Homeowners? Rebellion: Could 62 Million Homes Be Foreclosure-Proof?

[Lumi]

[FONT=Georgia, Times New Roman, Times, serif][FONT=Times New Roman, Times, serif]Homeowners? Rebellion: Could 62 Million Homes Be Foreclosure-Proof?[/FONT][/FONT]

[FONT=Georgia, Times New Roman, Times, serif][FONT=Times New Roman, Times, serif]by Ellen Brown
Seeking Alpha[/FONT][/FONT]
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[FONT=Times New Roman, Times, serif]Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for the convenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions, recently held that this electronic shortcut makes it impossible for banks to establish their ownership of property titles ? and therefore to foreclose on mortgaged properties. The logical result could be 62 million homes that are foreclosure-proof.[/FONT]

[FONT=Times New Roman, Times, serif]Mortgages bundled into securities were a favorite investment of speculators at the height of the financial bubble leading up to the crash of 2008. The securities changed hands frequently, and the companies profiting from mortgage payments were often not the same parties that negotiated the loans. At the heart of this disconnect was the Mortgage Electronic Registration System, or MERS, a company that serves as the mortgagee of record for lenders, allowing properties to change hands without the necessity of recording each transfer.[/FONT]

[FONT=Times New Roman, Times, serif]MERS was convenient for the mortgage industry, but courts are now questioning the impact of all of this financial juggling when it comes to mortgage ownership. To foreclose on real property, the plaintiff must be able to establish the chain of title entitling it to relief. But MERS has acknowledged, and recent cases have held, that MERS is a mere ?nominee? ? an entity appointed by the true owner simply for the purpose of holding property in order to facilitate transactions. [/FONT]
[FONT=Times New Roman, Times, serif][/FONT]
[FONT=Times New Roman, Times, serif]Recent court opinions stress that this defect is not just a procedural but is a substantive failure, one that is fatal to the plaintiff?s legal ability to foreclose.[/FONT]

[FONT=Times New Roman, Times, serif]That means hordes of victims of predatory lending could end up owning their homes free and clear ? while the financial industry could end up skewered on its own sword.[/FONT]

[FONT=Times New Roman, Times, serif]California Precedent[/FONT]

[FONT=Times New Roman, Times, serif]The latest of these court decisions came down in California on May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E?11. The court held that MERS could not foreclose because it was a mere nominee; and that as a result, plaintiff Citibank (C) could not collect on its claim. [/FONT]
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[FONT=Times New Roman, Times, serif]The judge opined:[/FONT]

[FONT=Times New Roman, Times, serif]Since no evidence of MERS? ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.[/FONT]
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[Mags]

That means hordes of victims of predatory lending could end up owning their homes free and clear ? while the financial industry could end up skewered on its own sword.[/FONT]

Can someone explain to me what "predatory lending" is? Does this mean banks where seeking people to take loans and forcing people to buy homes they couldn't afford?

This one has always confused me - mortgage terms are relatively easy to understand. And if you can't understand the terms of the mortgage, shouldn't you just decline it or not buy a house?

Isn't this more an issue of people buying a house over their heads (with pressure from the Gov to approve loans they shouldn't)... people thinking they were gonna make out like kings with the market going upward and upward - without understanding what downside risk is?

The term doesn't make sense to me...

 

[Trampled Underfoot]

Can someone explain to me what "predatory lending" is? Does this mean banks where seeking people to take loans and forcing people to buy homes they couldn't afford?

This one has always confused me - mortgage terms are relatively easy to understand. And if you can't understand the terms of the mortgage, shouldn't you just decline it or not buy a house?

Isn't this more an issue of people buying a house over their heads (with pressure from the Gov to approve loans they shouldn't)... people thinking they were gonna make out like kings with the market going upward and upward - without understanding what downside risk is?

The term doesn't make sense to me...

Some people are idiots. While I see some people on here I simply disagree with, some are big time morons. When those people get sucked into houses they can't afford, I consider that predatory lending practices. You know there are some people that really don't have the intelligence and mental capacity to understand what they are getting into. The banks feasted on those people.

 

[Lumi]

It's like catch and release fishing and dynamite fishing all in one.

