JPMorgan Pulls Out of MERS! AH-OO-GAH!

17 posts / 0 new
Last post
machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
JPMorgan Pulls Out of MERS! AH-OO-GAH!

MERS (Mortgage Electronic Registration System, backbone of the mortgage-backed securitires market) takes a punishing body blow:

NEW YORK – JPMorgan Chase's CEO says the bank has stopped using the electronic mortgage tracking system used by major financial institutions.

Lawyers have argued in court proceedings that the system is unable to accurately prove ownership of mortgages.

JPMorgan Chase & Co. and other banks have suspended some foreclosures following allegations of paperwork problems in thousands of cases.

JPMorgan's CEO, Jamie Dimon, made the announcement in a conference call Wednesday to discuss the bank's quarterly earnings.

The Mortgage Electronic Registration System, or MERS, acts as a trading house for millions of mortgages. Lawyers for homeowners say the system lacks the required paper trail to prove mortgage ownership in foreclosure proceedings.

http://news.yahoo.com/s/ap/20101013/ap_on_bi_ge/us_jpmorgan_mortgages

If Bank of America follows JPMorgan, MERS may be headed for the scrap heap -- and so may trillions of dollars worth of MBS!

This just adds fuel to the fire of populist cries for a nationwide foreclosure moratorium. I knew we were rhyming with the 1930s, but this is starting to get eerie.

Benny, we've got a problem. Or better to say, your bankster clients have got a problem. Surprised

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!

Forty-nine of fifty states are now investigating foreclosure fraud, with some demanding moratoriums:

Oct. 13 (Bloomberg) -- Top legal officers of 49 states opened a joint investigation into home foreclosures, saying they will probe practices at banks and mortgage companies.

The states, including Texas, Iowa and New Mexico, will conduct a coordinated inquiry into whether banks and loan servicers used false documents and signatures to justify hundreds of thousands of foreclosures, Minnesota Attorney General Lori Swanson said today in an e-mailed statement.

“Our multistate group has begun inquiring whether or not individual mortgage servicers have improperly submitted affidavits or other documents in support of foreclosures,” the attorneys general said in a statement. “The facts uncovered in our review will dictate the scope of our inquiry.”

As part of their probe, the attorneys general established an executive committee of the top legal officers from 12 states including California, Iowa, New York, Illinois and Texas, and the banking regulators of Maryland, New York and Pennsylvania.

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aBQbCK77VgTo&pos=5

This train's on a roll now, folks.

The only state not participating in the investigation is Alabama. By no coincidence, two of the four KongressHos who sponsored the disgraced (and vetoed) HR 3808 Foreclosure Fraud Enabling Act were from this corrupt little backwater: Robert Aderholt (R-AL) and Artur Davis (D-AL). I'd say these two sleazeball racketeers have got some 'splainin' to do for the voters, who might be just a lil' bit riled up.

http://www.opencongress.org/bill/111-h3808/show

 

Phil Williams's picture
Phil Williams
Status: Gold Member (Offline)
Joined: Oct 14 2009
Posts: 337
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!

Machinehead,

                     Thanks for the info! Do you know who is holding the mortgage backed securities? I know The Fed bought a bunch, but what about pension plans, bond funds etc..? I smell a bailout and a change of rules coming. What do you think?

Thanks

Phil

 

joemanc's picture
joemanc
Status: Martenson Brigade Member (Offline)
Joined: Aug 16 2008
Posts: 834
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!

I would have thought major news like this in addition to the robosigner/fraudclosure news would have roiled the markets...someone must know something behind the scenes because right now, 2+2=5, and I'm holding a 4.

ashvinp's picture
ashvinp
Status: Gold Member (Offline)
Joined: Jan 20 2010
Posts: 412
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!

