YOUR LAND TITLE IS NOT SAFE EVEN IF YOU PAID
Millions of people are sinking their money into homes they don’t legally own.
CHECK WITH A QUALIFIED LICENSED ATTORNEY IN YOUR JURISDICTION
EDITOR’S ANALYSIS: Almost every day we see another indictment of those who ‘defrauded the banks” with dozens or even hundreds of toxic, non-existent, or defective loans. This article references the latest of them and involves mortgage brokers, lawyers, disbarred lawyers etc. The actual masterminds who knew that these fraudulent schemes would be utilized have not been indicted and maybe never will be indicted although I hope that some Attorney General (Coakley in Massachusetts?) will have the nerve to nail them.
Wall Street didn’t care about fraud. In fact it wanted it and needed it. They just wanted a layer of plausible deniability between them and the people who were doing it. But in Florida alone, out of the many thousands of new mortgage brokers who were licensed during the mortgage mania, 10,000 (not a misprint) were convicted felons most of whom were involved in prior economic fraud. Wall Street wanted fraud and it went to those who knew how to commit it.
But they ran out of actual criminals to perform the fraud because their volume and need was so great. So they made it clear that fraudsters had a holiday from any bank investigation, and in so doing they got thousands more homeowners signatures. But that wasn’t enough either. So they engineered a system of straw-men in which “bankruptcy remote” vehicles (entities) were used to front the loans from Wall Street without telling the borrower what was going on.
No information to the borrower as to who the real lender was and certainly no information to the borrower about the gigantic fees that were being collected contemporaneously with each borrower signature that was affixed to a false piece of work called a “note” and an even more false document they called a “mortgage” or “deed of trust.”
What the media is still not picking up even though it is right in front of their face, is that these fraudsters were merely channels for the larger fraud committed on Wall Street. The fact that fraudulent channels were spawned and utilized is providing some cover to Wall Street, but as the truth be known, very little as time goes on.
Let these words not be construed as sanctifying fraud on any level. It is here that I indict Wall Street for the same crimes named in the indictments contained in the above article and hundreds of others. There never would have been such fraud if Wall Street was doing what it ordinarily does best — due diligence, in which it examines every deal like my grandmother used to inspect a chicken before buying.
The Banks and Wall Street Investment Banking Firms (now called “Banks” for some inexplicable reason) stopped due diligence, eliminated underwriting, and simply put the peddle to the metal on moving the money through the system — because when money moves, Wall Street makes money. They were inviting fraud, even insisting on it. The appraisals were all coming in, mysteriously, at $15k-$20k above contract price. The number of occasions in which appraisals failed to meet the contract price dropped to zero. Any appraiser who refused to play the game was blackballed from getting business.
They were never after loans, much less good loans. They were after signatures from hapless borrowers who, as usual, could not possibly explain or understand the mountain of documents in front of them and the mumbo jumbo given to them by the mortgage broker explaining how they needed to do this deal because housing prices, rental prices and everything else was going higher by the month and would continue to do so indefinitely, or so they said. It was all a lie — one which Wall Street invented and everyone else repeated. Told often enough even the most stupid lie becomes perceived as truth.
Why does this matter? It’s about the basic documents forming the foundation of each mortgage transaction. The note and mortgage are fatally defective in virtually all transactions in which the obligation was treated as though it was securitized. While it is helpful to know the name of the SPV or Trust that claims ownership of the loan, it is more important to understand that the SPV or Trust does NOT own the loan even though it claims to have the goods. They don’t.
Starting with the note, the payee is not the party to whom the money is owed, although the payor (homeowner) doesn’t know that. The terms of repayment to the real payee on the obligation are subject to documents that are very different from the note and include multiple third parties, many of whom must pay the payments or the principal due on the obligation without regard to actual default by the homeowner. The homeowner doesn’t know that either.
And the funding of the loan, coming from an undisclosed third party in a classic table-funded transaction (“predatory per se” according to TILA regulations) comes from a slush fund from which the funding of the loan is only a cover for the tremendous fees and profits taken out of the money that investors advanced.
In some cases, as we have shown on these pages, the fees were greater than the loan. That also is not a misprint. Yes, a $300,000 “loan” could actually generate as much as $600,000 in fees and profits, and most of the time DID generate fees and profits that were far in excess of industry norms at a second level of yield spread premium that regulators and prosecutors have still failed to investigate and understand. Who cares if the the loan is repaid? Nobody except the investor/lender from whom $1 million was taken to fund the $300,000 loan.
AND the investor/lender is boxed in: they can’t sue the homeowner for the loan without adopting all the fraudulent and predatory loan tactics sued to procure the signature of the borrower and the liability for affirmative defenses and counterclaims — all on property which when the truth was told, was worth a fraction of what was represented at closing.
This created a void. The creditor (investor) didn’t want to get involved in enforcement. The obligation was till out there. The temptation was irresistible. The Banks simply pretender they were the lenders, and made outrageous unsupportable claims, backed by forged fabricated documents knowing that nobody would think they would risk 150 year old reputations. The Banks were right. The risk was minimal, and the indictments are all aimed as the small fry who were just the street pushers in the larger drug cartels where the actual principals are people we recognize as heads of state, legislators, judges, and prosecutors.
The one thing they didn’t think through was the effect on title. We are now being crushed under a mountain (80 million plus) of real estate transactions that contain fatal defects in title because the wrong party took the payoff for the last loan and signed a satisfaction or reconveyance. The wrong party took title at a fatally defective auction of homes in fraudulent foreclosures.
Marketable title is being redefined by Wall Street as an emergency move to shore up this gaping hole left by their scheme. But nobody is buying what Wall Street is selling — title companies, the ultimate arbiter of title, now refuse to issue title insurance without an exception for any claim arising out of a securitized loan.
All roads lead back to the original transaction, which was fatally defective at the start. The note neither described the payee nor the terms. The mortgage merely pretended to secure a fictitious transaction described in the note, and the obligation of the homeowner to the investor is being replaced by the obligation of the investment banks to the investors for selling bogus mortgage bonds based upon non-existent pools with non-existent assets.
Thus more than 80 million real estate transactions have fatal defects in the chain of title, regardless of whether the “Securitized” loan is shown as paid off, regardless of whether the borrower is or did make all the payments required. The title to these properties is only now being recognized as unmarketable, because it only comes out when the current owner tries to sell or refinance the property. Yes it should have been revealed before this, but that takes nothing away from the fact that the defect is there and that it is incurable. Millions of people are sinking their money into homes they don’t legally own.
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: | bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND