FedUpUSA

Democrats in the Senate on Thursday held a recess hearing covering a taxpayer bailout of union pensions and a plan to seize private 401(k) plans to more “fairly” distribute taxpayer-funded pensions to everyone.

I called this one a long time ago, and unfortunately, I am sad to report that they’re actually trying to figure out how to do it.

If there’s a pitchfork moment in this country it had better show up fairly soon, because if this report is accurate you can bet that these clowns are going to find a way to attach this in some obscure section of a 2,000+ page “must pass” bill – another one of those “you have to pass it so you can read it” deals.

I hate it when I’m right.  I hate it even more when tens of millions of Americans are going to get reamed to pay for the crimes of the handful on Wall Street, and their crony enablers in Washington DC.

And by the way – you don’t hold hearings on something you don’t intend to do.

Foreclosuregate is rapidly spiraling out of control, and is going to get worse.

As I have repeatedly said since 2007, this is not about bad paperwork.  It is about fatally-defective securities sold to investors for half a decade and the fraud up and down the line that enabled those sales.

In no particular order the biggest (but by no means the only) problems are:

• Borrowers overstated income, assets or both.  In some cases they did so willingly and knowingly.  In others loan officers changed numbers to “ram it through” the computer-operated approval systems, submitting files multiple times while doctoring figures.  In the latter case perhaps the borrower knew, perhaps not – many people didn’t read the entire 100+ page stack of paper at closing.  That’s dumb but it’s not criminal.  Changing the figures or lying, on the other hand, is criminal.
• Lenders stuffed paper they either knew was bad or had the ability and legal duty to verify the provenance of but intentionally did not into securities sold to investors.  This has been disclosed in FCIC hearings and is no longer speculative, although as I noted in 2007 it had to be the case because it was the only way the deals that were being done could have possibly been done.  This was an act of deception and in my opinion (along with many others, including plenty of attorneys) meets the legal definition of fraud.
• The land title system in this nation was intentionally subverted and corrupted by both intentional act and intentional laziness, all driven by the motive of profit.  Original paperwork was either shipped overseas or intentionally destroyed.  In even more cases it was not conveyed as legally required by the trust documents.  This has massively-corrupted the chain of title for perhaps as much as one third to one half of all residential housing units in this country and if not corrected will render these homes unmarketable in the future.  This is the vastly unappreciated problem with what has been done to date.

There is a template for resolving this sort of problem, and The States can implement it right now.  It was used in large part in Florida to resolve the “swampland” mess that arose during the 1920s, and with minor changes we can adapt it to what we face now.

The correct, just, and only way to resolve these problems is to force a clearance of the chain of title, which in turn forces proof of provenance of the indebtedness claimed to be owed by the homeowner.   

This is no different than what is required in a bankruptcy or any other civil collection action where the person alleging that you owe a debt, and who wishes to obtain a judgment to collect it through garnishment or seizure, must first prove they are the actual beneficial holder of said debt.

Since there can only be one actual beneficial holder of said debt, this provides the necessary and appropriate judicial determination and forces recordation of the chain of title and security interest that should have been done all along.

To implement this we must do the following:

