Inquiring minds should be quite interested in GMAC Foreclosure Case May Set Anti-Bank Precedent
When James Renfro had to stop making payments on his two-story fixer-upper in Parma, Ohio, a suburb of Cleveland, he triggered events that were supposed to result in the forced sale of his home."Restoring Equity" vs. Penalization
That Nov. 15 auction has been canceled because of defects in documents submitted by his loan servicer, Ally Financial Inc.’s GMAC Mortgage unit. Two affidavits about Renfro’s home were signed by Jeffrey Stephan, a GMAC employee who said in sworn depositions in Florida and Maine that he hadn’t read thousands of affidavits he’d signed.
Renfro’s case has created a showdown between GMAC and Ohio’s Attorney General Richard Cordray. Cordray has asked Cuyahoga County Court of Common Pleas Judge Nancy Russo not to let GMAC simply submit new documents to cure defects without consequences. He’s taken the same stand against Wells Fargo & Co., which has said it found defects in 55,000 foreclosures.
“This is just the first,” said Cordray, who filed an amicus, or friend-of-the-court, brief in the Renfro case. He argued that Russo should punish GMAC, the fourth-largest U.S. mortgage lender, for its conduct.
I am not a lawyer. Indeed I would have a damn hard time being either a defense lawyer or a prosecutor. The former has a duty to get his client off even if he knows full well his client is guilty. The latter pursues cases known to be weak, perhaps even trumped up for political reasons.
I would not want to be in either situation. I could not send an innocent man to jail, nor could I defend a client who privately admitted to rape or some other crime yet insisted on a plea of "not guilty". My sense of fairness would not allow it.
In this case, a lawyer wants to punish GMAC. I happen to agree with that. Fraud must be punished. Nothing would please me more than to see a bunch of crooks go to jail.
However, we must also deal with the issue of "Restoring Equity".
Definition of "Equity"
By "restoring equity", I do not mean equity in the sense "4. the monetary value of a property or business beyond any amounts owed on it in mortgages, claims, liens, etc."
I mean equity as in "3.c an equitable right or claim".
In regards to 3.c, there is no dispute that people have stopped paying on their mortgages for months or years. The equitable thing is for those home owners to lose their homes. The idea that homeowners deserve "equity" (principal) writedowns over robo-signing is potty.
Notice I said "deserve". I have no idea what a court of law might allow. A court of law is not interested in "equity" (fairness), it is only interested in the rule (interpretation) of the law.
What's Equitable?
To restore equity in both senses of the word, the ideal solution is to prosecute fraudulent behavior to the full extent of the law, and to otherwise speed up foreclosures, with new laws if necessary.
There is nothing "equitable" in forcing lenders to give homeowners a break over robo-fraud.
In short, this is what needs to be done:
1. Send the fraudsters to jail
2. Speed up the foreclosure process in cases of default, with new laws if necessary.
Anything else is a travesty of justice.
What to Expect
Expect a travesty of justice in regards to sending fraudsters to jail. Also expect a travesty of justice whereby some judges give breaks to homeowners who successfully game the system over a perverse sense of "justice".
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Foreclosure Issues Pose Risks, Should Be Resolved With Time
Summary
Recently, some issues surrounding foreclosure sale proceedings have come to the forefront, leading several large banks to halt foreclosure sale proceedings in many states. The purpose of this note is twofold: to clear up some confusion on what exactly the issues at hand are and to bring some perspective to those issues. For instance, we note that the “foreclosure issue” that we are addressing here is separate from considerations surrounding potential bank loan repurchases. After the JPMorgan Chase earnings call, in which the company announced increased repurchase reserves, the two issues seem to have been muddied.
With respect to the issues surrounding foreclosure sales, while there are some outstanding risks, we think the issues that can be definitively addressed suggest a resolution could be possible over a matter of months. While that resolution should involve time, effort, and cost, we do not believe it will result in a major long–term disruption to the housing or mortgage markets.
Background
The issues surrounding foreclosure sale proceedings were initially brought to light on September 17, when GMAC/Ally halted evictions and REO sales in 23 judicial foreclosure states. Since that time, GMAC has extended their review to all 50 states, and four other large banks have halted foreclosure sales or launched internal reviews of their foreclosure processes: Bank of America has halted foreclosure sales in 50 states, JPMorgan Chase in 41 states, PNC in 23 states, and Litton is reviewing proceedings. Wells Fargo has stated that they are reviewing all pending foreclosures, but not halting the process and are confident their processes are robust. Attorneys General from all 50 states announced Wednesday that they have formed the Mortgage Foreclosure Multistate Group to review some of the practices around foreclosures proceedings.
The “foreclosure issues” being discussed at this point seem to encompass a few distinct problems, which we think it is useful to break down: robo-signers, MERS, and trust transfers.
