CNBC – Will Foreclosures Get Worse? Foreclosuregate – We don’t know who is entitled to the money

First I would like to say shame on you (Meghan) CNN.

Second, I would like to point out a certain segment of the video that is discussed below.

Listen to it over an over again. Here is the text from the 7:15  mark in the video. (be sure to have no breakables near you)

CNBC: What you all describing is a meltdown situation, there is no NFL referee, this is going to go on forever…

Shari Olefson: There is no question about that but the difference here is we know the money is owed to someone, for example we have a process…

CNBC: HOW DO WE KNOW THAT, how do we know that if multiple banks are claiming ownership!

Shari Olefson: (Nervous Giggle)

Shari Olefson: We don’t know who is entitled to the money, we don’t know who is suppose to get it, but we know it is not being paid.

So what we need is a process in order to enforce these documents…

We have a process now for finding borrowers…

We have a process of publishing in the paper and filing an affidavit that we couldn’t find them…

The problem is that, that not  knowing who the money is entitled  to doesn’t mean that the borrower should be able to walk away, there should be a way to collect…

Collect for who?

Video, Click through to view,
but read below first

From The Ticker

Kudlow Gets Into Foreclosuregate

Yes, I’ve dubbed it: Foreclosuregate.

I’d love to tell you that I think there’s some reasonable way to get out of this.

There isn’t.

The reality of this is far worse than it appears.  Kudlow is still downplaying it, really, even though I emailed him today with the source documents of a half-dozen Tickers.  Whether they prompted him to spend the time on it tonight I’ll never know.

The real problem isn’t the foreclosures.  It’s the REMICs.

The “loose document standards” of the go-go years were all predicated on this never happening – all the way up to now.  In fact, the entire premise of the last three years of Bernanke, Geithner and everyone else’s actions in the government has been under the (false) belief that they could “re-inflate” house prices.  This would allow everyone to refinance out of the mess, and since nobody would ever see the inside of a court, nobody would be the wiser, other than a few REMIC holders who went after each other when a note was sold twice.

Instead, what we have is a nightmare.  House prices are not going to go back up.  As a direct consequence, we have an intractable problem.

The REMICs – the foundational conduits for all this paper – are to a large degree defective.  I bet some of Fannie and Freddie’s are too.  Many notes were not conveyed, and in the states where recordation is necessary, most of them weren’t recorded either. Many of these original notes are known to be sitting with the originator, never endorsed over and in some cases shipped overseas or deliberately destroyed.  For all intents and purposes they’re gone, because once the MBS closes they can’t be put in later on.

This can’t be fixed because both the offering circulars and IRS regulations set hard cut-offs for these things by which time everything has to be “in” and done.  Further, you can’t put anything in a REMIC that’s defaulted – only good paper.  So a defaulted note can’t be put in, and nothing can be put in now, as the time has lapsed.  Violate either of these and the REMIC’s tax preference is destroyed. Don’t violate it and some of the REMICs are empty boxes with, at best, naked promissory notes (legally a signature loan) and no standing to foreclose.

On Larry’s show they were calling for “emergency legislation.”  It won’t matter.  The REMIC issues are the ones you can’t fix.  If those are defective then attempting to fix it triggers tax liabilities in the hundreds of billions of dollars.  Forget that idea.

Nobody should get a free house.  But the institutions – the big banks – are the ones who did this.  They are the ones who put together these securitizations with defective (or no) assignments.  Whether “by accident” or as a ruse to hide the fact that they were selling crap while representing them as good loans and knew it doesn’t matter in the end analysis.

They effectively sold people an empty box – or one full of dead fish instead of good paper.  Now with it all blowing up the entire “robosigner” thing appears to this author to be nothing more than a ruse to avoid responsibility.

Yet another ruse, just like “mark to myth” along with “extend and pretend.”

