that is approx 7x the average salary ,, WAY OUT OF BOUNDS ... and it was all driven by the fact that a Mexican with no SS or history could walk into a WAMU , claim a 150k salary and buy his cousins house for triple what it was worth and they would split the take and go back to Tijuana. There were no houses to rent back then ,, all the apartments went condo .. and those condo’s have crashed from 250K down to 30k...
We’re not talking about buying the latest tennis shoes or whatever new thing Apple just intro’d ... People really had no choice but to pay up... this went on for 5 years ,, it wasn’t a “blip” you could wait out.
As you live in Virginia I must ask what agency of Obama’s you work for?
How exactly does one teach “real estate” ? Did you teach those seminars for new RE agents? Did you teach RE law? Did you teach what the book says or what actually went on?
Why don’t you ever answer any questions?
Just like being a provacateur?
Do you have anything to add to the discussion or are you limited to simple phraseology and monosylabbic answers?
It’s called a free market, with voluntary buyers and sellers agreeing on a price. The bank does not set the price nor does any appraiser.
When you flood a market with money you bump prices. When you manipulate a market by disregarding all qualifications of the buyer you bump prices ,, if you want a job as an appraiser you give the numbers the bank wants ,, If you need a place to live you pay the price.
This ponzi scheme needed steadily increasing prices ,, and they manufactured them for 6 long years.
I’ve read your posts here and on other blogs and have concluded that you either work for the fraudsters or Owhatever. You know so much that is not true. Please go pester someone else.
Cheer leading the destruction of one's own country is about as low as one can get.
Thanks , I hadn’t seen that first story (Paulson/ABACUS) ,, of all the frauds that is by far the most blatant and easily understandable.
You're wrong. The court is saying the bifurcation of the note and mortgage rendered the note unsecured - like a jumbo (or should we say, jumbled) personal loan. The house doesn't secure the note any longer.
Whoever is entitled to payment (the one who legally holds the note) may sue the homeowner (if they can ever determine who that is) to satisfy the jumbo personal loan; their home is debt free, the homeowner may not be.
There is no judge nor court that can "fix" this problem to the bank's best interest. They skewered themselves over their own invented sword called "REMICS". Arrange the letters a little differently and you get "CRIMES". Ironic, isn't it?
They can file a motion to quiet title and get the title cleared, especially true now the court has ruled in their favor.
I heard of a bank a few blocks from me, that had protesters from moveon.org as part of this glop today.
except now the home owner owes all of the attorney legal fees as well
Not the ones stemming from the paperwork mess caused by the banks and investors. Then we still have to deal with the fraud and tax evasion by the banks that violated state laws.
Does that satisfy all claims to the title, or just the one the bank claims?
moveon.org is linked with the anti foreclosure types
Every once in a while a blind squirrel finds a nut...
I can assure you that I am not a moveon type , I want to see the rule of law prevail ,, the fraud condoned by the Bush2 and Obama admins ($4T down the rat hole) is why we cannot pull out of the financial mess we’re in ,, Maybe we should follow Japans lead and keep throwing money at the criminals for the next 20 years ... except we probably don’t have 20 months left.
Well that's great, but saying that people should be able to get out of their mortgages doesn't square with that.
As I have said many times; if housing prices had gone up; no one would be concerned about how mortgages are securitized.
We just have a lot of people looking for loopholes and for cover.
And if it was my home that had declined in value by 50% and I put 0% down; I might be one of them.
We are a nation of excuse makers and blame shifters. Personal responsibility is a quaint concept of the past. And it may destroy our nation as we know it.
That is a goal of move.og.
Other con men who lie about the known value of the product they are misrepresenting to the mark use the exact same line you are using - with the same intent.
If I am treating anyone unfairly, home and business locations will be selling for a similar price to what they went for in 2008 within three years.
If not, the banks - and their unprincipled apologists as well - were full of shit and deserve everything they and you get.
I note that this thread is just full of whining apologists for the banking industry all upset that the law requires them to transfer ownership in a certain way - and the way they tried to transfer ownership of likely unrecoverable loans was illegal and they want a do-over.
I saw this coming years in advance. It was unavoidable - as the properties were and are worth no where near what the loans were for.
If I am wrong, you can ridicule me on it three years from now - because you can be damned sure that if you are still on these forums then I won't be cutting you any slack if things continue the way things pretty much have to go when you have built a fifteen year oversupply of buildings.
Buyer beware indeed. Also poster beware - things you post now will be showing up in quotes in the future calling into question your credibility based on your past lack of comprehension or integrity.
I guess personal responsibility is a one way street, eh?
“A Morgan Stanley property fund failed to make $3.3 billion in debt payments by a deadline on Friday, handing over the keys to a central Tokyo office building to Blackstone (BX.N) and other investors, the largest repayment failure of its kind in Japan.”
And the ACLU is linked with some credible causes as well. they do it to achieve legitimacy.The mortgage fraud is real and people here at Free Republic have also been involved since early on.
Is it your intention to imply that Jim Robinson (since he runs this site) is now somehow connected to move on.org?
Also - what prompted you to characterize this as being anti foreclosure rather than anti mortgage fraud?
Do you also claim people opposed to illegal aliens are also opposed to immigration as a whole?
Just seeing if you are consistent.
