The Ibanez case and housing-market catastrophe risk
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The 16-page decision in the case of US Bank vs Ibanez does not make for easy reading. But it’s a very important case: it’s a solid precedent saying that if a bank doesn’t own a mortgage, then it can’t foreclose on a home. That was the decision of the lower court in Massachusetts, back in March 2009, and it has now been unanimously upheld on appeal to the Massachusetts supreme court.
After speaking to crack Reuters reporter Jonathan Stempel, I’m even more worried about this case than I was before.
The immediate effect of the ruling, which covers two separate cases, is that Mark and Tammy LaRace get to stay in their home, despite being foreclosed on in 2007. And Antonio Ibanez gets title to his home back, which means that the bank will either have to let him retake possession or else pay him for his deed.
Essentially, these homeowners bought their homes, defaulted on their mortgages, and then — after a long legal struggle — get to stay in their homes. It’s unclear whether they still owe money to any lender, and Massachusetts is a recourse state, which means that the bank could try to go after them personally, as it might had it lent them money on an unsecured basis. But in reality, if a bank does not have the ability to foreclose and the borrower is genuinely distressed and in default, there’s no point pursuing them for the balance of the loan.
The legal craziness that this decision sets in motion is going to be huge, I’m sure. Anybody who was foreclosed on in Massachusetts should now be phoning up their lawyer and trying to find out if the foreclosure was illegal. If it was — if there was a break in the chain of title somewhere which meant that the bank didn’t own the mortgage in question — then the borrower should be able to get their deed, and their home, back from the bank. This decision is retroactive, and no one has a clue how many thousands of foreclosures it might cover.
Similarly, if you bought a Massachusetts home out of foreclosure, you should be very worried. You might not have proper title to your home, and you risk losing it to the original owner. It might be worth dusting off your title insurance: you could need it. And if you ever need to sell your home, well, good luck with that.
Going forwards, every homeowner being foreclosed upon will as a matter of course challenge the banks to prove that they own the mortgage in question. If the bank can’t do that, then the foreclosure proceeding will be tossed out of court. This is likely to slow down foreclosures enormously, as banks ensure that all their legal ducks are in a row before they try to foreclose.
This decision won’t be appealed: the state law seems pretty cut-and-dried, every judge who’s looked at it has come to the same decision, and there’s no conceivable grounds for the US Supreme Court to take on the case.
What’s more, courts in the other 49 states are likely to lean heavily on this decision when similar cases come before them. The precedent applies only in Massachusetts for now, but it’s likely to spread, like some kind of bank-eating cancer.
If a similar decision comes down in California, which is a non-recourse state, the resulting chaos could be massive. People who are current on their mortgage and perfectly capable of paying it could simply make the strategic decision to default, if and when they find out or suspect that the chain of title is broken somewhere. They would take a ding to their credit rating, but millions of people will happily accept a lower credit rating if they get a free house as part of the bargain.
The big losers here are the banks — of course — as well as investors in mortgage-backed securities, including of course Fannie and Freddie, a/k/a the US taxpayer. No one knows how it’s all going to play out: there’s certainly going to be a lot of litigation in every US state, and there’s a good chance that the federal government is going to feel the need to get involved as well. Not every jurist and legislator is going to see things the same way as the judges of Massachusetts, and there’s a case to be made that banks should have the ability to go back and cure their mistakes once they’re pointed out, rather than just losing the house altogether, as they did in this case.
But of course the problem is that the banks can’t cure their mistakes: in many cases the original mortgage is lost, at this point, if it ever properly existed in the first place.
The tail risk here is enormous, and there’s no easy solution to the problem. And this is over and above the problem of putbacks, or legal risk associated with the scandal of banks lying to investors in many mortgage-bond deals. And it’s certainly yet another reason not to buy a house right now. You don’t know if you really have title to what you’re buying, you don’t know whether you’ll be able to sell it if you have to, and there’s a good chance that as a result of all these problems shaking out, home prices could fall dramatically.
Maybe we’ll muddle through this somehow — that’s still probably the base-case scenario. But maybe we won’t. And if we don’t, the downside here, to the banking system and to the economy as a whole, could hardly be larger.
Update: Adam Levitin emails with three other points, all important:
- The ruling should (but surely won’t) led to a ratings downgrade of every securitization trust with MA properties in it. The documentation sloppiness in Ibanez was hardly unique.
