Friday, Aug 20, 2010
And who'll be left holding the tab?
Web of Debt: Could 62 million homes be foreclosure-proof?
MERS in the US is in crisis. It's a shortcut set up by banks to allow properties to change hands a few times without recording each transfer (in order to facilitate shuffling, packaging, securitisation etc.). 62 million residences are involved and courts are saying this shortcut makes it impossible for banks to establish their ownership of property titles. Last year this seemed like a mere procedural defect, but now it's become a substantive failure, making foreclusure impossible. On top of this there's a triple whammy (1) lawyers are working to obtain full title to their homes for mortgagors (2) suits are alleging criminal activity by MERS (false docs etc.) and (3) local govts are suing for billions in foregone recording fees and having to deal with false docs. Oh dear. Hoist...petard?
5 Comments
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1. uncle tom said...
There's an itsy bitsy little problem with this article..
..there are only about 45 million mortgaged properties in the US..
When you get such a glaring error in the opening line, what credibility can you attach to the rest of it..?
2. icarus said...
That could be due to double-counting, given the complexity of the slicing, dicing and tranching processes in the creation of the bonds. Or it could be the total of first and second mortgages, or separation of deed and promissory note This doesn't invalidate the rest of the argument. There are real problems for MERS and the banks behind it. These are explained in more technical detail at
http://iamfacingforeclosure.com/blog/2009/09/24/the-trouble-with-mers/
3. uncle tom said...
icarus,
There's nothing new about the slicing and dicing raising legal question marks, but for every reported ruling in favour of a home owner, there have been around 100,000 repo's..
I suspect the legal victories that have been highlighted involve cases where the mortgage lenders have made a hash of their paperwork, either when granting the mortgage, or when attempting to foreclose. If a federal court concluded that millions of repo actions were unlawful, you could be pretty certain that congress would change the law in short order..
4. Crunchy said...
3. uncle tom said...If a federal court concluded that millions of repo actions were unlawful, you could be pretty certain that congress would change the law in short order..
Well, past performance? They ain't what they used to be UT. If they can't audit the Fed, of what real use are they.
Too many .......... in congress. Big problem.
5. icarus said...
UT - I don't know what the historical score is in the home-owner vs MERS/bank game but Ellen Brown is arguing that the wind is shifting in favour of the former.
If you look at some of the cases highlighted in the posted article and the piece to which I referred @2 you'd have to think lenders' difficulties were greater than just paperwork errors - if "the chain of title is broken" and cannot be pieced together again.
Your last sentence may well nail it, but there seem to be genuine technical difficulties in passing such a law if the chain of title is indeed broken.