Mbs May Have No Mortgages In Them!

[interestrateripoff]

http://market-ticker.org/akcs-www?post=174174

Reuters is out with a nasty article on the company which basically claims that the firm lied on it's conference call!

Still, Carbiener told the Wall Street analysts in an October 29 conference call that LPS's legal concerns were overblown, and the stock has jumped 13 percent since its close the day before the call.

But a Reuters investigation shows that LPS's legal woes are more serious than he let on. Public records reveal that the company's LPS Default Solutions unit produced documents of dubious authenticity in far larger quantities than it has disclosed, and over a much longer timespan.

Paging Mr. Sarbanes and Mr. Oxley on Line 1. Mr. Sarbanes, you're urgently wanted on Line #1.

This looked like, originally, yet another part of the Robosigning thing. But now we have this:

Interviews with key players and court records also show that pending investigations and lawsuits pose a bigger threat to the company than Carbiener let on.

The criminal investigation in Jacksonville by federal prosecutors and the Federal Bureau of Investigation is intensifying. The same goes for a separate inquiry by the Florida attorney general's office. Individuals with direct knowledge of the federal inquiry said that prosecutors have impaneled a grand jury, begun calling witnesses and subpoenaed records from LPS.

A Grand Jury? That, to the best of my knowledge, hasn't been disclosed by the company!

And here, again, is the root of the problem:

Without someone to draw up replacement documents, though, LPS's clients faced potential hardship, because so many mortgages were never assigned by lenders, as required, in the first place. Without these documents, thousands of foreclosures all over the country would come to a halt.

Oh, it's not just foreclosures. If the notes were never assigned by lenders as required in the first place to the trusts then the Trusts have nothing, the so-called "Mortgage-Backed Securities" have no mortgages in them, the buyers of said securities were sold an empty box and the originator was paid in full and thus can't foreclose either!

The "real issue" here is simply this: There may well be millions of investors, including pension funds, banks and individuals, who bought these instruments in good faith predicated on the representations in the PSAs, which I noted in my earlier Ticker, that in fact are false.

Anyone who had their fingers in that pie in any meaningful form, and especially anyone who was involved in covering up what happened, might be in for a very, very bad time.

This bears watching.

Disclosure: The author owns PUTs on LPS.

This just gets better and better if true. The entire system is completely fooked by greed.

[salamander]

Not wanting to p*ss on this 'breaking news' but KD has been talking about potentially empty MBS's for the last several months.

Still nice to see some mainstream recognition

[wonderpup]

They might as well just junk their entire legal system, sack the politicians and crown Lloyd Blankfein King of America. Why maintain this ongoing charade that they are a democratic state with rule of law- it's just another corrupt third world nation now.

[Redcellar]

They might as well just junk their entire legal system, sack the politicians and crown Lloyd Blankfein King of America. Why maintain this ongoing charade that they are a democratic state with rule of law- it's just another corrupt third world nation now.

Ahhh but it's their corrupt third world nation and they have nuclear weapons and an armed forces with attitude.

Anyway, what is all the fuss about. Laws were made to be changed. Happens every day over here. You just need to have the money, or more importantly, be thought of as having the money.

[interestrateripoff]

Not wanting to p*ss on this 'breaking news' but KD has been talking about potentially empty MBS's for the last several months.

Still nice to see some mainstream recognition

Yes I know, but it just kinds of tickles me knowing bankers sold worthless crap to suckers thinking they'll never get caught.

[wonderpup]

Ahhh but it's their corrupt third world nation and they have nuclear weapons and an armed forces with attitude.

As long as they can afford to pay for them. At what point do the 'markets' look a the US and decide that it's such a corrupt cesspool that their money would be safer out of it?

[happy_renting]

In this scenario, don't the people unable to pay their mortgages win?

[interestrateripoff]

In this scenario, don't the people unable to pay their mortgages win?

