I have personal experience with this back before the 2008 crash.
I owned a house along with someone else, an okay house, bought it for $115,000, held onto it for 5 years, until it appreciated to $350,000 in those hurly-burly days.
At some point, and I forgot why it came up, we needed to figure out who owned the loan. And we never did. It the morass of paper work and nearly fraudulent claims by various people who claimed to own the loan, we stopped paying on the loan. We literally had more than one company claim to own it at one point. What was weird is it was kind of a slow burn, even after we stopped paying. No one really seemed to care as much as you'd think $900 a month would make you care.
In the end, we sold the house, never paid off the remaining debt, and split the cash. I told my lawyer I'd hold onto savings to cover the debt if they ever came back and could legally claim it.. It's been 11 years. Nothing yet.
I am also interested in hearing about this. I guess they guaranteed good title, but kept money (earning enough interest?) in case the bank comes knocking?
Yes, I just talked to the person who I owned it with, and this is their recollection. We could transfer the title, but we were on the hook for the the mortgage. I'm pretty sure there wasn't a lien on the property.
Pretty funny you mentioned the interest. In the 11 years it's been like $50.00, since I keep it in just a regular account (instead of CDs or whatever).
>I'm pretty sure there wasn't a lien on the property
Which country was this in? Banks don't typically hand people hundreds of thousands of dollars without making sure that they'll get their pound of flesh when things go south. Not having any kind of collateral is a pretty big mistake on the bank's side.
If a bank sues you, they will be making claims for various damages. One of those damages will probably be projected interest they would have made from re-lending the money that wasn't being paid.
The debt could also be subject to a state of limitations, and you could potentially be clear. If its been 11 years, I would ask a lawyer about it. You may be able to safely use the money you've left set aside.
Holy crap, that blew up. Sorry, I posted this over morning espresso and then went to work and didn't look again until now. jpmattia, I'm just replying to your post, but it really applies to all the replies.
I'll be 100% honest here, and I don't know the finest of the details. I worked through a local realtor I've used for everything I've ever done, a local financial advisor, and my lawyer. User user5994461 is expressing the same fear I had in that I was afraid of doing something illegal. I've always kept a chunk of cash on hand equal to what I would owe just in case someone came after me.
At some point the service provider got confusing. I actually paid two different providers in one month in a panic about missing a payment. You cannot believe the paperwork I got. One of them was like "Uh, we don't know what to do with this," and the other took the money, but then that's when the issue of who owned the loan came up.
So as we were starting to sort out actually who to pay, and who actually was getting the money, that's when I stopped paying. At the time it didn't seem so much like stopping payment but instead of just not paying until we sorted it out.
The actual sale of the house was to a Korean family who wanted to house for their children who were going to go to college in our town. The realtor handled the sale, the lawyer checked everything out, and the only loose end was I accidentally left the gas in my name and bought the students a years worth of gas ($1000).
I do know that after they sale we were still trying to resolve what I owed and to who on the original mortgage. I guess technically that is still going on.
My subject take away from this was, "this is an avalanche of paperwork." We wanted to sell the house. Under the circumstance, we did whatever it took to sell it even if we didn't know who I owed the money to.
Also, up until this event, I didn't have a lawyer, or a realtor, or a financial advisor. When there is six figures, it's a big boys game, and you pay to play.
IIRC liens can stick to the property in some cases, rather than the owner. The purchaser would see that there is a lien and it would discount the price of the house.
Doesn't really surprise me. Bank debt trading is messed up. Everything is mostly done by fax. Things don't happen quickly. Time is measured in months.
Source: I was IT support (among other hats I wore) for the band debt team at a hedge fund for 7 years at a previous job. We held about $20B in notional debt running up to the 2008 crash. Was not a fun time to be in the industry.
Can confirm; my wife has worked the past five years in the foreclosure department at Suntrust Mortgage and every case she told me about took months to resolve. Finding the “true” owner of the loan routinely involved tracing the sale through 7+ other investors, each time faxing back and forth tons of documents, resulting in reams of paperwork for lawyers and courts to sift through. It’s quite a mess :/
That is interesting, but isn't there a point in the house selling process where they look for every party that might have an interest in the house and such? I mean I think that is part of the chunk of paperwork that realtors / title search companies or whatever do, right? What happened then?
