Daily Caller: One Nation, Under Fraud (Friendly Warning: The Foreclosure Mess is About to Get a Lot Worse, and That Will Affect You) (New Update in Post #508)

[Hubbs]

So stop paying the mortgage and empty the bank account?

Depends. What are you going to do with the dollars? That's ultimately what will be devalued.

[Rocky21]

I haven't gone through all 6 pages of this thread but a lot of that Op / Ed piece was alarmist bull****. The chances of a bank successfully foreclosing on a house with no mortgage is close to 0.

[DjTj]

Right. So tell me who "another bank" is. And tell me how that bank can prove it has the right to foreclose.

It might not be able to prove it. But it can come up with enough documents to take you to court. And you will have to hire a lawyer to defend you. They don't have to prove anything to hurt your wallet.

[PeterMP]

Right. So tell me who "another bank" is. And tell me how that bank can prove it has the right to foreclose.

1. In the vast majority of the times, the case is NOT being dismissed with prejuidice though. It is being dismissed WITHOUT prejuidice.

2. The few that have been dismissed without haven't been subjected to appeals yet because they are pretty recent.

3. My lawyer tells me the same bank that was trying to foreclose and had the case dismissed WITH prejudice can sell their "rights" to the mortgage (as best as they can prove it), and THEN the entity can come after you (He did note, when this happens the 2nd company is likely to have paid very little for the "rights" and are really looking to settle out of court for something much less than the value of the home, BUT if you've gone this route, then you are always going to have issues selling your house because the title companies aren't going to want to insure the title in case the courts were right and the banks were trying to foreclose on you didn't own the property and the company that actually does "uncovers" the paper work and comes after the house).

In none of the above is there ever a decision that YOU actually own the property, and there is always going to be an issue with the title UNLESS you can prove that you paid SOMEBODY the loan.

The fact that NOBODY else can prove that they own the property doesn't mean that ownership defaults to you, which means other than living in the house, you are going to have a hard time doing anything with it and people are always free to challenge your ownership.

[Hubbs]

I haven't gone through all 6 pages of this thread but a lot of that Op / Ed piece was alarmist bull****. The chances of a bank successfully foreclosing on a house with no mortgage is close to 0.

Um... yeah, that's kind of the point.

It might not be able to prove it. But it can come up with enough documents to take you to court. And you will have to hire a lawyer to defend you. They don't have to prove anything to hurt your wallet.

And what happens when the courts realize that that's what banks are doing?

1. In the vast majority of the times, the case is NOT being dismissed with prejuidice though. It is being dismissed WITHOUT prejuidice.

2. The few that have been dismissed without haven't been subjected to appeals yet because they are pretty recent.

3. My lawyer tells me the same bank that was trying to foreclose and had the case dismissed WITH prejudice can sell their "rights" to the mortgage (as best as they can prove it), and THEN the entity can come after you (He did note, when this happens the 2nd company is likely to have paid very little for the "rights" and are really looking to settle out of court for something much less than the value of the home, BUT if you've gone this route, then you are always going to have issues selling your house because the title companies aren't going to want to insure the title in case the courts were right and the banks were trying to foreclose on you didn't own the property and the company that actually does "uncovers" the paper work and comes after the house).

In none of the above is there ever a decision that YOU actually own the property, and there is always going to be an issue with the title UNLESS you can prove that you paid SOMEBODY the loan.

Hold on. A mortgage establishes that you own the property. All the bank has is the right to take possession of that property. Why do you think we call people homeowners? They're not called homerenters.

The paperwork showing that you own the property is destroyed, yes. So how does a court then determine who owns the property? The same way it determines who owns a hammer if nobody bothered to keep the receipt. Do you have possession of the hammer? Yes? Then a bank will have to prove that it has the right to take that possession away. Banks can't do that. They can only prove that someone has the right to take the hammer away. And that's not good enough.

You keep saying that homeowners have to prove they paid somebody. No they don't. They only have to prove that the bank the borrowed money from was paid. That's easy. In these foreclosure trials, you realize that it's not Chase Bank foreclosing on the homeowner that it lent money to, don't you? It's Deutsche foreclosing on the homeowner who Chase lent money to. And Deutsche is completely unable to prove that it has the right to do so.

[PeterMP]

You keep saying that homeowners have to prove they paid somebody. No they don't. They only have to prove that the bank the borrowed money from was paid. That's easy. In these foreclosure trials, you realize that it's not Chase Bank foreclosing on the homeowner that it lent money to, don't you? It's Deutsche foreclosing on the homeowner who Chase lent money to. And Deutsche is completely unable to prove that it has the right to do so.