This is really fixing to be one of those predicaments the elites/politicians can't pretend and extend away for more than a few months (at the most). What are the options here? Either they act like they care and continue suspending foreclosures indefinitely, allowing the entire housing market to become FUBAR (and therefore the balance sheets of banks, which would not be able to be whitewashed with some accounting tricks), or they come out and admit to the pubic that not only will massive amounts of fraud go unpunished, but it will be REWARDED by another direct/indirect bailout.

Talk about making peaceful revolutions impossible and violent ones inevitable...

land2341's picture
land2341
Status: Gold Member (Offline)
Joined: Aug 20 2009
Posts: 402
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!
ashvinp wrote:

This is really fixing to be one of those predicaments the elites/politicians can't pretend and extend away for more than a few months (at the most). What are the options here? Either they act like they care and continue suspending foreclosures indefinitely, allowing the entire housing market to become FUBAR (and therefore the balance sheets of banks, which would not be able to be whitewashed with some accounting tricks), or they come out and admit to the pubic that not only will massive amounts of fraud go unpunished, but it will be REWARDED by another direct/indirect bailout.

Talk about making peaceful revolutions impossible and violent ones inevitable...

If we're taking bets (and golly aren't we betting it all on this roll??)  I bet they choose this route.  Cry

And they'll bank on the people settling for cheetos and american idol for a few more years.  And they will be right.

stevem's picture
stevem
Status: Member (Offline)
Joined: Apr 22 2008
Posts: 5
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!

Cincinnati Law Review:

The Article concludes by considers whether the mortgage banking industry, in creating and embracing MERS, has subverted the democratic governance of the nation’s real property recording system.

 

 

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1469749

dshields's picture
dshields
Status: Platinum Member (Offline)
Joined: Oct 24 2009
Posts: 599
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!

i have never studied the mortgage market in depth so i do not understand all the implications of this development.  I understand they used the MERS to assist in the creation of structured securities like the now famous junk CDOs of a few years ago.  but, what are the implications of JPM pulling out now ?

 

dshields's picture
dshields
Status: Platinum Member (Offline)
Joined: Oct 24 2009
Posts: 599
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!

did a little digging and found this thing that says jpm dumped mers 2 years ago.

http://www.cnbc.com/id/39653903

 

SteveW's picture
SteveW
Status: Gold Member (Offline)
Joined: Jan 21 2010
Posts: 490
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!
machinehead wrote:

Benny, we've got a problem. Or better to say, your bankster clients have got a problem. Surprised

You mean there was improper conveyancing and title registration that flouting existing law! I'm shocked, positively shocked.

Obviously the law needs changing, just as it was when Citigroup broke Glass-Steagle. What good are the laws if they interfere with making a buck.

yobob1's picture
yobob1
Status: Silver Member (Offline)
Joined: Apr 20 2009
Posts: 132
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!
machinehead wrote:

 

If Bank of America follows JPMorgan, MERS may be headed for the scrap heap -- and so may trillions of dollars worth of MBS!

Benny, we've got a problem. Or better to say, your bankster clients have got a problem. Surprised

There will likely be a considerable pressure to force the banksters to repurchase a whole bunch of crap.  Not sure of the accuracy, but heard on the radio that even the Fed wanted some repurchased.  Considering that it will in all probability be the worst performing of the  (AAA + as originally rated by Moodys, but now barely worthy of an F- ) stuff coming home to roost, it all boils down to cash flow issues of biblical proportions boiling from the bottom up - the inevitable result of a trickle down hitting the super heated mortgage rocks below.  Naturally this is an inflationary event.  Laughing

Pimco, NY Fed Said to Seek BofA Mortgage Repurchases

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aDEGWHNeQvIw

 

rickets's picture
rickets
Status: Silver Member (Offline)
Joined: Jun 8 2009
Posts: 238
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!

