Michael Haltman

Academy Award winning documentary on Wall Street, greed and lack of any prosecutions of the key players

From the New York Times

“Inside Job,” a searing piece of muckraking on the causes of the financial crisis, took home the Oscar for Best Documentary.

Charles Ferguson, the film’s outspoken director, stayed in character when he bounded up on the stage and opened up his remarks by lambasting the Wall Street crowd.

“Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail, and that’s wrong,” Mr. Ferguson said, as the Hollywood crowd erupted in applause.

DealBook colleague Joe Nocera, who has previously written about “Inside Job,” addressed this issue in his column
this past weekend.

Examining why the government wasn’t bringing criminal charges against Angelo Mozilo, the chief executive of mortgage lender Countrywide Financial, Mr. Nocera observed that through the crisis and up until today, Mr. Mozilo praised subprime loans as a way to help lower-income individuals buy into the American dream. For every email in which Mr. Mozilo acknowledged the dangers of subprime lending, there was other evidence that he thought Countrywide’s mortgage business was strong. Mr. Nocera points to recently released government testimony in which Mr. Mozilo calls Countrywide “was one of the greatest companies in the world.”

“Mr. Mozilo would have been difficult to prosecute,” Mr. Nocera concludes. “Delusion is an iron-clad defense.”

If the video isn't loading please click here to view it.

SERS not MERS!

If you have been a reader of The Hallmark Abstract Sentinel then by now you are aware of MERS and the controversy that surrounds it. The Mortgage Electronic Recording System has been at the heart of questionable foreclosures due to standing issues, as well as for having aided in the avoidance of untold millions in recording fees not paid to counties.

It was only a matter of time before someone came up with a way to digitize marriage recordings in a system known as SERS, the Spouse Electronic Recording System (H/T 4closure Fraud).

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SERS | SPOUSE ELECTRONIC RECORDING SYSTEM

Mike, on February 21, 2011 at 7:01 am said:

I have finally come to one conclusion: if you can’t beat ‘em, join ‘em!

My proposal is quite simple–a paperless marriage recording system, called SERS, (Spouse Electronic Recording System) for the electronic recording of marriages. To avoid the high costs of (not to mention the hassle of) the filing of marriage certificates, a SERS member would be able to simply record himself or herself as a “nominee” for A marriage to A spouse. The SERS system will record that A marriage has taken place, but the person to whom the SERS member becomes married does not have to be specified until just prior to the termination of the marriage–via divorce or death.

In this manner, one is able to “leave one’s options open.” It is a perfect system for those who would like the stability of the institution of marriage, yet, at the same time, yearn for the flexibility of non-commitment. It announces to the world, “I’m married–I’m just not saying to whom it is that I am married.”

Mind you–the flexibility provided by SERS would have its limits. For example, a SERS marriage could only be assigned to a SERS member, and the marriage would have to be “officiated” by a SERS authorized officer. Nevertheless, virtually anyone with a pulse, $25 for an official SERS certifying officer stamp, an ink jet printer, and access to a SERS terminal could become a certifying officer of SERS. (And then there is Provision K, the “Kunkle Provision,” which provides for dead certifying officers, as well.)

At the “consecration” of the relationship–which is technically an “agency relationship,” the marriage will be given a SIN number, or Spouse Identification Number. In this manner, through the SIN number, any married person can track who their actual spouse is–except in the case of most situations–where the SERS member prefers to keep that information private. Rest assured, however, if you die or if you cause a divorce, a spouse will be assigned to you at least 30 days prior to such death or divorce, except in the case of most situations, where the spousal nominator doesn’t know what the heck is going on—wherein an assignment will be backdated to reflect that the spousal assignment transpired 30 days prior to said death or divorce.

Due to the high-tech nature of the proprietary data tracking software used by SERS, only one employee of SERSCORP will be necessary, and the cost of her salary and generous bonus structure will be virtually unnoticeable as it is skimmed off one marriage transaction fee at a time as SERS marital swaps are traded seamlessly Over The Counter through Cayman Island accounts. Due to the swapping functionality enabled by their individual (original) SINs, SERS marriages will facilitate the marital churning process without the pain, humiliation, or cost of conventional marital swapping. The cost of SERS transaction fees will be recouped in the sheer volume of marital business as marriage certificates are securitized into MBS (Marriage-Backed Securities.)

Keep in mind that many marital swaps can be transacted over the life of a SERS marriage, and the nominee spouse will be unaware of such arrangements. However, therein lies the genuine excitement that only fraud-ridden obfuscation could ever bring to a marriage. (Will my nominee spouse be long? Will my nominee spouse be short? Will my nominee spouse be naked? Will my nominee spouse purchase enhancements? Will my nominee spouse be synthetic? Will my nominee spouse be square?)

