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Reply #10: Very, very S L I C K..... but [View All]

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chill_wind Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-15-10 02:26 AM
Response to Reply #6
10. Very, very S L I C K..... but
they have finally figured out they are in deep sh#t. CITI internally in Ocober:

12 October 201 7 pages
Foreclosures Gone Wild
Key Takeaways from Our Conference Call

What's New Yesterday we hosted a conference call on the topic of
Foreclosures Gone Wild: Understanding the Legal Issues Surrounding the Recent
Foreclosure Freezes and Investigations. Our speaker was Adam Levitin who is an
Associate Professor of Law at Georgetown University. Levitin emphasized that all
parties involved are still trying to get their arms around the legal issues in
question. Relative to other opinions which we have heard on these issues, Levitin
painted what we believe to be one of the bleaker portraits of these matters and
their ultimate resolution.

(snip - see the pdf for the rest)

Issues Concerning MERS

MERS (Mortgage Electronic Registration Systems) functions as a centralized
electronic registry of mortgages and tracks ownership of mortgages. MERS
allows mortgage ownership to change hands efficiently and relatively quickly
since it is electronic and allows all parties to forgo making a filing in local land
records. Indeed, MERS was designed to function as a substitute for local land

Although MERS was designed to enhance efficiency in the mortgage
assignment process, Levitin argued it may not conform with the law. Slowly
but surely courts are issuing decisions which cast validity on the MERS
process. Although ~60% of mortgages list MERS as the nominee which
owns the mortgage, a handful of recent court cases have ruled that MERS has
no standing in foreclosure actions either because (1) physical paperwork must
be transferred when a mortgage is assigned by one party to another or (2)
MERS has no true economic interest in the mortgage in question since it
collects no payments from the borrowers.

What Happens Next?

Our speaker predicted that more and more lenders are likely to stop their
foreclosure processes in both judicial and non-judicial states. He also expects
more states attorney generals to get involved. At the federal level, it is possible
than banking regulators might step in as there is legal and reputational risk for
the banks involved.

Ultimately, if these issues do in fact escalate, the Administration may try to
broker some sort of settlement. If such deal brokering does take place, Levitin
believes that some payment will be exacted from the lenders and servicers.
The Administration could bargain for more mortgage principal write downs.
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