Banks Push Fed to Curb Borrowers’ Right to Rescind Mortgages

[Purveyor]

Source: Bloomberg

By Carter Dougherty

Dec. 16 (Bloomberg) -- Mortgage firms are pressing the Federal Reserve to curb homeowners’ right to invalidate loans based on flawed documents -- a right consumer groups say is one of the few weapons borrowers have to battle unfair lending.

Consumer groups and industry lawyers say a rule under consideration by the central bank would make it harder for borrowers to exercise their right of “rescission,” which forces a lender to relinquish a lien on a mortgaged property. They said the number of rescissions has grown in recent years as a result of the foreclosure crisis and allegations that mortgage documents were fabricated or processed improperly.

Ken Markison, regulatory counsel at the Mortgage Bankers Association, said the change would save lenders money. “Greater clarity will help avoid unnecessary litigation and reduce costs,” Markison said.

Wells Fargo & Co., Bank of America Corp., and JPMorgan Chase & Co., the three largest U.S. mortgage lenders, all declined to discuss rescissions or didn’t respond to requests for comment. Susan Stawick, a Fed spokeswoman, also declined to comment.

Lenders are pressing the Federal Reserve to act on the issue now because starting in July, rescission rules will come under the purview of the new Consumer Financial Protection Bureau, industry lawyers said. Jeffrey Naimon, a lawyer with Buckley Sandler LLP, described the consumer agency in an e-mail as “a much more political” regulator than the Fed.

Read more: http://noir.bloomberg.com/apps/news?pid=20601010&sid=abhKEloYvAAc

[phantom power]

1. I'm sure the GOP will get right behind this. Will the Dems "reach across the aisle"?

[No Elephants]

18. Who re-appointed Bernanke and made Timmeh Secretary of Treasury?

[IScreamSundays]

2. What the banks want, the Fed delivers.

Happy Hanukah BAC, Wells Fargo, JPM

[Roy Rolling]

3. Right...

Let's just excuse the legal details, they are not important. :sarcasm: These are the same people that demanded the President of the United States be impeached for saying to the Republican Inquisition that he did not get a blow job.

[riderinthestorm]

4. Wow! They really are afraid of Elizabeth Warren.

All the more reason for Dems to wait and let this fall under her purview....

Of course, that would mean protecting the little guy at the expense of Big Financial so I guess anything can happen.

Still, this is interesting and important news. Hope it doesn't get lost in the Assange and tax bill debate shuffle.

K and R.

[No Elephants]

19. This movement started before Warren's appointmeent.

[CatholicEdHead]

5. So they want to do away with the right to ask for formal documentation?

Much of it has been lost as the loan has been mixed in with this or that derivative and nobody is sure just who owns it. The banks need to clean up their paper mess themselves not waive the requirement. Find their own paperwork, not foreclose without proof.

[Grinchie]

8. It's more difficult than that, because of the way Title is conveyed in this country.

Valid Title is one that can be traced back to the beginning. Thats what title companies do, they do an abstract of title back about 40 years at most to ensure that the conveyances were legitimate. Then, after they are satisfied that everything is in order, they issue Title Insurance.

This is how it has been for nearly a century, abut not, with the securitization of the mortgages, Banks were using unsigned notes as collateral for loans, and passing them around like corporate paper. Furthermore, the Mortgage Electronic Registrations System (MERS) was created to simplify the transfer of these Deeds/Titles/Notes across state boundaries, with would otherwise need to be recorded in the state of record.

We are now finding that the MERS, created by the Big Banks and Mortgage industry, had a few flaws, such as have database crashes with the purported loss of transactions. One must ask oneself why the Big Banks would not safeguard their data, worth trillions of dollars, while they were riding high with record earnings? Perhaps their data center in Mumbai India was not the best place to store these databases (I kid, but I would not doubt it)

Now, instead of biting the bullet, and hiring the thousands of analysts and auditors to clean up this mess, they would rather rewrite the laws for convenience. Boo Hoo, we have to actually hire people to fix a catastrophic failure in a bogus system.. Boo Hoo.

[soryang]

11. Mers doesn't comply with state law in many states

That isn't a flaw, it is void, period. If you come into court without a valid chain of assignment of mortgage interest in the county records, you have no standing at all to bring a foreclosure. If you get by the judge, because a default judgement is entered based upon false recitations in the petition for foreclosure, the judgement of foreclosure has no quiet title effect. In other words, you can go behind the foreclosure order and void it.

[Grinchie]

12. Which is why Title Insurance is now questionable on Foreclosures

Thank you for the elboration of the process and of MERS.

Your concise explanation of the legal ramifications needs to be understood by everyone affected by this proposed rule change, because once they do, it shines a 5 million candlepower spotlight on the corruption occurring in our society today.

It's very seredipitous that all of this is coming to a head, since I have recently had a need to defend my own property from adverse possession and have needed to become familiar with the legal aspects of Real Property.

It's been a real eye opener, and it prepared me to actually understand the scope of the fraud they are attempting to unleash by passing this waiver. It's just a legal maneuver, and it may buy them some time, but I doubt is would stick, because it affects way too many people, both foreign and domestic to be valid. They may be able to get it passed, but it will be stuck in courts forever.

