I feel compelled to correct an embarrassing grammatical error in the Washington Post.

The paper, whose grammar is usually outstanding, wrote this morning that “The [foreclosure] problems came to light this fall as firms such as Ally Financial, Bank of America and J.P. Morgan Chase halted foreclosures because of revelations about shoddy documentation and other questionable practices.”

It came to light because the banks were embarrassed by public disclosures of the half-arsed, slip shod operations they were running — and because courts started kicking out foreclosure proceedings because of this.

As to the grammatical error: Forgery, fraud, and criminal contempt of court are not mere “questionable practices” — the word you are having some difficulty recalling is Felony. If the editors at Washington Post do not know how to spell the word, perhaps we can help them out:

The word is Felony.

Spelling bee contestant: “Can you use that in a sentence?”

Yes:Felony. The bank executive was convicted of a felony involving fraud, went to prison, and was sodomized daily. Felony

Felony. F-E-L-O-N-Y.

Congratulations, you spelled the word correctly.

WaPo excerpt:

“A congressional oversight panel is set to warn on Tuesday that a widespread problem of flawed and fraudulent foreclosure paperwork could upend the housing market and undermine the nation’s financial stability, just as the issue is coming under greater scrutiny this week in Washington.

The report, issued by the Congressional Oversight Panel, which monitors the government’s bailout program, marks the first time a federal watchdog has weighed in on the nationwide foreclosure mess.

The panel echoed concerns raised by consumer advocates and financial analysts, who have said that although the consequences of the foreclosure debacle remain unclear, the problems could throw into doubt the ownership not only of foreclosed properties but also the millions of ordinary mortgages that were pooled and traded by investors around the world.”

The possible legislative response to this ranges from doing nothing, to encouraging more mortgage mods (a waste of time and money), proposed bank cramdowns, and even an unconscionable MERS pardon.

If we see any sort of MERS pardon, I will be forced to send a team of Ninjas out into the night to do some paid lobbying of my own . . .


Don’t underestimate foreclosure crisis, watchdog to warn
Brady Dennis and Ariana Eunjung Cha
Washington Post , November 16, 2010

Category: Foreclosures

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

55 Responses to “Sen Kaufman: Don’t Underestimate Fraudclosure Crisis”

  1. Mannwich says:

    Been saying this for years now, but where would our economy be without the element of fraud in it? And how much of our economy is based on it now?

  2. carleric says:

    Until some of these incompetent, dishonest, oberpaid clowns running our banks take the famous “perp walk” this will go on for a long time. Their apologists need to step aside, send the bastards to jail and lets move on

  3. cpd says:

    It’s time to force across the board mortgage principal reductions on the banks. They raked in fees by driving an out-of-control mortgage origination process to feed their securitization pipelines. And that directly contributed to house price bubbles. Time for pay back. When some of them are subsequently shown to be insolvent, put them through the government resolution, wipe out the equity and re-structure the debt. And then break them up and sell the pieces. Enough is enough.

  4. foosion says:

    If you think any banksters will suffer for what they’ve done, you’re delusional. Alas.

  5. DeDude says:

    Considering that they actually tried to slip a “pardon the paperwork” thing into a bill just before the election, they must be pretty desperate. But way to many people are awake and angry to get a MERS pardon through the system now. There could be some real pain ahead for them.

  6. Lyle says:

    Actually on the foreclosure side they will slip it thru in the states where it really has to be done anyway. Its not clear that any federal fix would survive issues with the commerce clause, since real estate is located in a state and does not move. (Its about as far from interstate commerce as you can get). Everyone seems to think the feds can fix it, but its not clear they can land tenure is a uniquely state issue. For example if you die and own property in another state you get to have 2 probates one in your home state and one where the property is located.

  7. lalaland says:

    Ninjas NOW!

  8. b_thunder says:

    Is Obama getting a 2nd shot to become what he should have become in 2009 – real reformer?
    With Emanuel and Summers gone from the W.H., perhaps the Pres. will have the balls to do the right thing: put a few insolvent “zombie”-banks into the receivership, and slap handcuffs on some of the bank execs? (and lawyers, and everyone else involved in the chain of fraud, from origination to foreclosure?)

  9. Transor Z says:

    C… I… L… L…

    My landlord.

