UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

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UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Thu Jan 06, 2011 8:43 am

Last edited by Indaswamp on Fri Jan 07, 2011 11:36 am, edited 2 times in total.
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Re: Precident setting Case in Foreclosures...

Postby Indaswamp » Thu Jan 06, 2011 9:08 am

Whistling I May Soon Be: Fraudclosure


Oh, it will be time to get out the Image and sit back to enjoy this show.....

Massachusetts’s highest court is poised to rule on whether foreclosures in the state should be undone because securitization-industry practices violate real- estate law governing how mortgages may be transferred.

The fight between homeowners and banks before the Supreme Judicial Court in Boston turns on whether a mortgage can be transferred without naming the recipient, a common securitization practice. Also at issue is whether the right to a mortgage follows the promissory note it secures when the note is sold, as the industry argues.


Here's the issue, as I've pointed out. Mortgages and property recordation are a matter of State Law, whether the banks like it or not. They clearly didn't like it back in the 2000s and the 1990s, so they did what banks always do: they simply ignored the law.

This was all fine and well when foreclosures basically never happened, because if you got in trouble you could sell for more you owed. But when prices started falling, that became impossible.

The banks had "figured" they could never, ever lose under this paradigm. After all, real estate never goes down in price. Therefore, the law didn't matter because they'd never see the inside of a courtroom. They further reasoned that if push came to shove they could "lobby" (read: bribe) Congress and The States to guarantee that whatever they did would be ruled "ok", or at worst, they'd get a handslap fine. This has been a good strategy thus far - witness drug money laundering for Mexican gangs, illegal transfers of money to Iran, bilking state and municipal governments via various bid-rigging scams and other similar behavior.

Unfortunately, such a strategy requires that all fifty State Court systems be corruptible. If you run into just one that isn't, you're screwed.

We may be about to see exactly that happen:

The Massachusetts homeowners argued that the banks that took their homes didn’t follow their own rules for transferring mortgages into mortgage-backed trusts that issued bonds. The banks and the mortgage-bundling industry counter that the securitization documents themselves assign the mortgages.


Remember my posting of a handful of PSAs? Those PSAs require that physical delivery and endorsement take place. Not "contractual" delivery, physical delivery and physical endorsement, showing an unbroken chain of endorsements from origination onward.

Massachusetts Land Court Judge Keith C. Long in Boston ordered the banks to prove they had the right to foreclose in the first place.

In March 2009, he ruled they didn’t. Published notices listed U.S. Bancorp unit U.S. Bank and Wells Fargo as the foreclosing parties when they weren’t the actual mortgage holders at the time of the 2007 auction, a violation of state law, the judge said.


This case, incidentally, turned on the same sort of practice (retroactive transfers) on the back end, that is, after you defaulted and the foreclosure suit was filed. The Judge tossed it, saying that's a violation of State Law.

The banks then came back and tried to argue that this didn't matter because they had been constructively transferred. Unfortunately it appears that The Judge read the PSA which clearly stated that the Trustee had certified he had physically received the notes and that each one was properly endorsed through an unbroken chain of assignments when the MBS deal closed.

In other words, the PSA said that there was no such thing as a "constructive" transfer (although the UCC does allow it) - the clear language said that a physical transfer was required and worse, State Law required actual endorsement to an entity (not "in blank") because State Law requires that the documents be recordable. Unfortunately for the banks the record showed that the endorsement was indeed in blank and thus the alleged "endorsement" transferred nothing because as a matter of State Law such transfers are prohibited. Ergo, sorry, you didn't own the note and can't recover from this at this time because the allowed time to cure had expired.

The wheels of justice turn slowly, but they do turn. We shall see how the Massachusetts Supreme Court rules on this one. Incidentally, The State Attorney General backs the borrowers.
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Re: UPDATE!!! Precident setting Case in Foreclosures...

Postby Indaswamp » Fri Jan 07, 2011 11:34 am

Market isn't going to react well to this...

UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS


Ok, I now have the Slip Opinion - it's gnarly. (Read below if you want the whole thing)

We agree with the judge that the plaintiffs, who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure. As a result, they did not demonstrate that the foreclosure sales were valid to convey title to the subject properties, and their requests for a declaration of clear title were properly denied.
[FN5]

So far this just sounds like a "late assignment" problem. Unfortunately it's not - it's far worse, and in fact it goes directly to what I've been talking about now for more than a year.

..... At a hearing on the motions on April 17, 2009, the plaintiffs conceded that each complaint alleged a postnotice, postforeclosure sale assignment of the mortgage at issue, but they now represented to the judge that documents might exist that could show a prenotice, preforeclosure sale assignment of the mortgages. The judge granted the plaintiffs leave to produce such documents, provided they were produced in the form they existed in at the time the foreclosure sale was noticed and conducted. In response, the plaintiffs submitted hundreds of pages of documents to the judge, which they claimed established that the mortgages had been assigned to them before the foreclosures. Many of these documents related to the creation of the securitized mortgage pools in which the Ibanez and LaRace mortgages were purportedly included. [FN9]

The judge denied the plaintiffs' motions to vacate judgment on October 14, 2009, concluding that the newly submitted documents did not alter the conclusion that the plaintiffs were not the holders of the respective mortgages at the time of foreclosure. We granted the parties' applications for direct appellate review.


The banks tried to get constructive assignment (e.g. assignment by contract, even though the PSAs said otherwise - that actual assignment and delivery had to take place) recognized by the judge, and failed to produce evidence of actual assignment (because there wasn't any - the notes were originally endorsed in blank and there was no evidence of actual physical delivery to the trustee.) The Judge said no. That's what I was talking about earlier in this case - this has been the pattern and practice in these securitized loans, and the ASF and others in the industry have argued that despite language in the PSAs that required physical delivery they didn't have actually perform in that fashion to have a factually and legally-good transfer.

Finally, even if there were an executed trust agreement with the required schedule, U.S. Bank failed to furnish any evidence that the entity assigning the mortgage--Structured Asset Securities Corporation--ever held the mortgage to be assigned. The last assignment of the mortgage on record was from Rose Mortgage to Option One; nothing was submitted to the judge indicating that Option One ever assigned the mortgage to anyone before the foreclosure sale. [FN19] Thus, based on the documents submitted to the judge, Option One, not U.S. Bank, was the mortgage holder at the time of the foreclosure, and U.S. Bank did not have the authority to foreclose the mortgage.


BINGO.

Heh BAC, WFC and others: Dinner is served....

smiley

And for the market: "Here it comes....."



Update:

The Massachusetts Supreme Court just dealt a negative ruling to the banks in the closely-followed Ibanez case, which challenged securitization standards. It's pretty straightforward: The banks didn't have the proper parwork to foreclose, says the court. Hence, no legitimate foreclosure.


Oh oh. That's exactly what I argued at the time.

If the details look like what this appears to be, the banks are totally ****ed on their securitized paper. This decision is from the State Supreme Court and thus is final within the State, and makes it likely that MBS holders will now sue en-masse for the sale of fraudulently-constituted securities (that is, there are no mortgages in the MBS they were sold!)

Bloomberg is trying to spin this as only governing the fact that the transfers happened late. Nope - the problem is that they can't happen now into the trusts at all due to the REMIC regulations and the fact that certifications were filed by the Trustees that appear to be facially false. I'm sure the banks will try to put a happy face on this, but coming from a State Supreme Court this judgment will be cited as (albeit not as binding precedent) in other states with similar recording requirements and in addition will be cited by private actions in an attempt to unwind MBS and force them back on the banks.

