The economic meltdown is revealing itself to be a series of events set off like dominoes cascading to their demise.
The latest to fall informs us of issues regarding home foreclosures.
Not only did foreclosures hit a record high in September 2010 but public awareness also peaked with inquiry into potential errors on the part of the banks.
I am not an expert on this subject but from recent study will attempt to give a basic overview of this vital personal-finance issue.
Dubbed "foreclosure-gate" and "fraudclosure", banks are "under the gun" by light that shines on their mortgage-banking practices.
Due to reports of "robo"signers" (signing foreclosure documents without actually reading them), several large banks initiated temporary document-processing freezes.
A technical procedural misstep would be bad enough but, in fact, the robo-signing at issue diverts attention from the elephant in the board room: Systemic flaws.
The banking industry's full-court-press homeownership advertising campaign of the early 2000' lured countless Americans to become "true believers".
The mantra of "real estate would only go up" seemed to hypnotize the masses.
Millions threw caution to the wind to exploit the real-estate gold rush.
On the front end, real estate agents and mortgage brokers gladly racked up larger-than-ever commissions and sometimes under-the-table lender bonuses; turning a blind eye to inflated income levels, fake home appraisals and other lies inserted in to mortgage underwriting documents.
In turn, word on the street was "all systems go" to those who otherwise would never qualify for a loan.
The rest is history.
Time has proven that many of these financial products were really designed to benefit the financial sector, not the little guy.
Wall Street bankers developed them while the government permitted them; a joyous joint venture! Most real estate professionals knew full-well of their clients' (often sub-prime) likely inability to repay over the long-term.
Bottom line: A defaulting loan and a home in foreclosure were ultimately worth more money.
However, the real estate bubble and collapse was just the tip of the iceberg.
At the heart of this story lies MERS the heretofore elusive brain-child of a group of elite bankers who in the early nineties aimed to streamline (speed up) the real-estate mortgage process thereby also avoiding traditional County Recorder title-recording fees.
MERSCorp Inc.
(Mortgage Electronic Registration System) was incorporated in Delaware in 1995.
MERSCorp Inc.
functions as a legal pass-through electronic "conduit", owns nothing and has no building or employees.
Surprise surprise, shareholders listed on its website are some the usual suspects and largest beneficiaries of the TARP bailout and global revenue in general: Bank of America, Chase, CitiMortgage, Inc.
, Fannie Mae, Freddie Mac, HSBC, SunTrust, and Wells Fargo.
Below is the best overview of MERS I could find by Christopher L.
Peterson, Associate Dean of Academic Affairs and Professor of Law, University of Utah, S.
J.
Quinney College of Law.
"MERS operates a computer database designed to track servicing and ownership rights of mortgage loans anywhere in the United States.
Originators and secondary market players pay membership dues and per-transaction fees to MERS in exchange for the right to use and access MERS records.
"But, in addition to keeping track of ownership and servicing rights, MERS has attempted to take on a different, more aggressive, legal role.
When closing on home mortgages, mortgage lenders now often list MERS as the "mortgagee of record" on the paper mortgage-rather than the lender that is the actual mortgagee.
The mortgage is then recorded with the county property recorder's office under MERS, Inc.
's name, rather than the lender's name-even though MERS does not solicit, fund, service, or ever actually own any mortgage loans.
MERS then purports to remain the mortgagee for the life of a mortgage loan even after the original lender or a subsequent assignee transfers the loan into a pool of loans that are ultimately sold to investors-a process known as securitization.
Although MERS is a young company, 60 million mortgage loans are registered on its system.
" (Now 62 million in 2010 - ed.
) Some of these 62 million homeowners are extremely concerned about the implications of MERS showing as mortgagee of record.
US lending laws state that only the owner of a loan can initiate a foreclosure and MERS cannot lawfully own mortgage loans! In addition, investors who purchased pools of bank loans called securitizations now question the accuracy of the ratings assigned to the loans at the time they purchased them.
Plus, the legitimacy of the same loan pool sold over and over again to different investors is also under investigation.
Serious questions remain given how MERS private governance of the nation's real property recording system quietly supplanted centuries-old property law without an act of Congress.
To date, class-action lawsuits against MERS are pending in California, Georgia, Kentucky Nevada, and Arizona.
Who knows, maybe big banks will be forced to let families stay in their homes as well as buy back deceptive loans they peddled to investors.
Should issues of incomplete and mis-information given to borrowers, lost hard-evidence of title ownership (broken chain-of title) and investor deception prove to be true; will such revelations serve to level the playing field between banks and the people? Time will tell.
Some analysts say more likely to happen is that President Obama, sometime after the mid-term elections, will sign the very same executive order he pocket-vetoed on October 7 to make it more difficult for families to bring suit against the banks.
This might include an official retroactive redemption of mortgage-banking sins and blessing going forward on MERS as the digital savior of the "old school" county-recording system of title.
October 20, 2010,in ABC News Today, Secretary of Housing and Urban Development Shaun Donovan said although reviews continue on foreclosure documentation problems regarding specific lenders and banks who might not be following the rules, there does not seem to be any "underlying systemic problems".
If you believe this...
I have a bridge I'd like to sell you!