Tuesday, October 12, 2010

Mortgae Fraud: How it actually works

This is a precise summary of the foreclosure fraud crisis facing this country and the world.

Mr Grayson did not tell you that much of the assignments to mortgage note servicing companies of rights to collect your mortgage payments, and foreclose if you don't are in essence void. This is because ownership of the notes and mortgages was not legally transferred. The transferring companies did not have the ownership rights to transfer!

This is an especially difficult problem for very many securitizations because these instruments required that ownership of the assets in them be legally and properly transferred by a finite, unchangeable date that has long since passed.This cannot be fixed by a later assignment,legal or not. The deadline has passed.

Follow closely now: The vast majority of these securitizations have been sliced and diced into an alphabet soup of derivative securities that were sold world wide. If the underlying collateral - the very mortgages and notes we are talking about - were never legally assigned then these further securitizations and alphabet soup derivatives have been created and sold fraudulently.Imagine the lawsuits waiting to be filed everywhere!

Nobody knows who actually owns what. That will have to be decided by, no doubt lengthy, court cases.

Additionally, trillions of dollars, yen, francs, zloty, euro and on of liability hangs over the heads of the financial institutions who solicited these mortgages in the first place, or who bought them and fraudulently repackaged and resold them!!!!

Yep, the major players in this cesspool are our very own US banking giants: Citi Bank; Wells Fargo; Bank of America and of course the investment banks that aided and abetted the securitizations and sold them on: Goldman, Merril Lynch, Lehmann, etc etc

Too big to fail?? They are too big to survive.

Think about this too: you, the law abiding homeowner have been making your payments on time, to a servicer who does not have the legal right to collect them from you because that right to assign did not legally belong to the institution who said it had legal ownership if your note - it clearly did not.
So you have been making payments to a servicer who has a disputed authority to collect them, and has been sending them on (less its fees, of course) to entities that did not have proper legal ownership of the notes.
What happens if someone else comes along and sues you for non-payment under the note you signed that they now allege they legally own? Mr Grayson tells you this has already happened in Florida!!

All you will be left with is crippling legal expense to prove that you are the victim of fraud.

The Florida courts and many of the other foreclosure courts have only very recently been grudgingly coming to terms with this. Remember, judges are elected, are usually lawyers or politicians, who are presiding over proceedings in which their fellow legal practitioners are presumed to be ethical. They dispense justice in these courts, or do they? They are swamped, have not got the time to read documents, dispose of cases in 90 seconds in the interest of clearing the docket. All on the say so of lawyers for document mills representations!!

Click on the Heading for a link to an absolutely scary summary of organized crime at work with our Government Blessing.

The unsaid consequence of all of this is that banks and other owners of affected mortgages have a bunch of unenforceable contracts that they show as assets. These will have to be "marked to market" - and reserved for on balance sheets or written off.

Whichever path they go down, the destination is the same - banks are bankrupt. That means that the value of their assets (including all the money we the taxpayers gave them) is arguably less than their liabilities. They should be dealt with through the bankruptcy courts: sell their assets for what can be recovered and pay off as much of the liabilities as the proceeds allow.

Then of course we the people must find a way to keep the promise of the American Dream enshrined in the tax code: homeownership - a safe and secure roof over your head - is an entitlement written in the tax code for decades. It is a legally sanctioned "entitlement".

There is a way to do this and solve the problem once and for all. I have laid it out in detail in several previous posts. They are in the archives. I will re-post them, updated,for convenience of readers.

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