Posted on 03/15/2012 11:40:51 PM PDT by Mount Athos
I am making public the letter that I wrote to Senator Grassley (Feb. 23, 2011) regarding circumstances that led to my firing after 2.5 months by the Congressional Budget Office (CBO), particularly my writing about mortgage fraud and its roots in mortgage securitization that CBO sought to deny was a problem.
I was repeatedly pressured by the CBO Assistant Director, Deborah Lucas… to not write nor discuss issues in the banking sector and mortgage markets that might suggest weakness in these sectors and their consequences on the economy and households...
…Issues at the heart of the foreclosure problems pertain to securitization….and the Mortgage Electronic Registration System (MERS), which purports to have legal standing on electronic records of ownership on about 65 million…mortgages… MERS…facilitated Wall Street’s ability to expedite the pooling of subprime mortgages into MBSs by bypassing standard ownership transfer procedures as the housing bubble escalated…
The implications have profound financial and economic consequences that would be of compelling interest to Congress and the public, but the CBO sought to silence a discussion of such risks, that in reality have been materializing. These risks put into question the ability of investors or bondholders to make claims on the collateral (the homes) that underlies trillions of dollars in MBSs, the bulk of which are now guaranteed by …Fannie Mae and Freddie Mac. This affects $10 trillion in residential mortgage debt outstanding, of which $7 trillion in mortgage-backed securities (MBSs)…
The CBO dismissing such issues prevents an analysis of the risks, so that the public may be forced again to shoulder the consequences for which they have not been a given a voice or a choice.
Georgetown University Law Professor Adam Levitin, Special Counsel to the Congressional Oversight Panel and scholar at the American Bankruptcy Institute, raised essentially the same issues in his testimony before the House Financial Services Committee:
“The chain of title problems are highly technical issues, but they pose a potential systemic risk to the US economy. If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever….
These problems are very serious. At best they present problems of fraud on the court, clouded title to properties coming out of foreclosure, and delay in foreclosures that will increase the shadow housing inventory and drive down home prices. At worst, they represent a systemic risk that would bring the US financial system back to the dark days of the fall of 2008.”
Essentially, the chain of title on securitized mortgages appears broken, whether or not there is a foreclosure. This would pertain to most homebuyers in the past 10 years as most mortgages were securitized by Fannie Mae and Freddie Mac providing the guarantees, and the largest banks (“The $7 Trillion MBS Problem – Foreclosure Problems and Buybacks”). Recall that these same entities founded MERS, which expedited securitization and purported to have foreclosure authority from its electronic records of ownership on about 65 million mortgages. “Robo-signing” emerged as fraudulent or defective documents were used or created to establish the legal authority to foreclose as MERS faced legal challenges; as of July 22, 2011, foreclosures could no longer be initiated in MERS’ name.
It is unclear how the recent State attorney generals’ agreement to a proposed yet unpublished terms of the $25 billion robo-signing settlement would repair the chain of title issues that continue to mutate. In January 2011, the Massachusetts Supreme Judicial Court reversed the foreclosure actions of two banks for lacking proof of clear title, followed by a decision in October 2011 that a buyer who purchased a house that was improperly foreclosed upon does not make the buyer the new owner of the house; the sale does not transfer the property.
A striking little mention fact of the Massachusetts foreclosure case was that the lenders could not show that the two mortgages were part of the securitization pool. Let’s consider a thought exercise. Others have the raised the question: if the entity that has been taking the homeowners’ mortgage payments is not the real owner, what happens when the true owner(s) of
the mortgage shows up? Are homeowners on the hook again for those ‘missed’ mortgage payments? It was not uncommon for mortgages to be sold multiple times, and it is my understanding that loans were intentionally not given unique identifiers as it moved from origination or purchase through to securitization.
As I have come to learn, the issue of foreclosure fraud ‘robo-signing’ seems to be spoken in hushed tones near the powers of Washington D.C. CBO has the ear of Congress and can make or break policies that affect the nation with its analyses.
Who is the CBO serving?
So your point is that the MERS system has further broken the chain of ownership such that recently obtained titles are subject to dispute in court?
If so, purchase of foreclosed properties would carry a substantial risk not currently recognized as such.
That would reduce market liquedity and stifle recovery in the housing markets.
It gets worse:
...”loans were pledged multiple times in various securitizations,...”
http://market-ticker.org/cgi-ticker/akcs-www?post=203453
I hope he’s done estate planning in case he just made Obama’s ‘dead pool’ list.
http://www.nachumlist.com/deadpool.htm
Did you see this
Did you see this
http://www.zerohedge.com/contributed/foreclosure-fraud-lender-processing-services-robo-signer-whisleblower-found-dead-nevada
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Yes, I live in Las Vegas and did see this story. They kill with impunity, Boehner mists and the line in the sand just keeps getting moved backwards.
No problem. They’ll just double the scam called PMI and the banks will get it back.
Why is PMI a scam?
sfl
or make the cost of title insurance skyrocket.
Because it is practically worthless. It doesn’t insure against what most people think it does, and it certainly doesn’t protect who they think it does.
Not just foreclosed properties. The real problem that is little spoken of is this, all transactions that at some time went through MERS are questionable, as to ownership. This means that if you bought a house during the last ten years (myself included), you're likely to have a hard time getting a truly clear title. The people who set up MERS need to be in jail.
I thought PMI was protection for the lenders to have the sort of asset-collateral protection that they would have if the borrower had put 20% down—and so it enabled both sides to participate in loans otherwise on terms that weren’t feasible. No?
Because it is. It is a vigorish on your loan. The bank already has title to the collateral. Why do people have to pay extra on top of what they are already paying?
Because if you don’t put 20% down, as used to be standard in the good old days, there’s too much risk of the borrower ending up underwater and walking away. PMI helps to cover against that, and if you don’t like it you can simply put 20% down.
I have no doubt that the same enormous political pressures are being placed on every single federal agency, in particular the Bureau of Labor Statistics in its unemployment statistics. It will all come out after His Majesty loses in November.
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