We must not, as a matter of public policy, allow this.  Those who perjured themselves in court or forged documents must stand before Justice and have it meted out on their heads.  If this means that a bunch of attorneys go to prison and get disbarred, so be it.

Those transactions that are legally defective must be stopped, and when possible, unwound.

The MBS holders deserve to know exactly what’s in the box they bought – not what they were sold, but what’s really in there.  If the conveyances happened then there wouldn’t be a “robosigner” problem, as the original wet ink notes would be with the Trustee and we wouldn’t need to “robosign” things and create documents that don’t exist.

Obviously, this is not the case.

All we can do is unwind the transactions and make the MBS holders whole.  Force the banks to eat their own crap.  If this results in them detonating, then resolve them using our newfound Dodd/Frank authority and the FDIC.

And while we’re at it, hold Geithner and Bernanke personally responsible for this.  They both had to know.  Bernanke and Geithner not only had to know, but Bernanke has been buying MBS.  Is there anything in those REMICs or does he have empty boxes at The Fed too?  Either way, as primary regulators over these institutions, these two must be personally held to account for gross malfeasance and dereliction of their respective offices.

This is the right way to handle this.  It preserves the rule of law and protects the myriad investors who did nothing wrong – the pension funds, the individual investors and even government entities that bought these MBS in good faith, at least to the extent we can.

At the same time it puts both the homeowner who can’t pay and the bank who originally played warehouse or originator (and who in either case is the one responsible for lending money to someone who they knew couldn’t pay) in the same room, and says to them “You’re the only two real parties at interest left, as everyone else was paid off.  You figure it out – if you want to modify the loan, forebear part of the principal, or go ahead and foreclose and resell that’s fine.  It’s up to you.”

We also need to get federal criminal involvement in that if, as it appears, these conveyances didn’t happen “en-masse” then each and every investor who purchased believing the pooling and servicing agreements was defrauded.  Those sorts of things cannot be allowed to occur without the people responsible being held to account, and there are laws that were broken.

This mess will take a long time to clear out.  But the best, proper and only way to do it is as I’ve outlined above.  For those MBS/REMIC structures where proper assignment and endorsement is documented, leave ’em be – they’re valid, and they should be allowed to run.

But for those where there are critical violations of the Pooling and Servicing Agreement or IRS regulations, the only solution that works is to put the notes back on the issuer and hold the bundler to account for what they did, and the harm they’ve done.

If The Federal Government will not step in and do this right here and now, today, then the State Attorneys General must stand up and prevent any and all foreclosure activity until and unless for each one full compliance with all state laws related to these security instrument transfers have been documented.  If a REMIC that is out-of-compliance with IRS regulations is discovered, it must be referred for criminal tax fraud proceedings.

The States need to give the Federal Government a choice – do the right thing (which incidentally gets the states their overdue recording fees!) or all foreclosure actions will be stopped until they do.


Video, Click through to view

Shari Olefson: We don’t know who is entitled to the money, we don’t know who is suppose to get it, but we know it is not being paid…


There should be a way to collect…

BTW, what the hell happened to her forehead?

Looks like she has been banging her head against the wall all day…


12 Responses to “CNBC – Will Foreclosures Get Worse? Foreclosuregate – We don’t know who is entitled to the money”
  1. yvonne says:

    Not all the forclosures or pending foreclosures were due to sub prime or non payment…some were intentionally targeted even though payment was made…there is an issue with the forced insutance also…and the amount the bank insures the property for, for double ro more of the loan amount…also…they owned the insurance company and did not disclose those…they also tried to overcharge the homeowner on the insurance…check this out for yourself…causing an escrow shortage of exorbitant amount claiming that insurance at a very high rate was purchased by them …
    Therere is a lot more issues than has been disclosed so far…
    Some homeowenrs rightly need to be given back a clear title to their home …free and clear, esp if they have been paying a mortgage for 20 years and making regular payments before the bank tried to forecose…

  2. Gabe says:

    All this chaos could be stopped if the bansters wouldn’t be so greedy and approve loan modifications to homeowners who still in their homes, and able to pay the current market value for their homes. Hamp was created to make homes affordable. If a home mortgage was 500K and currently it is worth 250K the bank do not modify the loan. Instead foreclouse on the property kick the family out and sells the home for some investor for 200K. It doesn’t make any sense.
    If the Banksters would allow the family to keep the home for the current market value, home prices could stabilize. So would the economy.