- Notice how MA rejected the “mortgage follows the note” argument and also the “assignment of mortgage in blank” argument that ASF has argued is beyond reproach. There are (in my opinion) stronger arguments about the mortgage notes, but that wasn’t raised in this case.
- The MA Supreme Judicial Court is widely considered the best state court in the country. No one questions the quality of the jurists on the court (unlike in some other states). It’s one of the few state supreme courts that can routinely compete with federal appellate courts in recruiting top clerkship candidates and the only state court I know of that has had clerks go on to US Supreme Court clerkships.
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Danny_Black
I concede that several articles referred to these two mortgages being securitized; my mistake. But that misstatement doesn’t change my argument about the relevance of this court case to the broader MBS market.
As for your offer to purchase MBS at a discount: I didn’t say, nor did I imply, that faulty MBS units are worthless.
Indeed, investors have a number of claims and rights — not just over cash flows but also the right to put back faulty and/or fraudulent securities to the originator bank.
So, thanks for the offer but I think I’ll hold my position for a while…
Jon7, you missed the last part of the quote…
he executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder,”
Gants wrote. *However, there must be proof that the assignment was made by a party that itself held the mortgage.*
Danny Black, I ensured some time ago that none of my self directed pension funds are attached to High risk Wallstreet instruments and anything to do with Goldman Sachs. I am too close to retirement to be a gambler.
No one said that there was NO worth, but they are being further downgraded and another mortgage crisis is going to affect everyone’s homes, not just those who are unemployed.
Wallstreet doesn’t give a whit, but they will care that investers putback… something we might see much of soon.
Marty,
I’m a corporate bankruptcy lawyer. I’ve never done a home foreclosure, but I’m familiar with the process.
I agree with the earlier commenter that it would be a sleazy scheme. In any event, it wouldn’t work. The note is enforceable. The note holder could still foreclose on your house after they get a judgment. All the loss of the mortgage means is that they don’t have a lien on the house – so someone else can get to it first.
The problem is for quite some time the American public has operated under the belief that all the legal actions taken were true and proper. With the debt collect processes and abuses incurred over the past 10 years this points to the larger problem of who really owns the collateral after a loan is securitized, sold, or serviced, etc. If the chain of title is broken or if it cannot be perfected then by all accounts the legal action to foreclose is fraught with legal suspicion and the courts should demand that the plaintiff in recourse states of which they are all the ones east of the Mississippi perfect that chain prior to using up the courts time thus possibly delaying the process out over a year. In the non recourse states all heck will break loose because how in good consciousness can the states demand that the non judicial process be underwritten by the enforcement of eviction, and title sold by public officials on the steps of government property. This all makes them unwilling coconspirators in all of this. It is a bad day at black rock a coming pardners.
dbsmith1, yeah we all make mistakes.. Luckily for posterity, a extremely and undeservedly rude post i made to you got deleted so that when i inevitably make one in the future you won’t be able to point to that one and crow….
MA_Attorney, I have to say I was amazed they tried to appeal this rather than just re-foreclosing. According to judgement there is no dispute the banks own the mortgage now, it is just at the time of the foreclosure they didn’t, a defect which in at least one case they didn’t cure for over a year AFTER foreclosing. I would love to have a true investigative journalist dig into why they thought having an **unsigned** contract constituted proof of a deal.
hsvkitty, so you all in cash? How is that working out for you?
hsvkitty, the issue wasn’t with the assignment or ownership it is that they couldn’t show the loan got assigned at all. There are unsigned agreements, lists of loans in the trust that don’t include the mortgage in question and the mortgage transfer only formally got recorded long after the foreclosure.
ErnieD, actually what this proves is that there is rather a large amount of regulation, contrary to the belief that somehow the financial world got deregulated. I cannot believe that anyone seriously believes that claim. You think you sign millions of pieces of paper whenever you interact with your bank because they hate trees?
The point is that the regulations just lead to lots and lots of boilerplate that no one reads and lots of steps that are just done pro-forma – such as telling the person just before he invests in a fund that prices may go down as well as up after days of telling him how great this fund is. It also incentivises the creation of products that have no real economic value – they are reg arb or tax arb products – and a “get out of jail free” card for people who don’t bother to actually do the due diligence.
