Out of courtesy and respect, I will agree with Karl that “there is no evidence of any back-door deal made with her,” (Reagan), but I still believe there was. Yes, there is no lien release or any other document filed in the public records indicating she got a “free house”, but these things can take a while to hit, if that was the case.

Even still, that may not be the back-door deal Reagan received. I am still convinced that there was something offered in return for agreeing to strike SB1259.

So, in the interim, I will go along with Reagan being on the “Good Guys” side unless something else pops up.

It was just way to convenient that her lawsuit was dismissed with prejudice the same day SB1259 was changed.

From what I was told, the settlement between Reagan and Colonial Bank, is under court ordered seal and there also may be a confidentiality agreement.

Kinda strange if no back-door deals were done.

We will be watching…

The Market Ticker – Follow-up On Ms. Reagan And Ms. McLain From Arizona

I reached Michele Reagan from the Arizona Legislature this afternoon and we had a roughly hour-long conversation.

Let’s deal with a few things related to SB1259 and the allegations that are flying all over the blogosphere about Ms. Reagan, Ms. McLain and others in the Arizona Legislature.

First, there is nothing in the County Records that suggests that Michele Reagan got a “free house.”  Since she was not delinquent and was not in foreclosure for non-payment, but rather was sued for trying to find out who the hell owned her loan, there is no evidence of any back-door deal made with her.  Remember folks, property records are, for the most part, public.  I looked, I found the original Deed of Trust, I’m reasonably sure I have the right person, property and lender (all of which have been disclosed and as such it’s pretty simple to know you’re right) and I can’t find any evidence that suggests that the lien was released.  Those running this sort of meme need to do their homework, especially when the data required to do so is in the public record.  If you have evidence then produce it, because I can’t find it and I made a reasonably diligent search.  In short every thing I can determine leads to me to believe what I believed originally when this bill was filed and I wrote on it in February:  Representative Reagan was and remains on the “Good Guys” side.

Nancy McLain (R-3), on the other hand, deserves no quarter whatsoever.  She released the following statement (in part) related to this controversy:

In fact, I believe that this bill would have given those facing very dire consequences false hope, which is why I opposed it. Despite what some may think, SB1259 did nothing to help these individuals.  And it also opened an avenue for those who simply did not want to fulfill their obligation by potentially creating a loophole that could take years to resolve.

Abject nonsense.  Ok, that’s being too polite: That statement is a damned lie.

One of the primary rights that a person has when someone comes and accuses them of something in court (whether through judicial process or some supervisory quasi-judicial process) is the Constitutional right to face their accuser.  Our Constitutions presume, at both a State and Federal level, that you have a right to both know who is accusing you of something (in this case, not paying your mortgage) and that the person doing the accusing has standing before the courts to bring the allegation.

The latter is a critical function of the court system.  Opposition to SB1259 by the banking industry was an act of intentional derogation of that right.

We know for a fact that over 150,000 perjured affidavits were filed across the country in pursuit of foreclosures by these institutions and the law firms they hired.  We know this because it was admitted that these documents were perjured – that the person attesting personal knowledge “under penalty of perjury” never read the document in question.  Perjury, in most jurisdictions, is a felony.  Number of felony indictments issued thus far?  Zero.

There is a lot of evidence that the notes – the actual indebtedness – in many of these cases did not actually get into the trusts.  That is, the trust does not have standing to foreclose as it owns nothing, and the servicer cannot foreclose either because the servicer is an employee of the trust and cannot acquire a right the trust does not have to convey.

This is a legitimate issue of fact in these cases and must, as a matter of your rights as a homeowner, be heard.  The PSAs – that is, the Pooling and Servicing Agreement sets forth the hard, black-letter requirement for conveyance.  In some cases they’re pretty loosey-goosey and virtually anything will do.  But not all.  Some require actual physical conveyance and physical endorsement.

The argument that the homeowner is not a party at interest to that agreement and thus cannot demand production and perfection of this evidence is legally bankrupt.  This is not just my opinion, it is now starting to show up in the opinions written by Judges.  Real judges, including this one in Alabama:

Got it?  Without the Pooling and Servicing Agreement the borrower would not have been able to obtain financing.  The borrower is thus absolutely a third-party beneficiary.