We recently sold our house. I discovered a typo on our deed. The previous owner's deed also had the same typo. These deeds had been reviewed by at least 3 lawyers, at least 2 title insurance companies (who had a financial interest in not screwing it up), and at least 3 realtors. Nobody noticed the mistake.
It was hell on earth trying to sort it out, and the sale almost fell through because of it. The real kicker was that our lawyer basically told me he wished I hadn't noticed it because the sale would have just gone through and nobody would have cared... but since I did, we were legally obligated to fix it.
>It was hell on earth trying to sort it out, and the sale almost fell through because of it. The real kicker was that our lawyer basically told me he wished I hadn't noticed it because the sale would have just gone through and nobody would have cared... but since I did, we were legally obligated to fix it.
An ethical breach by a lawyer is grounds for banishment from the profession.
An ethical breach by a title insurance company likely violates its bylaws, and at the very least opens them up to liability.
It seems like this is a title error so the insurance company would be responsible. I don't see why a lawyer wouldn't report the error to the insurance company. It's billable time that the insurance company would need to pay for and they'd be working to keep their industry with clear deeds instead of faulty ones.
Re: the ethical breach being grounds for banishment, I think that’s quite an idealistic view of legal societies. In reality, they are soft on their own and are not going to drag a fellow lawyer through the coals for something this minor, especially when it can so easily and plausibly be an honest oversight.
Also, as in any client relationship, a lawyer’s first priority is the person paying his bills, not necessarily the industry. Even if it would be better in the long run and more ethical, when someone pays you there is a natural obligation attached to the relationship.
I used to be idealistic, but experience has shown me that people do what is expedient.
The paperwork that realtors and title companies do is a joke. When we bought our house I signed close to a hundred documents. Many of which were the same. Some documents were repeated 3 or 4 times. It's all a game where they try to convince you how grand and thorough and official the whole processes is. It made me realize how incompetent the banks really are.
For our most recent house purchase, the title company was invaluable -- not for a claim, but for the wealth of information they produced when they did the search. We found out about easements paperwork that we had no idea existed (even from the perspective of the property information system in our area).
I actually called the title insurance company at one point to ask what the heck something was, and was connected to an experienced person who was very happy to fully explain what they'd found.
My guess is that because the history of our house was pretty complicated, the title searcher was relieved to have something out of the ordinary to work on.
The upshot? That title search is really important, particularly if you're buying a property that predates electronic property systems.
The insurance companies aren't stupid. It's not quite as easy as just paying some money for the insurance and being done. Normally title insurance is something you pay once and it's valid as long as you continue to own the property. When I bought my current place my real estate lawyer had to do a bunch of digging because there was some ambiguity in some documents 3-4 owners back. The title insurance company would only offer insurance for 1 year if this ambiguity wasn't resolved.
I don't understand how is that possible to not know about a home loan. Didn't you have to open the loan when you bought the home? Don't you know what banked you dealt with?
It's weird to me. You need to know who to pay the mortgage to. The bank would have to notify you immediately when and whom they sell the mortgage to if they ever sell.
Unless they don't notify you on purpose to continue to receive the monthly payment, while cashing out on the resale, in which case that's fraud.
I can also imagine that the next buyer would try to pull the same trick. That obviously causes a problem. It seems to be what happened in the US, in which case everyone should check their mortgage to make sure who owns it.
You don't make payments to the lender. You make payments to a payment servicer hired by the lender.
Until midway through the Obama administration, nobody had any obligation to notify you if your mortgage was bought or sold. Payment servicers had no obligation to tell you who they were forwarding your checks to. Your mortgage could be bought and sold multiple times, but as long as the same servicer was used, you'd never know (there were/are only a few big servicers). If the mortgage buyer used a different servicer, you'd get a letter from your current servicer about the new servicer you should send your checks to, but no info about who now owned your mortgage.
I see how that could mean that the borrower might not know who owns the loan, but surely the payment servicer knows? Would they simply not tell you, even if you asked?
The servicers existed to serve as a smoke screen for mortgage securitization shenanigans. The servicers sent the payments to trusts that had dubious possession of the mortgages.