The Robo-Signer Issue
While judicial foreclosure proceedings vary from state to state depending on different laws, many involve the presentation of an “affidavit of debt” before the court, which certifies that an employee of the mortgage servicer is familiar with the mortgage and borrower under question. Across several servicers burdened with an increasing number of foreclosures, there were employees who allegedly signed large numbers of affidavits without “personal knowledge” of the stated information. In addition, some affidavits were not notarized at the time of affidavit signing. These deficiencies created became a problem when brought before judges.
Importantly, however, although these deficiencies introduce risk, the issue does not seem to be insurmountable. We believe that the likelihood for widespread outright forgiveness of debt in cases where affidavits were signed or attested improperly is low. The details behind resolving cases such as these are not clear from a legal standpoint, but they seem likely to be, in part, a matter of rectifying the affidavit, issues of time, effort, and cost. Similar issues exist for fixing faulty foreclosure processes from the start; it may be possible to solve the robo-signer issue by staffing up teams or via other efforts. While more costly, and likely to delay foreclosure processes a few to several months, again, in our view, the issues do not seem to be insurmountable.
The MERS Issue
A second issue that has arisen questions the validity of MERS, an electronic registration system for mortgages meant to simplify the process of transferring mortgage ownership. In the past, there have been court rulings in support of the MERS model, e.g. that holding title for the benefit of another party was valid or that foreclosure initiation in the name of MERS was valid. There have also been cases in which the model was not supported (e.g. Landmark v. Kessler in Kansas), but in most instances it seems those efforts have failed or been overturned. In the event the matters challenging MERS succeed, resolution seems to be a practical issue; while the process is unclear at this point, it may simply be a matter of assigning the mortgage from MERS to the foreclosing party in cases where foreclosure in the name of MERS is ruled against or of simply foreclosing in the name of the bank instead of in the name of MERS. There has been at least one case (U.S. Bank v. Ibanez) in Massachusetts, which calls into question the separation of legal and beneficial title holding, similar to that used in the MERS model. That case is currently under appeal.
In addition, there also seems to be some misinformation about the MERS system itself and whether some banks are utilizing it or not. MERS put out a press release yesterday to address some of these concerns, citing the fact that Chase registers their correspondent loans in MERS, but does not register their retail loans.
The Trust Transfer Issue
A third issue that has arisen concerns the validity of the trust as the owner of the mortgage for loans that have been securitized. When the note is transferred to a trust, it is endorsed “in blank”, meaning that the owner of the note is not assigned. The note is only endorsed to the trustee or servicer on behalf of the trust if they need to institute foreclosure proceedings. Our understanding is that this is a common practice when notes are transferred to a trust. With respect to physical documents, those are delivered and held by the designated custodian for the trust. Both the seller and the custodian should have verified the existence and validity of the notes upon transfer. If there were any deficiencies, the custodian should have notified the seller to remedy any deficiencies or if they could not be remedied, put the loan back to the seller. The transfer of the notes is governed by the loan purchase agreement which also provides for evidence of ownership of the loans by the trust. Also, when the notes are transferred, the servicer records the ownership of the loans with MERS.
The Risks
The primary risk in our view is not that the affidavits issue remains unresolved, but how much time and effort the resolution will take and how far the scope of investigations expands beyond this issue. As mentioned, the Attorneys General from each state have formed a task force to look into the affidavit matter to determine if they were processed correctly under state laws. However, given that AGs from non-judicial states have joined the task force, the scope of their investigation may expand beyond this issue and lengthen the timeframe for resolution. Complicating matters is that servicers have to abide by individual state regulations with respect to foreclosure processing.
In the end, we believe that the vast majority of foreclosures will stand assuming that the actions were taken against borrowers who were delinquent. However, the end result will likely be a further extension of foreclosure timelines. We believe that the incremental increase in loss severity should be minimal if these issues can be resolved in the next 3-6 months. For servicers this means additional staffing requirements as well as increased costs. With respect to investors, headline risk will remain the predominant near term concern. Additionally, the allocation of additional costs due to advancing and legal fees will have to worked out. We do believe that the tenets of securitization, MERS, extensive legal foundation that has been established over the last 30 years, and REMIC eligibility will stand.
In other words: all shall be well, and all manner of thing shall be well.
eric seiger
Forget AOL-Yahoo...It's <b>News</b> Corp-Yahoo That The Insiders Are <b>...</b>
One source close to News Corp says the company is monitoring the situation, and notes that Jon Miller and "Chief Yahoo" Jerry Yang have a good working relationship. Merger talk, says this source, is pre-mature. ...
Domain Name Wire » <b>News</b> » Confirmed: Facebook Acquires FB.com <b>...</b>
Facebook acquires FB.com domain name. Ending months of speculation, it's now confirmed that Facebook has acquired the FB.com domain name. The whois record for the domain name just updated to show Facebook's name and nameservers for the ...
