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NY AG Schneiderman slaps a new lawsuit on Bank of America (BAC), JPMorgan (JPM), and Wells Fargo...

NY AG Schneiderman slaps a new lawsuit on Bank of America (BAC), JPMorgan (JPM), and Wells Fargo (WFC), charging them with "deceptive and fraudulent" foreclosure proceedings through MERS - the national mortgage electronic registry. "The banks created the MERS system as an end-run around the property recording system," he says. (PR)
Comments (22)
  • bbro
    , contributor
    Comments (9322) | Send Message
     
    When Schneiderman planning to run for Governor or Senator??
    3 Feb 2012, 12:40 PM Reply Like
  • deercreekvols
    , contributor
    Comments (5145) | Send Message
     
    As soon as Cuomo runs for President or gets tabbed for VP :)
    5 Feb 2012, 01:01 PM Reply Like
  • Alex S. Gabor
    , contributor
    Comments (224) | Send Message
     
    It is irrelevant. What is a better question is how many lawsuits is BAC contending with now and have they responded yet to the $500 Trillion in Claims filed against it by the International Bank Activities Reform Commisson Fraud suit being filed in the International Court of Justice?
    5 Feb 2012, 01:47 PM Reply Like
  • pokalolo
    , contributor
    Comments (318) | Send Message
     
    Another question is how much is the value of BACs CDS swap exposure to the EU an Greece as it is on the OTC exchange an kept off the balance sheet. looks like Greece has to scoot in March ! pok
    6 Feb 2012, 07:15 AM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    Only in N.Y. The state that put Hillary in office.
    3 Feb 2012, 01:03 PM Reply Like
  • deercreekvols
    , contributor
    Comments (5145) | Send Message
     
    Any other states going to get in on this or does NY get to collect all of the money when settlements are made?
    3 Feb 2012, 01:07 PM Reply Like
  • darko714
    , contributor
    Comments (20) | Send Message
     
    NY only gets NY money. Each state is obliged to make its own deal.
    3 Feb 2012, 03:05 PM Reply Like
  • Alex S. Gabor
    , contributor
    Comments (224) | Send Message
     
    There are still $5 trillion in fraudelent mortgages out there, most of them underwritten and marketed by BAC, aka Countrywide, aka Merrill Lynch, aka WAMU, and JPM, and WFC et al. Where are these banks going to get the money to pay the size of such claims as are being made internationally against them? That is the more appropriate question.
    5 Feb 2012, 01:50 PM Reply Like
  • WMARKW
    , contributor
    Comments (10250) | Send Message
     
    Another big question is whether/if by failing to file 70 million mortgage documents with the normal title processing entities, are the title histories not polluted? And can anyone so involved, adaquately prove ownership or claim against titles?
    3 Feb 2012, 02:02 PM Reply Like
  • darko714
    , contributor
    Comments (20) | Send Message
     
    If the states hadn't jacked up their recording fees to take advantage of the secondary market trading, none of this would have happened. Governments owe a fiduciary duty to the public to keep land records.. Using their power to raise recording fees and create a cash cow to support outrageous benefits to public employees is extortion.
    3 Feb 2012, 03:17 PM Reply Like
  • helplessobserver
    , contributor
    Comments (575) | Send Message
     
    As most of you know when you sign up for a mortgage there is lots of paperwork to sign. But there are only two important documents in the pile. They are the loan promissory note and the lien document, the deed of trust. With both documents in hand you can execute a foreclosure if a default has occurred. The note entitles you to the proceeds of the property sale, the lien document empowers you to force the property sale. A property loan you make that does not include these documents can make you a unsecured creditor. MERS in many cases separated these important documents and resulted in the wholesale fabrication of the necessary foreclosure documents - which is a criminal offense.
    3 Feb 2012, 03:27 PM Reply Like
  • WMARKW
    , contributor
    Comments (10250) | Send Message
     
    helpless....I would agree so long as the documents you have an hand declare you to be the mortgage holder and the lien holder.....but if such documents cannot be produced by the forecloser....then the courts should tell them to take a hike and go do their work before they come back. And, as you say, and as I agree.....if you postured yourself as the holder without support, then IMHO, you should be sued for fraud.
    3 Feb 2012, 04:42 PM Reply Like
  • David_Lucterhand
    , contributor
    Comments (5) | Send Message
     
    Seeing these lawsuits slapped on BoA and others reminds me of the article that I just read in the Financial Times about Capitalism in Crisis. I have yet to see anyone summarize the essence of the crisis and what to do about it as well as Hernando de Soto has in his January 30 FT piece when he cited the root cause as attributable to destruction of the knowledge required to identify and join parts of credit and capital profitably. He goes on to further describe the disconnect in knowledge between mortgage loans and liquid securities and other financial instruments and concludes by saying that until the knowledge system is repaired, neither US nor European capitalism will recover.