Trusts and banks passed ownership of mortgages amongst themselves, though tax law was supposed to prevent them from doing so. Ultimately the servicers had no more idea of who actually owned the mortgages than the homeowners.
A judge can apply corrections in the local land registry. They're obviously conservative in doing so, but bad entries can and do appear, and judges, when presented with the right evidence, can repair them.
If there are court proceedings attached to the sale of the house, the corrections might be done there.
> A lender called Rose Mortgage had originated the loan, then sold it to Option One Bank, which sold it to Lehman Brothers, which sold it to Lehman’s fully owned subsidiary Structured Asset Securities Corporation, which pooled the loan into Structured Asset Securities Corporation Mortgage Pass-Through Certificates, Series 2006-Z, whose investors were now alleged to be the owner of Ibanez’s note. U.S. Bank was appointed trustee of the securitized trust, to enforce the payment of the notes, and, if necessary, to foreclose on defaulting homeowners such as Antonio Ibanez.
This statement is truly mind-boggling. Took me a minute or two to understand what was going on (or what I think was
going on)...
When you signed the loan for the mortgage, you made a business transaction with the bank. You knew full well the terms of the mortgage and the consequences of not paying it. You also should have known that the bank could sell the mortgage. They explained it clearly on all six mortgages I’ve signed for over the years.
But, I also have no moral qualms with “strategic defaults”. The bank also knew what they were signing.
> Some people might scoff at the ideas in the article. You took out a loan, only a deadbeat leech would default on that loan and expect to keep their house. Sounds about right, but that assumes we live in the world we all imagine. The "right" world, where business still resembles interpersonal relationships. It doesn't, and we don't live there.
We know that at the end of the day, a loan, insurance, utilities, etc. are all business contracts. Each party signs something, and each party expects what they signed for. The problem is that contracts (especially when buying a home) can be absurdly long full of unintelligible language. So we as ordinary people want to believe that we aren't going to get screwed over. We know that these major companies have the manpower and funds to ruin us, but we hope it doesn't come to that. From that same user[0]:
> You've paid your insurance bill diligently for years, but as soon as they are needed, they start looking for ways to get out of paying the claim. They will happily screw you over the tiniest technicality. The insurance industry certainly isn't the only offender in that regard.
It's a business transaction. Some of the time, we don't even have a choice with who we do business. But as an ordinary person, I don't want to get fucked over by these forced contracts.
The problem is that contracts (especially when buying a home) can be absurdly long full of unintelligible language. So we as ordinary people want to believe that we aren't going to get screwed over. We know that these major companies have the manpower and funds to ruin us, but we hope it doesn't come to that. From that same user[0]:
I know about all of the non conforming and other crazy loans taken out back during the real estate bubble pre-2008. I took advantage of most of them as a real estate investor and did many of the shady things myself that help cause the real estate bust and did a few “strategic defaults”.
While there is a lot of paperwork, for the traditional fixed rate mortgage that most people should be doing, it’s not that complicated- you pay your mortgage every month, the escrow amount may fluctuate but besides that it’s fixed, to whoever owns your loan this month, you keep your house.
Most people had no business doing the adjustable rate/ negative equity/no doc type of loans. I agree that mortgage lenders, especially those working with builders, pushed people into them.
> Most people had no business doing the adjustable rate/ negative equity/no doc type of loans. I agree that mortgage lenders, especially those working with builders, pushed people into them
You're right, but I'm not just talking about the subprime issue. It's bigger than that with numerous companies providing different goods and services. We're beholden to a number of service contracts that are stacked against us. For example, I was stuck with a terrible ISP. Daily outages, constant resets, and times in off-peak ours where my throughput was absurdly low. No matter how much I called and complained, there was nothing I had in my favor, because the speeds "may fluctuate from time-to-time due to the nature of the service". My choices? Pay double for ADSL or put up with it.
According to the contract, they're not obligated to give me 100% uptime with 100% of the bandwidth as advertised. That's understandable. But there was clearly an underlying issue with the infrastructure that was not being addressed. So contractually speaking, they can give me hand-wavy answers about why they can't give me complete uptime and throughput with no repercussions, but as the customer, I must pay my bill in full by the due date.
