The Market Ticker – Let’s Fix The Fraudclosure Mess

Here it is folks…. let’s push this as a singular piece of legislation that we want introduced and passed nationally on a state-by-state basis this coming year.

The Legislature finds that:

  • The practice of failure to accurately record the real parties at interest in mortgages and other secured real property transactions has led to clouded titles and foreclosure actions that are of questionable legality;and
  • The maintenance of clear, complete and accurate real property records forms the basis of private property rights and is a fundamental liberty interest secured under the State Constitution.

Therefore it is the law of this state upon the effective date of this legislation that:

    1. All real property land title records evidencing an indebtedness shallrequire public filing at the county level documentary evidence of the indebtedness claimed to be secured by said real property; 
    2. All such filings shallname the real party or parties at interest with reference to the full legal name of the entity the security interest is in favor of; 
    3. Such filings shallbe updated on a contemporary basis when debt instruments are sold, securitized, traded or otherwise transferred, with a deadline of not more than thirty (30) days after the effective date of said transaction. 
    4. A release shall be filed and returned to the property owner within thirty (30) days upon the event of payment in full or extinguishment of the debt secured by the property by any means, including but not limited to payment through a credit-default instrument, swap, deed-in-lieu proceeding, insurance payment or otherwise. The release returned to the property owner shallinclude the original wet-ink mortgage documents marked “PAID IN FULL” and signed by an authorized signatory of the holder in wet ink. 
    5. In any action for foreclosure the moving party shallpresent to the court in their original filing: 
      • The original, wet-ink mortgage agreement signed by the mortgagor and mortgagee or their agent(s). 
      • A full, complete and correct accounting of all monies transferred, paid, or received in reference to the indebtedness, including all securitization cash flows, payments in kind from third parties, credit protection payments under default swaps owed or paid under events of default or other arrangements, sufficient to establish as a matter of forensic proof through accounting that the monies claimed to be owed at the time of the default and foreclosure that are prayed for are in fact owed and outstanding and have not been satisfied and that the economic injury alleged has in fact occurred. 
      • Evidence of the full, complete and unbroken chain of assignments in the public records as required in items 1-3 above. 
      • A true, certified, dated and correct copy of the Notice of Default meeting the requirements of (6) below. 
      • Evidence documenting that any available Federal and State programs for foreclosure and default mitigation such as but not limited HAMP and HARP have been complied within in full and, if insufficient to resolve the default, the specific reasons for the failure or denial shallbe included in the initial foreclosure pleading. 
      • A foreclosure action shall be commenced within 120 days of the event of default giving rise to the action under the contract of mortgage, except that the time shall be tolled during the pendency of any HAMP or similar program not to exceed 90 additional days. Due to the deleterious effects on neighborhoods and the certainty of title and property within this state a tardy foreclosure action shall be barred as contrary to public policy of this state. The barring of said foreclosure actions shall notoperate to prevent other lawful and permissible collection actions such as suits at law or in equity for recovery of money damages. 
    6. Any “Notice of Default” or similar tendered to a defaulting mortgagee shall set forth the amount(s) necessary to cure the default, if default can be cured or the mortgage redeemed, in exact dollars and cents and in the form of payment accepted, during any available cure period. A default shall be curable for at least 30 days following the Notice of Default. A mortgagor or the subsequent assignee or transferee shallbe required to accept payment at an office within the county where the property is located during the hours of 9:00 – 5:00 local time at least four days per calendar week, or if there is no such office at a designated office within 100 road miles of the property address. 
    7. A foreclosure action that is filed and fails to satisfy the requirements of (5) and (6) above shall be dismissed upon the pleading by the defense alleging said deficiencies, and upon sustaining such a defense the defendants shallbe entitled to all reasonable attorney fees and costs from the plaintiff. 
    8. Within 180 days of the effective date of this legislation all existing property records that bear a mortgage and do not conform with the statutory documentation requirements for chain of title under clauses 1-4 shall be brought into compliance. Any landowner or mortgagee may sue for quiet title once the 180 day cure period expires from the effective date of this legislation and such a suit shall be sustained, removing any mortgage cloud upon the title, with reasonable attorney fees and costs taxed to the defendants.

That should pretty much do it. Let’s make ramming this through our state legislatures our personal priority for 2012.


View with responses