Danny Black – There are fundamentally three aspects to regulation:
1) Rules
2) Following the rules
3) Oversight and enforcement
I agree with you that there are lots of rules. The judges themselves point out what the well-defined and established rules are for this case.
The judges then point out that there is no immediate oversight that the rules are being followed which raises the bar for the diligence that the banks need to use in ensuring the rules and procedures are followed.
They then express various degrees of lack of amusement that the banks elected not to follow the well-defined rules and procedures due to “utter carelessness.”
Personally, I think the US has far too many rules, too few principles, and too little actual oversight and enforcement despite a plethora of purported regulators. It shouldn’t be this difficult and expensive to achieve so little protection against incompetence, negligence, and fraud.
However, what this case shows is that the banks appear to be executing basic well-defined requirements that are essential to their own financial health only when forced to by oversight. That is unacceptable for institutions that are critical to the financial and economic well-being of this country, particularly institutions that are receiving massive bail-outs from the government.
Danny_Black, it proves that banker cannot control their immoral urges and greed… Ernie was explaining that while we were dotting our I’s and crossing the T’s, and spending a lot of money to get everything in a buyers process to get the mortgage legally bound.
The banks were sloughing off and robo signing and using fake documents and bribing and coercing those along the way. And not even keeping track of the bank notes, or in some cases DESTROYING THEM. You are so full of it! The statutes of property go a long way back and the judgement cites them because they are the back bone of property law and were disregarded.
And what your last “point” says is typical of bankster (former in your case, but obviously still an unethical bank apologist) You said…”It also incentivises the creation of products that have no real economic value.”
Is that not another way to say we couldn’t help our immoral greedy guts selves to find ways around regulations and rules to do our risky financial crack as regulators gave us no choice?
The banks reaction to this lack of oversight was to simply dump the procedures in order to save a few pennies to improve their margins. They viewed the lack of oversight as an opportunity to tear up the rule book. They are now acting shocked that the courts are really pissed off at them for thumbing their noses at MA state law.
What ErnieD said is RIGHT ON and so I will quote him:
“This decade has proved over and over again the financial sector is incapable of regulating itself and following basic principles. This case is just another example of their flaunting basic requirements and then demanding that these provision be over-ridden because they would cost the banks money. In most other social scenarios, this would be termed fraud and extortion. In the financial sector, it is just called normal business practice.”
There are many other foreclosures which were done illegally and have different nuances that will make precedent each time they are won. The banks are going to run out of excuses, but as “sophisticated” entities themselves, they knew exactly what they were doing, didn’t they?
Danny_Black, it proves that banker cannot control their immoral urges and greed… Ernie was explaining that while we were dotting our I’s and crossing the T’s, and spending a lot of money to get everything in a buyers process to get the mortgage legally bound.
The banks were sloughing off and robo signing and using fake documents and bribing and coercing those along the way. And not even keeping track of the bank notes, or in some cases DESTROYING THEM. You are so full of it! The statutes of property go a long way back and the judgement cites them because they are the back bone of property law and were disregarded.
And what your last “point” says is typical of bankster (former in your case, but obviously still an unethical bank apologist) You said…”It also incentivises the creation of products that have no real economic value.”
Is that not another way to say we couldn’t help our immoral greedy guts selves to find ways around regulations and rules to do our risky financial crack as regulators gave us no choice?
The banks reaction to this lack of oversight was to simply dump the procedures in order to save a few pennies to improve their margins. They viewed the lack of oversight as an opportunity to tear up the rule book. They are now acting shocked that the courts are really pissed off at them for thumbing their noses at MA state law.
What ErnieD said is RIGHT ON and so I will quote him:
“This decade has proved over and over again the financial sector is incapable of regulating itself and following basic principles. This case is just another example of their flaunting basic requirements and then demanding that these provision be over-ridden because they would cost the banks money. In most other social scenarios, this would be termed fraud and extortion. In the financial sector, it is just called normal business practice.”
There are many other foreclosures which were done illegally and have different nuances that will make precedent each time they are won. The banks are going to run out of excuses, but as “sophisticated” entities themselves, they knew exactly what they were doing, didn’t they?
(grr I only pressed once!!)
Am a bit late to this thread. Yves Smith at Naked Capitalism has numerous great posts explaining how New York state trust law, where most of the securitization trusts reside, does not allow “cures” after precise time lags, with six months from closing generally being the longest. So in most likely all cases, the cure period is passed. IRS Remic regs also play a key part here. The Trust can’t “do things” to cure paperwork problems, or anything else, or the pass-through, tax-free status can be threatened.