Fox <b>News</b> Anchor Loses It On Live TV | PerezHilton.com
Whoa! Get a hold of yourself! Megyn Kelly of Fox News lost it on live TV when she started laughing uncontrollably after doing a story about a North Carolina woman who was brought back to life after...
eric seiger
Inquiring minds should be quite interested in GMAC Foreclosure Case May Set Anti-Bank Precedent
When James Renfro had to stop making payments on his two-story fixer-upper in Parma, Ohio, a suburb of Cleveland, he triggered events that were supposed to result in the forced sale of his home."Restoring Equity" vs. Penalization
That Nov. 15 auction has been canceled because of defects in documents submitted by his loan servicer, Ally Financial Inc.’s GMAC Mortgage unit. Two affidavits about Renfro’s home were signed by Jeffrey Stephan, a GMAC employee who said in sworn depositions in Florida and Maine that he hadn’t read thousands of affidavits he’d signed.
Renfro’s case has created a showdown between GMAC and Ohio’s Attorney General Richard Cordray. Cordray has asked Cuyahoga County Court of Common Pleas Judge Nancy Russo not to let GMAC simply submit new documents to cure defects without consequences. He’s taken the same stand against Wells Fargo & Co., which has said it found defects in 55,000 foreclosures.
“This is just the first,” said Cordray, who filed an amicus, or friend-of-the-court, brief in the Renfro case. He argued that Russo should punish GMAC, the fourth-largest U.S. mortgage lender, for its conduct.
I am not a lawyer. Indeed I would have a damn hard time being either a defense lawyer or a prosecutor. The former has a duty to get his client off even if he knows full well his client is guilty. The latter pursues cases known to be weak, perhaps even trumped up for political reasons.
I would not want to be in either situation. I could not send an innocent man to jail, nor could I defend a client who privately admitted to rape or some other crime yet insisted on a plea of "not guilty". My sense of fairness would not allow it.
In this case, a lawyer wants to punish GMAC. I happen to agree with that. Fraud must be punished. Nothing would please me more than to see a bunch of crooks go to jail.
However, we must also deal with the issue of "Restoring Equity".
Definition of "Equity"
By "restoring equity", I do not mean equity in the sense "4. the monetary value of a property or business beyond any amounts owed on it in mortgages, claims, liens, etc."
I mean equity as in "3.c an equitable right or claim".
In regards to 3.c, there is no dispute that people have stopped paying on their mortgages for months or years. The equitable thing is for those home owners to lose their homes. The idea that homeowners deserve "equity" (principal) writedowns over robo-signing is potty.
Notice I said "deserve". I have no idea what a court of law might allow. A court of law is not interested in "equity" (fairness), it is only interested in the rule (interpretation) of the law.
What's Equitable?
To restore equity in both senses of the word, the ideal solution is to prosecute fraudulent behavior to the full extent of the law, and to otherwise speed up foreclosures, with new laws if necessary.
There is nothing "equitable" in forcing lenders to give homeowners a break over robo-fraud.
In short, this is what needs to be done:
1. Send the fraudsters to jail
2. Speed up the foreclosure process in cases of default, with new laws if necessary.
Anything else is a travesty of justice.
What to Expect
Expect a travesty of justice in regards to sending fraudsters to jail. Also expect a travesty of justice whereby some judges give breaks to homeowners who successfully game the system over a perverse sense of "justice".
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Foreclosure Issues Pose Risks, Should Be Resolved With Time
Summary
Recently, some issues surrounding foreclosure sale proceedings have come to the forefront, leading several large banks to halt foreclosure sale proceedings in many states. The purpose of this note is twofold: to clear up some confusion on what exactly the issues at hand are and to bring some perspective to those issues. For instance, we note that the “foreclosure issue” that we are addressing here is separate from considerations surrounding potential bank loan repurchases. After the JPMorgan Chase earnings call, in which the company announced increased repurchase reserves, the two issues seem to have been muddied.
With respect to the issues surrounding foreclosure sales, while there are some outstanding risks, we think the issues that can be definitively addressed suggest a resolution could be possible over a matter of months. While that resolution should involve time, effort, and cost, we do not believe it will result in a major long–term disruption to the housing or mortgage markets.
Background
The issues surrounding foreclosure sale proceedings were initially brought to light on September 17, when GMAC/Ally halted evictions and REO sales in 23 judicial foreclosure states. Since that time, GMAC has extended their review to all 50 states, and four other large banks have halted foreclosure sales or launched internal reviews of their foreclosure processes: Bank of America has halted foreclosure sales in 50 states, JPMorgan Chase in 41 states, PNC in 23 states, and Litton is reviewing proceedings. Wells Fargo has stated that they are reviewing all pending foreclosures, but not halting the process and are confident their processes are robust. Attorneys General from all 50 states announced Wednesday that they have formed the Mortgage Foreclosure Multistate Group to review some of the practices around foreclosures proceedings.
The “foreclosure issues” being discussed at this point seem to encompass a few distinct problems, which we think it is useful to break down: robo-signers, MERS, and trust transfers.
