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Or what you do not know can hurt you and many other people badly!
By H. Hinman
Presider,
International Property Title Alliance*
It is more than just the blue-gray and weatherworn house in Denmark, Maine. As the fall
of 2010 becomes the winter of 2011 the secrets – whether they involve widespread
incompetence, fraud or even worse – perhaps the deliberate crashing of the American
economy – regarding MERS (“Mortgage Electronic Registration Systems”, abbreviated
“MERS”) – and its effects – are becoming apparent around the world.
This is in sharp contrast to what current American Land Title President (ALTA) Anne L.
Anastasi said a little over year ago when she was named President-elect:
It appears that transparency is transforming into opaqueness. Read on for more of the
mystery.
Note that Alan Zibel said “the first bank”. Although it has been reported that Bank of
America is resuming foreclosures in 23 states “once documents are fixed” [One wonders
how there can be any easy fixes?]iv, Zibel is hinting that it will not be the last.
There is a crisis mushrooming in this country, and it threatens to paralyze the entire real
estate market along with its stream of revenue of many types – and possibly bring down
the entire American economy with it.
This is no understatement.
Here is a small part of an incredible article by Jim Willie entitled “Gold and Silver
Breakout as Fascist Business Model Crumbles, Mortgage Market Fraud” in the The
Market Oracle:
The article then goes on to discuss various points including various RICO actions –
which the powers that be would like to keep under wraps – and includes this startling
quote:
In the Washington Post article of October 7, 2010 entitled “In foreclosure controversy,
problems run deeper than flawed paperwork” by Brady Dennis and Ariana Eunjung Cha
features this amazing quote by Janet Tavakoli, founder and president of Tavakoli
Structured Finance, a Chicago-based consulting firm.
Janet Tavakoli is the author of the book “Dear Mr. Buffett: What an Investor Learns
1,269 Miles from Wall Street”.
“Janet Tavakoli should have been listened to much more carefully in the
past… and will be in the future.” [Emphasis in original.]
At the core of it all is MERS, a concept of bundling and securitizing loans. What is
going on continues to astound me – and may just astound you as well.
If my Northwest United States source is correct, there will be an attempt to pick out a
handful or two of scapegoats, the Bernie Madoffs of the hour, to be sacrificed for what is
essentially a systemic screw-up.
In contrast to the book “The Black Swan” by Nassim Nicholas Taleb, this was not an
unexpected event. The warning signs were sounded – but almost everyone was too busy –
with their daily lives, with entertainment of all types – from “Dancing with the Stars” to
the latest movie or on set romance to those all important major league baseball pennant
races and playoffs. It all happened in plain sight – if anyone was paying attention to what
was – and is – truly important. This is REAL. It is really happening. The shockwaves
are buffeting Wall Street, Main Street and the worldwide economy.
What is MERS?
According to an article by Terry Smiljanich dated April 17, 2009 “Who is MERS and
Why Are They Suing Me?: The Mystery Company that Forecloses on Homes”:
“In other words, MERS made it cheaper and faster for these mortgage
companies to buy and sell loans without all the extra paperwork and fees
they would have incurred had they done it the old fashioned way. The
idea was that while your mortgage was being chopped up, sold and resold
[the so-called “slice and dice”], the ownership interests would supposedly
be electronically tracked by MERS, hopefully avoiding those pesky
recording fees in the county records.”
Here is the key point in the current MERS Fiasco from the same article:
An additional background article – which has been widely cited -- may be found at:
http://foreclosuredefensenationwide.com/?p=175
“In the period beginning in 1999 and ending in March of 2008, Mortgage Electronic
Registration Systems Inc., a/k/a/ MERS, has been named as a ‘mortgagee’ on over fifty
million mortgages. Yet MERS has never originated a single mortgage loan nor loaned a
dime to a single borrower.”
This means that MERS has no “skin in the game” and may not have what is called
standing. This means that they are not permitted under the United States of America
system of jurisprudence to maintain a court action.