  10. obsvr-1 says:

    I would have never thought that the chief of staff for then Sen Biden, who becomes his replacement as Sen of Delaware when the B goes VP would become my favorite person in Washington. Kaufman has become the crusader fighting against the criminals and fraud. Let’s hope he can keep the heat on and stay away from any kind of bizarre accident.

  11. James says:

    Love it . . . Barry “I don’t mince words” Ritholtz is kickin’ some more butt.

  12. Like Barry, I actually have a non-cynical, untarnished belief in the rule of law, so I deeply appreciate what he is saying here. Without the rule of law there is nothing except avarice and pilfering and kleptocracy.

  13. machinehead says:

    Probably ‘semantic error’ would be a better characterization than ‘grammatical error.’

    Although both terms are too nonjudgmental in this case. ;-)

  14. AHodge says:

    i get folks not wanting to do “banks” more favors
    However, three years ago i wrote 16 reasons why mortgage paper is bad paper, What i then watched was the funders of this Ponzi scheme, investors like pensions insurance cos, and yes the banks, taken out of this
    or allowed to cover it up.
    This latest flap makes me add reasons 16-19,
    BUT it is not the banks mostly on the hook, think this all covered by reps and warranties?
    they foreclosing on behalf of final investors? or those that guaranteed.
    as the first 16 flaws in this gigantic POS covered, stickin it to the man including all the fixed income boys seems not to be in the political cards.
    but thanks for trying—- rope and pitchforks!

  15. John says:

    The banks halted foreclosures because of “REVELATIONS about shoddy documentation and other questionable practices” and NOT because they were doing “shoddy documentation and other questionable practices”. The bank executives have no morals, so at least break up the banks. And preferably send the felons to prison.



    I agree with your prescription. But the vast majority of the American political class don’t have the balls to be reformers. Certainly Obama does not. And it doesn’t help that Americans won’t elect anyone with the balls to be reformers.

  16. Indeed, let’s force principal reductions on banks, but only in those 23 states where mortgages are foreclosed with judicial oversight. Then the people in the other 27 can pay taxes to fill the holes on the bank’s balance sheets caused by the windfall received from the banks in the judicial foreclosure states.

    How is Mers evil? I really don’t get this line of reasoning. Mers is simply an additional, ancilliary means of tracking ownership interests in mortgages. It does not, nor was intended to, replace the probate court filing system. It simply is a group of banks getting together and appointing an agent (Mers) to be the nominal owner of mortgages, no matter who among them actually owns the mortgage. So long as the banks are fine with it, why should anyone else be troubled about it? I know, I know. Probate courts are robbed of filing fees when an assignment is made within Mers. But that was part of the point. Why should a probate court collect taxes with every assignment of an already-filed mortgage? Recording an interest in property in the probate records is done to perfect the interest as against anyone else that may have an interest. Failing to record assignments means the assignments are not enforceable against others that may claim an interest in the mortgage and whose interest has been recorded. But none of this concerns the borrower. He still owes the money to a mortgage company, and he agreed when he borrowed the money that they could assign their interests as often as they like.

    And perhaps the stupidest comment I’ve read in awhile:

    “Its not clear that any federal fix would survive issues with the commerce clause, since real estate is located in a state and does not move.”

    Indeed. That’s why RESPA (the real estate settlement procedures act) only preempts any and all contrary laws in any and all of the fifty states, though the settlements concern only real estate, and, like you say, it doesn’ t move.

    After Wickard v Filburn in 1936, and then Katzenbach v McClung about 30 years later, the commerce clause has only as much meaning as Congress decides to allow it. Congress has already decided that real estate settlement procedures (the front end of the transaction) are subject to federal regulation. There’s no reason it can’t do the same for the back end, and dispense with all these silly procedural hurdles (like an affidavit attesting to the veracity of documents filed in a foreclosure) in places like Florida that impair the liquidity of real estate.

    But, if you guys think the residential real estate market would be better off if all states were like Florida…well, that might be enough to give us the crash the market really needs. So, I’d say you ought to all grow up, but really, what I want is a crash to get us back to price level that is more in line with supply and demand metrics, so flail away at Mers and fraudclosure all you want.

  17. Todd in SM says:

    The US has been so WILDLY skewed towards corporate favoritism. Sad.