Further, without determining that the person foreclosing actually owns the debt the conveyance by foreclosure and subsequent sale is potentially defective.  You cannot convey that which you do not have, and as such if someone was to buy a house improperly foreclosed upon in this fashion and it was to be determined that the foreclosure was fraudulent the subsequent buyer would have nothing.

There are many who say that you should simply look to title insurance in these cases.  But title insurance is only as good as the insurer’s pockets are deep.  That’s a serious problem as title insurance has a long history of paying out pennies, and as such reserves are tiny compared to potential liabilities.  Should 10,000 homeowners show up with $500,000 title claims the existing title companies would almost certainly go bankrupt instantly.  Look at Investors Title, for example – it has a paltry $35 million in cash on its balance sheet at the present time and an enterprise value of just $41 million.  How about Old Republic (ORI)?  $1 billion in cash on hand and a $2.6 billion enterprise value.

Those 10,000 claims of $500k each are a $5 billion liability.

And 10,000 homes?  That’s peanuts.

Title integrity is essential to private property interests and protecting the integrity of title is an essential function of state government.  The bill filed by Michele Reagan was a critical single-page piece of legislation that would have demanded that before anyone foreclosed and resold a house in Arizona that they prove they were the actual owner of the indebtedness and had standing to foreclose.

Ms. McLain admitted to KPHO’s reporter that she, and she alone, spiked the original bill:

“Just to be clear, representative, it was solely your decision to not hear the original bill in committee, right?” asked reporter Elizabeth Erwin.

“That is correct, yes,” McLain answered.

Having done so, there was nothing wrong with getting something useful out of its carcass.

In addition, Ms. McLain admitted that the banksters killed the bill and lobbied her:

“I’ve got to ask, did lobbyists have anything to do with your decision?” Erwin asked McLain.

“Well, there were people that came and talked to me about it,” she responded.

“Representative, of course the bankers aren’t going to like this bill, it doesn’t help them. But have you talked to the constituents, the folks in foreclosure who could have been assisted by this?” Erwin questioned.

“No, believe me, I have talked to many people, many constituents,” McLain said.

But she said her information on this bill came from the bankers.

Of course it did.

The banksters, for their part, would have no reason to oppose this bill if they could prove proper conveyance and ownership of the loans in question.  Banks are in the business of organizing and keeping paper and have been for a thousand years.  If they didn’t know they couldn’t comply with what is nothing more than a demand to produce an actual business record they claim they have, what would be the problem?

But if the banksters can’t actually prove they own the paper – and they know it – then they couldn’t foreclose.  That, in turn, might force examination of exactly what’s in those trusts (if anything), who conveyed what (if anything), when (rather important for REMIC tax reasons) and whether the certificate holders who got screwed blind – pension funds, insurance companies, maybe even your pension fund – were in fact defrauded and have a right to demand that these banks make them whole.

Worse, if the banksters are filing foreclosures while possessing actual or constructive knowledge that they do not have ownership of the loan they are committing frauds upon the court in thousands upon thousands of cases a year, they’re stealing homes to which they’re not entitled, and they’re corrupting the land title records across this nation in a form that may be difficult or even impossible to effectively redress.

This must not stand – not in Arizona or anywhere else.

Those who direct ire at Michele Reagan are sadly misplaced.

Ms. McLain, on the other hand, deserves every bit of political heat that she has taken and, hopefully, will continue to take on this very issue.  Her action, while legal under parliamentary rules, stands as a raw financial **** of those in Arizona who have been and continue to face foreclosures without any evidence being offered that the putative party demanding foreclosure has an actual right to that remedy.

Until and unless she renounces and publicly reverses her previous position I stand by my view that she is a “Putrid Viper” and call for her ouster at the next election and replacement with someone who gives a damn about the rule of law and private property rights.

Again, for those of you who missed it, here’s the video where she gets caught admitting, on tape, that she – and she alone – killed this legislation

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