     

    In the early years of 2000, I was head of the Financial Sector Initiative funded by USAID in Kazakhstan. The project was tasked with designing a fixed income market that would provide financial instruments for ever growing Pillar II pension funds. To develop the mortgage market and subsequent issuance of Kazakhstan’s first mortgage covered bond, we sponsored a visit by Mr. de Soto to meet with counterparts and secure their buy in. At the conclusion of his visit, we received a request to translate his book, The Mysteries of Capital, into Russian which we did. President Nazarbayev kept his copy and distributed the others that we provided to the then presidents of Kyrgyzstan, Tajikistan, and Uzbekistan. At the time, the connection between recordation of property rights in registries that could serve as collateral for loans to free up equity for investment seemed pretty basic. Little did I realize that some nine years later, this basic tenet would evolve into Mr. de Soto’s being able to connect the dots that explain how we got into this mess and how to get out of it.

     

    And to WMARKW I can only say, quite possibly ownership claims against title will not be adequately proved.

     

    Read it the article below and another piece of the financial crisis will come to light along with regulatory failure, greed and the usual suspects.

     

    Knowledge lies at the heart of western capitalism
    By Hernando de Soto
    The world economy is made up of many tiny parts that are useful only when we combine them into more complex wholes. The higher the value of these aggregations, the more economic growth. Humanity’s achievements – from the 120 ingredients of my clock to the countless financial deals and developments that produced the internet and flight navigation systems – all result from joining people and things to each other.

     

    That’s why western capitalism has triumphed for the past 150 years: it gave us the best knowledge to explore economic combinations. Capitalism does not need to be re-thought or re-invented; it simply has to be re-discovered.

     

    The reason credit and capital have contracted for the past five years in the US and Europe is that the knowledge required to identify and join parts profitably has been unwittingly destroyed. The connections between mortgage loans and liquid securities, between non-performing financial derivatives and the organisations that hold them; the non-standardised, scattered records that obscure who holds risks; and the off-balance-sheet accounting that obscures many companies’ health: these all make it harder to trust and hence combine. Until this knowledge system is repaired, neither US nor European capitalism will recover.

     

    Reformers and policymakers must recognise that they are not dealing with a financial crisis but with a knowledge crisis. Capitalism lives in two worlds: there is a visible one of palm trees and Panamanian ships, but it is the other – made up of the property information cocooned in laws and records – that allows us to organise and understand fragments of reality and join them creatively.

     

    The world of organised knowledge and joining began in earnest in the mid-19th century, when reformers in Europe and the US concluded that the segmented, undirected knowledge left by the old regimes could not cure the recessions that beset early capitalism. They faced what was known as “the knowledge problem”, the inability to select and store dispersed information about economic things. Those reformers created “property memory systems” to map – in rule-bound, certified and publicly accessible registries, titles and accounts – all the relevant knowledge available on assets, whether intangible (stocks, patents, promissory notes) or tangible (land, buildings, machines).

     

    Knowing who owned – and owed – what and where, and fixing that information in public records, made it possible for investors to locate suppliers, infer value, take risks and combine such simple things – to borrow a famous example – as graphite from Sri Lanka and wood from Oregon into pencils.

     

    Reformers also helped to solve “the binding problem,” finding the information needed for parts to fit together. This metaphysical concern affected all disciplines: physiologists discovered that what binds cells to form an organ performing specific, sophisticated functions is a nucleic acid now called DNA. The logic behind the property documentation is the DNA of capitalism.

     

    Modern recording systems evolved from data warehouses certifying isolated assets, into factories of facts for facilitating the knowledge entrepreneurs need to combine assets, skills, technologies and finance into more complex and valuable products. Thus, real estate documentation no longer just says that Smith owns the house on the hill but also describes that house as the address at which mortgages can be foreclosed; debts, rates and taxes collected; deliveries made; and from which utilities services can be controlled and bills collected.

     

    This knowledge allowed western economies to grow more since the second world war than in the previous 2,000 years without big credit contractions.

     

    Until 2008, when we began to learn that memory systems had stopped telling the truth – through off-balance-sheet accounting; debts buried in footnotes or the ledgers of “special purpose entities”; financing raised by “bundling” mortgages into securities not recorded in traditional public registries; and nations masking debt as income by swapping it from one currency to another. No wonder institutions and investors have lost confidence in the system.

     

    The brilliance of western capitalism lies not in providing a formula for wealth creation but in its property memory systems, which are the result of examining, selecting and validating information about who owns land, labour, credit, capital and technology, how they are connected and how they can be profitably recombined.

     

    For the past 15 years, the records of western capitalism have been debased, leaving governments without the facts to spot what needs to be fixed and for businesses to know where their risks are. To regain its vitality, western capitalism must bring under the rule of law and public memory hundreds of trillions of dollars now swirling mindlessly out of control in the obscure world of financial innovation. That task requires major political leadership.

