In February 2011 United States Bankruptcy Judge Robert Grossman ruled that MERS’s business practices are unlawful. He explicitly acknowledged that this ruling set a precedent that had far-reaching implications for half of the mortgages in this country. MERS is dead. The banks are in big trouble. And all foreclosures should be stopped immediately while the legislative branch comes up with a solution.
MERS — the industry’s creation — stepped up to the plate to facilitate the fraud. The judge had ruled that its practices are illegal. Here’s MERS’s business model in brief. Real estate property sales and mortgages are supposed to be recorded in local recording offices, with fees paid. With the rise of securitization, each mortgage might be sold a dozen times before it came to rest as the collateral behind a mortgage backed security (MBS), and each of those sales would need to be recorded. MERS was created to bypass public recording; it would be listed in the county records as the “mortgagee of record” and the “nominee” of the holder of mortgage. Members of MERS could then transfer the mortgage from one to another without all the trouble of changing the local records, simply by (voluntarily) recording transactions on MERS’s registry. MERS and the banks lose; investors and homeowners win right?
Well this report which was reported by L. Randall Wray here is probably the most suppressed story in the history of journalism. http://www.huffingtonpost.com/l-randall-wray/new-yorks-us-bankruptcy-c_b_824167.html.
So what happened in 2012? RealtyTrac said 1.8 million U.S. properties received default notices, scheduled auctions and bank repossessions in 2012, down 3 percent from 2011, and down 36 percent from the peak of 2.9 million properties with foreclosure filings in 2010.
Researchers found one in every 72, had at least one foreclosure filing during the year 2012, down 1.45 percent in 2011 and off 2.23 percent in 2010. Foreclosure activity increased in 25 states in 2012, while 25 states saw a decrease in foreclosure activity. But the backlog of foreclosures in some states due to court rulings that slowed lenders from seizing properties could lead to a jump in seized homes this year, RealtyTrac said.
“That could mean that although we are comfortably past the peak of the foreclosure problem nationally, 2013 is likely to be book-ended by two discrete jumps in foreclosure activity,” said Daren Blomquist, vice president at RealtyTrac, in a statement. “We expect to see continued increases in judicial foreclosure states near the beginning of the year as lenders finish catching up with the backlogs in those states, and another set of increases in some non-judicial states near the end of the year as lenders adjust to the new laws and process some deferred foreclosures in those states.”
Foreclosure activity in 2012 increased from 2011 in 25 states, including Massachusetts where foreclosures were up 14 percent, New Jersey (55 percent increase), Florida (53 percent increase), Connecticut (48 percent increase), Indiana (46 percent increase), Illinois 3 percent increase) and New York (31 percent increase).
Foreclosures fell in 25 states including Nevada (57 percent decrease), Utah (40 percent decrease), Oregon (40 percent decrease), Arizona (33 percent decrease), California (25 percent decrease) and Michigan (23 percent decrease).
In other words, even though MERS was determined to be an illegal casino racket, most of the courts seemed to ignore this fact or waited until the courts could find a way to circumvent Judge Grossman’s ruling.
Some things did occur in 2012 that did slow things down a bit. In early 2012 when five big banks settled with state and federal officials over widespread foreclosure abuses, flagrant violations — including the seizure of homes without due process — were supposed to end. But abuses kept coming to light. Despite happy talk about a housing rebound, nearly three million homeowners are in or near foreclosure, and many continued to be victimized by improper and possibly illegal practices.
It starts out innocently enough. The banks hire property management companies to determine whether homeowners who are behind on their mortgage payments have abandoned their homes and, if so, to secure the vacant property. It doesn’t always go that way. An Illinois suit accuses the largest company in the industry, Safeguard, of breaking into homes despite evidence of occupancy, damaging and removing personal property, changing locks, cutting off utilities, and bullying occupants into leaving their homes when they have the legal right to stay. In several other states, private lawsuits and complaints to legal aid lawyers have alleged similar abuses.
Under the foreclosure settlement, banks are responsible for vetting, supervising and auditing contractors, a category that clearly includes property management companies. Profit and expediency, however, seem to have trumped due process yet again. Property companies and their subcontractors make more money on vacant homes than on occupied ones, because abandoned property requires more work, including changing locks, boarding up doorways and removing trash. And banks get some or all of the proceeds from the sale of vacant homes.
In the past, banks have downplayed foreclosure abuses by noting that affected homeowners were, after all, late on their payments, as if that justifies harassment and worse. The Illinois suit makes clear that eviction is permissible only after a legal process is concluded. In addition, state laws to protect homeowners are consistent with federal policies — weak as they are — to promote loan modifications. Both state and federal laws are intended to ensure fairness in the brutal foreclosure process.
The failure of federal policy to ensure adequate mortgage relief to borrowers, even as the banks were bailed out, remains an injustice and a drag on the economy. Foreclosure abuses add inexcusable insult to injury.
So if you are a homeowner and you are facing the reality of foreclosure, and as we have documented here many times. Make sure that: 1). You fully understand the law and your rights. There is free legal advice out there so get it. 2). Do not leave your home under any circumstance, even if it appears you are being forced out until all proceedings are concluded. If you are being harassed or threatened by a property management company, call the police and file a complaint. If your utilities are cut, approach the utilities and demand proof that whoever ordered the utilities cut had a right to do so. In most cases they cannot provide that proof and will restore service as long as you are not delinquent.
RealtyTrac estimates that 47% of the nation’s foreclosed homes are currently occupied. The percentage actually tops 60% in some hot housing markets, like Miami and Los Angeles. Those still living in repossessed homes include both former owners and renters. Either way, their time in the homes is mortgage and rent free.