More updates as I get them.
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Fri Jan 07, 2011 11:42 am

get out the popcorn smileys!!
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Congress can't touch this one on behalf of the banks. The supreme court is final in that state.
Congress would have to risk a states rights issue at the federal level-and the law and precedent is clearly on the side of the states...this one will get interesting!! I told ya'll the sh!t's hitting the fan...bank stocks are falling right now.
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Fri Jan 07, 2011 11:51 am

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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby WTN10 » Fri Jan 07, 2011 11:52 am

:lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol:
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Fri Jan 07, 2011 11:57 am

WTN10 wrote::lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol:

let's hope my shorts on bank stocks end up in the money!! :yes: :yes:
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Fri Jan 07, 2011 12:15 pm

Here's the Money quote from the opinion:
The legal principles and requirements we set forth are well established in our case law and our statutes. All that has changed is the plaintiffs' apparent failure to abide by those principles and requirements in the rush to sell mortgage-backed securities.


BAM!!! Oops up side the head!!! :hammer: :hammer: come on shorts!!! :yes: :yes:
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Fri Jan 07, 2011 12:45 pm

Another Kicker:
Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.


http://www.nakedcapitalism.com/2011/01/mass-supreme-court-rules-against-wells-fargo-deutsche-case-on-validity-of-mortgage-transfers-in-securitizations.html
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Fri Jan 07, 2011 1:55 pm

interesting exchange in the ticker forum:
(I agree with GENESIS on this one...)

Jstanley01 wrote:
It's pretty straightforward: The banks didn't have the proper paperwork to foreclose, says the court. Hence, no legitimate foreclosure.


What the country and courts are having to deal with is the aftermath of CONTROL FRAUD, when BAC and the rest were turned into empty shells by the banksters's first round of looting of their own firms.

The only reason that the pigmen are still around -- this go-round arguing at the bar that the rule of law itself ought to be abrogated for their benefit -- is because Treasury and the Fed strong-armed CONgress into either voting for or allowing all the multifarious bailouts that they enjoy.

Bailouts which have allowed them to loot their bankrupt institutions YET AGAIN (the the tune of $143 billion in bonuses last year) via CONgress's looting of the American people for their benefit. Meanwhile, I have no doubt that they've already CONvinced the Republi-turds in the new CONgress that, if the country is to survive they must KEEP THE PONZI GOING AT ALL COSTS.

And if that requires CONgress stomping 500 years of common law and 235 years of state law into the dust, so be it...


GENESIS wrote:Not happening now Jstan...... there's no jurisdiction for them to get beyond on this one.

The 900lb Gorilla is now out and will smash the China - it's not this decision, it's the lawsuits from MBS holders that will cite this as controlling law where there are any such loans in MA. They win on a declaratory judgment if the notes are not properly endorsed now.

The spinmeisters will try to put a happy face on this. It ain't gonna work. The insurance companies are, right now, cranking up these guys and they're gonna have a FEAST.
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby cartervj » Fri Jan 07, 2011 9:48 pm

You remember all the hoopla for one day about the corruption between Gov and the Banks and then it went quiet

ya reckon the strong arm of the law will be shown? or too many heads would roll, where's a good patsy
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Fri Jan 07, 2011 11:11 pm

cartervj wrote:You remember all the hoopla for one day about the corruption between Gov and the Banks and then it went quiet

ya reckon the strong arm of the law will be shown? or too many heads would roll, where's a good patsy

To quote GENESIS:
(Option One being the bankrupt Originator that is still the Assignee on the paper..)


Concurring judgement: "The court's opinion clearly states that such assignments do not need to be in recordable form or recorded before the foreclosure, but they do have to have been effectuated."

Gen: "The problem is that Option One can't foreclose either, because they were paid in full."

Sorry if I'm real slow here, but couldn't the successors of the Option Ones finally assign the loans properly? They couldn't foreclose, but they could assign out their interest properly, right? Couldn't the chain of title be slowly recreated?



BTW, concurring opinions don't control - they are an opinion that reaches the same result via a different route. Read the base opinion; it says that the banks didn't transfer the paper into the trusts and they cannot now claim to have done by construct rather than by the letter of their PSA's procedure.

