DrD

WHO OWNS THE HOUSE? THE HOMEOWNER OF COURSE

In American Sovereign on April 5, 2011 at 4:40 pm

60 MINUTES: SECURITIZATION PROPERTY TITLES ARE A “TRAIN WRECK”

PAYMENT TO HOMEOWNERS TO BACK OFF LITIGATION PROPOSED

30,000 QUIET TITLE ACTIONS ALREADY FILED AND NUMBERS ARE CLIMBING SHARPLY

SHEILA BAIR: A Flood of Litigation from Homeowners is Swamping the Court System.

60 MINUTES; SECOND CRISIS IN THE MAKING

60 MINUTES OVERTIME: WHO OWNS YOUR MORTGAGE

Scott Pelley did a strong piece on the securitization scam last night on 60 minutes (see above links and watch the video). BUT THE SECURITIZATION MYTH WAS NEVERTHELESS PERPETUATED. According to Pelley, we don’t know who owns the mortgages AND THE TITLE IS CORRUPTED so people won’t be able to sell or refinance their house. The clear implication is that we don’t know who owns the house. But the answer is as simple Property Law 101. There is no mystery here. The fact that the securitizers intentionally or unintentionally screwed up the paperwork and the closings is not the homeowners’ problem.
WHO OWNS THE HOUSE? THE HOMEOWNER OF COURSE. THAT WOULD BE THE PERSON OR PERSONS IN THE PROPERTY RECORDS OF COUNTY RECORDERS OFFICE WHO WERE PROPERLY REGISTERED AS THE GRANTEE OF DEED FROM THE FORMER PROPERTY OWNER. The implication that the securitizers actually have some right to the house is wrong, and CBS was unintentionally carrying the message from Wall Street that this is just a paperwork mess that could be cleaned up. But as we have repeatedly said, if it were that simple, it COULD be corrected legally and they wouldn’t have need to have $10 per hour clerical people signing as vice-president of 20  different lending institutions, most of which they never heard of, were never employed by and who didn’t even know of their existence.

The reason why the paperwork is so screwed up is that Wall Street tried the usually successful practice of burying the opposition in paper. But the paper is meaningless. What Pelley missed in his focus on robo-signing was that the closing with the homeowner was defective in the first place and the only “correction” that is possible is to get another signature from the borrower. Good luck. The fact that Federal and state lending laws require that the lender be identified and that the fees and costs all be disclosed before the closing required that information to be on the promotional information given to the buyer, the Good Faith estimate, and the closing statement as well as the promissory note and mortgage or deed of trust. None of that was done.

SO THE QUESTION OF WHO OWNS THE MORTGAGE IS IRRELEVANT. There is no mortgage or deed of trust that can be enforced. The liability for the loan runs from the borrower to the lender. The party on the documents was not the lender. THAT is why this can’t be corrected without the cooperation of the borrowers who are now going to be presented with various proposals to induce them to sign off on paperwork that will make the initial filing of a mortgage valid and legal. It is highly unlikely, without a very significant payment estimated between $20,000 and $100,000 that any homeowner or former homeowner is going to sign such a document.

If the home is STILL worth less than the proposed mortgage, a significant number of homeowners simply won’t sign.

The bottom line is that the liability exists — only to the initial investor or successors who purchased mortgage bonds — and even there, such rights would only be valid if established i courts of equity where the “creditor” would come in with “clean hands” and a credible claim about how they are suffering a loss. Such parties might be and probably would be subject to answers, affirmative defenses, set-off, counterclaims and especially suits for quiet title, which are the last thing that pension funds, sovereign wealth funds, the Federal Reserve and U.S. Treasury want to get involved with.

THE REAL BOTTOM LINE IS THAT NEARLY ALL THE LOANS WERE UNDISCLOSED TABLE-FUNDED LOANS MEANT FOR THE SECURITIZATION MARKET, VIOLATING FEDERAL AND STATE LENDING LAWS. AT LEAST 96% OF ALL “LOAN TRANSACTIONS” HAD MONEY CHANGE HANDS BUT NONE OF THOSE HAD ANY VALID DOCUMENTATION.

PELLEY CALLED THIS A TRAIN WRECK. I disagree. I CALL IT JUSTICE AND THE APPLICATION OF LAW INSTEAD OF THE RULE OF WEALTHY MEN. When Xerox forgot to patent their document copying process, nobody said we should treat it as though they had the patent. Quite the contrary. When bankers, who have been doing this for hundreds of years, “forget” to document their liens and prioritize them, nobody should be saying we should give it to them anyway. Why? Because we already know they sold the same thing multiple times. In many cases, perhaps most, the “creditor has been paid, and perhaps over paid.

The consequences of homeowners getting an unintended collateral benefit from Wall Street’s screw-ups is unusual only because it is the little guy who is getting the benefit. But it is also society at large, where the attempted transfer of wealth did not succeed. Homeowners are realizing that they actually didn’t lose their house and are not at risk of losing their homes and that if they have any liability they have no burden of finding out the amount due or the identity of the creditor to whom it is due. The world is realizing that the mortgage bonds were empty pieces of paper and they have trading spit balls instead of proprietary currency.

The opportunity presented by this turn of events is enormous in terms of our ability to rebuild infrastructure, upgrade education, and level the playing field of what we want as a free market without domination by giants that are too big too fail and too big to manage or regulate.

 

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