Banks' Own Greed Now Making Foreclosure Impossible

If you get a foreclosure notice, don't accept it. Fight it. Because the mortgage industry in this country is so completely fucked up by Wall Street that chances are extremely good that the company filing foreclosure against you can't prove it owns your mortgage.

David Dayen at Firedoglake:

If you want a nice 8-minute primer into how the foreclosure fraud crisis works, here’s a video from Rep. Alan Grayson, complete with four real-world examples. He talks about a man who was foreclosed on when he didn’t have a mortgage and paid cash for the home; a home that had two foreclosure suits against it because both servicers claimed ownership of the title; a couple foreclosed on over a contested $75 late fee; and a story that sounded a lot like the ones from my HAMP series, only in the end the servicer used forged documents to claim ownership of the title.

Grayson takes us back to the very beginning of this crisis, during the housing bubble, where runaway mortgage sales and poor record-keeping led to confusion over title ownership on the part of the servicers. “The banks simply digitized mortgage titles into a privatized system, called the Mortgage Electronic Registry System (or MERS). And it did the transfers by trading Excel spreadsheets among the banks and trusts, rather than endorsing the notes as required by their own contracts, by state real estate law and by IRS rules.”

This was basically the original sin. Users of the MERS system did not make the proper procedures to own the notes, and according to Grayson, in 45 of the 50 states, they lack the legal right to foreclose. “Servicers are basically guessing that they have the right to foreclose when they do foreclose,” he says. This led to the foreclosure mills and the robo-signers and all the fraudulent activities and forgeries that we have seen.

Read the whole thing.