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Monday, January 17, 2011 11:48 AM

Comments Regarding "Quiet Title" and Banking Fraud; MERS a Symptom, Fed is the Real Problem

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In response to Utah's "Quiet Title Law" Bypasses MERS, Awards Homes Free and Clear; One Homeowner Had $417,000 Debt Erased, as story about a Utah judge who has launched a direct attack on MERS resulting in several people being awarded homes free and clear in spite of debts up to $417,000 - I received several comments I would like to share ...

"Dr. Evil" (the Dr. Evil who frequently comments on this blog, NOT the Dr. Evil European Bond trader) writes ...

Mish - I have mixed feeling on this. The bottom line is that justice should be done at every level. No one who owes on a house should get it free and clear but at the same time the lenders know damn well how to legally transfer interest in a property and chose not to follow the proper procedure. Beyond that you have an entire financial/political system that is controlled by a few who are apparently above the law or they would be doing life sentences by now - so justice on a far grander scale is not being done and until it is I have a hard time getting too upset about this sort of thing. It may involve a few million vs trillions in theft by the bankers. Plus the proper transfer of property is vital to upholding property rights. If the lenders decided to disrespect it then they should be punished in some way.
Similarly "Southernmost" writes ...
People have to get over the free house thing, and deadbeat borrower. YES, investors and OUR pension funds invested in the notes. However, it was the banks, servicers, and MERS that INTENTIONALLY destroyed the title chain so that they could perpetuate the fraudulent ponzi scheme. ANY mortgage with a MERS clause on it casts doubt on the fact of your mortgage payment getting credited to the correct investor. Whether you are making your payment or not, if you have a MERS clause you probably are not paying the correct party, or "at best" you are paying into a twisted algorithm to satisfy some tranch of MBS temporarily. This is as a DIRECT result of the banks intentional destruction of the title history. WE WILL NEVER KNOW WHO JUSTLY OWNS THE NOTE. Again as a direct result of the banks, not the borrower. Sorry, but I got tired of paying into a criminal enterprise that has destroyed our Country and land records and they had the audacity to come up with a fraudulent doctored note as the original. Should I get a free house, NO. I am proposing to auction it to charity, but BoA certainly shouldn't get title to it so they can sell it and perpetuate THEIR ponzi scheme and pay bankers bonuses.
"Greyzone" writes ....
Baloney, Mish. The big banks violated clear law regarding transfer of titles. They did so WITH PURPOSE. That purpose was to resell toxic bad mortgages as AAA securities. The clear title was deliberately obfuscated to make the investor unaware that he was deliberately being ripped off.
That comment immediately above might make some sense if it was the banks getting hurt. In general, they passed the trash, something Greyzone even stated.

"Setmefree" writes ...
I am current on my mortgage, not upside down. I "own" my residence and rent my residence prior to this with positive cash flow and good equity. I have a fear that I will make my payments to Chase over a long period of years, then not be able to clear my title at the end because of all the MBS snafu. Is that an unreasonable fear? Would it make sense to do a quiet title action now just to assure that doesn't happen?
That is exactly the problem this has unleashed. Every title in MERS is potentially clouded. How do you prove you paid the correct party. How do you prove you bought a house from someone that could legally discharge the liens on it? If you didn't, some genius lawyer, bank, or title company might find "legal" cause to come after you. That in turn may cause Congress to get into the act. This is a theoretical exercise so far, but not without concern.

Czar06 writes ....
What part of William Black's and the FBI's results that, "80% of mortgage fraud is lender fraud" don't you get? In what universe is fixing less than 20% of a problem a solution for the entire problem?
Hell Czar,

What part of you does not understand that homeowners bought houses they could not afford, willingly lied on application, overstated incomes, etc, etc, etc, and those are the 20% who are in default?

What part of you does not understand the potential implications raised by "Setmefree"?

What part of you does not understand that two wrongs do not make a right?

Mixed Feelings

In general, I share the "mixed feelings" of Dr. Evil. Unless Congress botches things up (always a distinct possibility), we will likely get a better system out of this than before.

That is one way, perhaps the only way to legitimately have "mixed feelings" about this.

Certainly there has been no justice served in regards to bank fraud. Not a single person has gone to jail or even been significantly fined as a result of all the various mortgage fraud committed.

More Putbacks Coming

Banks willingly took loan applications from people they knew would default, because they were able to pass the trash. They even lied to investors while doing so.

I wrote about this in More Bank of America Putbacks Coming; Fraud Exposed

Were investors purposely screwed by Countrywide Financial (now Bank of America)? You bet.

Will the banks suffer much from this fraud? It seems unlikely.

I see little justice here.

For all the rightful bitching about MERS (I do not like it either), most of the proposed "solutions" harm innocent parties while rewarding deadbeats, many of whom purposely lied about income or other things on their mortgage applications.

Many others who did not lie, managed to take out home loans for cars, boats, vacations, etc, etc, etc, knowing full well they did not have enough income to support the debt.

MERS a Symptom of the Real Problem

What is the real root cause of this mess and who can we blame for that cavalier attitude of lenders and borrowers alike? Why the Fed of course.

Thus, MERS is just a symptom of the problem. The real problem, once you backtrack it to the source, is loosey-goosey policies of the Fed in conjunction with fractional reserve lending.

In that sense, the problem cannot be fixed by fixing MERS. It can only be fixed by getting rid of the Fed and fractional reserve lending. Even if MERS is fixed to the complete satisfaction of people like Yves at Naked Capitalism, Fed-caused problems will just turn up somewhere else.

In the final analysis, banks just did what the Fed allowed. Actually, "encouraged" is a far better word than "allowed", and no amount of regulation can possibly stay ahead of that.

Those who really want to fix the problem should get off their High MERS Horses (blaming MERS for this mess) and look at the real problem.

Mike "Mish" Shedlock
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