What we have, as either Adam Levitin or Chris Whalen has said, are “non-mortgage backed securities”. The income from the mortgage notes goes into the trust and out to investors, but in a still unknown percentage of cases, the trust’s servicer will not be able to foreclose. The trust should put these loans back to the depositor, who then could work his way back up the ownership chain, get the documents in order, and then, if appropriate, foreclose.
But where is the pressure going to come from to do this? The trustee certifies at closing, and then periodically thereafter, that all documents for all loans are in order. They aren’t going to do it on their own initiative. The servicers and their foreclosure mill lawyers, have been trying to do everything, including making documents up, and ramming cases though the courts, to push through foreclosures, and they don’t want to admit they don’t have the right papers. Treasury has been peculiarly reluctant to put pressure on servicers, or their bank owners. Investors could do it, but as Yves Smith shows, it is difficult to get an investor suit properly organized, and they still have to fight it out loan by loan. The State AGs could, and still might, but the rumors seem to be pointing to settlement.
Suspect that the pressure will come, at least for a while, from individual homeowners/mortgagors and the anti-foreclosure bar. When more state supreme courts issue rulings like Ibanez, foreclosures, and sales out of foreclosure will back up in the market, and the Feds or Congress will have to act.
What will they do? Many of the commenters worry, as part of me still does as well, that the banks will be bailed out again. After some agonizing, am concluding that they won’t do this, because this time they would be bailing out the banks not just for stupidity and greed, but for breaking the law. Don’t think the politics will let them do that. So I predict that one or more banks will be in receivership or under resolution authority by the 2012 elections.
Well put, hsvkitty.
The banks are sufficiently sophisticated to be held wholly responsible for their lapses. They will be highly motivated to repair what they can. Anything they can’t repair they will ultimately pay for.
We may ultimately need to bail them out (nationalize?) some of the major banks again, but this isn’t a terrible outcome. The Treasury ultimately profited from the last bailout of the banks, and there is once again hundreds of billions of dollars of shareholders equity standing in the front line of losses.
What puzzles me is why people would so eagerly invest in the banks while all of this is going down. They MIGHT emerge unscathed, but how certain can anybody be?
jstuart, the “bailout” of Citigroup ended up with the Treasury owning much of the business. I would expect further “bailouts” along those lines.
If this ends up costing the banks as much as you suggest, they will be literally insolvent — not merely short on liquidity.
The shoes are dropping and en masse, it’s gonna’ hurt. I am not gleeful at the prospect, because everyone will have to suffer a bit, but it is time some people were sent to jail and a lot of suits lose their jobs for having turned their back on their clients and investors.
Hopefully the SEC is also still looking at the liar loans to “prime” mortgages as well and the insider trading done by those who placed them ever so thoughtfully into CDOs.
There is so much more, so hopefully the press will keep it fresh until some culprits are in jail. It’s time.
Class action suits may take years to be heard but meanwhile the banks will have to clean up or sink. (Some big banks think cleanup means Enron style shredding, which is probably pretty rampant right now if there is anything even left…)
A few ‘reminders’ from NYC pensions comptroller, in a state that has much to worry about … given the number of wrongful foreclosures and practices.
http://comptroller.nyc.gov/press/2011_re leases/pdf/PR11-01-003.pdf
ErnieD, I suspect we are arguing the same thing. Basically, financial services has a culture of adherring to the word of the law, whilst aiming to subvert the spirit. This is mainly because they get financially rewarded for it – this is from shareholders and customers to banks and so from banks to employees. It is hard to talk “long-term”, when your owners – the shareholders – are focused quarter to quarter and there is a bubble for over five years or 20 quarters. You say this is a bubble once, twice, three times but it only took a couple of years for Morgan Stanley to ditch its CEO who was pulling them out of prop trading and especially the mortgage business, meaning it got back into those busineses in a major way in 2006….
As for the excitement about this ruling, I think even a flick through shows the judges went out of their way to circumscribe its impact. Presumably because they predicted the orgy of journalistic misrepresentation they explicitly:
1) stated the house could and should be foreclosed on
2) they explicitly stated that the issue about mortgage following the note is limited to MA
3) they explicitly did not state that all foreclosed homes now revert back to their former owners
4) they also stated that the transfer in general of the mortgage for securitisation was valid and could be done and that you didn’t even have to formally record it but there had to be some proof that it was done AT THE TIME, such as bothering to sign the assignment documents.
