State antiquated property registration cause of foreclosuregate? WAPO says yes?
A Washington Post editorial suggests the meme that deliquencies are the main concern for us to consider instead of ownership issues that are more fundamental and problematic. But the author also suggests the states are at fault for their antiquated registration system…
To be sure, the revelations of “robo-signing” and other sloppy or unlawful methods are disturbing. There are big lessons to be learned, especially about how mass securitization of poorly underwritten home loans may have swamped the states’ antiquated, cumbersome property registration and foreclosure procedures. It is also true that the scandal underscores the failure of the Obama administration’s efforts to prevent foreclosures.
But what matters most is whether the misconduct caused large numbers of people to lose homes they otherwise could have kept. And so far, officials have found no evidence of that. This is logical. The robo-signed affidavits at issue were part of a technical review of documents, not the actual determination of a borrower’s delinquency. By the time robo-signers put pen to paper, default had been well established. An ironic consequence of diverting staff to fixing affidavits now is that it leaves fewer people to modify salvageable loans.
I had to recheck the date of the piece, which is this Monday Oct. 18, 2010. Banks have suggested there are only technical glitches for mostly foreclosure procedures, but to simply bypass documenting property ownership without asking anyone is okay? Stay tuned for new slogans.
Robert at Robert’s Stochastic Thoughts says it more forthrightly:
They have decided that the time derivative (not the level) of house prices is more important than the principle that claims to own something should not be accepted without evidence.
They have the idea that the foreclosure mess is a bad thing and not good because it slows foreclosures (OK) and therefore we should just ignore massive widespread perjury and accept any banks claim to own a house just on their say so (and robosign so).
They assert that property titles are “antiquated.” Lenin thought the same and it didn’t work out so well.
All that is sacred is profaned all that is solid melts into CDOs of RMBS.
Update: How many times can a mortgage be sold? See Naked Capitalism for one answer.
Thanks for the link. I think the last line I should have written was
All that is sacred is profaned- All that is solid melts into MERS.
With all of the slicing and dicing of mortgages for inclusion in various MBSs, what if the sum of the pieces of a mortgage sold “accidentally” added up to greater than 100 percent? Oops! What if there are thousands of such cases?
Arnold Kling pretty much said the same thing in a recent blog post:
“The way I look at it, we have two business processes and two record-keeping processes. One business process is old-fashioned lending, where the bank that makes your mortgage loan is still the holder of the loan years later. The other business process is securitization, where your mortgage loan is sold, pooled, sliced and diced, and could be sent around the world and traded every day.
The county record-keeping process is designed to support old-fashioned lending. The securitization process uses different record-keeping that is computerized.
The modern record-keeping process that supports securitization does work. These incredibly complex securities are tracked properly.
…If you want the record-keeping process to adhere perfectly to the traditional process, then you effectively eliminate securitization. I think that would be fine, but it would have been more helpful to have made that determination in 1968, before the government created GNMA, and before it created Freddie Mac in 1970.”
“They assert that property titles are “antiquated.” Lenin thought the same and it didn’t work out so well.”
Thisi is profoundly disingenuous.
I keep asking “When will the advocates of deregulation in pursuit of vague efficiencies in business and finance be forced to account for the cost of deregulated disasters? Are MBSs really more efficient once you back out these scams and frauds? Was deregulating electricity really all that cost effective once you paid for Enron? Same for telecom and WorldCom/Adelphia etc.”
I’m still waiting.
And relevant to a topic on another thread, it’s not hard to imagine that a few thousand highly paid government auditors with genuine authority to say “oh no you don’t” would probably have been a good investment.
Not to mention the shift in priorities at the FBI from MBS fraud to terrorism cases ca 2001. Ok some terrorists got lucky – wouldn’t it have been smarter to hire some more FBI agents to chase them than take away the ones who were uncovering this fraud 6 or 7 years earlier?
If they are trying to make the point that lawyers still wear powdered wigs, I would say…yes they are correct. If they are trying to lead us to the conclusion that we can ignore lawyers wearing powdered wigs, i would say no.
But that’s just my opinion and the big banks just announced they have found that they have zero defect procedures and the foreclosure mill can start up again. Clouded title hasn’t become an issue yet in the MSM.
So we will have to see if the State Barristry goes along with this.
I also think that since all costs can be flowed to the MBS and CDS trust funds, even tho mortgage and note may not have, that the investors of these securities better get a Class Action Barrister to force entry and investigation of what is in, and on the way, to the trust funds.
This would apply to the taxpayer as well in the case of F&F&FHA. Here we have a likely weak point for “costs” to accumulate.
Well its interesting to compare securities with real estate. Try to get a stock certificate today or an actual paper bond. They have been abolished all reside on computers now. This is how we have gotten commissions down to the level they now are at.
As I think this article or another pointed out why did the banks not go to the state legislatures and get the laws changed, they own the better than congress, or was it just to shaft the registrar of deeds?
Do we need to go back to the days of paper securities? I think the property business needs to start with Torrens Title accross the country. (Once it is recorded it is a proof of ownership absent fraud or the like). Then have the states take over MERS and run it,
Once upon a time in the US, land and title theft were common. As late as the 1870’s, if you had the right connections, you could become the owner of thousands and thousands of acres of any state you wished to acquire. This was fairly rountine in the early years of the Republic when millions of acres were sold to foreign investors and others.
Investors who showed up and asked to view their new estates in Georgia or South Carolina, were given a map and instructed to hire a guide. If the weather held, the locals continued, they could hit the Oconee and make it down to the Okefenokee in a few weeks. As it happened, the trip was unnecessary since their supposed vast estates had never been surveyed and title to the land had never been established. And, of course, negotiations with the Creek nation were still ongoing.
