More Fun With the Mortgage Racket

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Calculated Risk Loan Securitization Diagram
Or Maybe a Description of N-Dimensional Space

Here's a factoid that should surprise no one, securitized loans 500% more likely to be delinquent.

That a loan that you planned to offload on some poor schlub was executed with less due diligence than one you planned to hold onto, in part or in full, for the life of the loan.

Hoocoodanode?

In any case, it looks like that merry-go-round may be coming to an end, because it's beginning to look like the Kansas decision that said that the electronic database of mortgages, MERS, has no standing in a foreclosure matter, which means that no one knows who has standing in a mortgage matter for about ½ of the mortgages out there is expanding, though I am not entirely sure whether or not this directly applies to MERS, but in Massachusetts, a ruling throwing out thousands of foreclosures has been reaffirmed, and it is clear that the Judge will have none of the banks counter arguments:

Despite the lender’s attempt to convince him otherwise, Judge Long came out (again) in favor of consumers:

The issues in this case are not merely problems with paperwork or a matter of dotting i’s and crossing t’s. Instead, they lie at the heart of the protections given to homeowners and borrowers by the Massachusetts legislature. To accept the plaintiffs’ arguments is to allow them to take someone’s home without any demonstrable right to do so, based upon the assumption that they ultimately will be able to show that they have that right and the further assumption that potential bidders will be undeterred by the lack of a demonstrable legal foundation for the sale and will nonetheless bid full value in the expectation that that foundation will ultimately be produced, even if it takes a year or more. The law recognizes the troubling nature of these assumptions, the harm caused if those assumptions prove erroneous, and commands otherwise.

Judge Long also had some choice words for lenders:

[T]he problem the [lenders] face (the present title defect) is entirely of their own making as a result of their failure to comply with the statute and the directives in their own securitization documents… What the plaintiffs truly seek is a change in the foreclosure sale statute (G.L. c. 244, § 14), which can only come from the legislature.

I think that the courts are looking at the situation, and deciding that the lenders and securitizers are people with huge legal resources who chose to ignore the law because of the cost, and that property law has developed over the past few century and so is very specific regarding the formalities of documentation for a good reason, just look at historical accounts of theft of deeds, forged property papers, etc.

In any case, I would also point you to the following document, which shows how many of these property transactions are actually fraudulent, with a person acting as an agent for both the seller and the buyer, non existent signatures, false notarization, etc.


Foreclosure Fraud - Guide to Looking up Public Records for Fraud
You can find the author's blog here.