Banks Are Tanking After Suffering A Big Loss At The Massachusetts Supreme Court

[swag]

Source: Business Insider

The Massachusetts Supreme Court just dealt a negative ruling to the banks in the closely-followed Ibanez case, which challenged securitization standards. It's pretty straightforward: The banks didn't have the proper parwork to foreclose, says the court. Hence, no legitimate foreclosure.

Tracy Alloway at FT has a good overview of what was at stake here, but essentially it comes to question of whether banks have standing to foreclosure.

We'll post the ruling as it gets out.

Read more: http://www.businessinsider.com/bank-of-america-ibanez-case-2011-1#ixzz1AMlN1vwj


Read more: http://www.businessinsider.com/bank-of-america-ibanez-case-2011-1

[mbperrin]

1. Good news! Laws still actually apply to companies!

There's nothing new about requiring proper information, procedures, and forms to transact contractual business. It's just that the banks were too cheap and too lazy to want to do that.

So, any that fail are suicides. I don't want to hear one word about them being oppressed or hampered in any way. They did this.

[gratuitous]

16. Well, the Supreme Court hasn't weighed in yet

So it's yet to be seen whether you can lose your home because somebody at a too-big-to-fail financial institution decides you're in default. There's a pitched battle going on with minor skirmish victories on both sides. But every little win (and this is one) helps.

[DeSwiss]

37. Seeing how this is involves state law.....

...bearing upon transactions within the state it does not fall under the interstate commerce clause. And as such is not an issue which violates any federal prerogatives that I can see. The courts are simply saying you don't have the paperwork to prove you can foreclose. Therefore, I don't see any standing to appeal at the federal level. Not unless the banks can prove that their "rights" under the Constitution and Bill of Rights as a "legal person" have been violated in some way. And I can't see how that's possible because they knew what the laws and procedures involving real estate transactions were and what was required by the state of Massachusetts, prior to committing these fraudulent acts.

In the end it was the lawyers and politicians who came up with these complex and arcane rules and procedures primarily to frustrate the little guy so he doesn't understand what s/he's signing half the time, and to insure their client's legal position(s) of ownership until the debts are paid. But in this case it all turns upon two different sets of complex business recording procedures - one involving real estate and the other involving banking/securities.

State legislatures have rightfully enacted laws governing how real estate transactions must occur within their jurisdictions and the methods upon which such transactions would be considered a "legally recorded land transaction." Some securities procedures and laws may be enacted by a state, but they are almost always subject to federal oversight since they generally involve interstate entities who fall within the jurisdiction of the SEC and other federal agencies. So while securities rules, regulations and laws may indeed ultimately be within the purview of the federal courts, all these banking entities must still take into account how to operate (legally) within the various states where they do business. At least that's the way it's done in non-fascist states.

- So if they screwed it up due to a failure to follow procedures, they have a saying that they like to pull out on Joe Schmoes whenever something like this happens to us: caveat emptor!

K&R

[molly77]

40. Shame it is the exception rather than the rule.

[Oceansaway]

2. K&R...n/t

[xchrom]

3. Recommend

[dipsydoodle]

4. Such issues

can't really occur in the UK. All details of title and charges against properties are registered at the Land Registry Offices for legal title and hence proof. I think you have similar in the US but seemingly these charges have not been registered which removes the ability to foreclose - nothing to foreclose on.

[tridim]

6. We have that law here too, the banks just choose not to participate.

I'm foreclosed and there is still no title transfer (from 2003) in the public record. It never existed.

[dipsydoodle]

7. Sympathies to you.

Here without proof of title by a bank whatever there would be no case to answer.

[No Elephants]

18. It can occur in the UK, same way it occurred here. After centuries of being

careful, banks got sloppy.

btw, the issue usually is losing the note with the original signature of the borrower. A note with an original signature of the borrower is like a check signed by the borrower. the borrower signs only one originally per loan.

The lender does not file it. The lender files the mortgage that secures payment of the note, but the note with the original signature of the borrower is treated like money and put somewhere very safe--and fireproof and leakproof. I would bet the same is so in the UK.

However, you need a note with an original signature to show you are entitled to the mortgage and to foreclose for failure to pay the note in accordanoe with the terms of the note.

A note reflects a debt of money. It has nothing to do with title. The mortgage is an interest in real estate given as collateral. Filed or not, it does affect title, as between mortgagor (borrower) and mortgagee (lender). However, it must be filed in order to affect third parties, like a new buyer or someone who give a second mortgage. Again, I bet the UK is the same.

In this story, we have a different problem (or maybe another layer of problems, when mortgages were transferred en masse, MAYBE in connection with some of the high falutin stuff, like selling shares in a batch of mortgages to the public, same way as you would sell stock. If so, the banks would be serving as indenture trustees for the public shareholders.

