Wednesday, February 16, 2011

Bombshell Ruling Against Bankers Mortgage Fraud - New York MERS Foreclosures Banned

In my posts last year No Trick or Treat! Foreclosuregate is Scary as Hell and U.S. Banks Are Virtual Pirates on the High Seas of America, I wrote about the despicable practice of banks that caused the housing bubble by providing home loans to anyone in order to resell the mortgages to third party lenders for a huge profit.  This practice actually was more profitable then selling homes as some banks resold the same mortgage dozens of times in what is referred to as a derivatives market.  The banking industry created a fraudulent mechanism to perpetrate their derivative fraud market, widely known as MERS, an acronym for the Mortgage Electronic Registration System.

The bankers designed the MERS system to facilitate their derivatives market and overstep the legal mortgage process in claiming to record a mortgage deed within its own system, not through the required legal process.  Consequently, the banks used their MERS system that caused them to lose the chain of title to the foreclosure properties.  When I learned about this as a relatively new loan signing agent last year, I knew it was fraud.  I knew any judge who would overlook a bank not being able to produce evidence of chain in title would have to be corrupt. 

In what is being widely viewed as a huge blow to the real estate banking industry in a growing legal precedent, Bloomberg reported a two days ago (see Merscorp Lacks Right to Transfer Mortgages, Judge says) a New York Judge ruled the banks popular use of MERS, isn't recognized as legal in a court of law.  In other words, the judge ruled even though the banks tried to claim since 50% of residential mortgages rely on the system in the United States for recording mortgages, that doesn't make it legal.  U.S. Bankruptcy Judge Robert E. Grossman in Central Islip New York wrote:
“MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process,” Grossman wrote. “The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.” - Bloomberg
"Don’t come around here no more, is basically the message to MERS,” said April Charney, a senior attorney with Jacksonville Area Legal Aid in Jacksonville, Florida. “The judge basically deconstructed MERS and said there’s no possible way in any case you can come in and show you have this appropriate proper status to transfer the note.” -Bloomberg

Judge Grossman continued:
“MERS’s position that it can be both the mortgagee and an agent of the mortgagee is absurd, at best.”
I immediately saw how illegal MERS was when I learned about it.  I knew any judge who would overlook this bankers fraud scheme would have to be corrupt.  There have been judges who have overlooked the MERS system issues, but more judges are ruling against it and this latest ruling is being recognized as "huge" by many other bloggers. The fact Bloomberg didn't ignore it is also significant since it's a pro financial institution media outlet.

In anticipating the ruling, Merscorp, Inc.'s CEO RK Arnold resigned in late January, 2010. (see MERS CEO to Leave Company - Wall Street Journal)  Arnold knew what was coming because he lawyers must have given him a heads up.  Anyone who knows the law can instantly recognize MERS is unlawful and nothing more than a fraudulent bankers' scheme to make huge profits on the mortgage derivatives market. It's really a no brainer. 

I hope the people who were being foreclosed on by banks unlawfully can now keep their homes and not even have to pay another cent to these criminal banks.  The question is, when people learn their banks can't prove they own their mortgages, will they simply stop paying their mortgage?  I think they should get a good real property lawyer on it right away.  It will certainly be interesting to see how this mortgage fraud crisis all unfolds over the next few months. 

There is a possibility that our corrupt politicians in Congress could step in and save these banks from losing these properties.  We also have what many believe is a corrupt and highly political Supreme Court (e.g. ruled for corporate campaign contributions) that could overrule these lower courts should the banks take it that far.

Now if only judges would allow us all to dump the Federal Reserve, another banker fraud scheme. The law was slipped through under the Federal Reserve Act in 1913 while much of the Congress was on holiday vacation.  President Woodrow Wilson later damned himself for allowing the Act to pass.