Comments on: Does MERS Registration and Mortgage Fractionalization Extinguish Mortgage Rights?

By: coysami

coysami — Thu, 01 Oct 2009 21:08:55 +0000

I’d like to point out that the villains in all this are not going to suffer. All these mortgage backed securities were ‘insured’ against default using credit default swaps, many/most of which were issued by AIG, now a wholly owned subsidiary of the US Treasury. In brief, we will all end up making the security owners whole. Maybe that’s why Paulson was so quick to try to bail out the banks, because even the US Treasury can’t afford to guarantee the value of the entire mortgage debt in the US.

This conversation is so interesting…my previous comments about nonrecourse loans was taken from newspaper articles early on which claimed that most mortgages were nonrecourse.

By: Cynthia Kouril

Cynthia Kouril — Thu, 01 Oct 2009 17:32:53 +0000

What about all of the foreclosures that MERS has already implemented. Will the people foreclosed upon be able to go to Court and challenge the foreclosures since MERS had no standing in the first place? And the big question, whatever the obvious legalities of this, won’t we get judicial nullification of the law once it gets to this hypocritical Supreme Court?

In some jurisdictions, you might be able to reopen the case or appeal based on and interveneing chnage in law.But in general, no. You need to present all your defenses inthe first instance.

A lot of homeowners who were in default on their loans. didn’;t even contest their forclosures.

I have no clue what SCOTUS would do, nor why this would be a constitutional issue for them to decide. Not evey case is actually approapiate for SCOTUS review

By: Cynthia Kouril

Cynthia Kouril — Thu, 01 Oct 2009 16:59:12 +0000

ayyup!

By: letsgetitdone

letsgetitdone — Thu, 01 Oct 2009 16:08:27 +0000

If so, won’t the banks finally have to acknowledge their insolvency and won’t the Administration finally have to take them in resolution?

By: letsgetitdone

letsgetitdone — Thu, 01 Oct 2009 16:04:45 +0000

That’s “rich!”

By: letsgetitdone

letsgetitdone — Thu, 01 Oct 2009 16:00:20 +0000

Great analyses Cynthia and Hugh. It does my heart good to read that the smart operators may have outsmarted themselves.

I have another question. What about all of the foreclosures that MERS has already implemented. Will the people foreclosed upon be able to go to Court and challenge the foreclosures since MERS had no standing in the first place? And the big question, whatever the obvious legalities of this, won’t we get judicial nullification of the law once it gets to this hypocritical Supreme Court?

By: Arbusto

Arbusto — Thu, 01 Oct 2009 15:20:50 +0000

I wonder if foreclosed, ex-home owners could sue under right of rescission, or some such, INAL. Also would this MERS debacle be applicably in Trust Deed States, such as California. Something for ACORN to get its teeth into?

By: Cynthia Kouril

Cynthia Kouril — Thu, 01 Oct 2009 14:27:37 +0000

if anybody has a mortgage in NY, specifically in the NYC LI region that 1) has the mortgage part in MERS adn 2) has a non-recourse promissory note (defined as a promissory note that says that the lenders only way to collect is by taking your house) and would be willing to share a copy with me, I would love to have a real world example to use in a post.

I will redact all your identifying info, or you could redact it yourself before sharing with me.

You can email it at cynthiakouril at “geee”mail dot come (written that way to defeat auto spammers)

By: Cynthia Kouril

Cynthia Kouril — Thu, 01 Oct 2009 14:24:06 +0000

Actually, I just went and looked at the promissory note for a underwater homeowner that I am advising. It was NOT a no recourse note. In fact it read just like an unsecured promissory not and had a paragraph at the ned which waid that IN ADDITION to allthe rempayment rights under the note, the borrow was also giving a mortgage to provide additional secuirty for the note.

This is fascinating in that it would mena that theoretically in the event that there was a foreclosure, the bank could go after the homwoener’s other assets if the house fetched less than the outstanding amount on the note when sold at auction.

That form o f note protectes that back in the event of the housing bubble collapse!

Of course, ONLY if the homeowner is stupid and does not contest the forclosure if their mortgagee has been seperated from the note.

If they are seperated, in theory, the homeonwer declares banrupcy, lists the house as exempt property –which a house can be–and the note is paid off at whatever pennie son the dollar the rest of the unsecured creditors are getting.

If that is correct, it would mean that the value of ALL those mortgage backed securities is ZERO, which means a lot of pension funds are screwed.

By: Cynthia Kouril

Cynthia Kouril — Thu, 01 Oct 2009 13:41:04 +0000

I think it would 1) depend on the language of the indiviual note and 2) depend on each states own laws