IOW, we are not in Kansas anymore, if Kansas is the simple one borrower/mortgagor and one lender/mortgagee paradigm.

[muriel_volestrangler]

28. Not necessarily - I can see no mention in the story of what the US version of the Land Registry is

which make it look rather as if US (or some state, anyway) law was allowing the transfer of a charge on land just with the signing of forms by the 2 firms concerned. In Britain, any land can be registered at the Land Registry (and all sales in at least the past 20 years are bound to be, I think), and any charge on that land has to be registered there too; and, from what I can tell, any transfer of such charges. So the validity of the transfer would have been checked at the time, I think.

[jeff47]

34. The trick is there is no transfer

Selling a mortgage is not selling the property, so it doesn't have to be registered. AFAIK, in either country. Although I admit I'm not that familiar with UK's procedures.

Now, back in the old days they did indeed register the transfer of the mortgage with the county to protect their interest. But in the US there's a filing fee to do so, usually in the range of $30-60. So banks stopped registering the transactions to avoid paying the fees.

Registering the transaction required having a copy of the note, so the notes did not have a chance to get lost - they were handed over and then the transaction was registered. By stopping the registrations, the banks opened the possibility of the mortgage getting transferred without the note, which could then be lost - why keep around a note for a mortgage you no longer own?

[muriel_volestrangler]

35. I'm pretty sure the charge on the land has to be registered, in England and Wales

Since 1990 it has been compulsory for all land to be registered upon transfer. At present some land is registered and some is unregistered, although all land should eventually become registered. However, this will take a considerable period of time as some land is rarely, if ever, transferred. By definition, details of unregistered land have not been registered at the Land Registry. Therefore, in order to establish good title a conveyancer must check the title deeds for details of the property and ownership. However, rights over unregistered land are registered in the land charges register. The most common types of land charge registered are class C(1) land charges and class F land charges. Class C (1) charges relate to second and subsequent legal mortgages i.e. those where the lender does not hold the title deeds. These are also known as puisne mortgages. A class F land charge relates to the notification of a spouse's interest in a property under the provisions of the Family Law Act of 1996. Details of easements that are detrimental to the property, e.g. a right of way over the land, are also registered in the land charges register. Easements were dealt with in last week's column.

In the case of registered land, the details of the property will, by definition, have been lodged at the Land Registry. The Land Registry holds three registers in respect of registered land. The property register gives details of the property itself e.g. its title number and a plan of the property as well as information regarding easements that are beneficial to the property. The proprietorship register gives the name and address of the property and the nature of the estate, e.g. freehold or leasehold. This register also sets out the class of title - absolute, good leasehold, possessory or qualified. The charges register records any charges over the property such as the rights of second and subsequent mortgagees (puisne mortgages) and spouses' interests notified under the provisions of the Family Law Act of 1996. Consequently, it can be seen that the charges register holds details of charges over registered land, whilst the land charges register holds details of charges over unregistered land. Details of the property and proprietorship in respect of registered land are held in the property and proprietorship registers. In the case of unregistered land, these details are contained in the title deeds.

http://www.mortgagestrategy.co.uk/question-s-of-land-registration/82380.article

[JDPriestly]

42. muriel, in the States, it depends on state law.

Usually, everything has to be recorded in the County Recorder's Office or its local equivalent. We have mortgage states and trust deed states, so the details of the law differ from one state to the next.

[tridim]

5. The charts for the TBTF banks are beautiful today.

I love the smell of death spirals in the morning.

[asjr]

8. Let's hope they don't go to SCOTUS!

[molly77]

10. Obama vetoed the bill passed by the Senate unanimously

to give the banks immunity for all their crimes. That took courage.

[Kber]

14. I'd momentarily forgotten that...

thanks for the reminder.

[Demeter]

19. That Took Elizabeth Warren

She must have caught him in a weak moment.

[No Elephants]

20. Good for Obama. I hope he stays firm on that.

[EstimatedProphet]

9. Best news of the day

[No Elephants]

11. We'll post the ruling as it gets out. Ruling not out, yet banks are "tanking" already bc of it?

Seriously?

Hello, having a bank stock price go down slightly does NOT mean the bank itself is tanking, ffs, only that some investors lost a little.

RW = liars.

[swag]

12. Well, the later Bloomberg story was better

http://www.bloomberg.com/news/2011-01-07/us-bancorp-wells-fargo-lose-pivotal-massachusetts-foreclosure-case.html

[No Elephants]

25. It is, thanks, but does not affect my comment about the lying headline of the 1st story.

[malaise]

13. Great news

Rec

[boston bean]

15. So I wonder how people will be able to sell their homes, if there is basically no title.

Also, I think the solution to this may be a required modification of every home in foreclosure, (maybe the banks will be begging for that after this ruling) and in return the bank gets the title to the home.