That appears to be the point, because the Bank has already been paid back the mortgage by the "investors", therefore the bank isn't owed the money. To be fair to the borrower it's not like they asked the bank to do what they did, if the borrower ends up with the house because the bank screwed up, so what. The banks played a nice game where they couldn't possible lose. I mean it's not like the paperwork needed to be in legal order or anything. House prices only ever go up and it's not like the bank was going to be out of pocket or get sued.

[Bloo Loo]

That appears to be the point, because the Bank has already been paid back the mortgage by the "investors", therefore the bank isn't owed the money. To be fair to the borrower it's not like they asked the bank to do what they did, if the borrower ends up with the house because the bank screwed up, so what. The banks played a nice game where they couldn't possible lose. I mean it's not like the paperwork needed to be in legal order or anything. House prices only ever go up and it's not like the bank was going to be out of pocket or get sued.

bye bye your pension.

[interestrateripoff]

bye bye your pension.

But not if my pension is the house and I get a free one...

Yep unfortunately when this mess is cleared up no one will be left with very much, we are all serfs but to whom I have no idea.

[Bloo Loo]

But not if my pension is the house and I get a free one...

Yep unfortunately when this mess is cleared up no one will be left with very much, we are all serfs but to whom I have no idea.

US houses will reduce to utility and not ponzi values.

I gather UK MBS are different....anyone know how exactly?

[corevalue]

US houses will reduce to utility and not ponzi values.

I gather UK MBS are different....anyone know how exactly?

I recall reading of a court case here, where it was decided that the mortgage originator could not sell on the mortgage itself, but only the benefits of the mortgage, thus they still held the title deeds and have the ability to foreclose. They became just a payment processor.

[Tonkers]

Everyone in America should stop paying their mortgage right now. have they cottoned on yet?

[happy_renting]

I recall reading of a court case here, where it was decided that the mortgage originator could not sell on the mortgage itself, but only the benefits of the mortgage, thus they still held the title deeds and have the ability to foreclose. They became just a payment processor.

When a debt is assigned, it is usual for the liabilities to be transferred as well.

For example, in the case of consumer credit, the Consumer Credit Act explicitly states that the assignee inherits all the obligations under the credit agreement, as well as the benefits.

However, it would, generally, be possible legally to split the liabilities and benefits between assigner and assignee as you state, but I would expect the deed of assignment to be explicit on that point.

[billybong]

I recall reading of a court case here, where it was decided that the mortgage originator could not sell on the mortgage itself, but only the benefits of the mortgage, thus they still held the title deeds and have the ability to foreclose. They became just a payment processor.

Perhaps it was this link (below) posted by ockaycuckoo (thanks again) in an earlier thread on the subject (posted 9 October). It's really very interesting and the case was about a mortgage apparently started about 1989 with a possession order in 1995 although not immediately enforced. It seems clear cut and I guess under similar arrangements it sets a precedent.

From the wording of parts of the transcript it does seem to imply that legal ownership of the title can be transferred under certain circumstances so it's interesting whether there are ever alternative arrangements for title transfer possible in an MBS situation especially considering how much has changed since 1989 and the eventual gargantuan scale of the derivative market that grew faster than Topsy since those days.

http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2005/760.html&query=title+%28+paragon+%29+and+title+%28+pender+%29&method=boolean

Edited December 7, 2010 by billybong

[jareth]

US houses will reduce to utility and not ponzi values.

I gather UK MBS are different....anyone know how exactly?

From the sounds of it they aren't all that different. The robosigning doesn't appear to transfer the title to the buyer of the MBS. That is the same as happens in the UK AFAIK.

Take for example Northern Rock MBS. The furthest any lump of mortgages got from Northern Rock was to the offshore fake charity subsidiary. Investors in MBS weren't buying mortgages merely lending Northern Rock money in return for interest with the lump of mortgages being an indication that NR would be able to repay. The mortgages were not collateral in the sense that a failure by Northern Rock to keep up their payments to the investor would see those mortgages being forfeited. Mortgage backed securities are little more than wholesale unsecured lending.