  18. louis says:

    Is there a housing problem going on?

  19. Petey Wheatstraw says:


    Why should society prosecute any crime that does not involve me as a victim?

    You continue to argue not that laws were not broken, but that laws of no consequence were broken. That argument is flawed and false.

  20. bobby says:

    Dear NPR
    How do you spell TORTURE ?

    e-n-h-a-n-c-e-d i-n-t-e-r-r-o-g-a-t-i-o-n

    same shit everywhere… thanks BR

  21. Cynic_FA says:

    Wow BR! I don’t know if your grammar is correct, but, your writing style definitely has CLARITY! I wish you could find some equally harsh words about the Federal Reserve and QE2.

    You could even reccycle (think Green) some of the words you used about the fraudster. Just say we audit the Fed and the Fed is …
    “embarrassed by public disclosures of the half-arsed, slip shod operations they were running”

    The foreign markets which are not in depression mode (China, India, Brazil, Germany) have unanimously expressed disgust at the Fed’s QE2 program. With the German finance minister calling the move “clueless.”

    The US bond markets have universally rebuked QE2. The yield on 10 year treasuries is up 50 basis points. The TLT has plunged 10% (yep safe treasury bonds down 10% in 5 weeks)

    Come on Barry. you were one of the first to tell us the banks and mortgage lenders are all crooks. This is old news, the vast majority of Americans distrust the banks now. This is time for you to be a leader. Join with Rand Paul and demand an audit of the Federal Reserve. Tell your loving public that the Fed is stealing money from stodgy CD buyers and savers to inflate the profit margins and bonuses of the banksters. Actually, criticizing the Fed is just an extension of your efforts to pound the banksters. The primary goal of the Fed is to pump up the prices of mortgages, cdo’s, securitized credit cards, and commercial RE loans on the Bank balance sheets. The primary tactic for the Fed to strengthen bank income statements is to steal interest income from senior citizens and lend money to the banksters at zero interest.

  22. AHodge says:

    Barry i quote from yours on Institutional Investors also from today.
    • “Mortgage investments: Due to a surge of loan defaults, the share of assets invested in mortgages fell to 50.5% down from 59.4% at the end of 2008 and a peak of 69.1% at the end of 2006″

    if you think its just banks wetting themselves over fraudclosure, think again
    Got that number? OVER HALF of the $25 trillion TOTAL all assets held by Institutional Investors. though some of that must be commercial mortgages…

  23. Cynic_FA says:

    Douglas Watt says

    “Like Barry, I actually have a non-cynical, untarnished belief in the rule of law, so I deeply appreciate what he is saying here. Without the rule of law there is nothing except avarice and pilfering and kleptocracy.”

    Kleptocracy? is a term applied to a government that takes advantage of governmental corruption to extend the personal wealth and political power of government officials and the ruling class (collectively …

    I think you got the second part right “Without the rule of law there is nothing except avarice and pilfering and kleptocracy” this is where we are today with the banks and the Wall Street thieves. How many senators did the financial community buy during the last election? why did Democrats and Republicans alike allow the estate tax on a Billion dollar estate to go to zero?

    There is no law on Wall Street except the laws of the jungle and Darwin – survival of the fittest, everyone else is dinner.

  24. hammerandtong2001 says:

    So long as the banks are fine with it, why should anyone else be troubled about it? I know, I know. Probate courts are robbed of filing fees when an assignment is made within Mers. But that was part of the point. Why should a probate court collect taxes with every assignment of an already-filed mortgage?


    Because it’s the law.

    Now that I’ve guessed correctly, do I win a free toaster oven?


  25. Petey Wheatstraw:

    Do you prosecute the crime of driving over the speed limit by taking away the car?

    Should filing an affidavit that says a file is accurate that is later found to have been signed by someone that didn’t personally review every document in the file result in losing a mortgage against a house? Even if it turns out that the file was substantively accurate?

    Foreclosure affidavit laws are procedural in nature, intended to ensure that foreclosing mortgagees check their paperwork for accuracy, probably because the courts generally were (and have for some time been) relying on the assertions of the mortgagees alone in granting a foreclosure, as the borrower rarely ever made any appearance. If the files where foreclosure affidavits were “robo-signed” are nonetheless substantively accurate, hasn’t the essential purpose of the law been met?

