We don't need no stinking papers!

Yes, it turns out you can simultaneously own everything and nothing:

Millions of U.S. mortgages have been shuttled around the global financial system – sold and resold by firms – without the documents that traditionally prove who legally owns the loans.

Now, as many of these loans have fallen into default and banks have sought to seize homes, judges around the country have increasingly ruled that lenders had no right to foreclose, because they lacked clear title.

These fundamental concerns over ownership extend beyond those that surfaced over the past two weeks amid reports of fraudulent loan documents and corporate “robo-signers.”

That quaint concept of common sense that suggested the parties to a contract knew about each other?  Gone, lost somewhere in the haze of bundling together all these mortgages & passing them around the globe like Big Finance were challenging the world record for Longest Blunt Rotation.  The mere people being kicked out onto the street stage has evolved into (of course) the Existential Capitalist Crackup stage:

The court decisions, should they continue to spread, could call into doubt the ownership of mortgages throughout the country, raising urgent challenges for both the real estate market and the wider financial system.For struggling homeowners trying to avoid foreclosure, it could mean an opportunity to challenge the banks they argue have been unhelpful at best and deceptive at worst. But it also threatens to leave them in prolonged limbo, stuck in homes they still can’t afford and waiting for the foreclosure process to begin anew.  For big banks, “there’s a possible nightmare scenario here that no foreclosure is valid,” said Nancy Bush, a banking analyst from NAB Research. If millions of foreclosures past and present were invalidated because of the way the hurried securitization process muddied the chain of ownership, banks could face lawsuits from homeowners and from investors who bought stakes in the mortgage securities – an expensive and potentially crippling proposition. (emphasis mine)

“Nightmare scenario”?  Um…no.  You don’t get to call something a nightmare that is the direct, inevitable result of fraud so widespread the MSM doesn’t even bother with a euphemism.  You have that vision because you courted it.

Sadly, this could’ve easily been averted.  As for what to do now, here’s an idea: since the banks can’t prove anything, void the contracts involved entirely.  If the home is still occupied, then that’s who owns it, full stop.  If the Masters of the Universe don’t like it, they can just go try honest work for once.

BTW:

At the core of the fights over the legal standing of banks in foreclosure cases is Mortgage Electronic Registration Systems, based in Reston.  The company, known as MERS, was created more than a decade ago by the mortgage industry, including mortgage giants Fannie Mae and Freddie Mac, GMAC, and the Mortgage Bankers Association.

MERS allowed big financial firms to trade mortgages at lightning speed while largely bypassing local property laws throughout the country that required new forms and filing fees each time a loan changed hands, lawyers say.

The idea behind it was to build a centralized registry to track loans electronically as they were traded by big financial firms. Without this system, the business of creating massive securities made of thousands of mortgages would likely have never taken off. The company’s role caused few objections until millions of homes began to fall into foreclosure.

Because if there’s one thing that works, it’s centralization…

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About b-psycho

Left-libertarian blogger & occasional musician.
This entry was posted in economics. Bookmark the permalink.

One Response to We don't need no stinking papers!

  1. Pingback: Boofrickityhoo § Unqualified Offerings

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