“It appears that after MERS mortgage loans are flipped to the mortgage
backed trusts the promissory notes are not actually delivered to the
trustees. Nor are assignments of mortgages executed and delivered which
evidence the fact the original lender has transferred the debt that is secured
by the mortgage. This leaves the trusts with absolutely no paper evidence
of ownership of the secured debt it purportedly owns. One informed
lawyer who represents homeowners in Florida, April Charney, had
foreclosure proceedings against 300 clients dismissed or postponed in
2007 for lack of standing. She is quoted as saying that ‘80 percent of them
involved lost-note affidavits’. . . They raise the issue of whether the trusts
own the loans at all,” Charney said. ‘Lost-note affidavits are pattern and
practice in the industry. They are not exceptions. They are the rule.’
The assertion that losing the mortgage note paperwork is normal is astounding to me. It
appears to be the work of simpletons, charlatans, fraudsters and/or incompetents.
April Charney is the Florida attorney who appears to have originally figured what was
going on some three years ago. Now this knowledge is bursting up all over the country,
regarding the cutting of corners, standing and missing documents.
“At least two Florida judges shared Ms. Charney’s skepticism regarding
the copious amounts of MERS lost note affidavits and they issued show
cause orders, sua sponte [the court acting on its own, hopefully in the
interests of justice], challenging MERS to show proof that it held and/or
lost notes in numerous actions. After evidentiary hearings these two alert
judges dismissed twenty nine (29) MERS actions to foreclose for lack of
standing. One judge struck MERS pleadings as being sham.”
But like the United States Federal Reserve System, there are secrets, and secrets within
those secrets – some of them downright ugly.
Here is the most astonishing quote from the Jim Willie article that was picked up by Lew
Rockwell:
The idea that RICO might be aimed at Wall Street probably has the insiders having many
sleepless nights. Will a series of RICO actions across the country be their Achilles
Heels?
http://en.wikipedia.org/wiki/RICO
Know that RICO is an extremely serious matter. Here is a quote from this wikipedia
article:
“In many cases, the threat of a RICO indictment can force defendants to
plead guilty to lesser charges, in part because the seizure of assets would
make it difficult to pay a defense attorney. Despite its harsh provisions, a
RICO-related charge is considered easy to prove in court, as it focuses on
patterns of behavior as opposed to criminal acts.”
Here is another very telling quote from this article regarding Drexel Burnham Lambert
and a case from some two decades ago:
“Since banks will not extend credit to a firm indicted under RICO, an
indictment would have likely put Drexel out of business.”
Here is another way to look at the basics of the current Massive Mortgage Meltdown:
“In the mid-1990s mortgage bankers decided they did not want to pay
recording fees for assigning mortgages anymore. This decision was driven
by securitization—a process of pooling many mortgages into a trust and
selling income from the trust to investors on Wall Street. Securitization,
also sometimes called structured finance, usually required several
successive mortgage assignments to different companies. To avoid paying
county recording fees, mortgage bankers formed a plan to create one shell
company that would pretend to own all the mortgages in the country—that
way, the mortgage bankers would never have to record assignments since
the same company would always ‘own’ all the mortgages.”ix
Bloomberg news has recently reported on this in the October 18, 2010 article entitled:
“Foreclosure Crisis Triggers Debate on Role of Mortgage Registry” by Thom Weidlich.
Look for cash-strapped localities all over the United States – and swift attorneys in those
areas where they can share in the expected bounty to file suit over all the documents that
were to supposed to have been recorded – but either never were – or perhaps they were
created long after the fact.
In dry financial terms, here is what the Group of 20 (the so-called “G20”, comprised of
financial representatives of the 20 of the industrial powerhouses of the world, including
the United States, Canada, the European Union, Russia, South Africa, China, Brazil,
Argentina, South African and Australia) stated on November 15, 2008 – over two years
ago:
Note the reference to “supervisors” in the G20 verbiage. Where were the supervisors?
Amazingly, it seems that virtually everyone was asleep at the switch. Perhaps they were
engrossed with “Dancing with the Stars” or the latest vampire movie or their favorite
soap opera.
Quoting from a June 18, 2007 Forbes article by Brandon Condon entitled “Paper Chase”:
“You're in luck. Your mortgage lender has flipped, sliced and diced your loan--and now
no one knows who holds it.”xiii
Where were the title insurance companies in all this? [For those of you who do not
know, they are routinely paid for a title insurance policy to ensure a clear chain of title
during real estate transactions. This is sort of like losing track of the chain of custody of
evidence in a criminal case. Remember the O.J. Simpson murder trial in Los Angeles
about 15 years ago?]
Was no one at any of the companies paying attention – especially the supervisors?
