Off With Their Heads

Excellent news (careful, link to Murdoch’s WSJ):

New York’s attorney general on Friday accused some of the nation’s largest banks of deceit and fraud in using an electronic mortgage registry that he said puts homeowners at a disadvantage in foreclosures.

Democrat Eric Schneiderman sued Bank of America, J.P. Morgan Chase and Wells Fargo over their use of the Mortgage Electronic Registration Systems Inc., or MERS, claiming the banks submitted court documents containing false and misleading information that appeared to provide the authority for foreclosures when there was none.

The lawsuit also names the registry operator, MERSCORP Inc. of Virginia.

Schneiderman claims the MERS system has eliminated homeowners’ ability to track property transfers through traditional public records. He said the electronic system now stores that data and is plagued by inaccuracies.

There was no immediate comment from the banks.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages,” Schneiderman said Friday. “Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law.”

About time.






33 replies
  1. 1
    Villago Delenda Est says:

    MERSCORP needs to be crushed like a fucking insect.

    It needs to be utterly destroyed. What they did was attempt to undo centuries, fucking centuries of title law and procedure.

    No mercy for anyone involved in this. Ruin them, ruin their families, make them suffer.

  2. 2
    The Moar You Know says:

    Good starter steps, but MERS needs to be put out of business as of right now. Clear, traceable, transparent title is everything to property ownership, and without it property is valueless.

    We talk about banks being “too big to fail” but what MERS is doing to title records is “too dangerous to be allowed”.

  3. 3
    Michael says:

    This is the guy who Obama will appoint (has already appointed?) to head up the new unit that’s supposed to investigate misconduct related to mortgages.

    Also, I have an internship with a SDNY district judge this summer. It would be so unbelievably awesome if I got to work on this suit. Not sure where it was filed yet.

  4. 4
    David Hunt says:

    @Villago Delenda Est:

    Plus what you didn’t write explicitly: Prison terms. Until someone high up in one of these little financial adventures ends up behind bars, there isn’t anywhere near enough of a deterrent against it.

  5. 5
    shortstop says:

    I really hope this guy doesn’t patronize hookers.

  6. 6
  7. 7
    barbara says:

    I haven’t seen anyone point out that this “end run around the property recording system” was also an end run around paying fees to municipalities when property was registered in the public records, or so I believe. Does anyone know more about this?
    Is it possible that towns and cities have some sort of legal case that would require the banks to pay them for all this lost revenue?

  8. 8
    Anonymous says:

    Clear, traceable, transparent title is everything to property ownership, and without it property is valueless.

    MERS doesn’t affect title records, it affects records of mortgage assignments. (Which do cloud title don’t get me wrong…but there’s a lot of perception out there that MERS somehow fucks with the ownership deed, rather than the deed(s) of trust.)

    This is an important distinction because, I can tell you from experience, a loan doesn’t need to be MERS-registered to disappear from a homeowner’s view. All it takes is a lender deciding not to record their assignment of mortgage for the homeowner to lose track. In fact, in theory MERS was created to avoid just such a problem (that is, obviously their first priority was to make things easier for noteholders, but they SHOULD have also made things easier for homeowners as well.)

    I guess I’m saying that, while MERS may be a worthy target, it won’t magically fix the problem.

  9. 9
    Steve says:

    The Republican who ran against Schneiderman in 2010 had an interesting campaign strategy: He went around saying “I’m not the sheriff of Wall Street” and basically arguing that Wall Street is the lifeblood of the NY economy and they get picked on more than they should. Now, you might not think this was the brightest strategy to win votes (as opposed to fundraising, perhaps) but 2010 was a Republican year so you never know. Fortunately Schneiderman won as he has been far and away the national leader on this issue.