Just to play devil's advocate - I will suggest that the Real Estate market - specifically how transactions are handled (title transfer/deeds/mortgage paperwork) is in the dark ages.  Its simply amazing how inefficient the entire market is relative to every other sector of the economy.  This fraud in the way paperwork is handled should finally launch a massive overhaul to the corupt system of real estate.  Sorry real estate brokers - you do not deserve a fraction of what you make - - -it should be almost fully automated.

Further, while the paper work is a mess and full of fraud, in the end common sense will likely prevail in court.  If I am paying my mortgage to Wells Fargo, and living in a house that no one else is claiming they have a right to live in, then guess what, the courts are going to say I still need to pay the mortgage to Wells Fargo - - - no, they are not going to just poof forgive my debt as many articles regarding this topic have naively stated.

Now, regarding the liablility of those who packaged the mortgages together without the proper analysis (lying in the prospectus) - well they are in trouble.  However - -- the net net to the economy is the same as simply marking everything to market should they have to buy this crap back.  While that is a huge deal, its really left pocket to right pocket for the overall system.  I would wager heavily even if they take these mortgages back that the mark to market rules would continue to be put on the back burner like they are now. 

Again - just playing devils advocate here.  I dont think this is anything that will break down the system and cause masses title issues.  What it might mean is that MBS originators may be holding a bag of crap. 

ashvinp's picture
ashvinp
Status: Gold Member (Offline)
Joined: Jan 20 2010
Posts: 412
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!
rickets wrote:

Just to play devil's advocate - I will suggest that the Real Estate market - specifically how transactions are handled (title transfer/deeds/mortgage paperwork) is in the dark ages.  Its simply amazing how inefficient the entire market is relative to every other sector of the economy.  This fraud in the way paperwork is handled should finally launch a massive overhaul to the corupt system of real estate.  Sorry real estate brokers - you do not deserve a fraction of what you make - - -it should be almost fully automated.

Further, while the paper work is a mess and full of fraud, in the end common sense will likely prevail in court.  If I am paying my mortgage to Wells Fargo, and living in a house that no one else is claiming they have a right to live in, then guess what, the courts are going to say I still need to pay the mortgage to Wells Fargo - - - no, they are not going to just poof forgive my debt as many articles regarding this topic have naively stated.

The modern RE/mortgage market is a prime example of how efficiency can be a very bad thing. Hell, you can extrapolate that to financial markets in general. The US economy has made "efficiency" its one and only goal, sacrificing stability and any sense of equality in the process. So now, the paper behind these worthless assets can be a huge "mess and full of fraud", but the hell with equal application of the basic legal rules, because that would go against "common sense".

The bank fraudulently originated the loan, illegally subverted local/state recording laws in the securitization process, fraudulently sold many of these opaque, badly-rated MBS to investors, held the economy hostage to make the taxpayers eat their losses and then committed more fraud to cover up their earlier frauds and reckless behavior... all in the name of efficiency! How much more destructive crap do they have to do before we stop defending them and bailing them out?

rickets's picture
rickets
Status: Silver Member (Offline)
Joined: Jun 8 2009
Posts: 238
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!

ashvinp - the way these loans were packaged and the reasons behind the fraud in many cases was because the process is so cumbersome and inefficient.  In al parts of real estate - from mortgage loan details to real estate docs the process is almost entirely hand done.  There is an utter lack of efficiency and accuracy because they dont use common databases and require so many different people doing the things that one person could do in 5 minutes in a more automated industry.  This lack of efficiency leads lenders to cut corners.

ashvinp's picture
ashvinp
Status: Gold Member (Offline)
Joined: Jan 20 2010
Posts: 412
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!
rickets wrote:

ashvinp - the way these loans were packaged and the reasons behind the fraud in many cases was because the process is so cumbersome and inefficient.  In al parts of real estate - from mortgage loan details to real estate docs the process is almost entirely hand done.  There is an utter lack of efficiency and accuracy because they dont use common databases and require so many different people doing the things that one person could do in 5 minutes in a more automated industry.  This lack of efficiency leads lenders to cut corners.