  3. pelucheven says:

    Where did this lady come from? as far as I am concerned I cannot trust this people with any document and much less with the accounting. how do I know if they actually send my payments to the right party? how do I really know if my loan is actually secured by my home? how do I know if all the fees, commissions and payments into and out of my loan account have been fully accounted for?

    we got them on the forged and fabricated documents and now they think people are going to fall for their accounting practices.

    I am no longer taking the STUPID pills!

    call and write to your local media and literally force them to report of the accounting, that is where the next battle will be. WHERE IS THE MONEY??????

  4. John says:

    As these foreclosed houses sit empty for a long, long, time there is another expected happening.
    At all the trade days and roadside flea markets there are and will be greater and greater buys in light fixtures, lumber, decks, carpet, appliances, copper wire, fireplaces, and especially air condenser units and furnaces!
    I’ve never seen them so cheap.
    This is a thieves field day.
    What are we coming too?
    Better to leave folks in their homes and sign new, proper deals they can live with and with a correct lender so the homeowner can get clear title and finally a paid off note when final payment is made.
    Doing otherwise will cost lenders far more than what they reduce payments to existing homeowners. Not a threat of course, but, simply stating reality that lenders should consider. MONEY TALKS!

  5. foreseeyer says:

    “… it’s the end of the world as we know it….”

    Better start growing your own foods….

  6. leapfrog says:

    My originator went bankrupt in 2007 – American Broker’s Conduit. I’ve read the theories/market ticker articles on the BK originator – but really where does that leave me as a homeowner? The present pretender-lender has no skin in this game whatsoever.

  7. John says:

    Here is what I see happening. These banks and mortgasge companies being awarded empty houses and some will end up with 50-100 thousand or more with no one buying them because the title is not clear. No title company would touch this mess, but that hasn’t been addressed yet.
    Our best remedy is to have others in thsi industry that are as big and rich as the bankers fighting to save themselves instead of we the little people.
    Who’s going to buy one with the title in question and no clear title available?
    When these forclosed upon houses sit empty (some will burn) and you can bet the insurance cost and taxes and upkeep will be enormous, then and only then will we see negotions start with those people foreclosed on to move back in with reduced payments and good deals.
    They understand money, not what’s right or the law its sad to say!

  8. David in Cleveland says:

    Can anyone answer this for me?
    My GMAC foreclosure filing in Cuyahoga County, Ohio includes an Allonge to Note dated in Jan 27, 2010 with no “effective date” listed. Foreclosure filed 2/16/2010. Mortgage filed 7/7/2003. No further docs recorded on my parcel.
    1. Is that valid? Will that hold up in court?
    2. Don’t they have to file with the Recorder each Allonge or Assignment? And do that prior to filing a foreclosure action?

    Further, Jeffrey Stephan signed the mortgage Assignment, same date 1/27/2010. Stephan signed as Vice President of MERS as Nominee for Homecomings, the Lender on the Note, assigning to Deutsche Bank Trust Company Americas as Trustee. The copy of the Note attached shows TWO “Pay to the Order of…” to both Residential Funding Corporation AND to JP Morgan Chase Bank, as Trustee. And now the Allonge to Note is from JP Morgan to Deutsche, who is the foreclosing Plaintiff, and they filed the Complaint on 2/16/2010.
    How can Stephan sign as an agent of an extinct company, Homecomings? Who was bought out by GMAC?
    Further, the Deutsche Trust I can’t find a prospectus to look up the Closing Date. SEC website doesn’t show it. Ideas?
    Shouldn’t the Note show a chain of title from Homecomings, to Residential, to JP Morgan Chase, to Deutsche, ALL before they file foreclosure?
    Any answers you have will help. Thanks.

