Sunday , 3 December 2023

In Foreclosure? Don’t Worry! Your Bank Probably Can’t Prove They Own Your Mortgage! (+3K Views)

When a home owner is forced into foreclosure, the case is presented to a judge for approval. Historically, if uncontested, a foreclosure has quickly led to a judgment in favor of the bank – to evict the owner and confiscate the property. However, in the last few years a growing number of homeowners have been contesting the foreclosures and demanding proof of the note – or ownership of the mortgage – and, in many cases, the note can’t be located by the bank. [As such,] the foreclosures are not being approved due to lack of documentation. Words: 719

So says Chris Mack ( in a recent article* which has reformatted into edited […] excerpts below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) Mack goes on to say:

The issue is so serious that last week, Bank of America halted foreclosures in 23 states due to findings that it doesn’t have the necessary documentation to foreclose on owners and has been foreclosing on homes without proof of the note. JPM Chase and GMAC have also already halted foreclosures in a similar move. In order to successfully foreclose, the banks [have been] hiring legal firms to litigate and re-establish their legal right to collect the value of the mortgage. However, this could be time consuming, costly, and the debt may be shifted from being secured by the property to unsecured by judgment.

Fraud based on Fraud based on Fraud
Whether you have a mortgage that can be enforced is now in question, and by default so are the derivatives based upon the mortgage. The financial engineering and success of mortgage backed securities (MBSs) was based on the idea that mortgages could be pooled and sold to investors. It is now estimated that between 1/3rd and 2/3rds of all MBSs are not backed by a physical mortgage. Banks are simply unable to tie their products to the underlying mortgages. The result is that pensions, banks and other investors of even “high quality” MBSs may be holding near worthless paper. The derivatives based upon non-backed mortgage securities – based upon quasi-enforceable mortgages – based upon fraudulent, undocumented, or lax-documented standards are theoretical at best. Interestingly, this is represented by U.S. dollar deposits.

The Lawsuits Have Just Begun
Banks will sue homeowners for defaulting, homeowners will sue banks for deception, and investors in the mortgage backed securities will also sue for fraud. Pension holders will in turn sue the investment companies holding the worthless paper. The lawsuits have just begun but there may not be enough lawyers, judges, and courts in the world to ever untangle the chain of fraudulent derivatives based on other fraudulent derivatives. Ambac recently filed a $16.7 billion lawsuit against Bank of America, claiming that 97 percent of its securitized mortgages didn’t conform to lending underwriting guidelines.

The Mortgage Market is Now at Risk
With roughly $14 trillion in mortgages outstanding in the U.S., and more than $8 trillion in mortgage securities, a large amount of capital is now at risk – especially if those MBSs are considered leverageable deposits. The consequence could be a halt in mortgage processing for several months, and shutting of title insurance companies which would effectively close the mortgage market. The most likely outcome will be the complete monetization of the industry.

The lesson is clear; if you don’t own real assets then you don’t really own anything. The stampede into gold and silver will continue as investors seek protection from the largest distribution of wealth in history.