I pray they don't just pass some law saying that banks don't have to prove they have the title.

[No Elephants]

23. Exactly. If the mortgage is on record, it is a cloud on title, no matter what.

I wonder what the full opinion says.

[mudplanet]

44. What the hell is title insurance for if not this?

How are title insurance companies going to operate if people can't show proof of clear title?

[girl gone mad]

31. Not what the judgment says.

I only had a chance to read through the opinion quickly, but the judge did say that the assignments do not need to be in recordable form before the foreclosure. In other words, the banks can go back and fix this problem but it is going to be very, very costly for them.

[unblock]

17. as a financial services professional, i've defended the banks against silly attacks

but i got no sympathy for them on this one.

i've personally worked my ass off to make sure contracts are proper, all the i's are dotted and so on, fully expecting that it all falls apart if you don't get the details and formalities right.

if they screwed up, they deserve to lose.

[No Elephants]

24. Usually, It is not a detail problem, but a note storage problem.

You can have the most impeccably written papers, but, if someone loses a check or cash or an originally signed note, someone is SOL, unless the other side is very generous AND accomodating. Please see also, Reply 18.

[unblock]

26. right, i meant to include all manner of "details"

including operational ones.

the banks chose to view proper record maintenance and other aspects of loan/bond administration as a cost to be minimized, rather than as an insurance policy to make sure the loans behave financially as they modeled them when they originated or bought them.

i'm sure their models didn't account for inability to foreclose due to sloppy record-keeping or fraudulently signed documents or other operational/legal screwups on the banks' part.

[snappyturtle]

43. I'm reading your reply and in an honest world I'd say, sure, it could

be a storage problem. But, I think that's way over thinking it....these robbers were so rushed to bundle, 'secure', insure and pass the 'old maid' along to a group of equally greedy investors, ad infinitum. NOW, they've been caught. It was sloppy.....then when foreclosures popped their ugly heads up....opps! no note. Who'd a thunk? Maybe I'm wrong but..........imho

[WillyT]

21. This Is Big !!! - K & R !!!

:wow:

:kick:

[Tippy]

22. K&R

[WillyT]

27. Kick !!!

:kick:

[PBS Poll-435]

29. Down (and climbing back) about 1.5-1.8%?

HUGH!

SERIES!

[girl gone mad]

33. It's going to cost these banks more than 2% of market cap to correct.

Guess it depends on how quickly they manage to dump these costs onto the taxpayers, too.

[DainBramaged]

30. If there is ONE bank I HATE more than any other it is Wells Fargo

When my beloved ex became disabled many years ago, she had a car loan she was paying 8% on and after months of paperwork and wrangling they refused to reduce her interest rate. She fixed them.

[Poboy]

32. Recommend.

[JBoy]

36. A concept a 5yr old would understand and think is fair:

A big kid can't just "take" something from a smaller kid unless he can prove that it's his.

[valerief]

38. But the way the grown-up world works is the grown-up takes something from another

one, says, "It's mine!", and that's the end of the story. Well, if the first grown-up has $$$$$$$.

[Mariana]

39. That's only because the big kids don't get to make the rules.

The ADULTS make the rules, and make the big kids (and small ones too) obey them.

The natural tendency of many of the big kids is to take whatever the hell they want from the smaller kids.

[defendandprotect]

41. K/R

[Swampguana]

45. Banks are the root of all evil today

[TBF]

46. Some of us realize it is the Capitalism -

the bad actor script seems easier for some to accept though. Still searching for the "good capitalism" ...

[Swampguana]

47. Does good capitalism exist?

Or would it eventually always end up like this?

[TBF]

50. That was my point - it would always end up like this. Or worse. nt

[affrayer]

48. This Is Unbelievable!

It's pretty straightforward: The banks didn't have the proper parwork to foreclose, says the court. Hence, no legitimate foreclosure.

The thing that really boggles the mind is that the courts took this issue seriously in the first place. The evidence clearly shows the banks went wild in committing millions of instances of FRAUD, CONSPIRACY TO DEFRAUD, FORGERY, PERJURY, AND OTHER CRIMES.

In something called http://www.charlotteobserver.com/2010/06/18/1508309/mortgage-case-twist-bankers-and.html">"Operation Stolen Dreams" prosecutors have lined up over 1,200 defendents national wide of bank employees who criminally acted in improper bank foreclosures.

And that's only the tip of the ice berg...

[SmileyRose]

49. 2% is tanking??

as in CEO and major stockholders WON'T walk away with billions?

[Odin2005]

51. Where is that pic: "JUMP, YOU FUCKERS!"?