Judge: MERS Invalid

“MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process. The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

-U.S. Bankruptcy Judge Robert E. Grossman

>

To be technically precise, they lack the ability to legally transfer mortgages. That doesn’t mean they are invalid, but it does eliminate their reason for existence.

Here’s Bloomberg:

Merscorp Inc., operator of the electronic-registration system that contains about half of all U.S. home mortgages, has no right to transfer the mortgages under its membership rules, a judge said.

U.S. Bankruptcy Judge Robert E. Grossman in Central Islip, New York, in a decision he said he knew would have a “significant impact,” wrote that the membership rules of the company’s Mortgage Electronic Registration Systems, or MERS, don’t make it an agent of the banks that own the mortgages.

“MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not supported by the law,” Grossman wrote in a Feb. 10 opinion. “MERS did not have authority, as ‘nominee’ or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal.”

April Charney, a senior attorney with Legal Aid in Jacksonville, Florida, who has been aggressively criticizing MERS for some time, had the quote of the day, channeling Tom Petty: “ ‘Don’t come around here no more,’ is basically the message to MERS.”

The judge has “deconstructed” MERS and determined that they cannot be both principle and agent =– you have to chose one or the other.

Happy Valentines Day to you!

>

Sources:
In re: FERREL L. AGARD, Debtor
Case No. 810-77338-reg
UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF NEW YORK
http://www.ritholtz.com/blog/2011/02/mers-decision-in-re-ferrel-l-agard-case-no-810-77338-reg/

Merscorp Lacks Right to Transfer Mortgages, Judge Says
Bloomberg Feb. 14 2010
Thom Weidlich
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a7hKAVragHWg

Category: Legal, Real Estate

Who is Esperanza Spalding ?

Who Is Esperanza Spalding, Best New Artist Winner? Official site Album: Esperanza Hat tip Craig!

Category: Music, Weekend

Not Quite Overbought Yet, But . . .

As this graph from The Chart Store shows, the markets are not quite overbought yet. > > But Ron Griess has some advice to those people who have been fighting the tape:

Category: Markets, Technical Analysis

Sports Illustrated Swimsuits Issue to Boost New Biz Model

Time Warner Inc.’s Sports Illustrated magazine is changing it’s subscription model, and is betting on the popularity of its swimsuit issue to aid new business. Bloomberg’s Michele Steele reports.


Feb. 14 (Bloomberg)

Category: Video

UltraShort Indices

I don’t understand why, but I keep seeing portfolios strewn with Ultra-Short inverse funds. These are the ETFs that bet 2X and even 3X that major indices will go down. 20, 30 even 40% of some accounts are laden with these. Please stop. Eventually, the downside bet will be a moneymaker. Eventually. But if you…Read More

Category: Really, really bad calls, Short Selling, Trading

Dow 36,000 for Bonds!

James Glassman must be a helluva salesman. How else can you explain how the co-author of Dow 36,000 was able to convince a publisher to allow him to demonstrate his lack of acumen on a related subject? After penning what became the classic exemplar of Dot Com excesses — a spectacularly wrong tome about equity…Read More

Category: Really, really bad calls

Ferrari FF

Just in time for Valentine’s Day, Classic Driver brings us these photos of the new AWD Red Ferrari FF (Ferrari Four).

The FF has four seats and four-wheel drive, a 6.3-liter direct-injection 651 horsepower engine with 504 pound-feet of torque. C/Net notes the FF time from zero to 62 mph is 3.7 seconds.

>

Read More

Category: Weekend

Middle Eastern response to Friday’s news

Responding for the 1st time to the news on Friday that Egypt’s Pres would step down immediately and not wait until the Sept elections, Commercial Int’l Bank Egypt, the biggest component of the Egyptian stock market, is up 5.6% in London trading but is just back to the level of one week ago. Orascom Construction,…Read More

Category: MacroNotes

Traders, Guns & Money

Traders, Guns & Money: Knowns and unknowns in the dazzling world of derivatives by Satyajit Das>

Long before the 2008-09 credit crisis and collapse, one of the strongest warnings about the dangers of derivatives came from Satyajit Das.

I am about halfway thru, and I can tell you it reads more like a crime novel  than a financial book.

Reviews

“Traders, Guns & Money is very fresh history, just two years old. Das picks apart the new machinery of the mega-trillion-dollar derivatives market, the one economists say might be next to collapse on our heads. And I’m with him, I really am. The guy has a thing for ridiculous puns and also for pitiable characters. We meet a couple of noodle makers who wreck their company on a deal no one but Das seems to understand. But by the end of his book, you’ll get the deal too, I promise.” – All Things Considered, NPR, October 15, 2008

“WHETHER you are an investor, an observer of financial markets, or even an investment professional, Satyajit Das’s Traders, Guns & Money should prove an entertaining, eye-opening read. –The Business Times, Singapore, September 27, 2008

“With the financial crisis tightening its chokehold on global banks, Das’ forewarnings – outlined in his 2006 book Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – are looking rather timely. Still, some in the industry initially scoffed at his warnings.” – The Toronto Star, September 23, 2008

“The sexier side of finance … at last … a convincing picture of what life is like in today’s modern financial industry. Traders Guns and Money by Satyajit Das not only has a catchy title, it actually manages to entertain, educate and inform.”  Corporate Financier, July 2006

“A must read for all CEOs, CFOs, Bankers and anyone who cares about what banks are doing with their money.” – Finance Asia, May 2006

“… true rarity: a derivatives book that keeps your attention all the way through. ” FOW April 2006

“… a scalpel of a book” – Financial Engineering News, July 2006

“A distincly timely book… This makes fascinating reading…. A good crib sheet for how the whole derivatives game works. ” – Financial Times, May 2006

“Das is especially good on structured products and on the recently fashionable world of structured credit… a diverting read” – Financial World, July 2006

“a worthwhile read for anyone with connection to the financial world” – World Finance, July 2006

“The murky and complex world of finances and derivatives is scrupulously and frantically told in this brilliant narrative. … This is a collection and recollection of exquisite financial tales well worth your time.’ Convergence, September 2006

“…a fascinating and compelling insight into the world of derivatives… [TGM has] a page turning quality more reminiscent of a John Grisham novel than a dissertation on derivatives.” – FINASIA, October 2006

“An absorbing accessible primer… scoots along at a blistering pace” – Wilmott Magazine, December 2006

“part thriller, part expose… will be useful for anyone with connection to finance…will tell you some of the truth of what really does go on.” Society of Business Economists Book Review – Jan 07

~~~

NPR Interview:

If the flash audio fails to load, go here

>

Chapter 2 after the jump

Read More

Category: Books, Derivatives

The Dangle: Illusory Promises of Content Farms

“The funny thing about all these frothy millions and billions piling up? Most of the value was created by people working free.” -David Carr, writing about HuffPo, Twitter, and Facebook > I have been meaning to address this issue for some time; It started with Seeking Alpha, then moved to RGE and Business Insider, before…Read More

Category: Financial Press, Venture Capital, Web/Tech, Weblogs