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the entire mortgage market was a criminal enterprise?





handfleisch
A piece by investigative journalist Matt Taibbi. Interesting times we live in.

http://trueslant.com/matttaibbi/2009/09/22/landmark-decision-massive-relief-for-homeowners-and-trouble-for-the-banks/

Quote:
Waking up to discover the mortgage market was a giant criminal enterprise

Quote:
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. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. 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. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.

via Landmark Decision: Massive Relief for Homeowners and Trouble for the Banks.

This is a potentially gigantic story. It seems that a court has ruled that about half of the mortgage market has been run as a criminal enterprise for years, which would invalidate any potential forelosure proceedings for about, oh, 60 million mortgages. The court ruled that the electronic transfer system used by the private company MERS — a clearing system for mortgages, similar to a depository, that is used for about half the mortgage market — is fundamentally unreliable, and any mortgage sold and/or transferred through MERS can’t be foreclosed upon, at least not in Kansas.

Coincidentally I’d been working on something related to this all day yesterday. All over the country, lawyers are contesting foreclosures because of similar chain-of-custody issues. I have some material about this coming out in my next Rolling Stone story, so I can’t get into this too much, but suffice to say the lenders and the banks were extremely sloppy about their paperwork (at best — there is a fraud angle as well) and jammed up the system with missing and/or mismarked mortgage notes. Since a sale isn’t legal unless there’s full transfer of the physical note, a lot of the sales of mortgage-backed securities were not entirely legal, since the actual notes were often not transferred.

Nothing like waking up in the morning and finding out a whole sector of the economy is completely screwed. Are these good times or what?
Although this particular case pertains to MERS, non-MERS mortgages were often even worse.
deanhills
Well, my logical mind would say that if the mortgages were a criminal enterprise, that the people by implication cannot own their houses, they did not obtain the mortgages legally, all contracts and agreements would need to be null and void or redrafted? Wonder who will be carrying the cost for that?
Bluedoll
counterfits in the kitchen . . . by Bluedoll

I hope this is doesn’t seem like a distraction off the topic because it certainly is an interesting one for sure!

Just that the topic made me think of a movie I once watched “The Godfather” the fictional story of a Mafia family that evolves and goes la jit which I think means legalized. I know that Lost Vegas had such a history as it was originally created from less that legalized money and perhaps that kind of thing is more wide spread than we realize.

The question on my mind is who has the greater moral and non-criminal nature? The man (the fictional Godfather) in charge of his family’s well being and peoples associated with his family or his politicians and judges that allowed it to take place.

I suppose this kind of thing challenges the legal systems especially when the paper hits the fan as good hard working family people without homes are usually the ones to suffer in the end.
deanhills
Bluedoll wrote:
as good hard working family people without homes are usually the ones to suffer in the end.
Right ... as with the economy .... the big guys get baled out, those less than the big guys get to fold, and people in society get to suffer the most losing their jobs, and having less value in a dollar that obviously can buy less. They actually took huge cuts in their income by voting for the bale outs. Small people who were borderline poverty before, have become unemployed and have to report to welfare, etc.
Ophois
deanhills wrote:
They actually took huge cuts in their income by voting for the bale outs.
I don't remember being able to vote on the bail outs. If memory serves, Congress made that decision for us.
deanhills
Ophois wrote:
deanhills wrote:
They actually took huge cuts in their income by voting for the bale outs.
I don't remember being able to vote on the bail outs. If memory serves, Congress made that decision for us.
Aren't they your representatives however? If there had been a great objection, representatives could have been lobbied to the contrary? Technically?

Amazing still that something like that could have been hurried through with some not even having a chance to read the content of the Bill properly. They had less than a day to do it in.
Ophois
deanhills wrote:
Amazing still that something like that could have been hurried through with some not even having a chance to read the content of the Bill properly. They had less than a day to do it in.
That was kinda my point. By the time anyone in the public had a chance to object, it was sent through. They do this quite often with bills that they know will not have much public support.
ocalhoun
Well, reliving problems of the bad economy aside, people need a little personal responsibility.

