Since the monthly jobs data will be released Friday morning, today’s action was muted. Or was slow because, well, it is every day? Anyhow, there wasn’t much to write about until tomorrow so until then, I thought you might like a “fraudclosure” update.
An interesting wrinkle may be developing in Massachusetts, as Karl Denninger writes here…http://market-ticker.org/akcs-www?post=176615
Oh, it will be time to get out the and sit back to enjoy this show.....
Massachusetts’s highest court is poised to rule on whether foreclosures in the state should be undone because securitization-industry practices violate real- estate law governing how mortgages may be transferred.
The fight between homeowners and banks before the Supreme Judicial Court in Boston turns on whether a mortgage can be transferred without naming the recipient, a common securitization practice. Also at issue is whether the right to a mortgage follows the promissory note it secures when the note is sold, as the industry argues.
Here's the issue, as I've pointed out. Mortgages and property recordation are a matter of State Law, whether the banks like it or not. They clearly didn't like it back in the 2000s and the 1990s, so they did what banks always do: they simply ignored the law.
This was all fine and well when foreclosures basically never happened, because if you got in trouble you could sell for more you owed. But when prices started falling, that became impossible.
The banks had "figured" they could never, ever lose under this paradigm. After all, real estate never goes down in price. Therefore, the law didn't matter because they'd never see the inside of a courtroom. They further reasoned that if push came to shove they could "lobby" (read: bribe) Congress and The States to guarantee that whatever they did would be ruled "ok", or at worst, they'd get a handslap fine. This has been a good strategy thus far - witness drug money laundering for Mexican gangs, illegal transfers of money to Iran, bilking state and municipal governments via various bid-rigging scams and other similar behavior.
Unfortunately, such a strategy requires that all fifty State Court systems be corruptible. If you run into just one that isn't, you're screwed.
We may be about to see exactly that happen:
The Massachusetts homeowners argued that the banks that took their homes didn’t follow their own rules for transferring mortgages into mortgage-backed trusts that issued bonds. The banks and the mortgage-bundling industry counter that the securitization documents themselves assign the mortgages.
Remember my posting of a handful of PSAs? Those PSAs require that physical delivery and endorsement take place. Not "contractual" delivery, physical delivery and physical endorsement, showing an unbroken chain of endorsements from origination onward.
There is more to the story which can be read at the link above. Although something interesting “could” develop from this story – like the court finding the banksters guilty for breaking the law (silly notion I know) – I doubt that will happen. The banks always get away with a slap on the wrist, even while committing felonies. The fines imposed are now just the cost of doing business.
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