The Robo-Signer Issue
While judicial foreclosure proceedings vary from state to state depending on different laws, many involve the presentation of an “affidavit of debt” before the court, which certifies that an employee of the mortgage servicer is familiar with the mortgage and borrower under question. Across several servicers burdened with an increasing number of foreclosures, there were employees who allegedly signed large numbers of affidavits without “personal knowledge” of the stated information. In addition, some affidavits were not notarized at the time of affidavit signing. These deficiencies created became a problem when brought before judges.
Importantly, however, although these deficiencies introduce risk, the issue does not seem to be insurmountable. We believe that the likelihood for widespread outright forgiveness of debt in cases where affidavits were signed or attested improperly is low. The details behind resolving cases such as these are not clear from a legal standpoint, but they seem likely to be, in part, a matter of rectifying the affidavit, issues of time, effort, and cost. Similar issues exist for fixing faulty foreclosure processes from the start; it may be possible to solve the robo-signer issue by staffing up teams or via other efforts. While more costly, and likely to delay foreclosure processes a few to several months, again, in our view, the issues do not seem to be insurmountable.
The MERS Issue
A second issue that has arisen questions the validity of MERS, an electronic registration system for mortgages meant to simplify the process of transferring mortgage ownership. In the past, there have been court rulings in support of the MERS model, e.g. that holding title for the benefit of another party was valid or that foreclosure initiation in the name of MERS was valid. There have also been cases in which the model was not supported (e.g. Landmark v. Kessler in Kansas), but in most instances it seems those efforts have failed or been overturned. In the event the matters challenging MERS succeed, resolution seems to be a practical issue; while the process is unclear at this point, it may simply be a matter of assigning the mortgage from MERS to the foreclosing party in cases where foreclosure in the name of MERS is ruled against or of simply foreclosing in the name of the bank instead of in the name of MERS. There has been at least one case (U.S. Bank v. Ibanez) in Massachusetts, which calls into question the separation of legal and beneficial title holding, similar to that used in the MERS model. That case is currently under appeal.
In addition, there also seems to be some misinformation about the MERS system itself and whether some banks are utilizing it or not. MERS put out a press release yesterday to address some of these concerns, citing the fact that Chase registers their correspondent loans in MERS, but does not register their retail loans.
The Trust Transfer Issue
A third issue that has arisen concerns the validity of the trust as the owner of the mortgage for loans that have been securitized. When the note is transferred to a trust, it is endorsed “in blank”, meaning that the owner of the note is not assigned. The note is only endorsed to the trustee or servicer on behalf of the trust if they need to institute foreclosure proceedings. Our understanding is that this is a common practice when notes are transferred to a trust. With respect to physical documents, those are delivered and held by the designated custodian for the trust. Both the seller and the custodian should have verified the existence and validity of the notes upon transfer. If there were any deficiencies, the custodian should have notified the seller to remedy any deficiencies or if they could not be remedied, put the loan back to the seller. The transfer of the notes is governed by the loan purchase agreement which also provides for evidence of ownership of the loans by the trust. Also, when the notes are transferred, the servicer records the ownership of the loans with MERS.
The Risks
The primary risk in our view is not that the affidavits issue remains unresolved, but how much time and effort the resolution will take and how far the scope of investigations expands beyond this issue. As mentioned, the Attorneys General from each state have formed a task force to look into the affidavit matter to determine if they were processed correctly under state laws. However, given that AGs from non-judicial states have joined the task force, the scope of their investigation may expand beyond this issue and lengthen the timeframe for resolution. Complicating matters is that servicers have to abide by individual state regulations with respect to foreclosure processing.
In the end, we believe that the vast majority of foreclosures will stand assuming that the actions were taken against borrowers who were delinquent. However, the end result will likely be a further extension of foreclosure timelines. We believe that the incremental increase in loss severity should be minimal if these issues can be resolved in the next 3-6 months. For servicers this means additional staffing requirements as well as increased costs. With respect to investors, headline risk will remain the predominant near term concern. Additionally, the allocation of additional costs due to advancing and legal fees will have to worked out. We do believe that the tenets of securitization, MERS, extensive legal foundation that has been established over the last 30 years, and REMIC eligibility will stand.
In other words: all shall be well, and all manner of thing shall be well.
eric seiger
Forget AOL-Yahoo...It's <b>News</b> Corp-Yahoo That The Insiders Are <b>...</b>
One source close to News Corp says the company is monitoring the situation, and notes that Jon Miller and "Chief Yahoo" Jerry Yang have a good working relationship. Merger talk, says this source, is pre-mature. ...
Domain Name Wire » <b>News</b> » Confirmed: Facebook Acquires FB.com <b>...</b>
Facebook acquires FB.com domain name. Ending months of speculation, it's now confirmed that Facebook has acquired the FB.com domain name. The whois record for the domain name just updated to show Facebook's name and nameservers for the ...