• Halt all foreclosures and sales – stand-still – until this process is completed.  Those who currently have possession will continue to have it for the time being.
• Halt all mortgage payments where the servicer (the entity to whom the payment is made) is not the original lender, or where the loan was securitized.  Instead, such payments are made to suspense accounts held by the Clerks of the Court in each county where titles are maintained and recorded.  This is necessary in order to provide the essential motive of cooperation by those who allege they are owed the money.
• For each parcel with mortgage(s), those who claim interest must then come to court and prove it up with an unbroken chain of assignments.  Provide a reasonable amount of time (one year?) for them to do so.  If there are multiple claimants then the court must resolve who actually has standing and who does not.  This will resolve with either one valid claimant or none at all.
• If there is one valid claimant, then that chain of assignments is recorded, the impounded funds are released, and the homeowner now knows who pay.  If there are no valid claimants within the time provided then the title is quieted and a judicial release of liens is recorded.  Either way, we resolve the land title problem and the entity entitled to receive the payment stream has proven their case and obtained a release of their funds.
• The lack of a valid claimant under state law does not extinguish the debt – only the security instrument.  Those who think they’re going to get a “Free House” are likely to be sadly mistaken.  The creditor still has a claim for the money owed (if he can prove it up in court) and can enforce it via lawsuit as with any other unsecured debt but he can’t seize the property in a foreclosure action.  As with any claim of a debt in a court, the creditor still has to prove standing – which means he needs to prove the obligation was taken by the borrower and he has acquired sole and lawful ownership of that obligation.  Note that this is similar to the above process but not identical – in many states it is entirely possible to irrevocably sever a security interest on real property, but that does not extinguish the debt – only the lien on the title.
• We MUST compel Trustees to audit all MBS files.   If investors are holding an empty box they certainly have a cause of action.  So far we have seen few of these actions, and no evidence that these audits were ever done – including at inception of the Trust.  It was and is a legal duty of the securitizing parties to insure compliance with both the representations and warranties provided to investors regarding loan quality and IRS regulations.  The proper “hammer” to wield here is via the IRS – these trusts must meet specific legal requirements in order to have and keep their “pass-through” status.  Most of the scams and frauds, if they occurred in a given trust, would cause it to violate those requirements.  We have a serious budget problem in the United States, and this is one way to help address it.
• We must enjoin by permanent legal process future subversion of land titles.  This includes entities such as “MERS”.  If MERS wishes to “track” mortgages for people’s convenience that’s fine and well but that cannot be allowed to stand in for recordation of transfers of security and ownership interests.  MERS cannot be allowed to replace, subvert or supplant the land title system in The United States.  This is a State Law function – not a federal one and is well-supported in State Law.  It is historically, and with good cause, vested at the level of the county government, where ad-valorem taxes are levied as well for local government support.  As such any claim made by an entity such as MERS must have no legal standing whatsoever – recorded county records control, period.
• Where criminal conduct is found – whether it be securities fraud, control fraud, borrower fraud or any other sort of fraud, the case must be referred for prosecution.  We must start with the “heads of the snakes” but we must not stop there.  There are plenty of people who were involved in this and knew what they were doing was illegal – but didn’t care.  Most of the offenses involved are felonies, and we are well-beyond where we should be seeing indictments by the hundreds with civil forfeiture actions attached.

This process will inevitably cause the paper that was either not conveyed to the MBS Trusts at all or was conveyed in violation of the Representations and Warranties to be forced back up the chain.  It will land on the large banking institutions who performed these securitizations.  In some cases they will be able to force it further backward onto the originators, but in many cases the originator either was the bank or they’re out of business.  In those circumstances they’re stuck with it.

This will further erase the arguments about servicers and investors over loan modifications, since now the Bank will hold the loan and have an undivided interest in it.  As such there’s nothing to fight about – if it’s in the best interest of the Bank to modify the loan, they will.  If it’s in their best interest to foreclose, they will.  But in either case they will do so lawfully, within the confines of due process and land title law, rather than the outrageously lawless process we have going on now.

The nation is on the edge of anarchy with reports of homes being literally stolen, bank employees breaking into occupied dwellings to change the locks on houses they had not yet foreclosed on, multiple sales of the same property, improper foreclosures on houses where there was no mortgage at all, service of process that never happened and was attested to, literal forgery of court documents (e.g. process service filed that pre-dated the lawsuit itself) and other outrages. 

If this is not stopped immediately there is every reason to believe that the people of this nation will come to the conclusion that the bedrock of society – private property ownership – has been intentionally destroyed by a band of brigands with the explicit cooperation and permission of the government.  Should that conclusion be reached – that our government has conspired with private parties to expropriate the homes of the citizens – history says that the outcome is likely to be extremely unpleasant and irreversible.