    You see, contrary to all the saintly people that claim they believe in the rule of law and therefore claim these procedures should be followed to the letter, one is more loyal to the spirit of the rule of law when it is refused to allow procedural mishaps to affect substantive rights and obligations. Awarding a house for an affidavit does not embrace the spirit of the rule of law. It embraces proceduralism.

    Besides all that, attesting that a file has been reviewed for accuracy is a subjective inquiry that anyway should be meaningless if the file turns out, objectively, to be accurate.

  26. AHodge says:

    yes these geniuses had 69% of their “assets” in mortgages in 2006.
    please please let us pretend they are still OK?

  27. “Because it’s the law.

    Now that I’ve guessed correctly, do I win a free toaster oven?”

    No, dumbass, you don’t. Because it is not the law. There is no requirement that any property interest be recorded in the probate records for the interest to be enforceable as to the parties to the interest, i.e., two mortgage companies can make whatever agreements regarding a mortgage they wish between themselves and never have them recorded, yet they can still enforce those agreements in a court of law–between themselves.

    What they can’t do is enforce those agreements against a third-party that claims a competing interest in the property, that has filed his claim in the probate court.

    What is being mucked up the states attorney generals is whether a third-party’s (the borrower) agreement to abide by assignments outside of the public records is enforceable against the borrower through a designated agent for doing so (Mers).

  28. It’s funny, peoples minds are totally fine with something like a family holding legal title in trust and people adding or transferring ownership of the property within that trust. Everyones fine with it. But as soon as a corporation does the same thing with the note it is evil, illegal and invalidates the mortgage. *rolls eyes*


    BR: That is not remotely what is going on with MERS. There is no parallel between the sharing of an asset between family members, and a fraudulent scheme designed to rip off filing fees from local towns, hide ownership of loans, and deceive the public thru an extra-legal technique that undermines 100s of years of property law.

    It may only be Tuesday, but we have a winner for the dumbest comment of the week.

  29. zell says:

    FIFO: Felonies in; felonies out. The R.E. bubble was fostered by widespread deceit that has been ignored. It’s no surprise to see the same on the flip side.

  30. Niskyboy says:


  31. Lugnut says:


    You’ve hit upon a key topic that I took notice (at least with this particular issue) from day 1, and its one that drives me nuckin futz. Namely the absolute reluctance, if not outright refusal of the mainstream print and television media to characterize or hint that this situation is anything other than a mere ‘mistake’ that will cleaned up with some 409 and a paper towel, and we’ll all move happily on from there. That fact that its a persistant story, and not some one night mention little blurb, makes it all the more obvious and disquieting.

    What is it? Is it because they hadn’t done enough primary investigative journalism to feel comfortable in classifying it as fraud? Do they just not understand the nuances of the laws, paperwork, and complex relationships enough to not want to make an error in judgement in branding it fraud? Do the senior editors say “Lets wait till the Justice Department indicts them so we don’t have to make that judgement ourselves”? Or are there merely in the tank for the firms that devote a good chunk of their advertising dollars to their particular news organization, and/or are frequent guests?

    Whatever it is, I think it comes down to a total lack of balls, ethics, and conviction of purpose. They all guilty of it. Repeatedly. And quite franky it makes me sick. Its a Rorschach test for their continued Darwinistic self destruction of credibility.

  32. Tarkus says:

    Yes – everyone notices how the discussion of fraud when applied to financial companies is always handled with kiddie-glove euphemisms.

    It’s tiring, and the more they do it, the more you notice it.

    Fraud is rewitten using “mistakes”, “errors”, “oversights”, “incompetence” (until it is pay/bonus time), “didn’t see it coming”, etc, etc.

    WSJ and the rest are cowering, not reporting.

  33. Andy T says:


    You seem to have some knowledge on these type of matters and have an opinion that dissents from the “mob.”

    Thanks for the commentary on these matters.

    It’s a refreshing change of pace from almost every other comment I see here at TBP.

  34. yoganmahew says:

    That would be a syntactical error. If they had spelled it wrong, it would be a grammar error…

  35. obsvr-1 says:

    @ndy T Says (and Curmudgeon):


    You seem to have some knowledge on these type of matters and have an opinion that dissents from the “mob.”

    Thanks for the commentary on these matters.