Fox <b>News</b> Anchor Loses It On Live TV | PerezHilton.com
Whoa! Get a hold of yourself! Megyn Kelly of Fox News lost it on live TV when she started laughing uncontrollably after doing a story about a North Carolina woman who was brought back to life after...
eric seiger
eric seiger
eric seiger
Forget AOL-Yahoo...It's <b>News</b> Corp-Yahoo That The Insiders Are <b>...</b>
One source close to News Corp says the company is monitoring the situation, and notes that Jon Miller and "Chief Yahoo" Jerry Yang have a good working relationship. Merger talk, says this source, is pre-mature. ...
Domain Name Wire » <b>News</b> » Confirmed: Facebook Acquires FB.com <b>...</b>
Facebook acquires FB.com domain name. Ending months of speculation, it's now confirmed that Facebook has acquired the FB.com domain name. The whois record for the domain name just updated to show Facebook's name and nameservers for the ...
Fox <b>News</b> Anchor Loses It On Live TV | PerezHilton.com
Whoa! Get a hold of yourself! Megyn Kelly of Fox News lost it on live TV when she started laughing uncontrollably after doing a story about a North Carolina woman who was brought back to life after...
eric seiger
Inquiring minds should be quite interested in GMAC Foreclosure Case May Set Anti-Bank Precedent
When James Renfro had to stop making payments on his two-story fixer-upper in Parma, Ohio, a suburb of Cleveland, he triggered events that were supposed to result in the forced sale of his home."Restoring Equity" vs. Penalization
That Nov. 15 auction has been canceled because of defects in documents submitted by his loan servicer, Ally Financial Inc.’s GMAC Mortgage unit. Two affidavits about Renfro’s home were signed by Jeffrey Stephan, a GMAC employee who said in sworn depositions in Florida and Maine that he hadn’t read thousands of affidavits he’d signed.
Renfro’s case has created a showdown between GMAC and Ohio’s Attorney General Richard Cordray. Cordray has asked Cuyahoga County Court of Common Pleas Judge Nancy Russo not to let GMAC simply submit new documents to cure defects without consequences. He’s taken the same stand against Wells Fargo & Co., which has said it found defects in 55,000 foreclosures.
“This is just the first,” said Cordray, who filed an amicus, or friend-of-the-court, brief in the Renfro case. He argued that Russo should punish GMAC, the fourth-largest U.S. mortgage lender, for its conduct.
I am not a lawyer. Indeed I would have a damn hard time being either a defense lawyer or a prosecutor. The former has a duty to get his client off even if he knows full well his client is guilty. The latter pursues cases known to be weak, perhaps even trumped up for political reasons.
I would not want to be in either situation. I could not send an innocent man to jail, nor could I defend a client who privately admitted to rape or some other crime yet insisted on a plea of "not guilty". My sense of fairness would not allow it.
In this case, a lawyer wants to punish GMAC. I happen to agree with that. Fraud must be punished. Nothing would please me more than to see a bunch of crooks go to jail.
However, we must also deal with the issue of "Restoring Equity".
Definition of "Equity"
By "restoring equity", I do not mean equity in the sense "4. the monetary value of a property or business beyond any amounts owed on it in mortgages, claims, liens, etc."
I mean equity as in "3.c an equitable right or claim".
In regards to 3.c, there is no dispute that people have stopped paying on their mortgages for months or years. The equitable thing is for those home owners to lose their homes. The idea that homeowners deserve "equity" (principal) writedowns over robo-signing is potty.
Notice I said "deserve". I have no idea what a court of law might allow. A court of law is not interested in "equity" (fairness), it is only interested in the rule (interpretation) of the law.
What's Equitable?
To restore equity in both senses of the word, the ideal solution is to prosecute fraudulent behavior to the full extent of the law, and to otherwise speed up foreclosures, with new laws if necessary.
There is nothing "equitable" in forcing lenders to give homeowners a break over robo-fraud.
In short, this is what needs to be done:
1. Send the fraudsters to jail
2. Speed up the foreclosure process in cases of default, with new laws if necessary.
Anything else is a travesty of justice.
What to Expect
Expect a travesty of justice in regards to sending fraudsters to jail. Also expect a travesty of justice whereby some judges give breaks to homeowners who successfully game the system over a perverse sense of "justice".
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Foreclosure Issues Pose Risks, Should Be Resolved With Time
Summary
Recently, some issues surrounding foreclosure sale proceedings have come to the forefront, leading several large banks to halt foreclosure sale proceedings in many states. The purpose of this note is twofold: to clear up some confusion on what exactly the issues at hand are and to bring some perspective to those issues. For instance, we note that the “foreclosure issue” that we are addressing here is separate from considerations surrounding potential bank loan repurchases. After the JPMorgan Chase earnings call, in which the company announced increased repurchase reserves, the two issues seem to have been muddied.
With respect to the issues surrounding foreclosure sales, while there are some outstanding risks, we think the issues that can be definitively addressed suggest a resolution could be possible over a matter of months. While that resolution should involve time, effort, and cost, we do not believe it will result in a major long–term disruption to the housing or mortgage markets.