That’s basically because ISPs are a semi-natural mononpoly without competition there is really no incentive to do better. Heck Comcast acts like a monopoly in my area and they are competing with AT&T who offers better service - 1Gbps up and down [1] vs 1Gbps/35Mbps Comcast, at a lower price and Google Fiber in some parts of town.
[1] I’ve got to give a shout out to AT&T and BackBlaze, I just changed my Plex Server over to a new computer and my entire 1.7TB collection was uploaded in less than 3 days. I was getting speeds between 500GB per day and 1Tb+ a day.
I've made a couple decisions, both before and after the housing bust, that make me feel a lot more comfortable with my mortgages. First was only ever doing a fixed rate loan. Second was limiting my business to a local bank which basically guaranteed they would hold the mortgage themselves until the end. The only exception to this is my very first mortgage, which is how I learned (thankfully with no real pain) to do it right.
Did you read the article? The premise wasn't, these banks aren't fair or that there's anything necessarily wrong with banks selling mortgages. The premise is that banks have created a system that erodes one of the foundations of our system, the proof of ownership.
If you're fine with someone using the technicalities of the contract to strategically default then you should equally be fine with someone using the weird system of title transfers that the banks use to their benefit in one's own favor.
How does selling the title, without changing the terms, hurt the individual? The law states that you have 60 (90?) days before the recipient bank can penalize you for making payments to the wrong bank.
One of the pieces of paper I signed with a very clear explanation that the mortgage company I was using sells “100%” of mortgages within 90 days to other banks. You don’t just sign mortgage papers blindly. The closing attorney describes every piece of paper you sign.
The selling of the loan is an often time consuming and disconcerting process. How many people would even open a letter from a bank they've never done business with? How many have automatic payments setup that would just stop when the loan is sold? How many blindly write a check to the same bank every month as their mortgage book tells them to? Answer: almost everyone that's ever taken out a mortgage or any other loan for that matter.
I think, from a consumer perspective, the answer here is the originating bank of the loan should be responsible for the lifetime of the loan for servicing it, even if they sell the debt itself to another party. This simple act would simplify immensely the process for the consumer and probably put a bit more pressure on the banks to get the paperwork right.
The selling of the loan is an often time consuming and disconcerting process. How many people would even open a letter from a bank they've never done business with?
The first letter you get is from your current bank.
How many have automatic payments setup that would just stop when the loan is sold?
I think I would notice if my largest bill wasn’t deducted from my bank account.
But at the end of the day, the bank doesn’t want your house. They don’t want to go through the trouble of foreclosure, for being responsible for maintenance while it’s being sold. They don’t want to go through the hassle of selling your house.
You will get letters, phone calls, notices, court dates, etc before your house goes into foreclosure. I doubt that people are sending thier payments to the wrong place long enough to go into foreclose.
> The first letter you get is from your current bank.
Where in that letter can I say "I object to this transaction"?
Where in that letter can I say "I will be emotionally and/or financially damaged by this transaction"?
Where in that letter can I tell the bank that the new bank does not personally know me and I do not believe it can fulfill the obligations to Know Your Customer?
It doesn't. But when you must the chain of trust you can end up in situations where two different entities claim you open them money. Or you could pay off your loan and discover you still don't have a clear title.
If the chain of trust is violated then all breasts are off. There is no harm in ensuring that you are the one who benefits as opposed to being hosed if that happens.
What do you do when it's literally not possible to determine who owns your debt. That can be an enormous risk for you to take on though no fault of your own. A perfectly valid legal remedy for a court is to force the entities who messed up their record keeping to open the mistake interest of you.
This is explained in the article. They are bipassing the recording process and this is the basis multiple state supreme courts have used for considering such transfers and the MERS system in total invalid.
But mostly I don't understand why would the borrower should have its say on who he owns the money to. As far as the borrower is concerned he got some money and must pay it back with interest. What does it change that the payment goes to institution x or y?
I don't have much sympathy for people who borrow money to then find some loophole to swindle their way out of their debt. They succeeded? Good for them! Proud to be dishonest. Let the other borrowers pay for you through higher margins.
I think I should have a lot of say over who owns my debt.
There's a lot of mechanics that go into paying my debt, is it automatic withdrawal? If so how do I change the account? Is it someone I can barely hear in a noisy call center I get to talk to after an hour? Or is it someone at the bank around the corner where I first opened my account when I was 14?