    It’s a refreshing change of pace from almost every other comment I see here at TBP.

    —- Reply

    go watch the entire Senate Committee Banking, Housing and Urban Affairs hearing today on “Mortgage Services and Forclosure Processes”


    The problem is much bigger that a technical issue of paperwork or process — amongst the criminal activities are fraud and unethical behavior throughout the servicer and banking industry which is magnifying the problem. Fraudclosure is just light that is illuminating a problem that is large enough for the Cong. Oversight Panel (COP) and the Senate Committee to call on the Financial Stability Oversight Committee to investigate systemic risk concerns.


    And no, people who owe on their mortgage owe on their mortgage — arguing whether someone should get a free house because of a procedural problem is not the center of the issue (they shouldn’t). Questioning why nobody is going to jail for breaking, ignoring or circumventing the laws which is creating systemic risk (AGAIN) is a valid. The banks are in deep do-do and bail-outs are not on the menu this time around … a test of the FinReg resolution clauses may be in the near future.

  36. RW says:


    “…whether a third-party’s (the borrower) agreement to abide by assignments outside of the public records is enforceable against the borrower through a designated agent for doing so (Mers).”

    Seems reasonable but it appears that the structure and function of MERS itself has become the problem, not so?

    That is, the principle of MERS is not the problem — it does appear to be a legal entity even though it is essentially just a database, a filing cabinet, with no officers or employees — and all parties to the loan agreed to it as a nexus even though agency can clearly not be implemented directly by MERS.

    But then the integrity of MERS as that which establishes connection between buyer and seller(s), a nexus, becomes crucial so if suspicions arise that the filing cabinet is ‘damaged’ or otherwise unreliable — if it is not possible to go into the MERS database and pull up complete, accurate records with confirmable authenticity via accessible originals — then how is valid agency to be recreated?

    If a nexus between lenders (independent of their number or intra-agency agreements) and the third party cannot be established who then has standing to enforce a lien against the third party? It would seem that all agreements essentially become putative.

  37. Jim67545 says:

    Curmudgeon is entirely correct, based on my decent knowledge in the field. I would focus attention on whether the homeowner is actually delinquent, how far, whether they had tried to work out the situation in some way, whether they were ignored, whether they received due process, etc. Failures by the lenders in these areas should be punished. Otherwise, there is nothing nefarious about MERS, it is not some fraudulent conspiracy and the thought that it is a conspiracy to defraud title offices of recording costs is equally laughable. Yes, it no doubt has that intended effect but the task of tracking the recording of interests in mortgages every time they change hands would make the entire system unworkable.

    We have a housing financing market that is nearly totally constipated. Add into the mix a profound uncertainty over the legal standing that a mortgage holder may have and the few who might invest in this asset will run away – as will the 35% of the purchasers who are buying foreclosed properties. That direction leads to the government being the mortgage financier of only resort for as far as we can see. And, we should all know who puts up the $$ to make that happen. And, with foreclosed property sales dropping we would have a serious slowdown in absorption of foreclosed properties and farther price weaknesses (, losses to individuals and lenders, etc.)

    Collapse the current housing finance market and we are all back into 3 or 5 year ARMs. Kiss your 30 year fixed goodbye. That would seriously impact affordability not to mention the entire real estate industry not, need I point out, at the best of times. So, I suggest that most of those above look before they leap. This has to be worked out.

  38. Fred C Dobbs says:

    Let’s see if I understand what people are arguing about. 1) a bank makes a loan to someone, 2) the borrower secures the borrower promise to repay with a mortgage on the borrower’s residence, 3) the borrower fails or refuses to repay the loan, breaking his promise, 4) lender resorts to the security the borrower gave to secure his loan, that is, the bank initiates foreclosure, 5) borrower finds some defects in the loan or foreclosure paperwork and goes to a lawyer, 6) the lawyer tells the borrower it is cheaper to hire the lawyer to defeat foreclosure than for the borrower to keep his promise to repay, 7) the lawyer tells the court to rule the lender may not foreclose because ___(fill in the reason)_____, 8) the judge rules in favor of the borrower, 9) the lender now has an unsecured loan, for there can be no doubt that the borrower got the money and has not paid it back, (10) the borrower sells his mortgage-free residence, 11) borrower moves to another state taking his money with him, or otherwise makes him or his money unavailable to lender, 12) lender charges off the loan as uncollectible and takes a loss, the amount being equal to the unpaid loan balance plus accrued interest and costs. The bank lent the money in good faith, even though its processors may have made documentary mistakes, and likewise began foreclosure in good faith, even though it may have made documentary mistakes. Lender, in bad faith, fails or refuses to repay loan.