Background
The issues surrounding foreclosure sale proceedings were initially brought to light on September 17, when GMAC/Ally halted evictions and REO sales in 23 judicial foreclosure states. Since that time, GMAC has extended their review to all 50 states, and four other large banks have halted foreclosure sales or launched internal reviews of their foreclosure processes: Bank of America has halted foreclosure sales in 50 states, JPMorgan Chase in 41 states, PNC in 23 states, and Litton is reviewing proceedings. Wells Fargo has stated that they are reviewing all pending foreclosures, but not halting the process and are confident their processes are robust. Attorneys General from all 50 states announced Wednesday that they have formed the Mortgage Foreclosure Multistate Group to review some of the practices around foreclosures proceedings.
The “foreclosure issues” being discussed at this point seem to encompass a few distinct problems, which we think it is useful to break down: robo-signers, MERS, and trust transfers.
The Robo-Signer Issue
While judicial foreclosure proceedings vary from state to state depending on different laws, many involve the presentation of an “affidavit of debt” before the court, which certifies that an employee of the mortgage servicer is familiar with the mortgage and borrower under question. Across several servicers burdened with an increasing number of foreclosures, there were employees who allegedly signed large numbers of affidavits without “personal knowledge” of the stated information. In addition, some affidavits were not notarized at the time of affidavit signing. These deficiencies created became a problem when brought before judges.
Importantly, however, although these deficiencies introduce risk, the issue does not seem to be insurmountable. We believe that the likelihood for widespread outright forgiveness of debt in cases where affidavits were signed or attested improperly is low. The details behind resolving cases such as these are not clear from a legal standpoint, but they seem likely to be, in part, a matter of rectifying the affidavit, issues of time, effort, and cost. Similar issues exist for fixing faulty foreclosure processes from the start; it may be possible to solve the robo-signer issue by staffing up teams or via other efforts. While more costly, and likely to delay foreclosure processes a few to several months, again, in our view, the issues do not seem to be insurmountable.
The MERS Issue
A second issue that has arisen questions the validity of MERS, an electronic registration system for mortgages meant to simplify the process of transferring mortgage ownership. In the past, there have been court rulings in support of the MERS model, e.g. that holding title for the benefit of another party was valid or that foreclosure initiation in the name of MERS was valid. There have also been cases in which the model was not supported (e.g. Landmark v. Kessler in Kansas), but in most instances it seems those efforts have failed or been overturned. In the event the matters challenging MERS succeed, resolution seems to be a practical issue; while the process is unclear at this point, it may simply be a matter of assigning the mortgage from MERS to the foreclosing party in cases where foreclosure in the name of MERS is ruled against or of simply foreclosing in the name of the bank instead of in the name of MERS. There has been at least one case (U.S. Bank v. Ibanez) in Massachusetts, which calls into question the separation of legal and beneficial title holding, similar to that used in the MERS model. That case is currently under appeal.
In addition, there also seems to be some misinformation about the MERS system itself and whether some banks are utilizing it or not. MERS put out a press release yesterday to address some of these concerns, citing the fact that Chase registers their correspondent loans in MERS, but does not register their retail loans.
The Trust Transfer Issue
A third issue that has arisen concerns the validity of the trust as the owner of the mortgage for loans that have been securitized. When the note is transferred to a trust, it is endorsed “in blank”, meaning that the owner of the note is not assigned. The note is only endorsed to the trustee or servicer on behalf of the trust if they need to institute foreclosure proceedings. Our understanding is that this is a common practice when notes are transferred to a trust. With respect to physical documents, those are delivered and held by the designated custodian for the trust. Both the seller and the custodian should have verified the existence and validity of the notes upon transfer. If there were any deficiencies, the custodian should have notified the seller to remedy any deficiencies or if they could not be remedied, put the loan back to the seller. The transfer of the notes is governed by the loan purchase agreement which also provides for evidence of ownership of the loans by the trust. Also, when the notes are transferred, the servicer records the ownership of the loans with MERS.
The Risks
The primary risk in our view is not that the affidavits issue remains unresolved, but how much time and effort the resolution will take and how far the scope of investigations expands beyond this issue. As mentioned, the Attorneys General from each state have formed a task force to look into the affidavit matter to determine if they were processed correctly under state laws. However, given that AGs from non-judicial states have joined the task force, the scope of their investigation may expand beyond this issue and lengthen the timeframe for resolution. Complicating matters is that servicers have to abide by individual state regulations with respect to foreclosure processing.
In the end, we believe that the vast majority of foreclosures will stand assuming that the actions were taken against borrowers who were delinquent. However, the end result will likely be a further extension of foreclosure timelines. We believe that the incremental increase in loss severity should be minimal if these issues can be resolved in the next 3-6 months. For servicers this means additional staffing requirements as well as increased costs. With respect to investors, headline risk will remain the predominant near term concern. Additionally, the allocation of additional costs due to advancing and legal fees will have to worked out. We do believe that the tenets of securitization, MERS, extensive legal foundation that has been established over the last 30 years, and REMIC eligibility will stand.