I've got a mortgage, they've got a fine UI for logging in and making a bonus payment, printing out amortization schedules, etc. etc. If they sold my debt to someone who would only talk to me via fax I'd be pissed off.
I think I should have a lot of say over who owns my debt.
That’s the thing. You don’t own the debt, the bank does.
There's a lot of mechanics that go into paying my debt, is it automatic withdrawal? If so how do I change the account? Is it someone I can barely hear in a noisy call center I get to talk to after an hour? Or is it someone at the bank around the corner where I first opened my account when I was 14?
I don’t let any company have direct access to my bank account. I pay my mortgage and all of my other bills using bill pay from my bank. When the letter comes saying the mortgage has been changed, I log into my account at my bank and change the bill pay. A mortgage is one of the easiest transactions.
If they paid - who would the money go to? If nobody knows where to forward to, the money would just stop somewhere along the road anyway. Someone would take, someone not entitled to it - might just as well be the home owner.
There is a difference between successfully legally challenging the lack of sufficient documentation for the transfer of a loan, and you not knowing who to pay the money back to. The fact that someone found a loophole doesn't make it right and doesn't mean the loan hasn't been transferred.
When you signed the loan for the mortgage, you made a business transaction with the bank.
Looked at through this light, there's a strong ethical argument that no agreement was made, as very few single humans are informed enough to have the capacity to genuinely consent to an agreement as complex as a modern mortgage.
What is “complex” about a traditional 30 year fixed mortgage? The type that most people have been doing for decades - aside from the craziness between 2000-2008?
Truly, it is a simple document that no one has ever been confused about the finer points of. The implications for bankruptcy proceedings, estate law, injury liability, and chain of title are all so straightforward that everyone knows them and no one ever needs a lawyer.
I think most people realize that your home loan is secured by your home. Despite what the lawyers say, bankruptcy won’t usually protect a secured asset.
I remember one of the most explicitly explain parts of the home was the title.
“Injury liability”? You are required to have homeowners insurance and if it’s not good enough to satisfy the loan, they will make sure you know it. While pre-2008, I had loans without an escrow that paid the insurance. They are a lot stricter about it now.
Giving consent does not imply that it's informed. How often do you read the full EULA before you click okay? If you did, read it all, do you think you know enough about to understand all the legal ramifications? If you're about to say yes, perhapd consider checking yourself since many of the clauses commonly included in EULAs are completely untested in court. No one--not even the legal experts who wrote them--knows for sure what these things mean, what's enforceable, and what isn't.
Maybe you have a better chance at getting the idea of it because you are more techie, and you know some legal jargon.
But to most people, an EULA is complete and utter gibberish. To some people, a 30-year fixed mortgage is utterly meaningless gibberish.
Yeah, you can sign on the line, but it's not any more informed consent than what most people do when they click okay before they log in.
One of the papers you sign when getting a mortgage is one that says simply "I have read and understood all these documents."
I have read them. There are a lot of pages, but it's pretty straightforward. (The escrow agent just sat there impatiently twirling her pencil and sighing, but she never said a word.)
If you can't read them, or can't understand them, hire a lawyer to do it for you, check for any hanky-panky, and explain it to you. It's worth a couple hundred bucks to protect your 6 figure investment.
>The escrow agent just sat there impatiently twirling her pencil and sighing, but she never said a word
That's because you're probably 1 out of 100 that actually bothers to read and understand all of those documents. Your own realtor doesn't understand those documents and the vast majority of home buyers do not hire their own lawyer to check all of the documents and contracts they sign when buying a home. Whether it's worth it or not to actually read all of those documents and have a lawyer review them before signing or not, that's not what happens in the vast majority of cases. It's not an understatement that the majority of home buyers do not understand all of the obligations of their mortgage.
>One of the papers you sign when getting a mortgage is one that says simply "I have read and understood all these documents."
And I'm sure the EULA that everyone always skips says the same thing. That doesn't change the fact that almost no one actually has read and understood all of the documents.
And yet if you sign "I have read and understood these documents", how can you claim in court that you didn't?