If you borrow money to buy something, and then can't or don't repay the money as promised, you deserve to have what you bought taken away. -- Unreliable computer systems or no unreliable computer systems.
Ophois
ocalhoun wrote:
Well, reliving problems of the bad economy aside, people need a little personal responsibility.

If you borrow money to buy something, and then can't or don't repay the money as promised, you deserve to have what you bought taken away. -- Unreliable computer systems or no unreliable computer systems.
I totally agree. 50 years ago, people saved money, then bought what they needed or wanted. Now people get loans that they know are not in their favor in the long run, and they either don't pay them back or they go broke trying. But we also have the group of people who take these loans, are able to pay them back, but because companies fold and induce massive lay-offs, they lose their jobs and can't make their payments. This happened to my brother, and while he survived by the skin of his teeth, many don't. It sucks to see good people suffering for the total greed of others.
deanhills
Ophois wrote:
ocalhoun wrote:
Well, reliving problems of the bad economy aside, people need a little personal responsibility.

If you borrow money to buy something, and then can't or don't repay the money as promised, you deserve to have what you bought taken away. -- Unreliable computer systems or no unreliable computer systems.
I totally agree. 50 years ago, people saved money, then bought what they needed or wanted. Now people get loans that they know are not in their favor in the long run, and they either don't pay them back or they go broke trying. But we also have the group of people who take these loans, are able to pay them back, but because companies fold and induce massive lay-offs, they lose their jobs and can't make their payments. This happened to my brother, and while he survived by the skin of his teeth, many don't. It sucks to see good people suffering for the total greed of others.
Right! That is how I saw the bale outs. The message that was sent out at the time when Obama was canvassing for it, was that it would be for the sake of the people in the street. For me the list of those Banks who had been baled out, were more the kind of Banks with funds in it that belonged to Government and the very wealthy. Also, going into that much debt, would automatically devalue the US dollar, which means people would have less money in their pockets and took a pay cut. On top of the growing unemployed people. None of that was debated ahead of the Bill. If one goes to a doctor for major surgery, it is his professional duty to explain all the cons of the operation. I did not see any real deliberations about the negatives.
Bluedoll
Lookin at the bigger picture, I am wondering did these actions actually help to prevent a possible depression perhaps more serious than the depression of the 1930's after the market crash of 29. The government at that time did very little or nothing and the outcome was, well it is part of history now.

The question is now that we have seen this play out what will the medium and long term effects be? Will the rich get richer and we see a wideing gap between the rich and the poor classes with the death of the middle class or will there be a different outcome after things settle down?

It seems everytime I played the board game monopoly with my brothers the banker always seemed to win. Why is that?

Crying or Very sad
deanhills
@bluedol. Found this quote last night, and it completely captivated me:
Quote:
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, (Attributed)
3rd president of US (1743 - 1826)

Source: http://www.quotationspage.com/quote/37700.html
atul2242
Should send it to Obama....
handfleisch
deanhills wrote:
@bluedol. Found this quote last night, and it completely captivated me:
Quote:
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, (Attributed)
3rd president of US (1743 - 1826)

Source: http://www.quotationspage.com/quote/37700.html


HOAX alert. Jefferson never said it

http://www.snopes.com/quotes/jefferson/banks.asp
deanhills
@Handfleisch. Thanks for pointing that out to me Handfleisch. I did some research on Jefferson's opinion about Banks, and if the quote is a hoax, it is not very far off as far as I can see it. Basically Jefferson believed that Banking should be the ownership of the States and not the Federal Government:

Quote:
I consider the foundation of the Constitution as laid on this ground: That " all powers not delegated to the United States, by the Constitution, nor prohibited by it to the States, are reserved to the States or to the people." [XIIth amendment.] To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition.

The incorporation of a bank, and the powers assumed by this bill, have not, in my opinion, been delegated to the United States, by the Constitution.


This has been taken from the Yale Law School Library "Jefferson's Opinion on the Constitutionality of a National Bank : 1791"
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