Throw the book at them
I do quite a bit of bankruptcy law and have a multitude of cases where the bankrupt lost their homes to the mortgage company as a secured creditor. If the bankruptcy trustees or bankruptcy court judges believed there was good law to claim that these properties were unsecured, they would go after the property in a New York minute. However, no bankruptcy trustee or court in the entire country has tried to claim that these mortgages are void or even voidable.
Throw the book at them
There may be SOME of it that is real on the origination side.
But that's not what we hear from some posters.
Some posters infer that every foreclosure is unjust and unlawful.
Skipping out on taxes seemed like a cherry on top. lol We’re all supposed to be goose-stepping the dead-beat line. Fail.
Don’t forget the CRA...
“Dont forget the CRA...”
Of course anyone who is knowledgeable of the industry, knows the CRA has some blame for what happened.
If you do not make payment arrangements it is over with. I got involved in car finance for a few years, every time I got a bankruptcy notice I would hang it on the wall, twenty four hour after the hearing I would repo the car. I was always getting those calls I filed bankruptcy you cannot get my car. Always a good laugh.
Popular delusions and the madness of synthetic securitization.
LOL, and you have the little thing called intent, the lenders never pulled a gun on anyone and forced them to sign anything.
Laws are for other people, certainly not the ultra-rich country club set from Wall Street.
Well that’s great, but saying that people should be able to get out of their mortgages doesn’t square with that
People aren’t “getting out of their mortgages” ,, the mortgages were invalid from inception , they don’t really exist according to the TILA laws , they weren’t mortgages they were undisclosed securities contracts with hidden parties , they cannot and will not stand.
When people start realizing that the foreclosing entities are the ones that have been getting the “free house” you’re so upset about ,, that they NEVER LENT THE MONEY ,, then your attitude will change .. you’re just conditioned to accept the banks argument because “they’re the bank” ,, WELL ; THEY”RE NOT THE LENDER ,, the way the Wall Streeters constructed this scam is to ensure thatthey through control of the servicing and trusts would always be between the lender and borrower ... SO THEY COULD CONTROL THE INFORMATION...
I do quite a bit of bankruptcy law ..... to the mortgage company as a secured creditor.
Maybe you should update your skills ,, if the mortgage is securitized list it as an unsecured assett and make the lender prove chain of title .. your claim about a lack of case law in the way you stated it is valid but deceptive ... MANY people have taken that route and won as it is easier than going QT outside of BK.
The failure of to disclose the real lender is a violation unto itself leading to various remedies and consequences especially as to perfection of the lien, and providing the context for a transaction with clear title. But the intentional act of FALSELY stating the name of the Lender without any reference to disclosing a principal or under ordinary principal agent rules, and the failure to provide either the real lender or the borrower with the documents (some of which should have been recorded in the title registry in the country recording office) creates a fatal defect in perfecting a lien to the point where the note is a nullity and the mortgage or deed of trust is nothing more than a wild deed. Any subsequent foreclosure sale in which a deed is used on a credit bid would similarly be a wild deed subject to either being ignored as void or voidable by judicial action.
They signed a valid mortgage at their closing.
The only question with some; is who is able to foreclose due to the mortgages being sold.
Horace - just don't seem like a typical 'Bama name. Are they even citizens?
You do not have a clue as to what you are talking about. And, when the courts eventually throw this nonsense out, you will be claiming the court is in the bank's pocket.
Sound a little like what is going on in the mortgage business?
It seems that we have intent by the otrgage companies to evade taxes by not using the established procedure to record mortgages. By using appraisers that would go along with any asking price, the banks mislead borrowers into thinking they were paying a reasonable price. On the other hand, the borrowers asked for mortgages that they couldn’t afford. It seems that almost everyone involved was part of the problem.
It seems that we have intent by the mortgage companies to evade taxes by not using the established procedure to record mortgages. By using appraisers that would go along with any asking price, the banks mislead borrowers into thinking they were paying a reasonable price. On the other hand, the borrowers asked for mortgages that they couldn’t afford. It seems that almost everyone involved was part of the problem.
Sounds like you may have lost your home - if that is the case you probably paid too high a price based on your ability to make the payments.
I say this based on the emotion apparent in your reply.
The painful fact is, the value of an object is determined by the buyer and seller at a point in time. Circumstances change - and willing and able buyers are not always plentiful - when that is the case - prices fall.
When buyers are eager and abundant - prices rise. Neither I nor anyone else can predict with confidence rising or falling prices of objects.
Please take a class in macro economics - it may help protect you from paying too much in your next major purchase.
Who, that's the problem - there ARE NO ASSIGNMENTS. MERS was the responsible party for failing to do that. Anyone who claims to be an assign, a holder in due course, has to prove they have standing - that's a problem also because the chain of assignment is lost and cannot be "reconstructed" without unwinding a mess of MBS's and by violation of the MBS Pooling, subjecting themselves and investors to millions in taxes and penalties.
Some loan servicing banks will walk away before risking the chance of having fork over millions to establish that chain.
You really should follow the works and advice of Adam Levin and excellent defense foreclosure lawyers like Tom Ice, Carol Asbury, Matt Weidner, Lynn Szymoniak, Nick Wooten, Gary Blackburn, and Max Gardner III.
I'll let their works testify for themselves without "making up stuff".