During the housing boom, lenders passed around mortgages as if they were whiskey bottles at a frat party. Notes were lost, destroyed, sold into multiple pools. Mortgages were not recorded and exorbitant fees were collected by the big firms on Wall Street.

Now that the bubble has burst, “lenders” are trying to collect on loans they do not own, in most cases never lent a dime on the transaction, have no right to, or were paid 30 times over in bailouts, insurance, credit default swaps, etc.

They are doing this because they can. They are steamrolling the courts rocket dockets because hardly anyone is contesting their foreclosures. Think about it. If you could go into a court and file thousands of foreclosures a week, and only a mere 10% challenged the authority of the foreclosing entity, what would you do if you were the greedy bankster?

The crises is even worse in non judicial states…

In almost every case these pretender lenders do not and did not own the loan. Almost all loans during the boom were securitized and it was investors that put up the money. Not the banks.

Now these “pretender lenders” are trying to steal the homes by filing fraudulent assignments, by the thousands, to process the foreclosures.

Don’t believe me? See for you yourself.

http://4closurefraud.wordpress.com/

4closureFraud

See also:
livinglies.com
http://livinglies.wordpress.com/foreclosure-defense-forms/people-players-and-resources/mers-mortgage-electronic-registration-systems/

Congress will probably preempt any states that start erasing mortgages though.

Somebody correct me if I am wrong, but in non judicial forclosure states can’t the homeowner sue the lender and do all this “prove the note” stuff?

I thought non judicial forclosures only went forward if the homeowner did not go to court to get a restraining order. I realize this shifts the burden of initiating a court action onto the homeowner, but I THINK homeowners have some sort of judicial relief availbale–if facts warrant it–in evey state.

Please correct me if I am wrong about this. I am not admitted in all 50 states , nor have I attempetd to (yet) to research this point.

You are looking at the total fianacial collapse of those kinds of institutions. This is a disaster.

If my theroy is correct, and I almost wishit wasn’t, it would mean that all mortgages that had the interst in land separated from the promissory note AND had the promissory note included in a pool that was divided into traunches and those traunches sold to different investors would have broken the privity of contract needed to make the promissory note enforcable.

We are not there yet, we still need a test case for that theory, but if I’m right. All of those debts would just evaporate.

So, you could end up owneing your house free and clear which is nice, but it might be a nightmare if you ever wanted to sell it. I cannot imagine how a title company would deal with it.

There will be a series of posts to develope this idea. I’m going to do a Marcy Wheeler type trip into the weeds, so it will take many short posts to avoid confusing everyone, including myself.