In the Spring of 2010, when the situation of “robo-signers” first hit public awareness,
where were they? [For those of you who do not know, these were people who signed
thousands upon thousands of foreclosure documents without proper review.]
Here is a quote from an article by Lauren Tara LaCapra in The Street published on
October 8, 2010:
“Now even the final step in the mortgage death spiral -- foreclosures --
could end up costing banks even more grief as a result of outside
contractors.
Again, this appears to be a failure by many individuals throughout the entire system.
Any attempt to scapegoat a few for this systemic failure will simply lead to further
catastrophes in the future.
Now I am not a real estate attorney, nor I am allowed to give any legal advice. But I
CAN reveal the facts, as I believe them to be.
The first thing for you to do is to ask who – if anyone – holds your mortgage note. This
is called: “Produce the Note”. You might just be in luck!
I would not be surprised if over the next few months the powers that be to attempt to ram
legislation through on the local, state and federal levels to ratify what has happened and is
happening. Watch especially for action by so-called lame duck legislators!
What does this all mean for the general real estate market?
Barring some sort of quick fix, the properties tainted by MERS may be tied up in
litigation for years.
But there will be jewels. Properties that did not go through MERS such as seller-
financed property, or is owned free and clear – especially productive farmland and
ranchland.
Another way to look at this is: Who will get left holding the bag? The insiders are
counting on John Q. Public and Jane Z. Public to get stuck yet again. Will you let them?
To quote Brock D’Avignon, a real estate analyst with Phone Voter Television Network:
“Just as Ron Paul asked ‘Is there any gold in Fort Knox’, I wonder if there
is any marketable title on Wall Street”.
“Taxpayers have already been saddled with crushing debt that transferred
benefits to those most connected with Washington. Bloomberg News
estimates the financial rescue already approaches $12.8 trillion in
combined lending, spending, guarantees, and commitments. Taxpayer-
subsidized banks that played a key role in getting us into this mess
continue to pay their officers handsomely for failure. There were
alternatives to Washington's largesse: controlled bankruptcy,
conservatorship, and restructuring.”xv
[This article is for educational and informational purposes only. Copyright 2011 by H.
Hinman. All Rights Reserved.]
**Background information on this event from the 1980s and 1990s may be found at:
http://en.wikipedia.org/wiki/Savings_and_Loan_Crisis
(That one was pretty ugly, but not nearly as ugly as I suspect this one is going to be! To
paraphrase Gerald Celente: Welcome to the Greater Depression.)
i
Source:
http://www.businessweek.com/magazine/content/10_44/b4201076208349_page_2.htm
ii
Source:
http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&ne
wsId=20091116006747&newsLang=en
iii
The entire article may be viewed at:
http://news.yahoo.com/s/ap/20101008/ap_on_bi_ge/us_foreclosure_mess
iv
[Source: http://news.yahoo.com/s/ap/us_bank_of_america_foreclosures]
v
Source Andrew M. Harris on Bloomberg.com:
http://www.bloomberg.com/news/2010-10-19/bank-of-america-s-countrywide-accused-
of-racketeering-in-homeowners-suit.html
vi
The URL for this article appears to be:
http://www.washingtonpost.com/wp-
dyn/content/article/2010/10/06/AR2010100607227_2.html?sid=ST2010100607251
http://www.consumerwarningnetwork.com/2009/04/17/who-is-mers-and-why-are-they-
suing-me/
viii
The full article may be found at:
http://www.lewrockwell.com/spl2/gold-silver-breakout.html
http://www.marketoracle.co.uk/Article23276.html
ix
http://www.washingtonsblog.com/2010/10/what-is-mers-and-what-role-does-it-have.html
x
Source: http://www.quitam.com/id8.html
xi
The complete article may be found at:
http://www.bloomberg.com/news/2010-10-19/u-s-electronic-mortgage-registry-comes-
under-fire-in-foreclosure-crisis.html
xii
Source: http://en.wikipedia.org/wiki/Subprime_mortgage_crisis
xiii
The full article may be viewed at:
http://www.forbes.com/forbes/2007/0618/040b.html
xiv
The complete article by may be found at:
http://www.thestreet.com/story/10883307/1/revenge-of-the-robosigners.html
xv
Source:
http://www.huffingtonpost.com/janet-tavakoli/warren-buffett-and-charli_b_732998.html