The Wheels Are Coming Off in MBS Land: All 50 State AGs Join Probe; Banks Abandoning MERS Foreclosures « naked capitalism

Even though the headline item is the fact that the attorneys general in all 50 states are joining the mortgage fraud investigation, the real indicator that the banks are stressed is that they have started abandoning MERS, the electronic database that passes itself off as a registry for mortgages. JP Morgan has quit using it as an agent on foreclosures; it clearly can't withdraw from it fully, given that it has become a central information service.

Despite this being treated as a pretty routine event in the JP Morgan earnings call, trust me, it isn't. The withdrawal of JP Morgan from the use of MERS as the face in foreclosures is a tacit admission that the past practice of using MERS as the stand -in for the trust is problematic. I've heard lawyers discuss the possibility of class action litigation to invalidate all MERS-initiated foreclosures in states with strong anti-MERS rulings; this idea no doubt will get more traction given JP Morgan's move. (An attorney who is in the thick of this situation told me another major bank has made the same move as JPM, but I see no confirmation in the news as of this writing).

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char

a move some experts fear will cause uncertainty and threaten the recovery of the fragile housing market.

Well, it is good to be able to fob blame onto those trying to uphold the law for the consequences of lawless behavior by the mortgage industry. The recovery is not "fragile" it is non-existent. In Mt. Home, AR the Building Committee of the City Council has canceled meetings for the second month in a row for lack of new work to review and the work they last reviewed had been set in motion at least a year previously, except for some permits for advertising billboards.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

How 2 civilian sleuths brought foreclosure problems to light | McClatchy

PALM BEACH, Fla. -- More than a year before lenders, law firms and document companies began owning up to widespread paperwork problems with their foreclosure filings, Lisa Epstein and Michael Redman already knew that something was wrong -- very wrong.

Redman, a former online automobile consultant, got his first taste of the problem in early 2008, when he tried to help a relative who was facing foreclosure.

As he tried to determine which of three or four supposed lenders held the note, Redman, 35, realized that not only did he not know the answer, neither did any of the companies that were asking for payment.

Epstein, a nurse who cares for cancer patients, also is going through foreclosure. She got her baptism in the world of shoddy foreclosure paperwork in the summer of 2009, however, when she tried to help a brain tumor patient keep her home.

[...]

Equal parts agitators, activists and advocates, Redman and Epstein have made their presence felt in Florida and nationally through their respective websites, 4closureFraud.org and foreclosurehamlet.org.

Now we know whom to thank.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

FT.com / Companies / Banks - Wells adds to crisis over home seizures

The US mortgage foreclosure crisis deepened as it emerged that Wells Fargo may have used practices that prompted rivals to halt home repossessions, and JPMorgan Chase said banks might be fined over the issue.

Bank of America, JPMorgan and GMAC have halted foreclosures after learning that "robo signers" had rubber-stamped thousands of mortgage documents without checking their accuracy. Attorneys-general in 50 states have launched a joint investigation into the matter.
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Jamie Dimon, JPMorgan chief executive, on Wednesday became the first top banking executive to say some attorneys-general may levy penalties on banks for their foreclosure practices.

Legal documents obtained by the Financial Times suggest that Wells Fargo, the second-largest US mortgage servicer, also used a "robo signer". Unlike its rivals, Wells Fargo has not halted foreclosures. The San Francisco-based bank said on Tuesday it was reviewing some pending cases, but it has maintained that it has checks and balances designed to prevent serious procedural lapses.

In a sworn deposition on March 9 seen by the FT, Xee Moua, identified in court documents as a vice-president of loan documentation for Wells, said she signed as many as 500 foreclosure-related papers a day on behalf of the bank.

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char