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The Banks’ Worst Nightmare: Homes Given to Borrowers in Utah - FDL

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WillyT Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:16 PM
Original message
The Banks’ Worst Nightmare: Homes Given to Borrowers in Utah - FDL
The Banks’ Worst Nightmare: Homes Given to Borrowers in Utah
By: David Dayen
Monday January 17, 2011 9:21 am

<snip>

The Salt Lake Tribune ran a story focusing on some rulings in that state that essentially gave homes back to borrowers because nobody could figure out who owned them or who had the right to foreclose.

A Utah court case in which the owner of a Draper townhouse got clear title to the property, even though he still owed $132,000 on it, raises new legal and financial questions about a property-records database created by mortgage bankers.

The award of a title free of liens means that whoever owns the promissory note on the Draper property — likely a group of faraway investors — no longer has the right to foreclose to collect on a delinquent loan. Indeed, the townhouse owner has sold the property and kept the money. Those who own the promissory note probably don’t even know what occurred.

Decisions such as the one 3rd District Judge Glen Iwasaki handed down in the Draper case could have a big impact as the state wends its way through hundreds of lawsuits involving foreclosures, loans on properties for more than they’re worth and predatory lending practices that led Utahns to lose their homes as the real-estate bubble burst.


This is all tied up with MERS, the online database that has stood in for the land records system in as many as 60% of the mortgages in America over the past decade or so. As we’ve seen, MERS is essentially a way for the largest banks to avoid recording fees, by naming them as the mortgagee on the original record and then transferring the mortgage and the note through their database. The problem is that MERS is named as an owner on loans in which it has no financial interest, and the judicial system doesn’t yet know how to manage that. This has confused the hell out of title insurance companies, who cannot determine who holds the note or even who can collect payments on it. As a result, in this case, the courts and the title company failed to figure any of that out, so they gave title back to the homeowner.

The attorney for the man in Draper, Utah, says he has won two other cases this way, and another attorney in Utah got a default judgment giving title to borrowers who owed $417,000 on a home.


<snip>

More: http://news.firedoglake.com/2011/01/17/the-banks-worst-nightmare-homes-given-to-borrowers-in-utah/

:wow:

:kick:
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Oceansaway Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:18 PM
Response to Original message
1. K&R...n/t
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Stuart G Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:19 PM
Response to Original message
2. K and R nt
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hobbit709 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:19 PM
Response to Original message
3. That will teach them to keep the paperwork straight.
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Javaman Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:22 PM
Response to Reply #3
6. Or to deal in bullshit tranches. nt
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KansDem Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 10:16 AM
Response to Reply #3
33. Agreed...
When we, as consumers, fail to keep our paperwork straight (i.e., credit-card statements, utility bills, mortgage/rent payments, etc), we take on additional fees, penalties, higher interest rates, lower credit score, have utilities shut off, etc. What makes these folks believe they shouldn't be held to the same standard they expect of us?
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Swamp Rat Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:20 PM
Response to Original message
4. k&r
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leftstreet Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:22 PM
Response to Original message
5. K&R
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Commie Pinko Dirtbag Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:24 PM
Response to Original message
7. Cue the Brave Defenders of the Poor Oppressed Rich in 3... 2... 1...
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phantom power Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:25 PM
Response to Original message
8. This is perfect:
This gets the case entirely backwards. When the homeowners signed the mortgage contract, they didn’t request that the bank transfer it multiple times improperly and then throw it into a legal gray area where nobody could determine proper ownership. They did not request that the banks involved use a private database of questionable legal standing instead of the land recording system that worked for hundreds of years. The banks made this mess. The homeowners may be profiting from the consequences (or maybe not; we don’t know the facts of the case), but those consequences came from the actions of the banks. The investors now have every right and responsibility to invalidate the securities. If the law worked as it should, the responsible party for this colossal fuck-up would pay the price.


:applause:
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CanonRay Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 09:10 AM
Response to Reply #8
29. The banks screwed it all up
they should pay the penalty. The sooner these too big to fail monsters go under, the better off we'll all be.
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molly77 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 09:53 AM
Response to Reply #8
30. Posts like these make me so glad that Obama is our president
It took a lot of courage when he vetoed the bill passed unanimously by the Senate to give the banks retroactive immunity for their crimes. He kept a LOT of people in their homes by doing that.
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upi402 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:30 PM
Response to Original message
9. Bring on the tort reform war again! n/t
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Qutzupalotl Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:33 PM
Response to Original message
10. A little bit of justice.
It sounds fair to me.

This won't come close to "balancing" the millions of people who lost their homes due to banks' greed and fuckups, but it's a start. I hope it sets a precedent.
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FreakinDJ Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:37 PM
Response to Original message
11. Look for the GOP to seek legislative remedies for Banks
to continue taking homes
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WillyT Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:39 PM
Response to Reply #11
12. And Look To The Democrats To...
I know what the Republicans are going to try and do, the Democrats OTOH...