Same for the sodbusters in the Lincoln County War and elsewhere and, of course, the Florida land boom of the 1920’s when for $50 down and a dollar a month you could buy a big chunk of waterfront property in the Big Cypress. Or, a thousand acres of oranges in Volusia County. Sorry I forgot to tell you about the big freeze last year. Etc.
Quite naturally, people insisted on systems of records to establish and transfer title to land. A whole bunch of lawyers and courts worked out our principles of real estate law, and that can’t happen here anymore. Right? It looks to me like there really is a time machine and we’re really in it. Nancy O.
So WaPo is advocating that the entire country should, what, swap over to MERS and simply rely on digital representations of documents? Really? I’ve got five pages of case law against MERS that suggest otherwise.
On a separate note re: BAC ‘s review/reaffidaviting – Can someone check my math? 102,000 affidavits in even 5 days = 20400 per day, 2040 per hour assuming a non-stop 10 hour day, 34 per minute and 1.76 documents per second? High school geometry and trig gave me fits so SOMEone please tell me that I’m wrong here. How many document control people and notaries does BAC have on payroll this week?
You’ve heard of high speed trading? Welcome to high speed signing. 😉
The legislatures can fix the case law. MERS is now run on a state by state basis by the state, of course some new fees attach to pay for it. The feds also help to make it work. Anyway in other realms than land we have switched over, as I noted earlier thats the way all securities work now. (See DTC and others).
I meant the new MERS not the existing one essentially the states take it over.
The best name for this situation is “Fauxclosuregate” !
So WaPo thinks forgery and perjury are “technical” details — they didn’t think so back in 1998 and the Clinton impeachment. If the “technical” glitches are forgiven, then the late fees, default interest rates, collection costs and all the other expenses loaded on should also be wiped out.
Does this only work for banksters, or can I claim to own, just for example, the Empire State Building and get a judge to give me the keys because I said so?
Lawyers in the USA don’t wear wigs and aren’t barristers. The USA owns GMAC too, so the most blatantly criminal foreclosure efforts illustrate the ruthless power of the non profit motive.
The MBS holders can note that prospectuses claimed the paper work was in order and demand their money back.
Calling my analogy disengenuous is not a counter argument. I wouldn’t be surprised at all if there is some difference between Lenin’s attitude towards private property and the attitude displayed by The Washington Post editorial board. Could you explain to me what it is ? I ask for information.
No. You need a notary’s stamp too.
They gave the workload to their econ dept. They are adept at statistical sampling.
Reading some comments, I realize that not quite everyone here clicked over from eschatonblog
http://www.eschatonblog.com/2010/10/some-things-are-to-crazy-to-contemplate.html
In a legal motion, Bank of America asserts that mortgages were sold twice. One mortgage. Two entities paid for it. I quote from the official legal motion filed in court by BoA
“It appears as though many loans and other mortgage related assets have been double – and even triple – pledged to various constituencies.
[skip]
“disputed funds — more than $548 million.”
The case concerns Ocala funding LLC not the whole country.
But hey, they saved $22 per transfer of a mortgage so it’s OK.
If you exchange real money for a claim unsupported by any evidence, you are likely to get burned. The antiquated and quaint approach of keeping track of who owns what, and forcing people to prove they own something before they sell it, worked rather well for the past few milennia.
The new approach of taking Ocala LLC’s word that they hadn’t already sold it to anyone else doesn’t seem to have worked so well.
Yes that scans better. But even the first version was inspired 🙂
The judge might give you a copy of the keys.
MERS was founded in 1995. Your assertion that securitization was impossible before MERS is plainly false.
Use the wikipedia
http://en.wikipedia.org/wiki/MERS .
I think it applies to anyone who signs up online as a MERS “Vice President” and to any mortgage registered with an old-fashioned county clerk’s office in MERS’ name. “Probably” the Empire State Building has a clearer title recorded, but if you had asked this question I’d have said “definitely” instead of just “probably”.
Here’s a week old post from Felix Salmon about how fraud entered the MBS creation process.
http://blogs.reuters.com/felix-salmon/2010/10/13/the-enormous-mortgage-bond-scandal/
… if you had asked this question … LAST MONTH … I’d have said “definitely” …
That means liberal economists just got their wildest dream fulfilled. $4.5 trillion in government spending!!!!!! That’s how much F&F&FHA MBS is out there for investors to demand their money back.
Securitization was invented by Solomon Bros. in the 70s, quickly copied by Larry Fink at First Boston, and then the USG thought it was such a cool concept that they supersized it and created Fannie and the then unattached Freddie.
Part of the ground breaking work Solomon did was to figure out how to get the whole thing to comply with state and federal real estate, securities and tax law.
Here we go. The first shot has been fired. PIMCO, Blackrock and NYF go after BAC for refund on Countrywide crap.
http://finance.yahoo.com/news/Pimco-New-York-Fed-Said-to-bloomberg-1351005346.html?x=0&sec=topStories&pos=1&asset=&ccode=
Here’s Andrea Mitchell (aka Mrs. Alan Greenspan) on NPR yesterday:
“It certainly doesn’t translate from their houses and that’s the other big hazard out there for Democrats, the foreclosure issue. That’s why they’re have a big crisis meeting at the White House (giggle) … as though they could do anything about it in this short term.”
Okay then. Nothing to see here folks, move along!
If we don’t need a property title do we also not need a stock certificate? Are stock certificates of existing corporations antiguated?