Here are a few recent tidbits from the press, just in case you were feeling a bit overly optimistic.
1. MERS Helps Wall Street Steal Your Home
Over the past couple of years, I’ve tried to explain how the financial sector created MERS to destroy property records so that it would be easier to steal homes. In the old days, property records were maintained at county recorder offices. But that was so old-school. It made it too easy to find out who owes whom and who owns what. Wall Street wanted to make this as complicated as possible so that no indebted homeowner would ever know who she/he owes. Wall Street took the mortgages and sliced and diced them, separating origination of mortgages from the ownership of the right to receive payment, and as well separated that ownership from the servicing of the mortgages. And then the bankers burned all the records.
In the old days, you had to keep all the documents together, in physical form. And when a mortgage was sold, you had to go back to the recorder’s office to change the record. With the creation of MERS, most of those documents were destroyed and the banksters never bothered to tell the recorders who owned what. The indebted households have no idea who owns their note and who services the mortgages. Even if they write that monthly check, the banks claim they never received it—the dog ate it, you know.
In truth, since they screwed up all the property records, even the banksters have no idea who owes who what. So they just start foreclosing on everything. Don’t owe a mortgage? Who cares, they foreclose anyway. You cannot prove you’ve got a right to the house you live in, since they shredded all the documents and “forgot” to tell MERS you paid off the note. No more “note burning parties” since they burned the notes as soon as they got them. See here: http://www.ritholtz.com/blog/2009/10/countrywide-destroyed-required-records/http://www.zerohedge.com/article/mortgage-lenders-seeking-court-permission-destroy-22100-boxes-original-loan-documents
I just came across an excellent video—albeit wonky—that explains all this: http://www.youtube.com/watch?v=tlUCaq22oYo
It will take decades to sort out the mess that MERS has made of property records. Meanwhile, don’t believe ‘em. They have no proof they’ve got a right to take your home from you.
Update: Since some flaming comments are flowing in from the “bank lobby”, let me add a couple of pieces I came across today.
Yes, I know how hard it is to believe just how much MERS has screwed things up. And some find it hard to believe that bankers are willfully stealing homes. Here’s a column from HuffPost that summarizes a new study of bank foreclosure thefts: http://www.huffingtonpost.com/2013/04/09/foreclosure-review-errors_n_3045941.html
A few key sentences: “BOSTON — Nearly a third of all foreclosed borrowers who faced proceedings brought by the biggest U.S. mortgage companies during the height of the housing crisis came to the brink of losing their homes due to potential bank errors or under now-banned practices, regulators have revealed. Close to 1.2 million borrowers, or about 30 percent of the more than 3.9 million households whose properties were foreclosed on by 11 leading financial institutions in 2009 and 2010, had to battle potentially wrongful efforts to seize their homes despite not having defaulted on their loans, being protected under a host of federal laws, or having been in good standing under bank-approved plans to either restructure their mortgages or temporarily delay required payments. More than 244,000 of those borrowers eventually lost their homes, government data show….”
And here’s a more academic piece on the industry’s Frankenstein monster, MERS, which discusses the ways county clerks and qui tam litigants are fighting back against MERS. It can be found at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2227789
From the paper’s abstract: “Mortgage Electronic Registration Systems, Inc. (MERS) has faced unceasing controversy from litigators and scholars for its role in foreclosures, its effect on public records transparency, and its role in the housing bubble. While scholarly accounts have described the challenges MERS has faced in foreclosure and bankruptcy courts, this essay seeks to examine the most recent burgeoning challenge to MERS’ manner of business: county clerk and qui tam lawsuits. All around the nation, county clerks and qui tam litigants have begun to file lawsuits against MERS, alleging a number of claims, including that (1) MERS violated state laws requiring assignments to be recorded; (2) MERS used deceptive language to avoid recording laws; and (3) MERS has been unjustfully enriched by depriving county clerks of recording fee revenue. Ultimately, the essay finds that most courts have rejected these claims against MERS, but that such lawsuits remain an expensive risk to MERS….”