:shrug:
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FreakinDJ Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 05:11 PM
Response to Reply #12
16. Will vote right along with them to Screw your average John E. Taxpayer
and they say the TeaBaggers are crazy ...
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defendandprotect Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 10:10 PM
Response to Reply #11
23. Agree -- a sure thing!
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David__77 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:42 PM
Response to Original message
13. What about those of us who are renters?
Where is our free property?
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jeff47 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 05:20 PM
Response to Reply #13
17. Get screwed over by a bank, and you might get some. (nt)
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Commie Pinko Dirtbag Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 05:49 PM
Response to Reply #13
18. ...liftoff! We have a liftoff!
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WillyT Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 05:50 PM
Response to Reply #18
19. LOL !!!
:spank:

:rofl:

:evilgrin:

:hi:
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David__77 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 07:54 PM
Response to Reply #18
20. Ah, not really.
I wasn't really being facetious. I think that broader solution is to implement policies that tend to reduce housing prices at this point, while providing relief for those who are upside down. I am not opposed to clamping down on the banks; in fact, I support large-scale receivership for them, and the implementation of a true national bank.
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Hissyspit Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:50 PM
Response to Original message
14. "nightmare scenario for the banks"
"This is essentially the nightmare scenario for the banks. These initial judgments have the effect of turning mortgage backed securities into non mortgage backed securities. If the note never transferred to the mortgage pools, then the investors and their loan servicers cannot foreclose and cannot collect payments. In response, the investors will surely try to put back the securities, which are essentially worthless at that point, on the banks from which they purchased them. And that’s when these enormous losses in the mortgage market go back to the banks. They don’t have enough money to deal with the repurchases."
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Citizen Worker Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-17-11 03:53 PM
Response to Original message
15. The banks and investors have no worries at all. The US taxpayer will make them whole regardless of
where said investor(s) live or the cost. And we'll be told that this is the free market working its wonders. Worse still, we'll accept it as a full and complete explanation.
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pottersvilleusa Donating Member (54 posts) Send PM | Profile | Ignore Mon Jan-17-11 08:46 PM
Response to Original message
21. Poor babies
We may have to pass the hat for the bankers.
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Thav Donating Member (336 posts) Send PM | Profile | Ignore Mon Jan-17-11 09:49 PM
Response to Reply #21
22. Again?
I thought we already did that twice. Maybe third time's the charm.
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Hamlette Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 01:38 AM
Response to Original message
24. Hey! That judge is my former law partner!
He's a great guy.

I wonder if I can get him to wipe out my mortgage . . . .
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mackerel Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 02:06 AM
Response to Reply #24
25. It's too bad that more of these cases can't be sorted out in a
court of law.
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grahamhgreen Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 12:40 PM
Response to Reply #24
41. Please send him some DU love!
The term "Your Honor" has never been more appropriate!
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Enthusiast Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 06:59 AM
Response to Original message
26. That's just beautiful.
I love it.
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elocs Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 08:00 AM
Response to Original message
27. Reality check here: the banks will get their pound of flesh, just from somebody else.
They always get their money some way. They will simply screw over somebody else to make up the difference, or they will go back to the government with a sob story and get billions there.

For every person who got their house a thousand others will be gouged or nicked to make up the difference, except their miseries won't make a big story.
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creon Donating Member (723 posts) Send PM | Profile | Ignore Tue Jan-18-11 08:44 AM
Response to Original message
28. rough justice
I guess that is a good way to describe it.

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sam sarrha Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 10:01 AM
Response to Original message
31. i cant wait to see the ads on TV by lawyers offering to search your title for $19.99..
:bounce: :party: :toast: :wow: :fistbump: :headbang: :woohoo: :applause: :rofl: :nopity:
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grahamhgreen Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 12:42 PM
Response to Reply #31
42. OMFG!
My buddy is an out of work title examiner...
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meow2u3 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 10:02 AM
Response to Original message
32. If that won't teach the banks a lesson, what will?
Homeowners to banks: thou shalt not steal, especially by means of elaborate deception. Got it?
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Roland99 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 10:35 AM
Response to Original message
34.  RICO Case in Kentucky ( Class Action)...(MERS-related)
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earcandle Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 11:09 AM
Response to Original message
35. Go Utah!
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DeSwiss Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 11:28 AM
Response to Original message
36. They were trying to squeeze.....
...the last juice out of the consumer and didn't realize that it was their own tail they had in their clutches.


- Ha-ha. Capital!

K&R
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benld74 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 11:43 AM
Response to Original message
37. MERS is a freaking data base!
I work IT for a fed agency that deals with loans. The agencies have MANY data bases, containing borrower information, loan information, title information etc.
The data base itself DOES NOT own the damn note on the property. Never meant to, never should, it is a non-entity. Even the feds didnt screw up this part of the process!
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poverlay Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 12:10 PM
Response to Original message
38. Lol.. FREE HOUSES FOR EVERYBODY! ..n/t
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CoffeeCat Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 12:27 PM
Response to Original message
39. The banks will use this to justify more bailout billions..
I sense the banks hankering for another cache of taxpayer billions.

There's no way the homeowner wins against the banks. The banks bought our
Congress, and those elected officials will find a way to screw us and protect
their generous bankers.

A judge here and there might rule in favor of a homeowner...but we'll never see
justice.

My fear is that these few-and-far-between cases, in which homeowners win, will
be used to justify another bailout windfall for the banks.

Can't you just see it? I think it's coming sooner than we think.
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FredStembottom Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 12:37 PM
Response to Original message
40. I would thoroughly enjoy an avalanche......
Edited on Tue Jan-18-11 12:37 PM by FredStembottom
....of these lawsuits!
:spray::applause: :woohoo:
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julian09 Donating Member (418 posts) Send PM | Profile | Ignore Tue Jan-18-11 01:36 PM
Response to Reply #40
43. How many banking entities can write off same mortgage
and how many times does taxpayer have cover the losses of a single mortgage?
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DesertDiamond Donating Member (838 posts) Send PM | Profile | Ignore Tue Jan-18-11 01:49 PM
Response to Original message
44. Exactly what I've been wanting to see all along!
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ladywnch Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-18-11 02:46 PM
Response to Original message
45. come on now. when you've made your living off of screwing
people in the backside it's a real bitch to be the one bent over the barrel...... a little sympathy is in order.


Now, if you'll excuse me, my order of party hats and noise makers has arrived.......the champagne is late.
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