The legal system shouldn't be set up to make sure lenders can originate and securitize as many loans as possible for the sake of short term profits. What we want is a system that limits these types of transactions to those that conform to adequate lending standards, reserve requirements and rules regarding perfection or assignment of security interests. By making the mortgage process "more efficient", we are essentially incentivizing a more speculative housing market by lowering the costs of lenders.

But to be fair, I don't think increasing federal regulation of the mortgage market is necessarily the right thing to do, because of unintended consequences, corruption and the ability of lenders to circumvent existing rules (as they have so aptly done in the last decade). I essentially view these problems as a function of too much complexity, and so ultimately the only "solution" is to reduce economic complexity.

jhart5's picture
jhart5
Status: Bronze Member (Offline)
Joined: Jul 25 2009
Posts: 89
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!

Economics Edge - Sum more splanin' to do 

This whole bank mess has turned into a surreal and bizarre affair. Yesterday the New York Fed along with PIMCO and BlackRock announced they are filing suit against Bank of America in an attempt to get them to repurchase Mortgage Backed Securities (MBS) that have turned bad. The irony of this lawsuit runs as long as the river Nile. For starters, BlackRock just happens to OWN 5.35% of BAC, they are the largest shareholder of Bank of America! Thus they are in effect suing themselves!?! But wait, BAC also happens to be the largest owner in BlackRock with a huge 34% – 47% stake, depending upon the source cited. And if that relationship isn’t bizarre enough, consider that the New York “Fed” is really a private institution that is owned by the banks, the largest shareholders of the “Fed” are the large Primary Dealers of which BAC is one of the biggest! In short, BAC also owns a portion of the New York Fed.

This incestuous relationship is not a minor point, nor did it come about by accident. There are very serious games afoot here and ultimately I believe that this suit is most likely some sort of distraction that is leading ultimately to the sacrifice of another institution or two and most likely is a setup for another round of public fleecing by these private criminals who are absolutely robbing America blind. Don’t be fooled for a second into believing they are finally doing the right thing – absolutely not fooling me. Just look at the fact that PIMCO has been buying up MBS over the past couple of months while simultaneously talking about overpriced treasuries. Connect the dots and you will see that something contrived is occurring and that it is leading somewhere… where? I’ll bet we find out at the height of fear – again.

So how exactly does that work, owning one another like that? Is it okay for me to create “Nate, Inc.” and sell you stock which you buy through issuing your own “You, Inc.” stock? In other words, we could simply do a stock swap and both claim to be worth whatever we want? Is that okay?

Will we ever learn the lesson that what’s most important in nearly all aspects of running a country is WHO controls the power to create the supply of money? Sigh.

This issue of foreclosure title handling is simply the tip of a HUGE iceberg that can and probably will wind up involving nearly every retirement fund and investor who has purchased MBS. In fact, it will run to the entire spectrum of how debt is securitized – all MBS, plus securitized Commercial Real Estate debt, Auto debt, credit card debt, all of it.

jhart5's picture
jhart5
Status: Bronze Member (Offline)
Joined: Jul 25 2009
Posts: 89
Re: JPMorgan Pulls Out of MERS! AH-OO-GAH!

Big banks, hedge funds hide roles in foreclosure schemes - Beyond Belief

Huffington Post Investigative Fund - By Fred Schulte

Nearly a dozen major banks and hedge funds, anticipating quick profits from homeowners who fall behind on property taxes, are quietly plowing hundreds of millions of dollars into businesses that collect the debts, tack on escalating fees and threaten to foreclose on the homes of those who fail to pay.

The investors, which include Bank of America and JPMorgan Chase, have purchased from local governments the right to collect delinquent taxes on several hundred thousand properties, many in distressed housing markets, the Huffington Post Investigative Fund has found.

http://www.huffingtonpost.com/2010/10/18/the-new-tax-man-big-banks_n_766169.html

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments