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Reply #99


Response to joshcryer (Reply #75)

Sun Jan 22, 2012, 05:06 PM

99. I only know what I have read in various...

...places and I am NOT that knowledgeable about financial issues. BUT...from what I understand, there are multiple issues where the banks are concerned.

1. Toxic loans (stated income, for instance) that were doomed to fail and the need for that to support the MBSecurities that banks made money on. The rules/boundaries became blurred between Commercial banks and Investment banks.

2. Systemic changes to how banks/mortgage companies did business. The creation of MERS as an online system to help banks deal with their side of the business seemed, IMHO, to ignore certain laws that had been in place for a long time. Because these changes were allowed to stand unchallenged for YEARS, a lot of mortgages were affected.

3. Fallout from the financial meltdown of 2008 on homeowners. Foreclosures. The economy tanking. Did this 'new world' of MBS that the banks created cause the 2008 crisis? Of course it did.

4. Finally, I once worked at a low-responsibility title job. But I learned a few things. When a mortgage holder (on the original Trust Deed) no longer wants that TD, it is sold. The documentation for that is an Assignment of Trust Deed. In CA, that requires recording the document in the county where the property is located. The county collects a fee each time such a document is recorded. Creation of MERS bypassed that action. Trust Deeds (loan docs) were assigned, assigned and assigned again without doing the recording step which made it legal. Counties lost ALL THOSE FEES at a time when they needed the money. Banks just documented the assignments on MERS and moved on to make new loans. After 2008, when the foreclosures started, they didn't know who legally held the deeds of trust. They foreclosed anyway. Since they had no recorded (at the county) of assignments of TDs, they created them and 'robosigned' to get the paperwork they needed. Illegal, IMHO. But I'm no expert.

Here is my GUESS about the problem: Now there are LOTS of these situations out there, some foreclosed on (legally or not), some in the process (legally or not) and some outstanding mortgages that were wrongly assigned, without documentation or the fees paid, where homeowners' payments are up-to-date but the servicer has no legal proof that the mortgage TD was assigned to them.

Thoughts?


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