    New York has taken the lead in other ways as well. A couple years ago, the state’s highest court took the initiative and created a new rule for foreclosure cases where the attorney filing the papers has to personally attest, under penalty of perjury, that he’s inspected all the documentation and finds it to be authentic, etc. You might think this would create more accountability than relying on some out-of-state robosigned notary, and you’d be right! Shockingly, foreclosure filings went down significantly after this rule was passed, almost as if there were a lot of cases where nobody could find an attorney willing to risk his license on the authenticity of the documents.

    A couple months ago, the forces of evil filed a lawsuit trying to have that rule declared unconstitutional and so forth. I haven’t heard anything lately about that case, but as always, it’s interesting to see the sorts of people who have a problem with successful antifraud provisions.

  10. 10
    satby says:

    About time is right. And maybe some justice for the people who’s lives were trashed by the banksters. One can hope anyway. Good stuff happenin’ today.

  11. 11
    Rafer Janders says:

    Democrat Eric Schneiderman sued Bank of America, J.P. Morgan Chase and Wells Fargo over their use of the Mortgage Electronic Registration Systems Inc.,

    Man, this is really gonna put their Susan G. Komen grants at risk…

  12. 12
    burnspbesq says:

    From the AG’s website:

    The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices.

    http://www.ag.ny.gov/media_cen.....3a_12.html

    There’s also a link to the complaint.

    Theoretically, there would be nothing wrong with a system like MERS if it were electronically linked to recording offices and automatically generated filings that complied with applicable state law. It’s just that the lenders that created it kinda forgot the part that’s in italics.

  13. 13
    Rafer Janders says:

    @Michael:

    Also, I have an internship with a SDNY district judge this summer. It would be so unbelievably awesome if I got to work on this suit. Not sure where it was filed yet.

    Here’s a very friendly tip to aid you in your legal career: don’t post in public forums that you want to work on certain cases, especially if you might give the impression that you’ve pre-judged the matter. Judges absolutely hate that. Discretion is key to survival.

    (Until you reach the Supreme Court, that is. Then you can fly around the country shooting your mouth off).

  14. 14
    burnspbesq says:

    Filed in state court in Brooklyn.

  15. 15
    DanielX says:

    @burnspbesq:

    “The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages,” Schneiderman said Friday. “Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law.”

    It was also an effort to get around all those niggling and troublesome recording fees paid to county clerks all over the country, which added up to tens of millions. Pay that money for recording fees when it could be going towards bonuses? Fuhgeddaboutit…

  16. 16
    terraformer says:

    I suppose someone kindly asked that this news be released late on a Friday.

  17. 17
    Michael says:

    @Rafer Janders: Probably a good idea. I do have the comfortable cloak of anonymity here.

    Looks like it doesn’t matter though, per burns

  18. 18
    WaterGirl says:

    i can’t believe the last line doesn’t say: About fucking time.

  19. 19
    WaterGirl says:

    Eric Schneiderman was on Up with Chris Hayes last weekend. Really interesting show with lots of good information on this subject.

  20. 20
    Villago Delenda Est says:

    @burnspbesq:

    Because it would take too long, in too many jurisdictions, to change the law to allow this, and also to make it so the fees for performing this work were paid out.

    These assholes didn’t want to pay for this, they wanted to run their fucking scam right now, they didn’t want to wait.

    Every last swingin’ dick involved with this needs to go to jail, be ruined, and suffer for what they did. They blatantly sidestepped the law and CENTURIES of procedure to pull their fucking scams.

    No mercy for them, none. They messed with primal laws of the universe…the consequences need to reflect the profound harm they’ve done. Florida’s title system is fucked up for decades now as people try to unfuck this mess.

  21. 21
    Mike Goetz says:

    @Villago Delenda Est:

    How about the old Chinese way: public summary execution of whole family, including one generation above and one below the offenders?

  22. 22
    priscianusjr says:

    @barbara:

    I haven’t seen anyone point out that this “end run around the property recording system” was also an end run around paying fees to municipalities when property was registered in the public records, or so I believe. Does anyone know more about this?
    Is it possible that towns and cities have some sort of legal case that would require the banks to pay them for all this lost revenue?