[soryang]

13. I was in a similar conversation with a DUer who pointed out...

...the chain of mortgage assignments could be defective on a loan that isn't in default. How do you know you are paying off the proper party in interest if his interest isn't of record?

I think that I will bring my own board certified real estate attorney to any real estate transaction these days. In the past I had relied on the title insurer's broker and his attorney. You can't do that anymore.

I've got some other posts on this subject in my journal. The web site www.4closurefraud.com is pretty good for me because I own property in Florida. They've got a lot of articles with actual foreclosure orders and decisions. Other defects in mortgage backed securities and associated Pooling and Servicing Agreements are described in some archives in www.nakedcapitalism.com. A lot of my analysis for the past two years was based on some legal education i had many years ago. I've found that my analysis is substantiated on these two sites.

I would get a real estate attorney just to pay off my mortgage. I no longer trust these banksters or the mortgage servicing agents.

Thanks for your interest and comments on this subject. A little daylight goes a long way on this subject matter. Most people find it too dry.

[Grinchie]

22. You're right, many people can't make the time to perform Due Diligence anymore.

Unfortunately, this is the reason these con men can get away with so much. People would much rather avoid reading a 40 page mortgage agreement and ask questions, which would make them look ignorant. Oh the shame!

It is amazing how many shiesters will be scared off when you actually start doing proper due diligence, or appear to be protecting your interests in Real Property, or just about any deal that may offer them an avenue to endanger your assets.

There are many people out there that love to take advantage of trusting individuals by entangling them in some sort of litigation in order to weaken them for the kill.

There is a great deal of fraud going on right now that is associated to Foreclosures. Such as the foreclosed owner collecting rents after the bank has foreclosed and taken title. Or the other fraud where some con artist drops by and tell the tenants that the property is foreclosed and offers to "Review" the lease agreement in order to determine whether they can stay, and then use the information for Identity theft.

Then there is the case of renters being told to get out by a third party, not affiliated with either the bank or the previous owner, who notifies the tenants to get out, and then take possession of the property for themselves, rent free untill the foreclosure process is complete, with full knowledge of a yearlong backlog.

Renters especially are vulnerable, because many don't know their rights, and blindly obey the words of some stranger that knocks on their door one day.

It doesn't work that way, but their are so many naieve people out there that the scamsters have easy pickings.

I am in agreement with you regarding the Real Estate Attorney. It's a very small price to pay considering the amount of trouble one can get into in real estate transactions these days.

When I started reading all of these contracts, I realized how little I knew about the terminology and it prompted me to learn as much as I could about language, and especially the specific meaning of ambiguous, open ended language inserted into legal contracts. I people did what I do, and actually read and comprehend the terms of the contract, many would just walk away deal laughing. I find myself doing that a lot these days, and by golly I feel much better knowing I escaped a nasty trap, simply by reading carefully.

[Raksha]

24. Thanks for the information on foreclosure fraudsters, Grinchie.

I'm in a very vulnerable situation myself because my landlord is in foreclosure on the house I'm living in and the one next door, which he also owns. The auction was postponed at the last possible minute--it was scheduled for December 20th and was only postponed on December 16th. So it appears (as of right now) that the short sale my landlord was hoping for is going to go through after all.

I paid my rent through the end of December just to be on the safe side, on the advice of the local legal aid society. My landlord told me he is still the legal owner of the property (and therefore I'm still obligated to pay him rent) until the escrow CLOSES, but I understand the escrow companies are so backlogged that could well take up to a year. Do you happen to know if this is true or not? Don't worry; I'm not going to take what you tell me as definitive. I'll double-check with the legal aid society.

I'm well aware of some the scams you mentioned. One of them happened exactly a block away from me--same house number of mine but one block over. The house wasn't in foreclosure but it was vacant and theoretically for rent although there was no sign out front. Some third-party scammer, not affiliated with the owner, the bank, the real property management company or anyone else got wind of the vacancy, stuck up a "For Rent" sign and presented themselves to the prospective tenants as the owner or the authorized rental agent.

They got these poor gullible marks to sign a rental agreement and the whole bit. And the tenants moved in, not realizing anything was wrong. I think they were there for about a month before the real property management company got wind of the situation and evicted them--I assume with a 30 days' notice. I felt so sorry for those tenants because the situation was in no way their fault.

I'm familiar with another very similar scenario that happened about a year ago that was even flakier. In that case it involved someone renting rooms in a house where she wasn't even a legal tenant herself but the mother of the tenant. I have to say my friends who gotted ripped off should really have known better. The property management company ended up evicting everyone, innocent and guilty alike--I believe it was a total of about six people.

In my own situation, when the auction was still scheduled for December 20th, I was advised to attend it myself and see who (if anyone) bid on the property. I was warned not to blindly trust anyone who showed up at my door claiming to be the new owner. My friends said I should demand verification in the form of proof of title (or something) before handing over any rent money. Definitely good advice--apparently the huge number for foreclosures in this neighborhood makes it a happy hunting ground for scammers of all kinds.

