View Congresswoman Mary Kaptur (D, Ohio) on with Dylan Ratigan discussing MERS and the mortgage mess. Each explanation gets better.
Congresswoman discusses MERS and the Foreclosure Mess
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Category Archives: MERS
More Banks Suspend Foreclosures
It began with GMAC announcing that it was suspending foreclosure operations in 23 states because of “flawed” paperwork procedures. GMAC was quickly followed by JPMorgan Chase and now Bank of America joined the fray. Whose next?
The flaws include document signers not reading the document, failure to verify information and the notary not being present.
In some cases, documents have been signed by employees who say they have not verified crucial information like amounts owed by borrowers. Other problems involve questionable legal notarization of documents, in which, for example, the notarizations predate the actual preparation of documents — suggesting that signatures were never actually reviewed by a notary.
Other problems occurred when notarizations took place so far from where the documents were signed that it was highly unlikely that the notaries witnessed the signings, as the law requires.
The huge number of foreclosures has to cause a massive administrative problem for the banks. This does not excuse them from doing things right.
Since most of the banks are also tied in with MERS it further complicates the situation. MERS has repeatedly been slapped down because it has not been able to show standing in the proceedings.
Read more here.
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GMAC Discovers Rampant Mortgage Fraud
Much discussion has been made on the subject of mortgage fraud. The common assumption was that the perpetrator of the fraud was the customer or possibly the mortgage broker. We now learn that the real fraud has been committed by the banks themselves. It may not have been intentional, but the effect is still the same.
We have frequently posted about the MERS problem and its’ consequences. Foreclosures have now taken a sudden turn that may halt all foreclosure actions for a long time. GMAC has announced that they are halting all foreclosures in 23 states.
The problem finally came to a head in Florida.
On September 14, 2010, Florida Default Law Group filed “Notices” in foreclosure actions that the firm was withdrawing Affidavits it had previously filed. The Affidavits were signed by Jeffrey Stephan of GMAC Mortgage/Homecomings Financial in Montgomery County, PA. Stephan had previously admitted in depositions that he signed thousands of such affidavits each month with no knowledge of the contents and in many cases without even bothering to read the Affidavits.
Stephan further admitted in deposition that these affidavits were NOT witnessed by a notary as was required by Florida law.
GMAC finally recognized how large the problem was and stopped the foreclosures. If this is so, thousands of foreclosures across the country were fraudulent and consequently, not valid.
. It appears that these states are primarily judicial foreclosure states.
These are the states where judicial foreclosures are more common and in which the lender has to appear before a judge and obtain a court order before initiating foreclosure proceedings against the delinquent borrower. They tend to have much longer foreclosure timelines than non-judicial states. What is striking about the list of states in the GMAC announcement is that all but one (North Carolina) are judicial states. Also, all judicial states in the country but one (Delaware) are in the GMAC list. This would hint at some potential issues with judicial states that is driving the GMAC directive.
Since Nevada is a non-judicial foreclosure state, we are not immediately affected. I would expect, however, that the foreclosures in Nevada will slow significantly, at least until the dust settles.
It would not surprise me to see some of the foreclosures, even here in Nevada, overturned. The question then is what happens to the foreclosure buyer who has already spent a lot of money to rehab the property and quite possibly then sold the property to an end user. I want to stand very clear of that situation.
Read more here.
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MERS loses again in California Bankruptcy Case
A ruling issued by the United States Bankruptcy Court for the Eastern District of California found that, as a matter of law, MERS could not have transferred the note to Citibank from the original lender, Bayrock Mortgage Corp. The Court’s opinion states that MERS and Citibank are not the real parties in interest.
The court found that MERS acted “only as a nominee” for Bayrock under the Deed of Trust and there was no evidence that the note was transferred. The opinion also noted that “several courts have found that MERS is not the owner of the underlying note and therefore could not transfer the note, the beneficial interest in the deed of trust, or foreclose on the property secured by the deed”.
The opinion states: “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.”
The bottom line is that MERS cannot assign what it does NOT own.
For more see here.