B of A follows the lead of GMAC and JP Morgan Chase and attempts to correct faulty mortgage paperwork. by Gene DeNardo
(libertarian)
Saturday, October 2, 2010
Bank of America followed the lead of Ally Financial and halted foreclosure proceedings in the 23 states that require a notarized affidavit to initiate the process of evicting the defaulting homebuyer from their home. Like Ally {GMAC}, they admitted to procedural errors and paperwork that was improperly prepared.
JP Morgan Chase had taken a similar stand that would affect tens of thousands of cases in various states for essentially the same reasons. Jerry Brown, attorney general of California, referred to the situation as a "ruse" and instructed Chase to suspend foreclosures unless it could prove it had complied with California's consumer protection laws.
Bank of America executive Renee Hertzler, apparently competing for world champion "robo signer" with Jeffery Stephens of the GMAC team, [link edited for length] said in a Massachusetts deposition that she had signed as many as 8,000 foreclosure documents in a month without reviewing them.
Nobody seems to know who Linda Green actually worked for. Supposedly an employee for a Georgia documents processing company, her signature appears on tens of thousands of affidavits as an officer of B of A, Wells Fargo, US Bank and a bunch of other lenders. It also appears the signature is forged in many cases. Lenders and attorneys have begun pulling documents with her name on them.
In Florida, the state attorney general is investigating four law firms, two with ties to GMAC for allegedly providing fraudulent foreclosure documents. Other states have similar questions about procedural items up for review.
The uncertainty here is not so much the sloppy paperwork, but whether the actual mortgage "notes" exist. While public information is lacking on the underlying mechanics behind the defective procedural actions of these mortgage giants, there is the strong possibility that the MERS system itself will be questioned for legality or at the very least for accuracy. This article [link edited for length] goes into detail about the MERS {Mortgage Electronic Registration System} system.
What we don't know is whether the mortgage industry is using sloppy and what may even prove as fraudulent affidavits simply to rush through hundreds of thousands of foreclosures that are pending on their books or to conceal an underlying problem of incomplete mortgage recordkeeping.
The estimated sixty million mortgages that have been bundled into the secondary mortgage market and resold, sometimes multiple times, are not logged onto public records in the traditional manner. If they are recorded, they are somewhere deep in the belly of the MERS computer. They are owned by banks and investors all over the world, none who signed the hundreds or thousands of mortgage notes that are filed with each Mortgage Backed Security. Many Collateralized Debt Obligations that contain numerous MBS's are in the vaults of the three Maiden Lane corporations that the Federal Reserve created with the solitary purpose of storing a collection of the most toxic financial waste out there. They aren't worth that much, even on Ebay.
What will eventually come out of this is some very critical information. Does the mortgage industry have the paper to back up the very forceful action of removing defaulting buyers from their homes? Courts in the past have time and time again have refused to rock the boat, but this situation is somewhat unique.
The actual mortgage holder never appears in court. MERS is contracted as a "nominee" of the note holder, who could be any one of a number of banks, investment firms or individuals and be anywhere on the planet. MERS appoints a mortgage company {it could be the original servicer but not necessarily} to represent the mortgage holder in the courts. The contracted mortgage company usually contracts with a law firm to represent them and carry out the proceedings.
This foreclosure process as executed by and through the MERS system has never been questioned. Bundling of mortgages for resale and this evasive method of recording has never been legally questioned. It appears extremely likely that it will soon be questioned and it will be questioned not it one court, but it many different state courts. This brings up the likelihood that some of those state courts will take a harder look than others and may come up with some real doubts as to the validity of the system.
Whatever comes to pass, we will likely find out if they actually have the papers and if what they have satisfies the courts. May you live in interesting times!
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The views expressed
in this article are those of Gene DeNardo only and
do not represent the views of Nolan Chart, LLC or its affiliates.
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