Arizona Bill Would Void Foreclosures Without Full Title History

[annabanana]

Source: RSN

Arizona may become the first state to require lenders to prove they have the right to foreclose by providing a complete list of any previous owners of the mortgage, under a bill passed yesterday by its Senate.

The legislation, which is headed to the House after being approved 28-2 in the Republican-dominated Senate, would allow foreclosure sales to be voided if lenders that didn't originate the loan can't produce the full chain of title. Arizona permits nonjudicial foreclosures, meaning property can be seized from the homeowner without a court order.

Lawmakers in states including New York, Oregon and Virginia also have proposed legislation to address concerns among consumer advocates that lenders or mortgage servicers are using incomplete or false paperwork to repossess properties in default. The attorneys general of all 50 states are jointly investigating how the mortgage-servicing industry operates.

"If you foreclose on somebody you should have to tell them who owns the property," Michele Reagan, who sponsored Senate Bill 1259, said in a telephone interview. "People have the right in this country to face their accusers." The Republican lawmaker is in litigation with her mortgage servicer, which she said won't identify the owner of the loan.



Read more: http://readersupportednews.org/news-section2/320-80/5095-arizona-bill-would-void-foreclosures-without-full-title-history

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I am astonished to see this come out of ARIZONA of all places. There are almost NO mortgages that were sold during the bundling debacle that can provide clear title for a forclosure. The banks are terrified of this.

[Xipe Totec]

1. All it takes if for some repig to have skin in the game, and allofasudden things change. nt

[Bucky]

13. Holy Mary Cheney, Batman! If only there were Republican with an unemployed family member!

Of course whenever Republicans are in office, most of their family members are assured of some kind of employment or no-bid contract sweetheart deal--so I guess my idea's a nonstarter.

[barbtries]

14. there ya go.

lol. i was kind of amazed by it myself, but then you brought me back to earth.

[Xipe Totec]

31. It's the Republican's One Note Samba - me, me, me, me, me... nt

[gateley]

2. So happy to hear that ONE good thing is happening FOR THE PEOPLE

in Arizona! Thanks for posting this!

[alfredo]

3. Chain of title is like chain of custody for evidence in a trial.

without it you can't prove evidence wasn't altered or otherwise falsified.

[Angry Dragon]

4. When a repug something good that should be acknowledged

but the only reason is because she is having trouble

[Yupster]

5. So what happens if someone can't find the original title?

The person gets a free house without paying for it?

Lots of mortgage brokers went bankrupt, so I bet there's a lot of missing titles out there.

[annabanana]

6. As far as I can tell... pretty much.

The banks are scared shitless that they'll have to, you know, deal with consequences of their reckless lawbreaking.

Frankly I'm guessing that our bought and paid for legislatures will just right some get out of jail free card for them, again.

[TroubleMan]

8. They might still owe the money, but the house is no longer collateral for the loan.

That's because the MERS process and some of the other securitization processes separate the loan from the property. It then makes the debt an unsecured debt. The bankers may be able to still sue for the money, but again they'd need a clear chain of custody on the debt.

[reformist2]

15. The government is going to have to create a "black box" and put all MERS mortgages into it.

[jmowreader]

30. That's a damn big black box you're talking about...

since almost all mortgages issued since 1995 (when MERS was founded) have been MERS mortgages.

[sendero]

35. The MERS process...

... is blatantly illegal in most states because they do not fulfill the requirement of registering a transfer. These dorks essentially decided on their own that they did not have to obey the state laws regarding mortgages.

They are about to, along with everyone involved in the bullshit securitization nonsense, get a real ass reaming and I for one don't feel a bit sorry for them.

[jmowreader]

36. Is it illegal in MOST states?

I was thinking it was illegal everywhere. Seriously.

The problem with this ass reaming is, because securitization is so intertwined with the rest of the economy we're all about to get it.

When our friend Phil Gramm wrote the Commodity Futures Modernization Act of 2000, he said he wanted the United States to be the world leader in derivatives transactions...which is a little like being the world leader in heart attacks. Neither is good.

[reformist2]

51. If they can't establish a chain of custody, I don't see any other way.

The notion that some homebuyers will get "free" houses, and that some MBS investors will get nothing, both are unacceptable imo.

[jmowreader]

55. Neither is acceptable to me either

Simply because the economy would collapse if either one happened. Besides, there is a fairness thing going on: no matter how screwed up the mortgage situation is, people still owe money for the houses they contracted to buy.

I thought about it some, and this is what they should do:

1. Compile a list of all outstanding MBS. These are exchange-traded funds, so there's some sort of a paper trail outstanding.