    Now, who thinks the poor, little down-trodden borrower deserves to keep the money, at the same time f___ his fellow members of society? Banks function as financial intermediaries for the benefit of all. Weakening a bank, giving a portion of its net worth to a bad faith borrower, weakens us all. The supply of lendable funds is reduced, and the demand causes the cost to rise.

  39. Harry Lime says:

    Classic, classic stuff. This reminds me that there is a God. Whether there is Justice or not is still to be determined.

  40. DeDude says:


    You are not cynical enough. The reason treasuries are up is that somebody is about to sell a lot of treasuries to the Fed. Got to get those prices jammed up so you can sell at a profit.

  41. This Presidential veto override attempt should fix things

    Veto Override Attempt
    H.R. 3808:
    to require any Federal or State court to recognize any notarization made by a notary public licensed by a State other than the State where the court is located when such notarization occurs in or affects interstate commerce.


    I suggest everyone follows the market tickers advice. Fast

  42. hammerandtong2001 says:

    ****It doesn’t matter when mortgage assignments and endorsements are recorded because the existence of the pooling and service agreement and purchase sale agreement is proof in itself that the loan was conveyed, said Stephen Ornstein, a partner in the Washington office of SNR Denton, a law firm that represents loan servicers and lenders.

    “If the assignment is missing, you can create it by having the old assignee reassign it to you,” Ornstein said.****

    I’ve heard this argument before, and none of the five experts who advise New York state on trust matters (and virtually all mortgage securitizations use New York trusts) accept that point of view. New York trusts can accept assets only as stipulated in their governing agreement. The pooling and servicing agreement made very specific provisions as to how the notes (the borrower IOUs) were to be endorsed and further required that the process be completed by specific dates, typically no later than 90 days after the trust was closed, with only very limited exceptions. And the trustee, on behalf of the trust, was required to provide multiple certifications that all these steps had been taken.

    Let’s put it another way: the industry position is that the underlying contract, the pooling and servicing agreement, can just be ignored if the industry screws up on a grand enough scale. Would any servicer tolerate this argument if someone, say Treasury, tried to cut their fees? Funny how the “sanctity of contract” argument is nowhere to be found when adherence to contracts might crimp industry profits.


    “SIFMA rejects sweeping claims that fundamental flaws regarding the transfer and ownership of mortgage loans are endemic to secondary markets and mortgage securitization, and believes that such concerns are exaggerated and without merit. While each situation may have variations, SIFMA believes that the customary practices utilized in secondary markets to convey ownership of mortgage loans from originators to other parties, and into securitization trusts, are sound and in accordance with generally applicable legal principles.”

    The use of “sweeping claims” implies that the critics have no evidence for their views, when borrower attorneys all over the US report widespread errors. A group of nearly 100 attorneys who work with bankruptcy lawyer Max Gardner have reported that in their collective experience, they have yet to find a single note that was conveyed correctly in accordance with the requirements of the pooling and servicing agreement. Other investigations show widespread problems. As much as SIFMA tries to dismiss the use of the word “endemic”, all they offer is bluster, when the evidence on the ground to the contrary is extensive.

    And you have to love this part: “customary practices…are sound and in accordance with generally applicable legal principles.” This is simple an effort to divert attention from the fact that the contracts that the industry itself devised were often ignored. So a more accurate rendering would be “We did what was convenient instead of what we agreed to do, and if you pretend we didn’t have to satisfy a lot of complicated legal requirements to meet all the objectives of all the parties, we can find a way to justify what we did.”

    It’s all here:


    And I’m the “dumbass”?

    Breaking the law to enforce a contract, no matter the material weight of breach on the offending parties’ side, is still breaking the law.

    There it is.


  43. Bill W says:


    I agree with that sentiment. This could become an opportunity for Obama to reform the system the way it needs to be reformed. By letting the stupid and the greedy reap what they’ve sowed.