No.

In a foreclosure hearing the bank that wants to foreclose has to prove they own the mortgage. If they can't, then they can't foreclose. If you had to prove that the bank that loaned you the money got paid, you'd have the same problem the banks are having.

The failure of the bank to prove that will keep them from foreclosing.

It doesn't mean that you own the title though. It doesn't mean you are in the free and clear.

You haven't proven anything, which is generally required for you to do anything to the house, including sell it. Even to make changes to the property a lot of times local governments want proof that you own it.

Just because no bank can prove that they own the mortgage isn't proof that you own the house and having a mortgage that you didn't pay doesn't prove that you own the house. People buying houses want proof that the person they are buying it from, own the house.

***EDIT***

Look, I'm done with this. What I'm posting is essentially coming from a friend of mine that has done work for me that is a real estate lawyer in NJ that does work in NY and PA too. All he does is closings and foreclosures.

He's strongly suggested that even if you THINK the paper work is messed up on my house that I shouldn't go this route if I ever want to do anything other than just live in the house (e.g. sell the house). The only way going this route makes sense if you are going to lose the house to foreclosure, and you aren't in the free and clear if you this route and likely never will be. There will be always somebody that is willing to take whatever the relevant paper work is and challenge you in hopes of nothing else forcing you to settle rather than pay fees related to going to court.

Your title will always have a huge question market attached to it.

But realisticlaly, I don't have anything else to add to this discussion so I'm done here.

[DjTj]

And what happens when the courts realize that that's what banks are doing?

Courts treat these things on a case-by-case basis. And in each case, there will be at least some documents showing that the bank owns the mortgage (otherwise how are they even figuring out how to sue). These are cases with several witnesses and a lot of different documents. A judge isn't going to throw it out immediately because, as Peter points out, the homeowner isn't going to have any clear evidence on their side that they own the house free and clear.

A judge doesn't have to determine who owns the property at the end of a case. They can really only determine that Deutsche Bank failed to show that it is more likely than not that it owns the mortgage. That's not going to be good enough for you to obtain clear title to your home so that you can sell it.

So the best outcome really is that you can squat. And have lawyers knocking on your door every few months. I don't think a lot of people are going to choose that option.

[Tulane Skins Fan]

Ok, I think I started some of this debacle when I indicated the problem with the derivatives that will be drying up credit, but now the thread is just full of experts without expertise.

Let's start with a basic point: a mortgage and a title are totally different, and they aren't nearly as related as you think. You can have Title to your house and no mortgage; you can have a mortgage ane no title. Proving title is not done by proving you have a mortgage. Just drop that right now.

The problem is not that the homeowner won't be able to prove that they own the house; the problem is whether the bundled security sellers will be able to prove that they actually had a product to sell THAT THEY OWNED when they sold it.

[PeterMP]

Ok, I think I started some of this debacle when I indicated the problem with the derivatives that will be drying up credit, but now the thread is just full of experts without expertise.

Let's start with a basic point: a mortgage and a title are totally different, and they aren't nearly as related as you think. You can have Title to your house and no mortgage; you can have a mortgage ane no title. Proving title is not done by proving you have a mortgage. Just drop that right now.

The problem is not that the homeowner won't be able to prove that they own the house; the problem is whether the bundled security sellers will be able to prove that they actually had a product to sell THAT THEY OWNED when they sold it.

Well, the current discussion started because Hubbs claimed that people who are having foreclosure cases against them dismissed because the banks couldn't produce the proper paper work are in the "free and clear".

What happens if the bundlers didn't own what they were selling?

Wouldn't that be buyer-beware (i.e. that's the buyers problem)? Or are the buyers going after the bundlers for fraud?

[Hubbs]

No.

In a foreclosure hearing the bank that wants to foreclose has to prove they own the mortgage. If they can't, then they can't foreclose. If you had to prove that the bank that loaned you the money got paid, you'd have the same problem the banks are having.

Um... yeah. But it wouldn't be a "problem" to you. It'd be great.

The failure of the bank to prove that will keep them from foreclosing.

It doesn't mean that you own the title though. It doesn't mean you are in the free and clear.

How will banks prove that they own the title?

You haven't proven anything, which is generally required for you to do anything to the house, including sell it.

Exactly. So do banks. Like I said before, I really can't figure out why we're arguing.

Even to make changes to the property a lot of times local governments want proof that you own it.

Yes. They do.

Just because no bank can prove that they own the mortgage isn't proof that you own the house and having a mortgage that you didn't pay doesn't prove that you own the house. People buying houses want proof that the person they are buying it from, own the house.

That's probably why I didn't say that the fact that banks can't prove they own the house doesn't mean that you own the house. The fact that no papers showing that anybody owns the house exist means that the person who currently possesses it owns it. Homeowners are those people.

***EDIT***

Look, I'm done with this. What I'm posting is essentially coming from a friend of mine that has done work for me that is a real estate lawyer in NJ that does work in NY and PA too. All he does is closings and foreclosures.

You can be done if you want. I have no ability to change that. But what I'm posting is that the vast majority of lawyers don't currently understand the situation. The lawyer in Florida, who deals exclusively in foreclosure cases, says that fraud is happening 95% of the time. Sure, he has incentive to say that. But what's at the root of the incentive? The idea that he believes that he's right. Otherwise he wouldn't take these cases. So what makes your lawyer trump my lawyer?

He's strongly suggested that even if you THINK the paper work is messed up on my house that I shouldn't go this route if I ever want to do anything other than just live in the house (e.g. sell the house). The only way going this route makes sense if you are going to lose the house to foreclosure, and you aren't in the free and clear if you this route and likely never will be. There will be always somebody that is willing to take whatever the relevant paper work is and challenge you in hopes of nothing else forcing you to settle rather than pay fees related to going to court.

Your title will always have a huge question market attached to it.

But realisticlaly, I don't have anything else to add to this discussion so I'm done here.

You've added that a lawyer in NJ says I'm wrong. A lawyer in Florida says I'm right. New titles will have to be created, and those titles will show that the homeowner, by definition, owns the home. You keep operating with the assumption that someone, somewhere has a title to these homes. Nobody does. And nobody can prove who should.

[Hubbs]

Ok, I think I started some of this debacle when I indicated the problem with the derivatives that will be drying up credit, but now the thread is just full of experts without expertise.

Let's start with a basic point: a mortgage and a title are totally different, and they aren't nearly as related as you think. You can have Title to your house and no mortgage; you can have a mortgage ane no title. Proving title is not done by proving you have a mortgage. Just drop that right now.

The problem is not that the homeowner won't be able to prove that they own the house; the problem is whether the bundled security sellers will be able to prove that they actually had a product to sell THAT THEY OWNED when they sold it.

Bingo. They didn't. And even if they did, the government would take it away.

[DjTj]

I think everyone generally agrees except for this one statement.

The fact that no papers showing that anybody owns the house exist means that the person who currently possesses it owns it. Homeowners are those people.

You can't prove a negative. Maybe you can wait out the statute of limitations, but a court is not going to hand you a declaration saying that you own the house when all the evidence you have is a mortgage agreement saying that you own the house unless you fail to make payments, and you are not making payments.

Maybe nobody else will be able to show that they own the house in one particular lawsuit, but you will still be vulnerable to future lawsuits. And to Peter's point, you will have a hard time selling your house when there are possible creditors out there. Is a bank going to be willing to give a mortgage to the buyer of your house? How much is your house really worth if you can't sell it?

The best solution for all parties is probably a refinance or a short sale where the documentation can be corrected and everyone's roles are clear. Homeowners would also probably be more comfortable with that kind of amicable solution where you get to stay out of the courtroom. If everyone tried to lawyer up to take advantage of the situation, I think you're right that a major collapse could happen, but that's not how the vast majority of people act in the real world.

[zoony]

There will be greatly increased legal costs in the foreclosure process going forward. Lawyers should have a field day, and banks will be hurt by the increased outlays of cash.

All this stuff about the next great depression is alarmist bull****. I'm sick of it. Get out and get some fresh air for chrisakes.

[Predicto]

I was not aware that it was impossible for a bank to win a quiet title action (against a homeowner or against another bank) without the original documents. The civil preponderance of the evidence standard is rarely interpreted that way.

In other words, just because things are snafu'd doesn't automatically mean that there is no enforceable mortgage.

[Tulane Skins Fan]

Bingo. They didn't. And even if they did, the government would take it away.

My head is spinning from how you were able to put some blame on the government for all these "efficient" private companies failing to do the proper work necessary to secure their interests.

[Tulane Skins Fan]

I think everyone generally agrees except for this one statement.

You can't prove a negative. Maybe you can wait out the statute of limitations, but a court is not going to hand you a declaration saying that you own the house when all the evidence you have is a mortgage agreement saying that you own the house unless you fail to make payments, and you are not making payments.

Maybe nobody else will be able to show that they own the house in one particular lawsuit, but you will still be vulnerable to future lawsuits. And to Peter's point, you will have a hard time selling your house when there are possible creditors out there. Is a bank going to be willing to give a mortgage to the buyer of your house? How much is your house really worth if you can't sell it?

