Wall Street made hay out of the U.S. Housing Market over the last several years. Much of their "Securitization Magic" could not have happened with the instant capability to "slice and dice" individual Mortgages -- into what amounted to "Investor Shares" ... on OUR Homes.
These tiny "Shares" of individual Mortgages, were spread out, repackaged, and sold off -- as can't-lose Income-generating Securities, to Institutional Investors around the world. Under the guise of Collaterized Debt Obligations (CDOs) and Mortgage Backed Securities (MBS) -- those Institutional Investors bought-in, in a big way.
Afterall as the sales pitch went, "What could be more secure that Owning your own Slice of the American Housing Market ?" At the time, the "annual appreciation" rate, on the value of a U.S. Home, seemed unstoppable. (10-20% per year)
Very little of this "instant capability" to "slice and dice" individual Mortgages and repackage them, multiple times over, would not have been possible without the "electronic sleight of hand" of the company: Mortgage Electronic Registration Systems Inc. (MERS). MERS had the hundreds of "electronic spreadsheets" to track the thousands, the millions, of tiny "Shares" making a claim on our individual Mortgages.
A tracking system, from which Wall Street would make its Trillion Dollar "Hay".
Back in their "Hey day" that is.
The key to any profitable Bubble Scam, is to "Get in, and Get out -- Quick!" You DON'T want to be the last one 'holding the bag' -- when the "true value" of the Investment, starts to become more widely known.
MERS enabled Wall Street to do just that. "Get in, and Get out -- Quick!"
Individual Investor Stakes in OUR Mortgages changed hands multiple times over. That's the Derivative market for you. That's Wall Street. You Churn, you Earn!
Problem is, once all these MERS "virtual transactions" started becoming the common "basis" for Foreclosing on the Individual Home-owner ... Well it was only a matter of time, before Bankruptcy Judges would begin to start "weighing in" on this "House of Cards" that Wall Street created.
What those Judges have been ruling and saying about this inevitable Wall Street-MERS faux-bookkeeping fallout, is very interesting, to say the least ...
Funny thing about Mortgage and Title law -- there is a long, tortured history of insisting on have the right "Paperwork". Indeed, there is a giant industry based on ensuring these property documents are valid, known as "Title Insurance".
MERS seems to have gleefully "side-stepped" those quaint traditions.
FEDERAL BANKRUPTCY JUDGE RULED AGAINST MERS FORECLOSURE
G J Beckus -- Jan 5, 2010
U.S. District Judge Kent Dawson [Nevada] upheld a bankruptcy court ruling that makes it harder for lenders to foreclose on home mortgages.
The case, which was heard by a panel of federal judges in November, concerned whether Mortgage Electronic Registration Systems Inc., or MERS, could foreclose on residences on behalf of lenders. The electronic system records the ownership of residential mortgages for the mortgage banking industry.
Dawson said the company could not foreclose on a home because it did not provide evidence that it held the note on the residence and didn’t show that it was an agent of the lender.
[...]
MERS asked bankruptcy Judge Linda Riegle for permission to start foreclosure proceedings against a property owned by Lisa Marie Chong. Bankruptcy trustee Lenard Schwartzer objected, saying the electronic system was not a “real party in interest” in the mortgage loan.
Like many mortgages, Chong’s loan had been securitized, meaning it had been pooled or packaged into a security held by investors.
MERS was unable to show that it had possession of the note. The bankruptcy judge ruled in Schwartzer’s favor. The decision was appealed to federal court.
Oregon Judges have been stopping these Questionable MERS-based Foreclosures too.
MERS Getting Crushed in Oregon
Three Rulings Against MERS in February Alone
By Daniel Edstrom, DTC Systems, Inc. -- March 7, 2011
Brent Hunsberger from the Oregonian has reported that hundreds of Oregon foreclosure sales have been stopped after judges’ rulings. Two rulings are from October 2010, but three rulings were from February 2011. Apparently Oregon has a law requiring all intervening assignments be recorded. This appears to be a problem since MERS was specifically designed to hide the beneficial ownership of the loan and to avoid the payment of taxes on the transfer or assignment of the loan.
Oregon woman, representing self, halts BofA foreclosure in court
By Brent Hunsberger, The Oregonian -- October 08, 2010
However, King [U.S. District Judge Garr King] noted that courts, including a U.S. Bankruptcy judge in Oregon, have said MERS was "more akin to that of a straw man than to a party possessing all the rights given a buyer." The Oregon judge, Elizabeth Perris, concluded Aug. 24 that under Oregon law, MERS was not a beneficiary of the deed, raising questions about whether it had authority to take steps to start foreclosure proceedings.
Well this a switch -- Kansas finally getting something right, too!
Kansas Supreme Court Landmark Ruling Against MERs
by Tony, obamasavemyhome.com -- October 5, 2009
A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. [...] The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose -- on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name.
IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 98,489
LANDMARK NATIONAL BANK,
Plaintiff/Appellee, v. BOYD A. KESLER
Appellee/Cross-appellant MILLENNIA MORTGAGE CORPORATION,
Defendant, (MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AND SOVEREIGN BANK),
SYLLABUS BY THE COURT
[...]
The relationship that MERS has to Sovereign is more akin to that of a straw man than to a party possessing all the rights given a buyer. [...] By statute, assignment of the mortgage carries with it the assignment of the debt. K.S.A. 58-2323. Although MERS asserts that, under some situations, the mortgage document purports to give it the same rights as the lender, [...] The document consistently limits MERS to acting "solely" as the nominee of the lender.
[...]
"The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note.
[...]
The Missouri court found that, because MERS was not the original holder of the promissory note and because the record contained no evidence that the original holder of the note authorized MERS to transfer the note, the language of the assignment purporting to transfer the promissory note was ineffective.
This New York Bankruptcy Judge doesn't mince words -- he calls the MERS "Documents" being use as legal-basis to claim harm and start Foreclosure proceedings: "Absurb, at best".
Merscorp Lacks Right to Transfer Mortgages, Judge Says
By Thom Weidlich - Feb 14, 2011
U.S. Bankruptcy Judge Robert E. Grossman in Central Islip, New York, in a decision he said he knew would have a “significant impact,” wrote that the membership rules of the company’s Mortgage Electronic Registration Systems, or MERS, don’t make it an agent of the banks that own the mortgages.
“MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not supported by the law,” Grossman wrote in a Feb. 10 opinion. “MERS did not have authority, as ‘nominee’ or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal.”
[...]
'Nominee' Status
“Without more, this court finds that MERS’s ‘nominee’ status and the rights bestowed upon MERS within the mortgage itself, are insufficient to empower MERS to effectuate a valid assignment of mortgage,” the judge wrote. “MERS’s position that it can be both the mortgagee and an agent of the mortgagee is absurd, at best.”
Unfortunately, with the Appeals and the Supremes yet to weigh in, in a big way -- we are a long ways from a "clear resolution" on the extent of damage that the MERS-enabled Securities are "liable for" ... or alternately -- the debt payments they are "entitled to" -- entitled to vouch for.
As this recent Appeals Court ruling shows. According to them, MERS CAN legally initiate Foreclosures. The real problem, according to this Califorinia Court, is with the "speculative home-owners" who are bringing suit to stop Foreclosures -- as some sort of 'Gold-digging gimick', they seem to be saying ...
MERS Can Foreclose in California, State Appeals Court Rules
By Thom Weidlich, Bloomberg, businessweek.com -- Feb 23, 2011
“Under California law MERS may initiate a foreclosure as the nominee, or agent, of the noteholder,” California Court of Appeal Justice Joan K. Irion in San Diego wrote in a Feb. 18 ruling.
[...]
“It’s incorrect,” Ehud Gersten, the San Diego lawyer who brought the suit on behalf of the borrower, Jose Gomes, said of the ruling in a phone interview today. “I disagree with it completely.”
Gersten said he will appeal the decision.
[...]
'Speculative Suit'
Gomes didn’t allege any facts to suggest MERS lacked the right to foreclose, Irion said, calling his case “a speculative suit.” The state legislature would have to act to allow such litigation, she said.
Gomes also agreed, by signing the deed of trust securing the promissory note for the loan, that MERS had the authority to foreclose, the court said.
“Essentially, the Court of Appeal is saying that once somebody starts to foreclose,” borrowers “can’t seek any right from or question that person,” Gersten said in the interview. “The beneficiary under the deed of trust can authorize MERS to foreclose but they never did that. We don’t know who the beneficiary is.”
That's a strange irony, isn't it. Homeowners demanding proof of the "clear rights" of those wishing to kick them out of their Homes -- being guilty of bring "speculative suits" (ie. Nuisance Suits). What could be more "annoying" -- than being evicted onto the street, by "faceless" computer-based "interests" ?
Since when did enforcing existing "Title Law" become merely an 'ambulance-chasing' endeavor?
Of course with ALL the high-stakes legal claims, winding their way throught the courtrooms across the country, the "Real Investors" in YOUR Mortgage -- may be getting kind of worried? ... Worried that the general public at large, may finally be catching on to their "House of Cards" Securitization of OUR American Dreams ...
Kansas Supreme Court Landmark Ruling Against MERs
by Tony, obamasavemyhome.com -- October 5, 2009
Eliminating the “Straw Man” Shielding Lenders and Investors from Liability
The development of “electronic” mortgages managed by MERS went hand in hand with the “securitization” of mortgage loans -- chopping them into pieces and selling them off to investors.
In the heyday of mortgage securitizations, before investors got wise to their risks, lenders would slice up loans, bundle them into “financial products” called “collateralized debt obligations” (CDOs), ostensibly insure them against default by wrapping them in derivatives called “credit default swaps,” and sell them to pension funds, municipal funds, foreign investment funds, and so forth.
