Back in 2007-2008 I told the State of Arizona and other states that inquired, that they were owed a lot of money because of the failure to abide by state law regarding the recording of instruments. Taxes, fees, costs and expenses were never collected because of MERS and lesser known similar systems (See Chase Bank), resulting in billions of dollars in lost revenue while the same offices got inundated with low cost (Lis Pendens) filings when the mortgage loans turned up in foreclosure courts. And that was just in the State of Arizona. Think about 50 States. The counties and states were hit with an avalanche, 6 million so far, of foreclosures and had to hire more staff, more judges and adopt questionable “rocket dockets” and incorrect interpretations of non-judicial statutory schemes.
The result, according to some studies was that the states lost money, the banks made money through dubious foreclosures, and the investors who were the source of nearly all the money loaned on residential homes ended up suing or begging for settlements. Government was crushed under debts and expenses that could not be paid. Arizona Finance admitted that the total was about $3 Billion which was almost exactly the same as the State deficit. After months of wrangling my plan was adopted by the leaders of the State Senate and House of Representatives, and the governor’s office. Then suddenly it went dark and various orchestrations of “Neil Garfield doesn’t know what he is talking about” were played around the country, with the Banks footing the bill.
Now a Judge in Pennsylvania has stated the obvious (see below) and Pennsylvania will be the first state to recoup billions of dollars in lost revenue and expenses, fines, interest and other charges — without spending a dime on lawyers, who are all proceeding on a contingency fee basis. Those lawyers are going to make a king’s ransom in fees.
Now a Federal Judge has seen the light and expressed himself quite clearly. The whole point of the public records system is to provide confidence in the system of title and giving buyers or lenders the comfort of knowing that they had what they thought they were getting. The whole purpose of MERS and similar schemes was to avoid the public records system — until it comes time to use them to foreclose on previously unrecorded transactions involving the mortgage. Judges around the country have expressed fear that our entire title system has been compromised — both publicly in Bar seminars and privately to me in interviews.
All this happened because the decision was made to force borrowers to shoulder the entire burden of the mortgage meltdown. This country has a habit of relying on a “free marketplace” where it is OK to promote debt and borrowing, including a hard sell and then blame people when they believe the commercials and sales script. We blame them for being in debt! In so doing we got people to rely on easy credit in lieu of a living wage. We did the same thing with tobacco products where nobody cool would be caught dead (every pun intended) without a cigarette hanging from their mouth. But when they get cancer or COPD we blame the smoker. And not to get too political, we did the same thing with immigration. The “free marketplace” did everything they could with local, state and federal government to bring in 11 million people who would provide cheap labor, pay taxes and buy goods and services. Nobody cared whether they had papers and Reagan even granted them amnesty. Now we blame them all for being here.
The systemic problem is that we fail to match accountability with capability. Just because you can get a pension fund manager to part with $100 million doesn’t mean you are entitled to keep it. Just because you get a borrower to sign some papers that make no sense whatsoever, doesn’t mean the papers ought to be enforced — especially when it is at the expense of the pension fund. We have the intermediaries driving the train instead of the real parties in interest. The Banks are seen as too big to fail while the horrendous loss of confidence and net worth in most households (some of which are now under a bridge) is something we just need to suck up and get over. Our system was created to allow for plenty of room for chaos and even a bit of insanity. But when you have the inmates (Banks) running the asylum, then the benefits flow out of the system instead of flowing to those who are part of the society that is governed by our system of government.
Filed under: foreclosure |