5) They also explicitly state that this was properly done AFTER the foreclosure.
The cure for this case is relatively simple. Just go back and foreclose again. I would love to know why they didn’t simply do this rather than keep appealing but I would bet the answer is laziness.
jstuart902, again this is not a big deal. Maybe one day a case will come that truly does say all the things people are claiming for this case but it hasn’t happened yet.
The issue about redos for trusts is only an issue if they are a REMIC. To cure it would be pretty simple, start a new trust. Sell bonds based on that trust buying the mortgages of the old trust. It buys the old mortgages and voila done over. Expensive and presumably investors will try and get the dodgy mortgages kicked to touch but they will presumably prefer that to suddenly paying a load of tax. If this does actually start happening in a big way – and there is zero evidence it will have to – then I’d buy IB stock because of all the fees they’ll reap.
Just to reiterate I see nothing in this case that threatens in anyway securitisation or a banks ability to foreclose – again the judges went out of their way to say if the banks had bothered to show standing at the time of foreclosure they would have been able to. They didn’t bother to do it in the ***original*** claim and just kept appealing it, rather than put together a proper claim which the judges explicitly points out they would have had but AFTER the foreclosure.
TFF, firstly the banks have set aside billions for additional legal costs and putbacks. I think most of the bad news is priced in, especially if this case represents the worst of what is coming.
Secondly, maybe someone can point out how this case actually hurts the investors of MBS or how it really hurts the banks. Seeing lots of hypotheticals but not terribly much meat and certainly nothing based on this case.
Seems to me the logic is If all these homes are foreclosed on and if all in all the cases, not only does the bank not show standing but CANNOT show standing and if all of those cases there is a timeout clause on trust and if the MBSes are trading at a price that implied a significant recovery which now won’t happen then there will be a meltdown.
There is only one possible group of people who I could see getting killed by this sort of thing – the GSEs – because they credit wrap their MBSes. If I invest in their trusts bonds then I don’t really care about what happens if the guy defaults, gets foreclosed on, can’t get foreclosed on etc. In the end the GSE makes me good or in other words the US taxpayer.
the judges also explicitly stated – contrary to Felix’s claim – that the home can be foreclosed on and that the loan is not magically uncollateralised.
hsvkitty, it is weird. If you were a stickler for the spirit of the law you’d be here every day demanding that people who defaulted on their mortgages should be out of their homes yesterday. You would be ranting this judgement is so unfair because despite the fact the mortgagors clearly defaulted and they clearly have a mortgage and because MA is a title state they should not be able to stay in their homes just because of some technicality.
Of course as an “immoral banker” I think the technicalities are important and that the banks have rightfully been taken round the back of the woodshed for this one but that is just me.
“The cure for this case is relatively simple. Just go back and foreclose again. I would love to know why they didn’t simply do this rather than keep appealing but I would bet the answer is laziness.”
To me, that suggests that the “fix” is rather less than simple and that the errors are commonplace. They didn’t want a process for fixing their errors, they wanted a rubber stamp of the faulty procedures. My guess is at the very least it will end up costing them tens of thousands per loan on foreclosures already processed.
I don’t pretend certainty as to the outcome, but this is a nasty can of worms and it hasn’t been capped YET. I’d rather invest in oil speculation on the Bakken Shale than in the banks right now.
TFF, in both cases in this judgement the trust does have right to close as is acknowledged in the judgement. The issue was they didn’t produce clear cut documentation that they had it at the time of the foreclosure at the time of the original judgement.
Ibanez:
“On September 2, 2008, more than one year after the sale, and more than five months after recording of the sale, American Home Mortgage Servicing, Inc., “as successor-in-interest” to Option One, which was until then the record holder of the Ibanez mortgage, executed a written assignment of that mortgage to U.S. Bank, as trustee for the securitization trust. [FN14] This assignment was recorded on September 11, 2008.” – so as of 11 Sept 2008, the trust owned the mortgage.
LaRace:
“Wells Fargo did not execute a statutory foreclosure affidavit or foreclosure deed until May 7, 2008. That same day, Option One, which was still the record holder of the LaRace mortgage, executed an assignment of the mortgage to Wells Fargo as trustee; the assignment was recorded on May 12, 2008.”