    The political opportunity for him is to steal some of the T-Party’s anti-establishment thunder.

  44. @hammerandtong2001:

    Mortgage assignments between mortgagees, whether or not they are recorded in the public records, are enforceable as between each other, according to whatever contract they have entered regarding the assignments.

    When borrowers signed the mortgages with the Mers as the nominee, they explicitly agreed, pursuant to the terms of the mortgage, that Mers had all the rights and obligations of the actual lender, so far as they are concerned, and that assignments could be made to other lenders in Mers which would not affect their relationship with Mers as the nominee agent for whatever lender made the assignment and to whom it was made.

    Mers has been operating without objection in all fifty states for over a decade now, and only became an issue when a few clever lawyers and populist nutcase attorneys general decided that the system might serve as a good whipping boy for all these poor folks losing their homes that incidentally also serve on jury pools and vote in attorneys general elections.

    If there was this terrible objection to the practices of Mers before, then why did the populists wait ’til now to present them? Same’s true of foreclosure affidavits in Florida and elsewhere. The structure of the foreclosure law in Florida made foreclosure mills a practical necessity if there were to be any Fannie Mae/Freddie Mac mortgages let in the state, and so foreclosure mills and robo-signers have been around a lot longer in Florida, and fully well-known by everyone, including preening attorneys general, than the financial crisis.

    You seem to claim laws were broken to enforce a contract amongst the mortgagees? That isn’t really the issue here. If they breached their contract with each other, that’s not breaking a public law.

    The issue here is whether a procedural misstep in foreclosure should yield a free house. I stand by my assertion that allowing such a thing would do great violence to the rule of law, far greater than simply requiring a correction to the procedure.

    I won’t call you a dumbass again, but you’ve still not got the facts straight. It is not “breaking the law” that every assignment between mortgagees is not recorded. It is simply choosing, amongst themselves, to operate a supplementary assignment system.

    and this:

    “BR: That is not remotely what is going on with MERS. There is no parallel between the sharing of an asset between family members, and a fraudulent scheme designed to rip off filing fees from local towns, hide ownership of loans, and deceive the public thru an extra-legal technique that undermines 100s of years of property law.”

    What, pray tell, is fraudulent about Mers? The borrowers agreed to Mers as the nominee lender at closing. There is no attempt to hide ownership of loans, it is simply a means of expediting the loan to the investor. Who owns the mortgage matters not a whit to the borrower–he is to pay whomever he is told to pay–and the ability to assign the loan is also agreed to by the borrower at closing. How, exactly, does Mers undermine hundreds of years of property law? There has never been a requirement as between the parties to a real property interest that the conveyance be recorded in the public records to make it enforceable as between the parties. I really don’ t get this outrage. Mers has been around a long time, and greatly facilitated the mortgage securitization process. Does it have flaws? Sure. Are mistakes occasionally made between the lenders within Mers as to who owns the loan or the servicing rights? Sure. But those sorts of things are rare and hardly rise to the level of criminality.

  45. Mbuna says:

    Barry, get ready to hire those ninjas…. http://market-ticker.org/akcs-www?post=172452
    as early as tomorrow!

  46. Notice the number of cases that support MERS:

    MERS seems to be losing some small cases which of course gets lots of press and winning the big cases, which doesn’t get any press. Nobody wants to hear that it’s actually legal and that they won’t actually get that house they overpaid for for free.

  47. bergsten says:

    @Fred C — I can explain what people are arguing about, thought it might be simpler all round for you to just look at all that’s been written and reported on the subject to date.

    I can explain why people are arguing — because people will argue about anything.

    I can explain what I am worried about:

    1. I take out a mortgage. 2. I dutifully pay my mortgage month after month until it’s paid off. 3. I ask the bank for the paperwork to show I no longer have a mortgage and own the property free and clear. 4. The bank tells me to pound salt as they weren’t the holders of the note. 5. The (lack of) precedent thanks to “nobody caring” about a few shortcuts and paperwork errors, causes the courts to tell me to pound salt too.

    Finally, I can explain what I’m mad about, though to do so, I am forced to invoke that conversation-stopping bit of history that starts with “H,” done by those who start with “N.”