2. Once you have the MBS list, determine, as well as possible, which mortgages are in which MBS, and which bondholders own which MBS. I think it's going to be harder to work with CDO and CDS because of the complexity of those derivatives. It's got to be possible, though.

3. Issue new notes, at current fixed interest rates, for each mortgage whose chain of title was lost by MERSing it.

The banks are going to lose a shitpot of money because their subprime ARMs have become prime-rate fixed, but it'll teach them to get their shit together next time--WITHOUT the "if the bank can't find the title the house is free" shit some liberals like.

[plumbob]

16. Why should they be allowed to be in business if they can't do such

a simple thing as produce the title?

No sympathy for however many bankers go out; they got theirs in the 2008 bailout for stupidity in business.

[Yupster]

17. The problem is that many of the loans were first made by

mortgage brokerage companies which quickly sold the loans to a larger bank.

Since it was the 21st century, most of the data transfers were done electronically with the original signed paperwork staying with the first company until it was eventually shredded or packed away in storage boxes.

Now five years later someone wants to see the original signed paperwork.

The bank can call the original lender who isn't returning calls since it likely declared bankrupcy in the 2008 meltdown.

I really don't see how any of that should change the fact that the people borrowed the money to buy a house.

[Trekologer]

19. That's the problem of the party wanting to forclose

If a bank bought a mortgage and didn't take the proper paperwork or perform other due diligence, then it is the bank's problem. Shouldn't the bank have to prove that they have standing to foreclose? Otherwise, the Bank of Trekologer (sm) could go around and foreclose on properties and just say, "Paperwork? Nah, just take our word for it."

[plumbob]

28. Precisely and thank you for a nice clear explanation.

I have no idea why people have such sympathies for corporations and none for people....

[plumbob]

27. It doesn't change it. It just means that the lenders took unauthorized shortcuts

with real estate laws that have been on the books for a couple hundred years at least and all to save some pennies on recording fees to the counties, where, btw, they could get certified copies if they hadn't taken a pass.

Tell me this - what would keep me from just showing up at people's houses and demanding payment if I didn't have to prove I had loaned them money against their title? And PLEASE don't say that no business would do that - some have gone to prison as crooks and many more to come.

All actions have consequences. These rich and powerful institutions decided to game the system for some extra bucks. They lost. They need to get over it.

[Trekologer]

46. What is someone who previously owned the mortgage now wants payment or foreclosure?

Almost every mortgage has been sold at least once. If the paperwork is allowed to be "lost" without consequences, what is stopping a bank who used to own a mortgage and sold it off from finding it again in their files and going after you for it? I think that this is more likely to occur than a random person trying to claim money is owed. It happens all the time when companies go bankrupt and their assets are sold off. Someone buys the accounts payable and starts trying to collect.

How many months or years of hassle and expense should one have to go through to fix that? Try telling a collection agency you don't owe something; they are sure to believe it. Even if you have air tight documentation, they call you a liar because their documentation is never wrong and yours always is.

[pnwmom]

40. They wouldn't need to produce the paper documentation

if they had recorded the transfer of ownership at the County Clerk's offices, as they have always legally been required to do.

But they thought they'd save some money by not bothering.

[LanternWaste]

54. I imagine that if I, a mere individual without the aid or assistanc...

I imagine that if I, a mere individual without the aid or assistance of CPA's, lawyers, and data firms have a responsibility to maintain and track all my financial records, regardless of whether they are in physical or electronic form, then I believe I can with all right, hold my lending and mortgage agencies to that same standard.

[joshcryer]

34. The tax assessor should be able to produce another title. The books are going to be local.

It'll be in the county tax assessor.

[pnwmom]

39. That was the whole point of the recording process for deeds and mortgages

in County Clerk's Offices. The recorded documents proved ownership, even if an original paper document was lost.

Then the banks got the bright idea of skipping that step, with its irritating little recording fees, and doing everything on MERS computers instead.

Ooops.

[joshcryer]

42. The county clerk is still going to have someone on their books though!

You have to pay taxes! Ownership is on paper in the tax office.

[pnwmom]

45. They have the owner of the house recorded, so of course that person owes taxes.

And they recorded the original mortgage or deed of trust. But more and more they don't have any record of the subsequent transfers of the mortgage/deed of trust -- and that's where the banks may be in trouble.

[crikkett]

50. Wouldn't that be a gamechanger?

I'm almost sorry I was too smart to buy a house.