TFF, I’d rather invest in legal firms. Looks like Ferraris all round for both defenders and plaintiffs. Not sure the homeowners are going to be doing so well out of it…
Danny, if I were a property lawyer, I would be taking on cases pro bono so I could stick it back to the banks. I would as always carefully select those cases that didn’t follow rule of law and broke the proper chain of property law,including those where the lawyers and the judges rubber stamped in collusion.
Lawyers don’t value when they have so much work to do to process individual cases or there would be thousands just like this being heard. That there are so many cases, each with it’s own nuances of illegalities, is why there are no class action suits… yet.
The forensic lawyer that took this on did it pro bono not to ensure people stayed in their homes illegally, but to ensure people were not and are not thrown out illegally. It was the right thing to do … But you will never get that…
Danny Black – I agree with your comment that you would prefer to invest in the law firms, although I don’t think I would want to be investing in the robo-signing ones right now.
I think that the key point that this case makes is that the banks had fairly well-defined procedures (at least in the jusges eyes) to follow. They didn’t.
The key concern that I have is that it appears in state after state that the banking procedures related to document ownership and standing of notes and liens fall far short of well-defined requirements wherever judges look at it in any detail. It appears that they have fallen short on nearly every documentation aspect, from securitization to foreclosure.
A few of these cases would not be a big deal. However, it appears clear that the banking system set up a complex Rube Goldberg machine of securitization, asked for a few legal opinions to justify minimal procedures, and then went on their merry way inserting their products into every real estate transaction in the country so they have a case of systemic dry rot throughout their mortgage structure.
I am a professional civil engineer. One of the big differences between my profession and the financial sector is that we usually don’t multiply “innovations” into almost every household in the US within a couple of years. As a result, the normal process of innovation with some trial-and-error failures plays out over a period of time so that we don’t don’t have an epidemic of collapsing structures and we can learn from our mistakes. Engineers are also typically somewhat pessimistic in some of our basdic assumptions, so we tend to build in various factors of safety (sometimes called factors of ignorance) in order to reduce the potential for failure until we better understand how the new system works.
In the financial sector, as soon as an innovation hits the street, all the companies want to do it within weeeks. As a result, an embedded problem can go undetected for a handful of years and then suddenly explode like a mushroom cloud once critical mass is achieved. At that point, it has usually multiplied like a plague, so it is everywhere and we get financial crises (S&L, LTCM, dot.com, subprime, etc.).
The MA Supreme Court went out of their way to show the banks various avenues to equitably execute the foreclosures. However, I think the banks have blown up their mortgage documentation procedures and it is going to take a lot of king’s soldiers to put their Humpty Dumpty back together again. They are going to need to spend much of the next year or two rebuilding their back-room staffs (internally or subcontractors) to reconstruct their paper trails to the point that the courts will be willing to accept them. It is unclear if they will ever be able to reconstruct some of their securitization trust paperwork trails given the strict time limits that many of the trusts have to have assets put into them – that is potentially a massive ticking time bomb.
This has nothing to do with dead-beat borrowers being let off the hook. There are very few of the cases where a deadbeat will not lose their house eventually. Instead, it has everything to do with the rule of law and legal procedure to take away assets that are equal to several times family incomes. However, I think that the increased costs that the banks will have documenting the assignments, as well as the securitization issues, will encourage the banks to do more mods where they make sense. That would be good for the housing market and the economy.
The only entities that the banks have to blame are themselves and their subcontractors. This is likely one of the biggest business management failures in history and heads should roll.
“I’d rather invest in legal firms. Looks like Ferraris all round for both defenders and plaintiffs. Not sure the homeowners are going to be doing so well out of it…”
Agreed. Always more costly to clean up messes than to avoid them in the first place.
And yes, these cases have nothing about homeowners being “defrauded”. The court agrees that they were clearly in default and ought to be foreclosed on. Foreclosed on PROPERLY, following PROCEDURES.
There is so much more, so hopefully the press will keep it fresh until some culprits are in jail. It’s time to change!
hsvkitty, I believe the guy who first noticed robo-signer in chief was an ex-mortgage banker working pro bono but I will happily bet most of these lawyers are not doing it out of the kindess of their hearts.