[Grinchie]

6. They just keep on piling the straw on the Camels back

It's almost as if they want to see how far the population of sheep can be tormented until they snap. Maybe this is the whole idea, in order to foment a revolution of the current social structure in order to use their obscenely effective weaponry against the remaining rabble and free thinks that exist in the country.

It would give them a great excuse to rebrand the same old oligarchy into a "New" and "Improved" version and start over with a new economay, and without all of those nasty and incriminating documents that fester in the archives waiting to be discovered and acted upon by regulators.

Many years ago, after I saw a career of 20 years disappear overnight, along with the income, I witnessed firsthand that there were no safety nets in place that provided for you after a lifetime of work and achievement. It forced me to relearn the old ways of self reliance and standing up for ethics, no matter the cost. I learned that making a vow to not buy goods made in China is nearly impossible. I learned that real products that retain value are no longer produced, and are generally over 50 years old, and were used by our grandparents, such as hand tools that were easy to use, comfortable, and extremely efficient once to relearned the lost techniques.

I learned that Food, Water and Shelter are the most important things we actually need, plus a safe way to dispose of our waste without contaminating gallons of water in the process. All the rest is a luxury, and once one thinks in this fashion, and ensures the 3 basics are met, everything else is "Luxury".

I learned that the Healthcare industry is much like the Agribusiness, where humans are treated in much the same fashion as units in a Concentrated Animal Feeding Operation, where we are treated for easily avoidable diseases in order to prolong life for ultimate marketability, and not for the quality of life of the unit. Quality of life is secondary for the most part in much of today's medical system, except for the very wealthy, and the rest is propaganda to convince the rest of the people to keep consuming the broken medical care we have access to.I learned to take accountability for myself and my loved ones, my own health, and learn to listen to my body and direct its miraculous healing energies that exist in every one of us, despite the fact that we are indoctrinated to believe that we are not qualified by the medical establishment.

Once I took these steps, and learned that working for myself and providing for the 3 basics was initially a full time job, I learned that once free of debt and the rat race, I had time to focus on bettering my environment, education, and health. No more did I have to commute 2 hours a day for a paycheck that indirectly paid for wars of aggression. I could listen to my body and sleep in, or I could stay up all night rolling with a new invention without being locked in some company building.

Most of all, I became self sufficient, and this transformed my life into true freedom. The freedom to take time to think, The freedom to do complete analysis of important decisions. And most of all, the ability to save money hand over fist. While I had meager savings to start this whole experiment almost a decade ago, and even though my bank is my mattress, I have actually earned money by remaining outside of the banking and investment schemes marketed to us constantly. I am liquid, and able to actually purchase items of real value without incurring debt, and thus being drawn back into debt slavery, as well as funding illegal wars and feeding the fascists that continue to destroy our wonderful country.

All it takes is a promise to oneself to give it a go, and make a valid attempt to fulfill the three basics all by yourself. Doing so will reveal the true costs associated with what many take for granted, and I assure you that you will never look at hot and cold running water, toilets, or food the same way ever again.

We all know that the Ponzi scheme is close to Control+Alt+Delete reset. I look forward to it, but it took 7 years to get prepared, and I had hoped that the US would change course prior to this. Well, it has not changed course, and Obama is nothing more than a figurehead for a desperate Cabal of power hungry oligarch who think they have all the answers, except for this case, and now they are desperately looking for a way out before the mob tears them apart.

I get the impression that they will attempt to get the angry mob to turn against themselves, and we see it in the propaganda with the tea party, Liberals, Conservatives, and all the other Lemmings they can create to foist blame on. One thing is certain though. The Congresscritters are guaranteed to be airlifted to safety, unaccountable for the divisive instigation, while the mob bursts into flame and is doused by an effective police force.

I truly hop Americans are smart enough not to fall for this trap like so many other empires have.

[Devil_Fish]

17. If I could rec this post, I would. NT

[thecrow]

21. Ok then... I'll do it for you

[freshwest]

23. So awesome and so true

And I am not going to make it.

[soryang]

7. Flawed documents?

How diplomatic! What we're really talking about is fraud, plain and simple.

[Grinchie]

9. Flawed = Non-Existant

Of course, that means you don't have valid Title. It's just that simple.

[soryang]

10. There are many court cases where forged affidavits are filed

...with stamped attorney signatures asserting intentionally false facts and when called out by the judge, the attorney says he doesn't know anything about the case and never even looked at any of the documents. That's fraud.

The media are deliberately not reporting on fraud, as are the bar associations. Robo-signing and allegations of negligence are simply euphemisms. They don't want the people to lose faith in the banks, and the legal system. But the truth is it is wrecked due to criminal activity by the banks and the collaboration of dishonest attorneys.

[ixion]

14. Legalizing FRAUD... how typical...

:argh:

[CubicleGuy]

15. It's simple

The banks want to have all the power, and they don't want consumers to have any.

[Demeter]

16. I wouldn't think the Fed Had the Power to Overturn Centuries of Law

but what do I know? I'm one of those F---ing retards.

[No Elephants]

20. Rescission by borrowers is a misnomer. This is failure by lenders to perfect their own rights.

Ministry of Information bs spin.