All you owners of real property which has a note attached to it, pay attention! And, if you're in foreclosure or about to be foreclosed on, pay close attention.
So far, it's been a pretty quiet but a potential – no, let us say here, inevitable – earth rattling cauldron is bubbling away 'neath the footings of the republic. It is the dirtiest, if not the newest, secret of them all. It seems that the entire American real estate credit structure, all those loans which have been sold, resold, monetized, bundled into securities to be sold yet again – finally – to us ordinary folk with 401(k)'s, and a little a little money in the stock market, and even maybe a little more in a bank money market savings account to cover your property taxes each year, is about to have its lid blown off.
Back in the go-go nineties, when all this business of bundling mortgages together to be sold on Wall St. started to really gather a head of steam, it turned out that the Banksters, rather than sell loans the old fashioned way to another lender by attaching a copy of the trust deed to be recorded with the county each time the loan was sold, decided to create a shortcut which would save them gazillions in fees, time and trouble.
They created an agency called the Mortgage Electronic Registering System (MERS) who would be “nominated” to be the owner of any trust deed which had a real estate loan associated to it. MERS would keep the files straight so that when the time came to satisfy the loan a clear title could be issued. Except that they didn't. And they couldn't. It turns out that around $6-$8 trilllion worth of loans have no record of who is supposed to own the collateral.
What has been happening is that as some poor schlemiel loses his job and the can't pay his mortgage, naturally the guy holding the note starts foreclosure proceedings against him. The problem is that if you're a lender or a holder of a real estate loan secured by the property in question, chances are that you can't prove you own the home whose paper you are carrying. You're also probably six or seven times removed from the entity who originated the loan and as it was sold and resold, no one passed a trust deed along to you; and you're probably a bank, or a Wall St. hedge fund. And MERS has no idea where loans went. And neither, of course, does the county.
Recent federal court cases have gone both for and against debtors who have asked In Oregon last May, a federal judge ruled in favor of a debtor, who wound up owning his home free and clear. Clearly the issue is traveling up the federal court system, but the betting seems to be in the debtor's favor. MERS cannot be a beneficiary of a property it may hold title to yet have no exposure to in a note. Similarly, a lender cannot foreclose on a property it has no deed of trust on. It is also entirely possible that the company you've been sending your loan check to isn't the legal owner of the property you're living in, and can't issue a clear deed if you somehow manage to satisfy the loan (after Aunt Millie left you a couple of hundred thouasand).
Banks are in full blown panic on this. If this goes down the way it very well could, the Banksters will be knocking on the doors of Congress looking for another bailout.
So, who can we point to as the real perps of this scam? Try both Bushes, Clinton and the Congress of the United States of America. It's all just a big party.
And you're not invited.