In other words: all shall be well, and all manner of thing shall be well.
eric seiger
eric seiger
Forget AOL-Yahoo...It's <b>News</b> Corp-Yahoo That The Insiders Are <b>...</b>
One source close to News Corp says the company is monitoring the situation, and notes that Jon Miller and "Chief Yahoo" Jerry Yang have a good working relationship. Merger talk, says this source, is pre-mature. ...
Domain Name Wire » <b>News</b> » Confirmed: Facebook Acquires FB.com <b>...</b>
Facebook acquires FB.com domain name. Ending months of speculation, it's now confirmed that Facebook has acquired the FB.com domain name. The whois record for the domain name just updated to show Facebook's name and nameservers for the ...
Fox <b>News</b> Anchor Loses It On Live TV | PerezHilton.com
Whoa! Get a hold of yourself! Megyn Kelly of Fox News lost it on live TV when she started laughing uncontrollably after doing a story about a North Carolina woman who was brought back to life after...
eric seiger
eric seiger
Forget AOL-Yahoo...It's <b>News</b> Corp-Yahoo That The Insiders Are <b>...</b>
One source close to News Corp says the company is monitoring the situation, and notes that Jon Miller and "Chief Yahoo" Jerry Yang have a good working relationship. Merger talk, says this source, is pre-mature. ...
Domain Name Wire » <b>News</b> » Confirmed: Facebook Acquires FB.com <b>...</b>
Facebook acquires FB.com domain name. Ending months of speculation, it's now confirmed that Facebook has acquired the FB.com domain name. The whois record for the domain name just updated to show Facebook's name and nameservers for the ...
Fox <b>News</b> Anchor Loses It On Live TV | PerezHilton.com
Whoa! Get a hold of yourself! Megyn Kelly of Fox News lost it on live TV when she started laughing uncontrollably after doing a story about a North Carolina woman who was brought back to life after...
eric seiger
Forget AOL-Yahoo...It's <b>News</b> Corp-Yahoo That The Insiders Are <b>...</b>
One source close to News Corp says the company is monitoring the situation, and notes that Jon Miller and "Chief Yahoo" Jerry Yang have a good working relationship. Merger talk, says this source, is pre-mature. ...
Domain Name Wire » <b>News</b> » Confirmed: Facebook Acquires FB.com <b>...</b>
Facebook acquires FB.com domain name. Ending months of speculation, it's now confirmed that Facebook has acquired the FB.com domain name. The whois record for the domain name just updated to show Facebook's name and nameservers for the ...
Fox <b>News</b> Anchor Loses It On Live TV | PerezHilton.com
Whoa! Get a hold of yourself! Megyn Kelly of Fox News lost it on live TV when she started laughing uncontrollably after doing a story about a North Carolina woman who was brought back to life after...
eric seiger
Forget AOL-Yahoo...It's <b>News</b> Corp-Yahoo That The Insiders Are <b>...</b>
One source close to News Corp says the company is monitoring the situation, and notes that Jon Miller and "Chief Yahoo" Jerry Yang have a good working relationship. Merger talk, says this source, is pre-mature. ...
Domain Name Wire » <b>News</b> » Confirmed: Facebook Acquires FB.com <b>...</b>
Facebook acquires FB.com domain name. Ending months of speculation, it's now confirmed that Facebook has acquired the FB.com domain name. The whois record for the domain name just updated to show Facebook's name and nameservers for the ...
Fox <b>News</b> Anchor Loses It On Live TV | PerezHilton.com
Whoa! Get a hold of yourself! Megyn Kelly of Fox News lost it on live TV when she started laughing uncontrollably after doing a story about a North Carolina woman who was brought back to life after...
eric seiger eric seiger
eric seiger
eric seiger
eric seiger
Forget AOL-Yahoo...It's <b>News</b> Corp-Yahoo That The Insiders Are <b>...</b>
One source close to News Corp says the company is monitoring the situation, and notes that Jon Miller and "Chief Yahoo" Jerry Yang have a good working relationship. Merger talk, says this source, is pre-mature. ...
Domain Name Wire » <b>News</b> » Confirmed: Facebook Acquires FB.com <b>...</b>
Facebook acquires FB.com domain name. Ending months of speculation, it's now confirmed that Facebook has acquired the FB.com domain name. The whois record for the domain name just updated to show Facebook's name and nameservers for the ...
Fox <b>News</b> Anchor Loses It On Live TV | PerezHilton.com
Whoa! Get a hold of yourself! Megyn Kelly of Fox News lost it on live TV when she started laughing uncontrollably after doing a story about a North Carolina woman who was brought back to life after...
With the declination of the economy the past several months, more and more home owners and property owners are being foreclosed upon. Sadly this is an all to common event and with he recent government bailouts and stipends for the big banking companies the United States has seen a very sharp rise in the amount of foreclosure actions that are being filed.