And from its conclusion: “So of what import is this most recent spate of MERS related litigation, given that the vast majority of suits have been dismissed? First, although this Article has taken a relatively skeptical and pessimistic view of these anti-MERS lawsuits, banks and their advocates must remain wary of these seemingly unending matters. Just as the tobacco lawsuits were initially met with skepticism and ridicule, one large win was all it took to turn regular routs into an industry-changing victory. Here, one verdict in favor of a clerk in a class-action suit could result in a ruling that MERS must go back and, for example, record innumerable assignments or pay millions of dollars in avoided recording fees. This, in turn, could result in a new appraisal of the viability of MERS’ manner of business.”
And, finally, here’s a link to a petition drive against MERS: http://www.huffingtonpost.com/richard-zombeck/audit-land-record_b_3041225.html
Richard Zombeck has been following the MERS scandal since the beginning and he offers a quick overview of the issues. Richard writes: “In short, MERS enabled the industry to throw mortgages around in their chimp-like poop-flinging frenzy without keeping any kind of paperwork or paying any fees. This has left the sanctity of the land records in every registry of deeds a veritable shambles. ‘This isn’t just affecting homeowners in foreclosure,’ says Jeff Greenberg the founder of Landtegrity, ‘MERS has polluted the majority of the land records in this country. Everyone should be concerned, especially people who are paying their mortgage and expect to own their home some day.’”
(Note if the links don’t work, copy and paste them into your browser.)
2. What You Should Learn From Cyprus: Deposit Insurance is Not Deposit Insurance
Here’s a scary piece: Think Your Bank Deposits Will Always Be 100 Percent Guaranteed by the FDIC? Think Again. http://www.truth-out.org/opinion/item/15500-think-your-bank-deposits-will-always-be-100-percent-guaranteed-by-the-fdic-think-again
Back in the early 1990s the Neolibs started to drumbeat about how deposit insurance removes market discipline from banking. If Uncle Sam promises insurance on your deposits, you have no incentive to “supervise” your bank. And since Uncle Sam (Fed, FDIC, OCC) decided in 1999 that the regulators would no longer supervise big banks, either, banksters partied like it was 1999—as we all know. Which then required a $29 trillion bail-out of Wall Street.
So the Neolibs are back. Cyprus was the opening gambit. You see, it is just so damned expensive to bail-out bankster banks, we need to “tax” (allow banks to default on) deposits. If you are lucky you might get half of your deposits. Next time, you’ll do a better job of supervising the banks that your government does not want to supervise!
3. Obama Joins Social Security’s Enemies on Pretense that Uncle Sam Ran Out of Money.
As I’ve been arguing for a long time, the whole deficit hysteria has been created to provide cover to the President and Democrats more generally so that they can slash the social safety net. I warned that Obama would push to cut Social Security. Pete Peterson has bought off Washington–they’re all on board now to gut the program.
Obama has helped to orchestrate a “grand bargain” that raised payroll taxes on average Americans. Now he’s joining Republicans who insist on spending cuts—even as the economy heads back into recession, in large part because of those tax hikes. See here for more on the President’s sell-out to Neolibs: http://www.bloomberg.com/news/2013-04-08/obama-abandons-stimulus-for-benefit-cut-to-win-over-republicans.html
So there you go: they’ve got your home, your deposits, and your retirement. Nothing left but feudal serfdom to serve Wall Street.
L. Randall Wray is a Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College, NY. A student of Hyman P. Minsky, Wray has focused on monetary theory and policy, macroeconomics, financial instability, and employment policy. He has published widely in journals and is the author of Understanding Modern Money: The Key to Full Employment and Price Stability (Elgar, 1998) and Money and Credit in Capitalist Economies (Elgar 1990). Wray received a B.A. from the University of the Pacific and an M.A. and Ph.D. from Washington University in St. Louis. He has served as a visiting professor at the Universities of Rome and Bologna in Italy, the University of Paris, and UAM and UNAM in Mexico City.