We are running out of time to do the right thing.

If you care about this country and its future you will fax this to your Governor, your State Attorney General, to your Congresspeople (all three) and to The President, and you will demand that they act – not talk – on this before November 2nd. 

Words no longer count.

Talk about a financial scandal. A consumer borrows money to buy a house, doesn’t make the mortgage payments, and then loses the house in foreclosure—only to learn that the wrong guy at the bank signed the foreclosure paperwork. Can you imagine? The affidavit was supposed to be signed by the nameless, faceless employee in the back office who reviewed the file, not the other nameless, faceless employee who sits in the front.

The result is the same, but politicians understand the pain that results when the anonymous paper pusher who kicks you out of your home is not the anonymous paper pusher who is supposed to kick you out of your home. Welcome to Washington’s financial crisis of the week.

Once again we have the corporate-owned “mainstream media” trying to obfuscate and deflect.

The issue is not about which paper-pusher signed documents.

The issue is whether the origination and securitization of this paper in the first instance was fraudulent, and whether we now we have a Watergate-style coverup of what a gang of brigands did to steal literal trillions of dollars!

THAT is the question before us today.

We’re not aware of a single case so far of a substantive error.

Now that’s a lie.  How about the woman who spent a half-hour in her bathtub calling 911 because bank contractors broke into her home while she was there to change the locks and attempt to lock her out – forced entry into an occupied dwelling – when they did not possess a foreclosure judgment.

Oh yeah, she’s late on her payments.  But that doesn’t give the bank the right to steal the property.  They’re supposed to go get a judgment first.  That’s called due process of law and I think I read that in The Bill of Rights somewhere.

But in the land of The Wall Street Journal, due process of law is meaningless.

Here’s the problem:

If it’s good enough for the banks and The Journal, it’s good enough for the people at large.

How about if the people were to decide as a nation that due process of law didn’t matter any more in the general case?  What if the people were to decide that The Wall Street Journal’s editorial board – or the thousands of bank executives, board members and others - were guilty of capital crimes – without a trial?

Since it now appears to be the position of this nation that due process of law is irrelevant, the people would no longer need an indictment, they would no longer need to produce evidence and prove up their case in front of a judge (and/or jury), and they would no longer need to actually obtain a judgment.

As a consequence the people could just skip all that formality stuff that doesn’t matter any more and can carry out sentences and execute judgments too exactly as the banks have been doing!

This is what The Wall Street Journal is advocating in their editorial.

It is what many in the “mainstream media” are advocating.

It is what The Government is currently advocating by their refusal to indict and prosecute those who are wantonly violating civil rights through these due process violations – intentional acts which the actors know do not comport with black-letter requirements under the law.

And it is what The Banking Industry is both advocating and doing literally on a daily basis.

Oh sure, today that advocacy benefits them.  They’re using it to “expedite” what they believe is right – and to get what they want.

But here’s the problem – once you take that position and start putting it forward as “the new set of rules” those rules apply to everyone whether you want them to or not!

Has anyone considered that if we no longer have a rule of law and we no longer have due process that there are 330,000,000 Americans who just became empowered, under the very standards put forward by The Journal’s Editorial Board, The Banks and our Government, to issue their own declaratory judgments and carry out their own sentences?

That’s not a road this nation would be wise to embark upon, as it is a one-way road straight to Hell and I want no part of it.

Indeed, the reason I have been and keep pounding the table asking “where are the damn cops?” is because I know where this road leads, and I also know that while “the powers that be” think they can play this game without getting caught in their own trap, history says otherwise, and history also says that knowing exactly where the critical point is beyond which the people will simply say “fuggit!” is impossible to determine until it’s too late.

I bet The Journal didn’t think about that before they penned that editorial, but they damn well better, and fast, because the road that was set forth as proper and just is one where the only investment that will make sense is BBQ Sauce and Briquettes – by the semi-truck load.