The best solution for all parties is probably a refinance or a short sale where the documentation can be corrected and everyone's roles are clear. Homeowners would also probably be more comfortable with that kind of amicable solution where you get to stay out of the courtroom. If everyone tried to lawyer up to take advantage of the situation, I think you're right that a major collapse could happen, but that's not how the vast majority of people act in the real world.

Title and mortgage are totally different. That's not what this is about.

Forclosure actions and quite title actions are also different. If someone forecloses on your mortgage they may end up with your house because you used your house as collateral for that loan. A mortgage is, in essence, a loan to buy the house in which the house you buy is the collateral to secure that loan. (Please read that last sentence slowly). If someone forecloses, its because you fell behind on payment on your LOAN, and they are attempting to recoup the lost loan payments via the secured interest, i.e. your house.

A quite title action is that someone is alleging that your title is not good or that it is somehow encumbered by someone else's rights to the title.

Two very different things.

The problem is not that the owner might not own the house. The problem is that the bank's interest, i.e. THE SECURED INTEREST OF YOUR HOUSE, THE COLLATERAL which was then re-sold over and over again, may not have been properly filed. So, its not that the bank didn't actually own THE HOUSE, its that they didn't own the INTEREST IN THE COLLATERAL that they thought they did.

This is bad because we just went through this crisis and we had a whole bunch of winners and losers, and now the losers might say, "whoa, we didn't really buy the things that we lost all that money on," and so we are back to square one.

[Predicto]

My head is spinning from how you were able to put some blame on the government for all these "efficient" private companies failing to do the proper work necessary to secure their interests.

All you have to do is say the magic words "Fannie and Freddie" three times and click your heels together, and the private sector magically is absolved of any responsibility for anything.

[DjTj]

Title and mortgage are totally different. That's not what this is about.

But Hubbs is the one saying that all these homeowners will get free and clear title because of the inability of banks to show that they own the mortgages. Do you agree with that?

[Larry]

I was not aware that it was impossible for a bank to win a quiet title action (against a homeowner or against another bank) without the original documents. The civil preponderance of the evidence standard is rarely interpreted that way.

In other words, just because things are snafu'd doesn't automatically mean that there is no enforceable mortgage.

Yeah, I don't quite see where people could think that they're Immune From Mortgage.

At least here in Florida, down at the courthouse, there are two documents on file.

One says that John Doe owns this property.

The other says that Bank X holds a mortgage (and a lien) for $200K. (Or whatever.)

Seems to me that no matter how messed up the paperwork gets, from that point on, no matter what, Bank X can always prove that you owe them money.

I'd say that if things are really, really, FUBAR'd, the court's ruling is going to be "OK, we know that Bank X holds this mortgage. Is there anyone in the courtroom who can prove that they bought the mortgage from Bank X?"

[RonBurgundy&Gold]

I work in loss mitigation for one of the big banks. We are not halting foreclosure proceedings. In 4 years, I've never came across a loan that went to foreclosure for no reason. Due to investor agreements, securities and transfers of servicing it may be difficult for some banks to locate the paperwork. This is not the case w/ my company. Hard up attorneys and politicians are trying to latch on to technicalities to prevent foreclosures, but at the end of the day, everyone should know when you don't pay your mortage, you lose your house.

[Tulane Skins Fan]

But Hubbs is the one saying that all these homeowners will get free and clear title because of the inability of banks to show that they own the mortgages. Do you agree with that?

He's not right. So, say you buy a home with a 500K mortgage. The bank gives you 500K (just assume nothing down) and in return you agree to pay them back a monthly fee AND THAT LOAN IS SECURED BY YOUR PROPERTY.

This is a very specific type of loan, but in general it is called a "secured interest loan." By taking a mortgage you are agreeing that if you fall behind they can collect their debts by collecting your house.

Now, I would be shocked if that meant that they don't have any other means to repayment. That is, they may not be able to get your house, but they could sue the **** out of you for regular breach of contract, and in the end you may have to sell your house to cover your losses.

So, is Hubbs' theory possible... yes. It is possible that you could own your house free and clear if your bank did not secure your mortgage correctly so that it could assert its interest in your property when you default. But, its highly unlikely that they'll remain with no recourse against you for failing to pay, as you agreed.

Its much more likely that the rebundled mortgage securities were not actually sold which causes a bigger, but different problem.

[Tulane Skins Fan]

Yeah, I don't quite see where people could think that they're Immune From Mortgage.

At least here in Florida, down at the courthouse, there are two documents on file.

One says that John Doe owns this property.