    Millions of people were eventually tortured and killed because (effectively) nobody complained as each individual indignity, infraction, policy, procedure, eviction, curfew, restriction, graffiti, insult, violence, theft, discrimination, law, and on and on were each excused as being non-material.

    Everybody asked “how can this happen?” and say “it can’t happen here.”

    Well, it happens one small step at a time, and it sure can happen here.

    All you have to do is marginalize the rule of law.

    Still want to blame the whole thing on “deadbeats”?

  48. Presidential Veto Override Attempt 
    H.R. 3808:
    to require any Federal or State court to recognize any notarization made by a notary public licensed by a State other than the State where the court is located when such notarization occurs in or affects interstate commerce.


    I suggest everyone follows the market tickers advice. Fast

  49. JerseyCynic says:


    So gates says there is a huge future threat and a considerable current threat…

    I say perfect timing to pull the plug and make all this bad bad go away

  50. JerseyCynic says:


    gates yesterday on cyber attack:

    “I think there is a huge future threat. And there is a considerable current threat,” Gates told The Wall Street Journal CEO Council. “And that’s just the reality that we all face.”


    what a perfect way to make all this bad bad go away!

    Mr. Ritholtz — maybe you can get that team of Ninjas to install a few dead drops around the area so we can keep in touch…


  51. Fred C Dobbs says:

    I apologize to Bergsten unreservedly, if he thinks I or anyone else wants “… to blame the whole thing on ‘deadbeats’”. They are mostly victims that should not have been lent to, in the first place.

    For myself, I agree that laws should be enforced, that when they are not enforced they marginalize law, and those who break the laws should not be excused because their ‘crime’ is non-material. And, I will go forward, and agree that in the case of documenting the making and transfer of residential loans, those humans that actually broke the law should pay fines and suffer imprisonment, every last one, even if they number in the tens of thousands. But, if we ignore them, and look at the abstract institutional entity, the lender, punishing the lender is misplaced. In the first place, you cannot imprison a bank, an inanimate mental construction, you can only fine them. And if you do, the human employees and agents of the institution who actually broke the law, will not suffer, only shareholders and society will suffer.

    As for you pounding salt, with all respect, I believe your fears are misplaced. If whoever you have been paying your loan fails to issue you a ‘deed of reconveyence’ to clear your title, you have your cancelled checks showing you have paid, and, if you misplace them, you can get copies, as all checks cleared since the ’70s are copied front and back by the bank and retained. If you show your last monthly loan statement that you received and your check showing payment to a Judge, he will order the loan paid, and you can record this and clear your title. And, he will no doubt fine the entity who failed to issue your deed of reconveyence, together with costs of suit and attorney fees. You will find most States have had, since the 1930s, such laws incentivizing institutions to play fair or else.

    As for ‘H…’ and “N…” I assume you meant no reference to me personally, but, if I am mistaken, please let me know.

  52. bergsten says:

    @Fred C. (2:17pm) — Absolutely no reference to you personally, my apologies if this wasn’t entirely clear. For that matter, the entire diatribe (written after a long day including many hours in god awful traffic), was directed at the issue (and its potential consequences), not at any TBP participant. Never at any TBP participant.

    I’ve recommended for over a year now that anyone so concerned should go down to their local Country Recorder to ensure that their home paperwork is “in order.” Which I’ve done. Of course, even so, they may only be “in order” at that particular point in time…

    So, this isn’t over any particular personal concern. But the more serious concern is that all of this finagling could set a precedent for having no recourse in the case of an error, intended or otherwise.

    If you (all) don’t believe this can happen, try calling anyone’s customer support.

  53. dss says:


    “All you have to do is marginalize the rule of law.

    Still want to blame the whole thing on “deadbeats”?

    Well said!

  54. dss says:

    The initial laws that were broken may be minor or inconsequential, like driving 30 in a 25 mile an hour zone, but it doesn’t matter how minor or inconsequential the law that was broken when it can kill a family of five. Then a minor traffic infractions suddenly becomes vehicular manslaughter.

    It is very revealing when the rule of law is treated by some as a matter of inconvenience, when the standard should be what were the end results when the laws were broken?

    Like a credit card company skimming a penny off on each transaction, (so inconsequential and petty, no real harm was done, why bother to worry about it?) and ends up stealing millions of dollars stolen from it’s customers.

    Would we prosecute either case?