Mortgage Crisis: No Political Solution to a Math Problem

Rachel Keyser and her daughter, Sydney, stand
in front of their house in Deerfield, New Hampshire.
(photo: Chris Arnold/NPR)

Dylan Ratigan and Eliot Spitzer, Reader Supported News

12 February 12

his week officials from the Obama administration, the banking regulators, and state Attorney Generals announced a settlement of claims stemming from the financial crisis. The nominal amount put forward as the cost of the settlement is $26 billion, and in return the banks will be released from civil claims on origination of mortgages and the falsification of documents in the foreclosure process, or "robosigning". This caps off a month of political noise on the housing situation which started at the State of the Union, when the president announced a task force on financial fraud headed by officials from his administration as well as New York Attorney General Eric Schneiderman.

An investigation, and a multi-billion dollar settlement. That sounds like a lot, until you put it into perspective. Here are the numbers. Roughly half of homeowners with mortgages are underwater, which means they owe more than they own, to the tune of $1 trillion or so. And housing values are still declining so far in this "recovery", throwing more homes underwater. In terms of an investigation, the Savings and Loan crisis used roughly 1000 FBI investigators to uncover fraud - this task force taking on a crisis forty times more severe will employ 10 FBI agents.

There's a reason this is so inadequate to the problem at hand.   READ MORE

Study: Errors in 84 percent of SF foreclosures

February 16, 2012 5:30 PM

(AP)  SAN FRANCISCO — More than 80 percent of residential mortgage loans that have gone into foreclosure in San Francisco have missing documents or signatures or otherwise violate the law, according to a review ordered by the city assessor.

The results hint at potentially broader problems with how foreclosures have been handled since the collapse of the housing market.

While many of the errors were technical and related to paperwork, the problem shows the state needs to change its antiquated real estate regulations, Assessor-Recorder Phil Ting said on Wednesday.

"The whole process ... is absolutely, 100 percent broken and not working for any of us at this time," Ting said. "These rules were made for people who walked or rode their horse to the bank."

The review found that signatures of some original owners of loans were missing and that affidavits were not filed showing lenders had contacted borrowers to discuss their options 30 days before a mortgage default notice.

The review was conducted by Newport Beach-based Aequitas Compliance Solutions. The company looked at 382 of the city's 2,405 foreclosure sales between January 2009 and October 2011.
  READ MORE

Occupy the Neighborhood: How Counties Can Use Land Banks and Eminent Domain

A foreclosed home in Salt Lake City, Utah.
Photo: Monica Almeida / The New York Times)

Saturday 14 January 2012

by: Ellen Brown, Truthout | News Analysis 

 

An electronic database called MERS (Mortgage Electronic Registration Systems) has created defects in the chain of title to over half the homes in America. Counties have been cheated out of millions of dollars in recording fees, and their title records are in hopeless disarray. Meanwhile, foreclosed and abandoned homes are blighting neighborhoods. Straightening out the records and restoring the homes to occupancy is clearly in the public interest, and the burden is on local government to do it. But how? New legal developments are presenting some innovative alternatives.

John O'Brien is register of deeds for Southern Essex County, Massachusetts. He is mad as hell and he isn't going to take it anymore. He calls his land registry a "crime scene." A formal forensic audit of the properties for which he is responsible found that:

• Only 16 percent of the mortgage assignments were valid.
    

• Twenty-seven percent of the invalid assignments were fraudulent, 35 percent were "robo-signed" and 10 percent violated the Massachusetts Mortgage Fraud Statute.
    

• The identity of financial institutions that are current owners of the mortgages could be determined for only 287 out of 473 (60 percent).
    

• There were 683 missing assignments for the 287 traced mortgages, representing approximately $180,000 in lost recording fees per 1,000 mortgages whose current ownership could be traced.

At the root of the problem is that title has been recorded in the name of a private entity called MERS as a mere placeholder for the true owners. The owners are a faceless, changing pool of investors owning indeterminate portions of sliced and diced securitized properties. Their identities have been so well hidden that their claims to title are now in doubt. According to the auditor:

What this means is that ... the institutions - including many pension funds - that purchased these mortgages don't actually own them....  READ MORE