So pick one as to remedies, assuming you get a court that rules on the concurring rather than the base (which leaves them ****ed with no real way out):

1. The REMIC doesn't own the paper. If it's assigned now it detonates the tax preference.

2. Option One cannot foreclose at present (they hold the paper and have title to it as it never left them and it's a bearer instrument) as they were paid in full. No economic harm = no standing.

How do you get the paper into the hands of someone who CAN foreclose? You can either detonate the REMIC tax preference (not going to happen and an instant lawsuit by the holders of the MBS against the Trustee who said he wouldn't do that) or you can force OOMC to give back the money they were paid so they recover the right to foreclose (and from where is OOMC going to get that money?)

This is the problem at its root - you can't "late cure" the assignments because (1) the PSA doesn't allow it, (2) NY Trust Law doesn't allow it, and (3) the IRS doesn't allow it.

Try to untangle that ball of string......best-a-luck.

There's no free houses of this - the debt is still there, but it's unsecured. Forced back on the originator they suddenly have a very strong interest in doing something equitable with a modification, provided they get more out of that than they would from a suit to collect the debt (especially if the owner files a bankruptcy in response, and he might!)
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Fri Jan 07, 2011 11:36 pm

FYI- this affects every mortgage bought after circa 2003ish. And this is why; Are you certain that the party you are paying is the LEGAL party receiving your payments?? if the transfer to the MBS never occurred-you are paying someone that does not have legal right to receive the payments!! :hi:

(Tallystick)
So if my mortgage originator didn't assign my mortgage to MERS until 2007, and then in 2009 MERS filed an assignment of my mortgage to a REIT that closed in 2005, would this be considered to be a fraudulent transfer by MERS?

Also, since MERS is only a database, who was the actual owner between 2007-2009?


(Throxxofvron)

Tallystick:

That is the whole point of calling attention to the MERS Deception.

It is not readily apparent that Anyone was the actual "Owner" in 2007-2009, -and by Statute; -a REMIC that closed in 2005 can't legally accept Certification in 2009 as the prescribed 90 DAY Cure Period is obviously long since closed.

It sounds like your Mortgage is/has been languishing in the MERS-hole...


See the problem? IMO this whole ball of wax was used to cover up control fraud from the point of origination...and has been covered up all the way up till now...study what Bill Black has put out on this if you doubt me.
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Sat Jan 08, 2011 12:42 am

cartervj wrote:You remember all the hoopla for one day about the corruption between Gov and the Banks and then it went quiet

ya reckon the strong arm of the law will be shown? or too many heads would roll, where's a good patsy

Cartervj...the politicians will have to pick sides-Bankers or the people that bought the MBS's (Pension Funds [Unions, firefighters, police, teachers, etc...], Hedge Funds, Municipalities, and Insurance Companies). Of these-the Insurance companies have DEEP pockets...AND they have statistical analysis down to an art. They were defrauded by the banks through fraudulent conveyance into the MBS's. No way to fix it. IMO-the banks are screwed because this will play out in state courts-not Federal court. Mass. was just the snowball forming...it will pick up speed. This is a massive clash of the titans between big money....and IMHO, the Mass. supreme court got it right and upheld hundreds of years of settled common law. Cut and dried common law with strong precedent!!
Someone will pay. and the loss will be incurred by someone. The fuse has been lit-we are only arguing how long it is...
I don't see any way for this to be avoided by an intervention at the Federal level without inciting a mass mob of armed angry American citizens.

Everyone should read:
http://market-ticker.org/akcs-www?post=168144
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Sun Jan 09, 2011 1:45 am

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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby cartervj » Mon Jan 10, 2011 10:07 pm

CNBC is reporting that report now, funny how they seem to lag behind your post :beer:
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Re: UPDATED: Massachusetts Fraudclosure - No Mortgages in MBS

Postby Indaswamp » Mon Jan 10, 2011 11:30 pm

cartervj wrote:CNBC is reporting that report now, funny how they seem to lag behind your post :beer:

that happens when you have good sources... :yes: But I bet ya they didn't tell ya that there is NO way to correct this mess with out it blowing up...probably conveniently left that out.
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