ErnieD, actually it takes years in finance too for “innovations” to spread and the docs for most of these trusts are in vaults somewhere, as I said before I suspect strongly that the plaintiffs simply didn’t bother to get them. When you are earning a fixed fee, then getting someone to go into fort knox, extract the actual original document and bring it to court andreturn it is going to bit into that fee. Hence the banks are probably going to move away from asking for a fixed fee from lawyers. Again, the trusts timing issue is a tax issue. If there is one things IBs like is tax issues. Apart from that pretty much agree with what you have to say.
Mr Salmon, given some of the mistakes you seem to have made in the claims about this case you sure you didn’t mishear when Jonathan Stempel was described as a ***crack*** reporter?
ErnieD, the fees I have seen quoted are between 1,200 to 1,500 per case. I can tell you know that getting an original document out of a trust banks vault into court and safely back is going to cost a significant portion of that. What I have difficulty understanding is why these guys don’t have some sort of work flow system that can bring up a scan of the document.
AT&T was bailed out for knowingly breaking the law in the FISA coverup so why not bail out the Banks for knowingly breaking the law in the Great Mortgage Fleece-Out too? Don’t they deserve it as much as the phone company?
Actually Danny Black, almost all of the people involved are doing the work pro bono, including the mortgage fraud forensic analyst that complied the original brief.
(for anyone who found this is a search, there are many scammers claiming to be forensic mortgage analysts since this case cropped up, so beware and do your homework for HUD approved legitimate companies)
Why don’t all the banks merge into a mega-bank and buy back all the mortgage bonds from their investors. Then there’s no question that they can foreclose on whomever they like as the must own the mortgage.
Obviously the above is ridiculous, so if I were a home owner in MA I’d put my home on the market now, today, at a bargain price. If houses are now free, then the price will reflect that over time. In addition no bank will ever issue a mortgage in MA, so there’ll be no future buyers.
How much capital gain is there in getting a free house? I presume those people who now own a house they didn’t pay for will need go broke if they ever try to sell…
Actually, the housing market in MA is comparatively healthy. A relatively small proportion of distressed properties, firm pricing at around the levels seen in 2002, continuing market activity albeit at a slow pace.
The delinquency rate remains under 3% and the local economy is recovering. Could be much better, but this isn’t California, Arizona, or Florida.
I just wanted to add some info about Florida’s foreclosure fraud. In the article is a presentation showing pages and pages of typical fraud and forgery. (there was more then what is on those 96 pages) Being they are being prosecuted civilly, there will be no jail time. So the person who coined that the best way to rob a bank is to own one… was not joking… Bank robbers (fraudsters and forgers) see jail time… these guys are being told to cease and desist? Holy crap!
http://www.huffingtonpost.com/2011/01/07 /foreclosure-fraud-report-_n_805963.htm l
What is clear about this ruling is that it will increase loss severities for private label MBS investors unless they mobilize and begin enforcing their legal rights. Will the Ibanez decision finally force these investors out of the shadows and into the courtrooms to ensure that they’re not left holding the bag for the banks’ sloppiness?
http://subprimeshakeout.blogspot.com/201 1/01/massachusetts-supreme-court-hands-d own.html
As you said Felix:
“And it’s certainly yet another reason not to buy a house right now. You don’t know if you really have title to what you’re buying, you don’t know whether you’ll be able to sell it if you have to, and there’s a good chance that as a result of all these problems shaking out, home prices could fall dramatically.”
http://www.bloomberg.com/news/2011-01-21 /faulty-foreclosure-case-in-massachuset ts-high-court-may-hurt-home-buyers.html
The Virginia banks have figured it out. Make new legislations that favours the banks. THAT outta fix all the foreclosure/lack of process woes, right? Nothing like unethical practices being rewarded to stop more unethical practice in the future.
http://www.nakedcapitalism.com/2011/01/b ank-board-member-proposes-legislation-in -virginia-to-change-ucc-to-help-banks-es cape-foreclosure-woes.html
Banks in Florida drop as many as 50 cases in a row because they were not winnable. Does that now tell the skeptics how wide spread the fraud was?
http://www.news-press.com/article/201101 19/RE/101190387/1076/Banks-drop-foreclos ures-in-Southwest-Florida
Not totally on topic as this pertains to the robosigners. Just this one robo signer of admitted 10k cases and so far 250 caes were dismissed.
http://www.bloomberg.com/news/2011-01-19 /ally-s-gmac-dismisses-250-maryland-for eclosures-update2-.html
The University of Maryland Consumer Protection Clinic and Civil Justice, Inc., a nonprofit, filed the class action lawsuit, arguing that any case using Jeffrey Stephan as a signer was illegitimate and must be dismissed. In court Friday, GMAC agreed to dismiss every case in Maryland relying on a Stephan affidavit.