    • Elaine S says:

      See jeffrey Stephan depositons (sworn testimony) top menu this website. pay attention to how many documents he was signing and the notary not being present so he boxed docs and sent them to a notary.

      And this webistie, main articles center section scroll down the to the one that starts Kaboom. Bookmark it if possible print it out so you can highlight it and write on it. Read the article first, and then the entire actual legal document. It is a long read, i guarantee you it will be worth it and answer many of your questions.The names you list strongly imply that even the MBS ( mortagege backed sercurities) parts are relevant.
      It is a huge education all in one place. It is a rough draft of a class action lawsuit yet to be filed. but it is an attorney writing. You may need to read some sections over and over again, but it will be worth it.
      You will quickly see that your recital about fits right in with the other examples of actual cases included in this filing. Be patient with yourself. reread the second time or the third will make new things understandable and more valuable.

      Just like a car, a note has a chain of title and so does a deed of trust. If there are any missing links you can’t prove a car title can you? And reverse your thinking for awhile too. See it as if someone by fraud and forgery were trying to criminally defraud you of your property. You don’t have to lok at this only through the perspective of “the banK’ taking back your house.

      make a list of every transfer. and list the proofs for each transfer. and list the lack of each item. What is missing is every bit imporant as what is there. The part about MBS’s using the word “trust” in a way that is misleading the court could be of particular value. That an MBS doesn’t hold any notes, only a custodian for the MBS does, explore that too.

  9. John says:

    The position some Judges are taking is if the bank or mortgage company has a foreclosure deed then they have standing and can evict.

    Any comments on this for us?

  10. Dan says:

    Homeowners are entitled to know their payements are going to the correct party. With the current confusion, they could pay on their note for 30 years and then find out they have been paying the wrong entity. They signed an agreement to pay for a house that had a free and clear title not a bogus process of uncertainty, therefore they have every right to with hold payment until they have verification that the situation has been cleared, otherwise they could be throwing money into a bottomeless pit.

  11. tony brown says:

    well in my case in South Carolina, the ” successor trustee” to the certificate series has produced a lost note affidavit , and two allonges; one is unsigned an undated the other is an allonge to assign the note because ; The lost note affidavit is not an assignment no where in the doc does it say we do hereby assign right, title or interest, it does not say, For value received and it does not say, for and in the consideration for the sum o f$$$. The UCC is clear about allonges. It says that an allonge is used when there is no room on the note and is to be firmly affixed as to become a perment part of the note.( attached to the original note ).The next thing the successor trustee did was file an assignment of note and mortgage at the ROD 16 days after the pendency ,summons and complaint from Mers directly to the successor trustee from the defunct original lender. I have a letter from MERS that states the MIN# is deactivated and it was transfered off the mers system in 2002.I found the PSA, Prospectus and I have also found my loan number on the wells fargo ctslink site. I have a sworn affidavit from the servicer that was also the seller in to the certificate series where they skip the despositor and state that “although they assigned the note to the trustee a written assignment was never prepared, however they have only acted as the servicer since 2003″ The seller was to assign ,transfer …etc to the despositor, the despositor was to sell, assign, etc. to the trust and then tothe successor trustee . No where did that occur and the servicer/ seller , the despositor , the trustee or successor trustee can fix it . It is a Fatal Flaw that cannot be cured! the series has been closed since 2003. Oh by the way I have the original wet ink Note endorsed in blank in my possession, so the lost note theory by the successor trustee in my case and in my opinion was a fake and created so that they could foreclose, along with the allonges and the MERS assignment by the one and only LPS/FIS in MN. It was signed by Liquenda allotey my god …. Just google him to see how many Job titles he has had.

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