There were many secured parties, and the pieces kept changing hands; but MERS supposedly kept track of all these changes electronically. MERS would register and record mortgage loans in its name, and it would bring foreclosure actions in its name. MERS not only facilitated the rapid turnover of mortgages and mortgage-backed securities, but it has served as a sort of “corporate shield” that protects investors from claims by borrowers concerning predatory lending practices.
Wow. Was MERS really intended to block and dismiss Homeowner rights? According to that Citizen Blogger, they were.
That's not all. According to Rep. Maxine Waters, the MERS-enabled Quick-exchanging of all those millions of Mortgages (ie. "securitization") may have "run afoul of federal tax rules".
Tax Avoidance -- Now THAT is a "Defrauding of Interests" that should stir some Govt Regulators. IRS are you paying attention?
Rep. Waters: $20 Billion Settlement Would Be Too Low
By Nick Timiraos, wsj.com -- February 25, 2011
She also said that regulators should focus additional attention on potential failures within the transfer of notes during the securitization process that might run afoul of federal tax rules for the treatment of certain mortgage-backed securities.
Well here is one little "Interest Group" that IS paying attention!
The last "bag holders" of Wall Street's can't-lose Investments. It seems they want their 'pound of flesh' ... they'll probably get it too. Break out the Big Gun Lawyers.
Countrywide Mortgage Backed Securities (MBS) Litigation
Cohen Milstein, Practice Area: Securities Fraud
Cohen Milstein Sellers & Toll PLLC (“Cohen Milstein”) announces that a class action lawsuit has been filed on behalf of purchasers of certain mortgage-backed securities sponsored by affiliates of Countrywide Financial Corporation and its wholly-owned subsidiary Countrywide Home Loans, Inc. (collectively, “Countrywide”) and related trusts (the “Issuing Trusts”), issued between 2005 and 2007. The case has been assigned a civil action number of 10-cv-00302-SJO-PJW and is pending in the United States District Court for the Central District of California.
[...]
The Complaint alleges claims under the Securities Act of 1933 (the “Securities Act”) as a class action on behalf of investors who purchased or otherwise acquired the following certificates.
[...]
Specifically, the Complaint charges that Countrywide, certain officers and directors of CWALT, CWABS, CWMBS and CWHEQ, and certain investment banks, which served as underwriters of the Certificates, violated the Securities Act by issuing the Certificates pursuant to Registration Statements and Prospectus Supplements that misstated and omitted material information regarding, inter alia, the process used to originate and the quality of mortgages that were pooled in the Issuing Trusts and were used as the financial basis for the Certificates. For example, the Complaint alleges that Countrywide did not follow the underwriting and appraisal standards described in the Registration Statements and Prospectus Supplements.
[...]
Likewise, the mortgages held by the Issuing Trusts and underlying the Certificates were based on collateral appraisals that overstated the value of the underlying properties, thus exposing the Issuing Trusts and Class members to losses in the event of foreclosure. As a result of the material misrepresentations and omissions in the Registration Statements and Prospectus Supplements, investors purchased securities that were far riskier than represented.
Interesting. Even the holders of the MERS-backed Securities, are claiming that MERS is was intending to hide and obscure the "real value" of all those tiny "shares of Mortgages" that they eagerly/foolishly bought into -- not so many years ago.
That's Wall Street. Buyer beware. Regulators keep playing catch-up, won't you. Catch them, if you can. If you dare.
Where are the Home Owners "class action suit" against MERS?
I'm not litigious by nature, but this is one "Straw Man" scam, where I do think the Home owners of American, DO have a very valid case.
Don't you?
---------------
PS. Here is one "class action suit" actually being brought against an prolific "Document Mill" firm, on behalf of New York citizens, I would assume ...
Firm Dominates Foreclosures, but Faces Growing Criticism
Andrew Keshner, New York Law Journal -- Feb 23, 2011
[...]
Indeed, Baum and his firm, Steven J. Baum, P.C., have faced increasing criticism with a surge in foreclosures [...]
Last year, it sought judicial action in 17,620 foreclosure cases, nearly 40 percent of the 46,572 reported by the court system. (The statewide total has more than doubled from the 22,601 recorded in 2005).
[...]
While Baum's business has soared, however, his firm has been reviled as a "foreclosure mill" that tramples on the rights of homeowners. [...] One federal suit even accuses it of knowingly filing "false and fraudulent" court documents.
[...]
Baum also is facing a second potential class action suit in the Eastern District of New York. Filed in November by Manhattan attorney Randall S. Newman, Menashe v. Steven J. Baum P.C., 10-cv-5155 [...]
Stay tuned. Home-owners SHOULD matter too. Afterall we provided the "seed money" that made Wall Street's "Securitized Investments" stack-up, in the first place.