I argued that MERS was created to run multiple frauds, a topic I will discuss in more detail in part two of this series. However, one of the big puzzles of the ongoing foreclosure crisis concerns the whereabouts of the “wet ink notes” — the IOUs signed by borrowers. In foreclosure cases across the nation, the banks have been filing “lost note affidavits”, certifying that they cannot find the notes that are required to prove that they have the right to take away someone’s home. In some cases, the notes miraculously appear, seemingly out of nowhere, and in others “Burger King kids” have been manufacturing them for robo-signers. By law, the notes are supposed to be at REMIC trustees, held against the MBSs sold on to investors — and must be presented to foreclose.
The real mystery is why these trustees cannot produce the notes. I think we have finally found the smoking gun. An interested reader alerted me to MERS’s instruction manual, “MERS Recommended Foreclosure Procedures — State by State”, originally written in 1999, updated in 2002 and available on MERS’s website (accessed by clicking on: Recommended Foreclosure Procedures).
I believe that a large part of the root cause of these “lost” documents is to cover up blatant and in many cases outrageous fraud. It is difficult to prove that a bank or other lender knew and ignored stated-income fraud (or allegedly “investigated” and “underwrote” a file when it did not) when the original file has been turned into ticker-tape confetti courtesy of the closest paper shredder!
MERS has thus given cover to a tremendous amount of fraudulent conduct – the very conduct that predatory lending statutes, “wet signature” and “chain of title” laws are supposed to prevent.
The real bottom line here is that securitized bondholders may in fact be holding worthless pieces of paper. My hollering about this began in April of 2007, right when The Ticker began publication, and continued all through 2007.
Randall goes on to state:
In the document, MERS claims that its recommended procedures are “customary”. In fact, there are several hundred years of “custom” that requires endorsement of notes at the time of transfer, with a clear chain of title to ensure that anyone who claims to be a creditor, and who tries to seize someone’s home, has clear documentary proof of entitlement. What MERS proposes in this document is to break the chain of title, to eliminate the protection that debtors need to prevent mortgage servicers and MERS from illegally stealing their property through the use of robo-signers and the manufacture of fake documents. In other words, both law and custom were formulated to prevent the sort of foreclosure fraud that has become normal business practice — what the MERS document calls “customary”.
I do not know why MERS proposed illegal activity as a new custom. It appears that MERS wanted to keep the notes handy, held by the servicers, to speed the foreclosure process — in other words, to run foreclosure mills. Perhaps MERS foresaw, even in 1999, a wave of foreclosures. Why else would it recommend multiple frauds (as explained in part two), urging servicers to keep the notes rather than passing them along to trustees? It now seems most likely that the fraudulent practices were recommended as a means to speed the illegal foreclosures we are now witnessing.
Again, in 2009 and going all the way back to 2007 I outlined why I believe it happened and continues to happen. It’s not that hard to figure out.
You cannot audit what you do not have.
Okay, but if the servicers hold the notes, why on earth can’t they find them–why do they need to file “lost note affidavits”? In a word, fraud. If they now produce the notes, it will be clear that they were not properly endorsed each time the mortgages were transferred. And they were never held by the REMIC trusts. As I will explain, that means mortgage backed securities are fraudulent and the banks are on the hook for hundreds of billions of dollars. And that the banks holding the mortgages cannot legally foreclose. That is why they are destroying the documents, and hiring robo-signers to forge new ones.
Let’s add “they don’t have it.”
Further, if this is admitted to (or forced into the open en-masse) then all the big banks and trustees are instantaneous insolvent.
Trustees? Yes, trustees. Why? Because they have filed certifications claiming they got physical delivery of the notes. If it turns out they lied then the liability that comes from this may well fall on them, and none of them have the ability to absorb even one or two of these deals blowing up in their face like this – say much less all of them.
Here’s the deal. This financial crisis is like Shrek’s onion. As you peel back layer after layer of sleaze, you find that the whole damn thing is fraud. We are talking about tens of trillions of dollars of it. Tens of thousands of individuals were involved. It was thorough. It was blatant. It was even transparent, right under the noses of regulators and supervisors. It was normal business practice. It never had any fear of prosecution or punishment. Even today, it taunts the impotent administration, daring President Obama to do anything.
And it expects to win. The fraudsters have Congress in their back pocket and plan to rush through legislation to validate ex post all of their illegal activity. It is almost a foregone conclusion that Congress will pass a law early next year to legalize everything MERS and the big banks did — lending fraud, recording fraud, tax fraud, securities fraud, and foreclosure fraud. There will be no rule of law to protect private property in the United States. Wall Street can claim any property it wants — no proof required. That is what President Bush meant when he proclaimed a new “Ownership Society” — as I wrote back in 2005. The plan all along was to put the bottom four deciles of Americans into permanent indebtedness while the top fraction of one percent would transfer ownership of everything to itself. So far, President Obama has stuck with the program — overseeing the greatest wealth transfer in human history.
Your house – whether you’re paying or not – has been stolen from you.
And you, the American sheeple, refuse to rise, refuse to demand it stop, refuse to demand these people go to prison, and you continue to be “sated” by nothing more than the stock market going up, while your home is stolen out from under you.
You’re going to lose again America, and this time it’s your fault, as the evidence that you’re being robbed has been stuck under your nose – both by people like me in The Ticker and by people like Bill Black, who saw the same damn game run in the 1980s and got over a thousand people prosecuted for it in the S&L crisis.
Go ahead and ignore this folks. Tell us that it’s “getting better.”
If you do, you’re going to find that your home isn’t yours any more and all that “better” is going to prove to be one big pile of bullcrap.