That being said, if you are being foreclosed upon, there are a few things that you should remember when defending yourself. These keys are invaluable when preparing yourself for the reality of losing your home.
1. Hire A Foreclosure Defense Attorney. There are times and situations in law and court processes that would allow the common individual to defend themselves as their own attorney. However in an action such as this its imperative that you at least consult an attorney with regards to your legal rights and responsibilities.
However, do not go to just anyone, its very important that you consult an attorney that specifically advertises Mortgage Foreclosure Defense. These attorneys have has experience in such areas and have knowledge about the banking system that other attorneys do not. Do not be afraid of consultation fees as many attorneys who are worth their time will charge to keep their time from being wasted. Do not be afraid to ask questions about their experience and do not be afraid to research them and ask around.
2. Do Not Be Fooled By Your Bank. Back when the housing markets were good, banks got into the habit of appraising property any where from 20% to 80% over that which it was really worth. Now that times are bad and that the economy has declined, they are foreclosing for the original amount of the loans. To make matters worse the big banks have been bailed out many different times and are now receiving assistance for every property that they foreclose upon.
Many people who are having problems making their payments are being sent to loan modification programs. While this may work for some home owners, it does not work for the majority. The reason that the banks use this is because they get a government kick-back for every person that they begin modification paper work on. Once the home owner is entered into the program they are often told to stop making their mortgage payments, however, when they are later denied (as most home owners are) the bank declares them to be in arrears and demands the original payments plus late fees. If the home owners are unable to pay the money, they are declared to be in unresponsive and the bank begin the legal process of foreclosure.
It is for this reason that you do not allow yourself to be fooled by your bank. Every time you talk to them write it in a note book, with information on who you talked to, what time, how long the conversation was and what the conversation was about. Also keep every piece of writing that you have sent them or that they have sent to you. These will prove invaluable if you hire an attorney because they will be able to see at a greater angle exactly what happened.
3. Save As Much Money As You Can. While hiring an attorney is a good idea, its important that you realize, that there is no guarantee that the attorney will be able to stop the foreclosure process. While there may have been a few attorneys who have actually done this, mostly they just make the banks abide by their federal and state guidelines and therefore delaying the process for several months. Although this is not as preferable as stopping the action altogether it is a good thing that allows the home owner to save money and be better prepared to leave the premises and go else where.
So, if you are in foreclosure you must save money to help you be better able to make the move to other living arrangements. Try and cut down on utility bills, food bills from eating out and bills on any things that is not necessary. It may seem unfair to have to give up trips to the theater or eating out, however, when the time comes for you to have to leave your property and find other living arrangements you will be so glad that you saved and that you have the money on you.
In conclusion, try and prepare yourself better for what lies ahead in a foreclosure action. While it is unfortunate, banks today do not care about their patrons and will foreclose on you even if your a few thousand away from paying off the note. Trying to ire an attorney to help you be prepared, keeping track of everything that you paid to the bank and that you have received from the bank, and saving all the money that you can will help you and your family to be ready to go if and when the time comes.
eric seiger
Forget AOL-Yahoo...It's <b>News</b> Corp-Yahoo That The Insiders Are <b>...</b>
One source close to News Corp says the company is monitoring the situation, and notes that Jon Miller and "Chief Yahoo" Jerry Yang have a good working relationship. Merger talk, says this source, is pre-mature. ...
Domain Name Wire » <b>News</b> » Confirmed: Facebook Acquires FB.com <b>...</b>
Facebook acquires FB.com domain name. Ending months of speculation, it's now confirmed that Facebook has acquired the FB.com domain name. The whois record for the domain name just updated to show Facebook's name and nameservers for the ...
Fox <b>News</b> Anchor Loses It On Live TV | PerezHilton.com
Whoa! Get a hold of yourself! Megyn Kelly of Fox News lost it on live TV when she started laughing uncontrollably after doing a story about a North Carolina woman who was brought back to life after...
eric seiger
Forget AOL-Yahoo...It's <b>News</b> Corp-Yahoo That The Insiders Are <b>...</b>
One source close to News Corp says the company is monitoring the situation, and notes that Jon Miller and "Chief Yahoo" Jerry Yang have a good working relationship. Merger talk, says this source, is pre-mature. ...
Domain Name Wire » <b>News</b> » Confirmed: Facebook Acquires FB.com <b>...</b>
Facebook acquires FB.com domain name. Ending months of speculation, it's now confirmed that Facebook has acquired the FB.com domain name. The whois record for the domain name just updated to show Facebook's name and nameservers for the ...
Fox <b>News</b> Anchor Loses It On Live TV | PerezHilton.com
Whoa! Get a hold of yourself! Megyn Kelly of Fox News lost it on live TV when she started laughing uncontrollably after doing a story about a North Carolina woman who was brought back to life after...
eric seiger
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