     

    The writer is author of ‘The Mystery of Capital’ and ‘The Other Path’
    3 Feb 2012, 05:13 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9923) | Send Message
     
    Good post and would largely agree. Do think the crony capitalists have obscured as much of the financial information as possible (SPV's, off balance sheet, unregulated derivatives, etc.) in order to fraudulently steal as much wealth as they could, take advantage of information dysfunction, cloud real financial condition, charge excess rents, etc.
    5 Feb 2012, 02:40 AM Reply Like
  • WMARKW
    , contributor
    Comments (10250) | Send Message
     
    David... a most excellent post and thanks for the article by Hernando de Soto. What's said is a symptom of the hugely increasing amounts of data in the universe and the ability/inability to master these databases for productive use. To be sure, there are many positive advancements, such as health information systems where records, images, etc can be passed along from physician to physician to hospital, etc.

     

    Similarly, I can take my car into my auto dealership or any affiliated dealership in the country and maintenance records can be easily accessed.

     

    And yet, the simple concept of ownership records and lien records for a piece of real property got debased so easily. I venture to say that any state's vehicle registration system using VIN numbers is better equipped today to tell you who the owner of a car is, than the real estate records are capable of saying who the owners of a house are and who the lien holder(s) is.

     

    An interesting follow up question is was the problem an unintended consequence, or was it an intended consequence?
    3 Feb 2012, 07:00 PM Reply Like
  • MattZN2
    , contributor
    Comments (676) | Send Message
     
    It's just the same old lawsuit recycled, there's nothing really new here except some idiot in New York trying to approach it from another (far less viable) direction, since their original approach failed. Even the framing is ludicrous. Bank executives are probably laughing their socks off seeing New York come up with something this weak.

     

    -Matt
    3 Feb 2012, 07:32 PM Reply Like
  • Eighthman
    , contributor
    Comments (212) | Send Message
     
    Thank God that someone , somewhere has the common sense to notice that scofflaw banks utterly ignored the whole body of established law regulating the transfer of ownership of properties.
    3 Feb 2012, 08:03 PM Reply Like
  • pokalolo
    , contributor
    Comments (318) | Send Message
     
    All the AG's want there chip for the future and that is why they didn't class action the suits. 29 more AG's will file soon and they all will win !
    Then when Greece can't pay their first loan payment we may see all the CDS swap insurance risks hidden on the OTC exchange by some of the same big banks being suited maybe this recent price pop will be a good place to short ! BAC !....................pok
    4 Feb 2012, 05:28 AM Reply Like
  • MexCom
    , contributor
    Comments (3050) | Send Message
     
    Yup. Got to get this in front of a jury. Basically its this - the legal flim flam is trying to get the loan defaulter out from having to pay. The bank is guilty in trying to foreclose on the property that was put up for collateral. If they win, the loan defaulter still loses his property, the bank loses their asset on the balance sheet and the property sits idle in decay with the municipality having no gain with a loss in tax base along with the court costs and legal fees in a no win situation.
    4 Feb 2012, 07:46 AM Reply Like
  • BlueCollarBlueDog
    , contributor
    Comments (94) | Send Message
     
    I've read Karl Denninger's running comments bemoaning the robo-signing, and foreclosure by non-lein holders who bought SIVs built from MBSs, and it's valid.

     

    However, if used to string out, or short change investors in mortagage paper this could possibly crush willingness to provide mortgage resources. That can been seen in the overwhelming failure of the administration's attempts are providing refinance programs.

     

    Unfortunately, I believe this is more election-year timing than an actual attempt at soliciting fair ownership. Schneiderman files this within 10 days of his appointment by Obama:

     

    http://bit.ly/zqHytZ

     

    Schneiderman named to fed mortgage unit
    Originally published: January 25, 2012

     

    New York State Attorney General Eric Schneiderman will co-chair a new federal mortgage unit that will investigate abuses that created the financial bubble and collapse.

     

    President Barack Obama announced Schneiderman's appointment during his State of the Union address Tuesday night.
    ...
    ----------------------...
    So, is he investigating what caused the bubble? Or is he simply stalling the forclosures until after the election? Hummmm.
    4 Feb 2012, 09:50 AM Reply Like
  • Tack
    , contributor
    Comments (12731) | Send Message
     
    Another political hack makes his mark. A NY tradition.
    5 Feb 2012, 07:49 AM Reply Like
  • Eighthman
    , contributor
    Comments (212) | Send Message
     
    He makes his mark by being given such an obvious target, namely, robosigning, scofflaw banks, that are too big to jail. He also gets emboldened by courts being skeptical of MERS.
    5 Feb 2012, 09:28 AM Reply Like
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