The other says that Bank X holds a mortgage (and a lien) for $200K. (Or whatever.)

Seems to me that no matter how messed up the paperwork gets, from that point on, no matter what, Bank X can always prove that you owe them money.

I'd say that if things are really, really, FUBAR'd, the court's ruling is going to be "OK, we know that Bank X holds this mortgage. Is there anyone in the courtroom who can prove that they bought the mortgage from Bank X?"

I think that's pretty much right. You still owe the money. They may not be able to win a foreclosure action, but they will have reason to collect the debt you owe them.

[Forehead]

Just for curiosity's sake, I called my mortgage company when I got home tonight. I asked them "who actually owns my mortgage?" It took them all of ten seconds to look it up and come back with the answer "Fannie Mae." You pay us, we pay them.

Guess they have their **** together, and I'll continue to make payments on my severly underwater house the way I always have

[PeterMP]

He's not right. So, say you buy a home with a 500K mortgage. The bank gives you 500K (just assume nothing down) and in return you agree to pay them back a monthly fee AND THAT LOAN IS SECURED BY YOUR PROPERTY.

This is a very specific type of loan, but in general it is called a "secured interest loan." By taking a mortgage you are agreeing that if you fall behind they can collect their debts by collecting your house.

Now, I would be shocked if that meant that they don't have any other means to repayment. That is, they may not be able to get your house, but they could sue the **** out of you for regular breach of contract, and in the end you may have to sell your house to cover your losses.

So, is Hubbs' theory possible... yes. It is possible that you could own your house free and clear if your bank did not secure your mortgage correctly so that it could assert its interest in your property when you default. But, its highly unlikely that they'll remain with no recourse against you for failing to pay, as you agreed.

Its much more likely that the rebundled mortgage securities were not actually sold which causes a bigger, but different problem.

Though even Hubbs' idea is only true if the case is dismissed with prejudice, which is happening only in a few cases that haven't been help up through appeal. Until that point in time, there is still a loan out there that for which your house is collatoral, which has implications to your house (and even then some other company might come forward saying they have the paper work saying they own the loan).

I don't understand what the other problem is that you are talking about.

Are the buyers now going to sue the bundlers for fraud?

Do they have any chance of winning?

Either way, how does that turn into a more general problem?

[Tulane Skins Fan]

Though even Hubbs' idea is only true if the case is dismissed with prejudice, which is happening only in a few cases that haven't been help up through appeal. Until that point in time, there is still a loan out there that for which your house is collatoral, which has implications to your house.

I don't understand what the other problem is that you are talking about.

Are the buyers now going to sue the bundlers for fraud?

Do they have any chance of winning?

Either way, how does that turn into a more general problem?

With or without prejudice probably won't make too much of a difference unless the problem is simply that they can't FIND the documents. If they actually didn't file them, then the dismissal without prejudice is basically a dismissal with prejudice.

Forget homebuyers in the "bigger problem." The real problem is that investment banks packaged and sold all their secured interests into what we now know as "mortgage backed securities." Then, they took bets on whether these mortgage back securities would fail or not. And for years, as very few people went into default, the people who bet that people wouldn't go into default made money on their bets. Then, when all these ARM and ridiculous mortgages that were extended to people who couldn't afford them started to go up, the banks started foreclosing on houses. Why did they do this?

Well, for a multitude of reasons, but a big reason was that they had bet with people that the homebuyers would not go into default. Now they lost, and they owed money to those people they bet. Lots of money. So, what they are trying to do, in some respects, is get back the money from the house via their secured interest, i.e. the property.

So, think about this, they sold their packaged and result their rights to the secured interest in some instances and in others they actually bet that they would not need to collect their secured interest. When they actually lost, they tried to collect on that secured interest. However, it is turning out in some cases that they never secured their interest. So, they are unable to collect the property, which causes a lot of harm. But it also does something else, much worse.

Like I said, to some people they sold the secured interest. They said, "hey, we've got this right to foreclose on these homes, in fact, here's a hundred homes that we have a right to foreclose on. How much would you like to pay us for an assignment of that right." And people bought the right to foreclose. Now its turning out they never actually had that right in some cases because they did not file the proper paperwork to perfect their interest. So, what did they sell? ****ing nothing. And the people who bought those rights, and then ended up with nothing, are now trying to at least claim that those transactions are null and void.

The big problem is that this causes a tremendous amount of uncertainty, and eventually panic. No one know where they stand. Did they really sell a secured interest, or not? Did I really buy a secured interest that cost me millions of dollars or not? So the general problem that could snowball is that banks, the same ones that lost money, stop lending again. Credit dries up, and then we have another near depression.