These lenders have it all figured out, they reel in the fish, bring it to the boat, pull the hook out, and talk to the fish in a moronic voice. They get the homebuyer (fish) to sign the papers, and then throw them out of the boat.

Two or three years later when the housing market takes a dump, the fisherman (the lender) goes back to the pond with some dynamite and throws in the lake and the concussion fron the explossion will knock the fish out and he scoops them up with a net.


Errrr, the fisherman, uhhh lender starts circling the homes that once went for say 350K and now are at 200K and the home owner is the fish floating up is so far under water on his mortgage, what can he do?

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[Mags]

Some people are idiots. While I see some people on here I simply disagree with, some are big time morons. When those people get sucked into houses they can't afford, I consider that predatory lending practices. You know there are some people that really don't have the intelligence and mental capacity to understand what they are getting into. The banks feasted on those people.

So, the lender is selling the house to the person? Isn't that the real estate agent's job? If the people were too dumb to understand, doesn't this responsibility fall on the real estate agent to make it clear to the prospective buyer that they could not afford the house?

And the lender makes the buying decision? I thought it was up to the person who bought the house to decide if they could afford it or not?

I really doubt any bank had a gun to a person's head saying "buy this house".. likely, it was the other way around.

 

[THE KOD]

So, the lender is selling the house to the person? Isn't that the real estate agent's job? If the people were too dumb to understand, doesn't this responsibility fall on the real estate agent to make it clear to the prospective buyer that they could not afford the house?

And the lender makes the buying decision? I thought it was up to the person who bought the house to decide if they could afford it or not?

I really doubt any bank had a gun to a person's head saying "buy this house".. likely, it was the other way around.

................................................................

dont play stupid

it makes you look more foolish than you are

 

[Mags]

................................................................

dont play stupid

it makes you look more foolish than you are

Sorry, Scott, but I just can't understand. Mortgages are pretty easy - you have a term and an interest rate. You can find payment calculators all over the internet.

I would bet the majority of people that got in trouble either a) bought a house hoping to get big equity gains and filp it and lost or b) took out an adjustable rate - and were willing to take the risk.

Neither of these situations are predatory lending - but stupid purchase decisions. We shouldn't rescue people for stupid decisions.

In fact, our family bought a 2nd house in a vacation area - that is now worth 40% of what we paid. We hate paying the mortgage every month, but have no one to blame but outselves. All one can do is gut it out and cut in other places. We never considered just cutting our losses and leaving the keys for the lender. Not the right thing to do.

I'm just sayin'..... everyone makes their own elective decisions on what to buy and how much to spend - and sometimes you have to live with bad decisions, not blame someone else for the decision you made.

 

[Trampled Underfoot]

Sorry, Scott, but I just can't understand. Mortgages are pretty easy - you have a term and an interest rate. You can find payment calculators all over the internet.

I would bet the majority of people that got in trouble either a) bought a house hoping to get big equity gains and filp it and lost or b) took out an adjustable rate - and were willing to take the risk.

Neither of these situations are predatory lending - but stupid purchase decisions. We shouldn't rescue people for stupid decisions.

In fact, our family bought a 2nd house in a vacation area - that is now worth 40% of what we paid. We hate paying the mortgage every month, but have no one to blame but outselves. All one can do is gut it out and cut in other places. We never considered just cutting our losses and leaving the keys for the lender. Not the right thing to do.

I'm just sayin'..... everyone makes their own elective decisions on what to buy and how much to spend - and sometimes you have to live with bad decisions, not blame someone else for the decision you made.

Think back to when you were 20. Somebody comes to you and tells you that you can get X much house for X amount of money. Then an agent says don't worry about it. We can refinance it before the payment bumps up. Look at all these houses going up. Do it!

Are people stupid? Yes. Are they responsible for making a mistake? Yes. But so are many lenders and agents.

 

[Mags]

Think back to when you were 20. Somebody comes to you and tells you that you can get X much house for X amount of money. Then an agent says don't worry about it. We can refinance it before the payment bumps up. Look at all these houses going up. Do it!

Are people stupid? Yes. Are they responsible for making a mistake? Yes. But so are many lenders and agents.

Tramp:

That was a great example - helped me understand the issue better. I can see how that can happen. Thanks!