At SERSCORP…we’ll put the SERS in Sersprise!

This is of course a fiction...For now!

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From Hallmark Abstract Service LLC

From The Hallmark Abstract Sentinel (http://hallmarkabstractllc.blogspot.com)

MERS - The Mortgage Electronic Registration System issues an Announcement that appears to be an attempt to put the genie back into the bottle

Summary: MERS has told its members not to foreclose in its name on home loans, effective immediately.

As a recap for those not closely following the issues surrounding MERS and foreclosures, this is hopefully a clear summary of an extremely complicated situation:

The MERS-Mortgage Foreclosure story

In the old days a potential borrower would go to their local bank, apply for a mortgage, qualify for the mortgage (or not) and then enter into an agreement with the bank. The transaction consisted of a note or an IOU representing a promise to repay the bank and the mortgage that pledged the property as collateral. After the closing the mortgage would be recorded in the county records. The bank would then typically "portfolio" the loan or keep it on its books until it was paid off.

Then came the age of easy money with no- income check loans, no-income no-asset check loans and other creative financing techniques where if you had a pulse you had yourself a loan. Whether you could actually afford it or not did not really come into play. This worked for a while because home prices were going up fast and the borrower who couldn't afford the home in the first place would flip it and make some cash along with the mortgage broker and everyone else up and down the real estate food chain.

Wall Street investment banks had developed REMICS or collateralized mortgage obligations (CMO's) as a conduit for making money, a lot of money. Loans were made, quickly resold by the bank originating it, then maybe resold five more times until it was packaged along with thousands of other similar loans and resold to investors all over the world often with AAA ratings (a story for another time).

All of this worked just fine until prices stopped going up and then started to actually decline. As the influx of foreclosures grew, along with them came serious questions about the process and paperwork involved in all of these mortgage transfers. These questions would most likely never have come up if those damn real estate prices just kept going up like they were supposed to do and foreclosures were few and far between.

Questions surrounded MERS, the electronic database that served to take the place of recording mortgages in the county records (along with a lot of saved filing fees). Could MERS be the foreclosing entity? Were assignments of mortgages actually done in MERS and were they done correctly? Issues surrounding robo-signers and fraudulent notarizations of documents. Questions over whether the entity initiating the foreclosure actually had the standing to foreclose and if the chain of title was intact and provable? Who actually had the original note or IOU?

From this came a variety of other legal issues such as completed foreclosures getting reversed, a moratorium on foreclosures, attorney's being required to sign affirmations that all of the paperwork was done correctly and demands by some underwriters of title insurance that in a foreclosure sale the seller indemnify the title insurer against the foreclosure being reversed due to incorrect paperwork.

At the heart of the matter is MERS, a database put into place to help streamline the process of mortgage assignments and to save filing costs in the securitization age.

This brings us back to the Announcement MERS issued to its Members yesterday. A short summary below followed by the Announcement in full:

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"... In recent months legal challenges have arisen regarding alleged inadequacies and improprieties in the foreclosure process including allegations of insufficient or incorrect supporting documentation and challenges to the legal capacity of parties’ right to foreclose. MERS is committed to reevaluate and strengthen its systems and procedures to protect against these types of legal challenges…

During this period we request that Members do not commence foreclosures in MERS’ name. If a Member determines that it will commence a foreclosure in MERS’ name during this 90-day period, two weeks advance notice must be given to MERS to permit verification of the appointment and current status of the Certifying Officer proposed to participate in the foreclosure. No foreclosure may be processed in MERS’ name without first obtaining this verification. We encourage Members to bring foreclosures only in the name of the holder of the note, in the name of the trustee or the servicer of record acting on behalf of the trustee…”

The steps discussed in the announcement do not seem to address the majority of the issues swirling around MERS and foreclosures. This is the complete announcement:

Announcement Number 2011-01

Page 1 of 2

To: All MERS Members February 16, 2011

Re: Foreclosure Processing and CRMS Scheduling

MERS is providing the following guidance to all Members to strengthen business practices, and minimize reputation, legal and compliance risk to MERS and its Members. In recent months legal challenges have arisen regarding alleged inadequacies and improprieties in the foreclosure process including allegations of insufficient or incorrect supporting documentation and challenges to the legal capacity of parties’ right to foreclose. MERS is committed to reevaluate and strengthen its systems and procedures to protect against these types of legal challenges. Consistent with this approach we have enhanced the Corporate Resolution Management System (CRMS) and instituted related policies and procedures designed to strengthen MERS’ business practices and limit compliance risks. To comply with this guidance, MERS Members should implement the following practices, effective immediately.