    Oh yeah!
    http://4closurefraud.org/2011/.....mpromised/

    http://4closurefraud.org/2011/.....n-dollars/

    http://www.businessweek.com/ma.....32011.html

    http://www.chron.com/news/hous.....232727.php

  23. 23
    Villago Delenda Est says:

    @Mike Goetz:

    No, the pain needs to be prolonged, to make a point.

    Strip them of all their assets. The kids get to go to vocational school, no university for them. The parents are kicked out of their comfy condo and go live in a rest home.

    The economy of Florida is fucked up for decades due to the fast and loose moving about of title in order to sell and resell bundled mortgage securities. The money was no longer in getting the mortgage repaid, it was in fees for selling the securities to some sucker. Now people can’t be sure if their title is real. This creates the uncertainty that the system was designed, over centuries, to avoid. All because some greedy, ethically void assholes saw quick bucks to be made.

  24. 24
    priscianusjr says:

    John,
    I know that one of the main reasons comments are put in moderation is that if multiple links are included, the program senses it may be spam. That wouldn’t be so bad if the moderation process was quick, but it usually isn’t, and sometimes perfectly innocent or indeed helpful comments never get on. I have just posted four links in direct answer to a question from commenter barbara. As a regular commenter here for years, is it likely I would be posting spam? Isn’t there a way the system can “recognize” commenters?
    While I’m on the subject, is there any mechanism here for tracking whether one’s comments have received replies? If there is, I haven’t figured it out.

  25. 25
    Nutella says:

    Go Schneiderman!

    I want to see jail terms and restitution of every nickel to every victim (mortgage holders, local governments, evicted tenants, etc.) Plus hefty penalties. If we have to sell their BMWs and fur coats to get that restitution I want to see that on TV with the bankster in an orange jumpsuit on hand to watch.

    Not that I’m bitter.

  26. 26

    Point to be made here: This is not a criminal prosecution. No one is going to jail as a result of this. What was done was not criminal. It was absolutely 100% immoral and vile, but not criminal, and people hearing this news and hoping for criminal prosecutions need to understand that this is not it.

    When words about this MERS thing came out, my recollection is that the lawyers said ‘This is a giant and bizarre grey area of what the law can or should do about it.’ I’m glad someone’s trying to wring it out so that the pain is all on the banks’ side. I wish him luck, because I’d like this to become a precedent that forces banks to stop pulling this crap.

  27. 27
    Anonymous says:

    Btw, either Schneiderman or WSJ should be a little bit less lackadaisical:

    “Schneiderman claims the MERS system has eliminated homeowners’ ability to track property transfers through traditional public records.”

    Untrue. Property transfers have nothing to do with MERS.

  28. 28
    Paris says:

    I’m surprised town/county governments don’t bring a class action suit against MERSCORP . There were a lot of fees that were avoided when mortgages changed owners but the changes weren’t registered in the county where the house was.

  29. 29
    Villago Delenda Est says:

    @Anonymous:

    Tell that to millions in Florida who don’t know the status of their title now.

  30. 30
    burnspbesq says:

    @Villago Delenda Est:

    Just curious: you have heard of title insurance, haven’t you?

  31. 31
    burnspbesq says:

    @Villago Delenda Est:

    This is a bit over the top, even by your standards.

    You have a dog in this fight, yes?

  32. 32
    Bago says:

    These are violations of CISSP standards.

    http://en.wikipedia.org/wiki/CISSP

    Sans audit trails and backups, there is no way this is good enough for government work.

  33. 33
    Villago Delenda Est says:

    @burnspbesq:

    I have, a good friend worked data for a title insurance company, and could not believe this shit was going on. He was familiar with the details of the title transfer process, since he wrote custom software for his customers. He knew how exacting and intricate it used to be, but then all this money got thrown around in fees, and suddenly, all those details were getting in the way.

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