Wednesday, October 19, 2011

A wrench in the works, pt 1

State Rules on Foreclosure 

So the Massachusetts Supreme Court ruled that if you bought a foreclosed house from a bank, and the house hadn't been properly foreclosed on, you don't own it.

Pretty simple, right.  I mean, this is common law at its most common.  Basic, solid, hard-headed common sense.

Except that any house where the title was processed via MERS, the mortgage clearing-house the banks created to get around paying county assessor fees (thus contributing significantly to the financial ill-health of counties across the US), is suspect.  For reasons described in the Link, but primarily this: some number, n, larger than a breadbox but smaller than every house bought or sold in the US since 1998, may have been processed by MERS, which (a) has no legal standing to process mortgages, and (b) used hired proxies for a variety of banks to sign off on documents to which they claimed personal and verifiable knowledge.  (b) is just fraud: I can't tell you I've seen foreclosure documents when I haven't.  (This is the root cause of the "robosigning" scandal.)  (a) is a problem because the banks have so entwined MERS in their various internal processes, if MERS is ultimately not legitimized somehow, piles of spaghetti will come crashing down from on high on top of bank profits.

Its getting harder and harder to prop up bank practices.  This is potentially trillions, far more than the EU and the Fed can cobble together.

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