They can refile foreclosure actions on the homes, but only at their own expense, and subject to new Maryland regulations which require mandatory mediation between borrower and lender before moving to foreclosure. Civil Justice and the Consumer Protection Clinic also want any cases with affidavits from Xee Moua of Wells Fargo, who has also admitted to robo-signing, thrown out, but that case has not yet been settled.
Hawaii chimin in…This case i being heard in the Supreme court.
http://livinglies.wordpress.com/2011/01/ 23/hawaiian-attorney-is-first-to-take-no n-judicial-to-us-supreme-court/
Now that MERS is next to take thwe spotlight, it seems its CEO is leaving the company. Wait…what company? And to whom does he hand his resignation? Which of the pseudo vice-Presidents will take his place?
http://online.wsj.com/article/SB10001424 052748704115404576096462866136394.html#a rticleTabs%3Dcomments
This isn’t about foreclosure, but about the Robo signing “forclosure king’ and the irony as he receives some well deserved Karma.
http://www.bloomberg.com/news/2011-02-06 /the-rise-and-fall-of-a-foreclosure-kin g.html
The banks are going to have to get it right or this may happen more and more. When people push back:
Court ordered seizure on a bank, for court and lawyers fees
http://www.newstalk980.com/story/2011021 5/47100
A homeowner incorrectly made to insure his property for 4 times its present value. (insurance fraud is also rampant. You subtract the property value when insuring for replacement value)
http://4closurefraud.org/2011/02/15/phil adelphia-homeowner-forecloses-on-wells-f argo/
This cocky lawyer is likely the reason Government is still trying to modify mortgages. Ibanez has emboldened and enriched a few lawyers already!
Modifying mortgages and refinancing means they can now have all the paperwork in their hot little hands, whereas the notes and paperwork were previously been non existant. Killing 2 birds! (or 3 or 4 if other documents were missing and forged) and they can still foreclose on those whose notes they do have.
It surely is one way to ensure hounds like this lawyer aren’t calling out for your blood and winning. It may further destabilize the market as those who need the mods might not necessarily be the ones who are going to get them, but at least the banks/servicers will have done their share to right their wrongs… um right? Pretty typical restitution.
http://tinyurl.com/66uwonr
In Clinton-like fashion, HSBC’s says “we don’t robosign” means they think they can divorce themselves from the actions of their servicers.
http://www.dailyfinance.com/story/credit /hsbc-foreclosure-moratorium-robo-signi ng-claims/19867343/?icid=sphere_copyrigh t
Modifications being offered are not for the sake of the homeowner. It is another stall tactic designed so banks and servicers who do not hold the note or have the proper paperwork to get the paperwork in order. (or possibly make up new strategies to rip off homeowners)
Refinancing and modifications may hide the previous illegalities and misdeeds, but the unethical behaviour will continue unabated. What incentive is there to change or follow the law?
Here is another example of the system gone absolutely whacko being this is a fix for the David Stern robosigners …
http://www2.tbo.com/content/2011/mar/24/ bogus-letter-tells-man-with-refinanced-m ortgage-to/news-breaking/
This case of an overturned foreclosure should have a few banks shaking in their boots…
http://livinglies.wordpress.com/2011/03/ 25/wisconsin-appeals-ct-aurora-is-not-ow ner-of-note-trial-court-reversed/
This URL is another court case where a judge , who cannot be bought to make a rocket docket sham of the court system and accept robo signed fake documents, makes a decision in favour of the note and makes it clear that MERS did not have the right to foreclose.
Maybe it’s time to go to the old fashioned law abiding chain of ownership where someone actually registers who owns the note.
http://www.nakedcapitalism.com/2011/04/a labama-judge-accepts-new-york-trust-theo ry-dismisses-foreclosure-act
This URL provides a little more info about MERS and why the AG’s are backing away from looking at what the banks, servicers, MERS,complicit judges and lawyers have done in the past…
http://www.businessinsider.com/new-yorks -us-bankruptcy-court-rules-merss-busines s-model-is-illegal-2011-2