1. MERS is planning to shortly announce a proposed amendment to Membership Rule 8. The proposed amendment will require Members to not foreclose in MERS’ name. Consistent with the Membership Rules there will be a 90-day comment period on the proposed Rule. During this period we request that Members do not commence foreclosures in MERS’ name. If a Member determines that it will commence a foreclosure in MERS’ name during this 90-day period, two weeks advance notice must be given to MERS to permit verification of the appointment and current status of the Certifying Officer proposed to participate in the foreclosure. No foreclosure may be processed in MERS’ name without first obtaining this verification. We encourage Members to bring foreclosures only in the name of the holder of the note, in the name of the trustee or the servicer of record acting on behalf of the trustee.

2. MERS Members shall have a MERS Certifying Officer (also known as MERS Signing Officer) execute assignments out of MERS’ name before initiating foreclosure proceedings. Assignments out of MERS’ name should be recorded in the county land records, even if the state law does not require such a recording (see MERS Membership Rule 8).

3. For all future assignments and the execution of other documents in the name of MERS, Members must use a MERS Certifying Officer who has been appointed under our new certifying officer process, which, after November 1, 2010, uses a new form of corporate resolution. Under our new process, all Certifying Officers are also being tested and appointed under the enhanced CRMS. Only Certifying Officers appointed under the new form of corporate resolution, tested, and transitioned onto CRMS after November 1, 2010 should execute assignments. We are in the process of ensuring that all Members are transitioned onto CRMS in compliance with our new policy, and we will work with all Members to ensure the transitions can be accomplished in an orderly and expeditious way. For those Members who have not undergone this transition onto the CRMS, you will receive login credentials and further instructions from MERS on how to complete this process. It is important that you follow all instructions and that you complete this process as quickly as possible. MERS will be communicating with you to notify you when your Company will be transitioned onto the CRMS under our new policy. Once your Company has access to the CRMS, all of your existing and potential Certifying Officers should work quickly to complete the certification process. Once all of your existing and potential Certifying Officers have successfully completed the certification process, you will need to submit your request to MERS for approval. Submissions from your Company will only be accepted during the phase-in period assigned to you. Because it will take some time to transition under our new policy, Certifying Officers can continue to execute documents in MERS’ name under existing resolutions until the new corporate resolution is issued to your Company. However, if your Company does not submit the request to MERS through the CRMS in the timeframe assigned to you, you will not be issued a new corporate resolution and any prior corporate resolutions issued to your company will be revoked.

Page 2 of 2 4. MERS Members should ensure the accuracy of the information in the complaint and foreclosure affidavit that addresses, where applicable, the authorization under which a MERS Certifying Officer validly assigned the mortgage to the foreclosing note-holder.

5. Other business practices Members should perform on a periodic basis include: Conduct a review of employees designated as Certifying Officers and reconcile to the CRMS to ensure MERS has an up-to-date and accurate list of Certifying Officers; Ensure employees designated as Certifying Officers receive appropriate training to carry out their duties and responsibilities as Certifying Officers; and Reconcile with CRMS to update corporate resolutions and signing authority agreements to ensure appropriate Certifying Officers are validly appointed. For free email or feed delivery of new articles published by The Hallmark Abstract Sentinel the easy sign-up forms are below:

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While the title of the the article rhymes, the proposal is far from entertaining

On page 1 of the Fiscal Year 2012 Budget of the U.S. Government you can begin to read The Budget Message of the President. In the preamble he discusses the recession and the fact that due to fiscal realities we face hard choices.

On page 4 the President proposes a 30% cut in itemized deductions for high-income taxpayers to use to pay for a fix to the Alternative Minimum Tax. What this means is that the mortgage interest deduction is being targeted again in the same way that it was in the 2011 Budget when its elimination was defeated.

As has been discussed in many quarters, the real estate market is facing a multitude of headwinds compounded by a recent move up in mortgage rates and the proposal to shrink the role of Fannie Mae and Freddie Mac.

This shrinkage, ala Seinfeld, would force borrowers to rely more heavily on private mortgage lenders who have shown a great reluctance to lend in the past to any but the most stellar of borrowers. This, although they had received 10's of billions of dollars from the federal government for that very purpose.

One of the things that the country needs most to get out of the economic doldrums we find ourselves in is to clear out the buildup of housing inventory and get the real estate market back on its feet.

Slicing the mortgage interest deduction would not accomplish this and would in fact take buyers out of the market. Positioned as a hit to the wealthy, this proposal would in reality impact those up and down the income scale!

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