[ZombieHorde]

7. Very interesting. nt

[Whoa_Nelly]

9. Am not astonished to see this come out of AZ

We are so strapped for cash, to have more people out of their homes, possibly on the street, needing assistance...would be better to keep them in their homes.
Also, Most of AZ is pretty much 365 days/yr. in construction, and the market is way down here for sales and new construction. If more people remain in their homes, it costs less in the courts for suits, and fewer homes empty means more property taxes can be collected.

BUT...am glad to see that this is happening..should be this all across the nation.

[joshcryer]

10. Phoenix was and continues to be hit *hard* by the mortgage crisis.

Houses have devalued by half in some instances. (Doesn't help of course that it's the largest urban sprawl in the US iirc.)

So to the OP: this doesn't really surprise me that much.

[SoapBox]

11. IF...any of this happened, it would be wonderful. BUT why do I feel that Gov. "Jihad" Brewer would..

veto such "intrusive on business" laws?

[Firebrand Gary]

12. Way to go Arizona! Now if only the other 49 would get their shit together.

Thanks again, and yes I mean that. Republicans can do right as well!

[Turbineguy]

18. Teabaggers won't like it.

[Quantess]

20. Teabaggers would probably like it, until they hear Sean Hannity complaining about it.

They would appreciate this law, if left to their own devices to figure it out. However, FOX and RW radio will prevent that.

[judesedit]

21. The top 20% wealthiest own about 80% of the wealth in this country. They should pay 80% of the taxes

Fair is fair. Tax those greedy bastards what they should be taxed. Down with the GOP. They are destroying this country by choice. Impeach Clarence Thomas for a starter. It's partly due to his corrupt decision for the blatant corporate takeover, not to mention cheating on his taxes for about 10 years. He knows no other way. He must be removed from the SCOTUS. Thomas has been stealing from us and is a common criminal.

[SkyDaddy7]

22. TYPO! The story claims this is Arizona...

It has to be a TYPO right? LOL! SHOCKED! But hey at least they are doing something that is not cold heart & evil!

[KamaAina]

23. "Arizona permits nonjudicial foreclosures, meaning property can be seized... without a court order"

That's the biggest part of the problem right there. That's where a lot of the flagrant abuses of the system come in. That's what they really need to stop.

[provis99]

24. Arizona did this? Is it the End Times?

Fire and Brimstone? Dogs and cats living together?

[emilyg]

25. Good.

[stevedeshazer]

26. SHOW ME THE PAPERS

+1

[Rabblevox]

29. Arizona, and the tea-baggers are not wrong about everything..../nt

[lonestarnot]

49. Try again.

:eyes:

[seeviewonder]

32. Great news! I hope it passes!

Didn't expect to see this coming from Arizona at all!

[Paradoxical]

33. AZ was one of the hardest hit during the bubble burst

From that perspective, this bill seems completely appropriate.

AZ is still a festering cesspool of right-wing nonsense.

[earcandle]

37. oh yes!

[lonestarnot]

38. When shit was at 500k at the top and now at 150k yeah I'd say AZ is fucked.

:rofl: Too bad it had to come from a pig. We are so balless.

[joshcryer]

43. Yeah, brand new houses are selling for $50k there (houses built in 06, worth $190k when built).

Never lived in or barely lived in houses. :rofl:

(Who'd want to live in Phoenix I dunno.)

[lovuian]

41. this is all about the Banks robbing pillaging this country

they want total control and there is no law no justice

I just hope the Judges Senators Governor realize that they will be left with their assets in the same situation

[lonestarnot]

44. but that is why they need to own them all; one isn't worth so much.

:dilemma:

[earcandle]

47. ewww! kick that out...

[lonestarnot]

48. What, you have bedbugs or would that be rats?

[earcandle]

56. I don't remember posting that one.... hmmm... .... don't blame you... for asking.. hmmm... neither..

[lonestarnot]

57. Maybe you were drunk?

:shrug:

[earcandle]

58. funny question... do you get drunk? I think the post I was answering got deleted.

[Bragi]

52. Won't this boost new homes, and further depress foreclosed ones?

Won't the effect here be to create greater uncertainty about who owns what when it comes to foreclosed homes, the end result being a further depression of the prices of housing that has been foreclosed?

So who does this actually help?

Seems to me the "winners" here would be people whose houses have NOT been foreclosed, and new housing developers.

The "losers" would be people who bought and own a home that was foreclosed on, which now has more uncertainty hovering over it.

Is that so, or am I missing something?

[DirkGently]

53. It's a good idea. Transferring w/o recording is not "illegal," but perhaps it should be.

Generally, recording Assignments of Mortgage is to protect the lender. There wasn't a big thought about protecting the borrower.


There should be.