BTW, I didn't have a lawyer review them. But they are not hard to understand. Probably a century of lawsuits have shaped their contents, and they are shaped by judgments against the authors of them when they are ambiguous or confusing. In fact, they're fairly standardized.
I've never had trouble with mortgage documents, but I have had trouble with car loans, repeatedly. The terms we verbally agreed on were altered in the final document, always significantly in the lender's favor. I always make them fix it, and they'll lie and say those were the terms we agreed, or those terms are their policy, or those changes are immaterial, or they don't have the time to fix the documents, all kinds of crap.
I.e. it's not that the documents are hard to understand, it's that they slip altered terms in them.
As near as I can tell, this complaint sounds like an offshoot of SovCit approach. Very similar approach.
In any case, I strongly favor discarding deeds, title search fussery, in favor of a national title registry - the decentralized approach seems, today, to be pointless. Maybe MERS should be nationalized and turned into the Standard Property Registry. It should be as simple as checking the database view to see the title, liens, claims, etc.
edit: I read each and every single document I signed for the 30 year conventional mortgage, both in the run-up and in the grand finale. Law is like code, but executed by courts and lawyers with a "virtual machine" of the great Anglo-American legal tradition governing it. Anyone competent to write code and read manuals should be able to read their mortgage documents.
Many of these homeowners, unlike "sovereign citizens", actually appear to have the law on their side. They aren't just making up their own insane interpretation of the legal system. It even sounds like it's more like MERS who made up an interpretation of title that disagrees with state laws.
You seem to be saying that MERS's interpretation should be correct, that MERS's database should be the law of the land and investors should be able to buy and sell the title to mortgages without states and counties being involved.
The current system has homeowners getting windfalls because MERS screwed up, and I suspect that screw-ups in your version would have the opposite effect, where homeowners get robbed by computers and nobody can be held accountable.
So that seems bad. And what would the benefit be? Sure, it would make mortgage-backed securities more efficient, but -- why is that good?
Crap happens. That's the point of the courts; to enforce remedy.
If you've ever dealt a little bit with funky titles, you'd know that having a central authority managing all claims to title would be a big deal and massively improve life for property buyers. Title searches are not exhaustive. That is why title insurance exists.
If MERS is a title registry and it also manages bundling of debts, I genuinely don't care. The issue isn't debt bundling, it was granting high risk mortgages and other high risk behavior.
Man, that's crazy. If the law says you have to have the deed and the note to foreclose, how can the court ignore this? Honestly, it sounds like Trotter was trying to game the system, but shit, isn't that what they do to us all the time? We forgot to check a box, or filled in something wrong, and they hurt us. We should hurt them for the same reason.
> If the law says you have to have the deed and the note to foreclose, how can the court ignore this?
Simple: that's not what the law says. At least not in Idaho.
According to the court's opinion, what the law says is that a trustee who forecloses must meet four specific requirements. None of those requirements equate to proving that you have "standing" (which was what Trotter alleged was required) to foreclose.
However, the first of the four requirements (p. 5 of the court's opinion) is: "The trust deed, any assignments of the trust deed by the trustee or the beneficiary and any appointment of a successor trustee are recorded in mortgage records in the counties in which the property described in the deed is situated". Since the main concern given in the article is that MERS and similar arrangements are circumventing the recording of who owns or has claims on real property in the local jurisdictions, it would appear that in the Trotter case, that concern was not present, since the relevant claim information was recorded in the local jurisdiction; the trustee who forecloses has to be the one whose trust deed is filed with the county for that property.
"The million dollar brownstone that nobody owned" story that came through recently had its title "restored" in Idaho which suggests to me that Idaho is a favorable jurisdiction for people to do this sort of thing.
> In accusing Keane of negligence, the Sedgwicks, their lender and title insurance company pointed in court documents to a recent article in Harper's magazine that quotes remarks from Keane at a dinner with the writer during which he made outrageous and sexually explicit remarks about his role in the case.
An interesting article, but the whole thing had a whiff of "paying income tax is unconstitutional", complete with the protagonist coming off as just a tad unhinged. IANAL, and even as an amateur one I wouldn't begin to claim to argue the merits of the law. But none of the folks mentioned in the article garner any sympathy from me. Banks weren't screwing anyone, AFAICT. Folks just couldn't make the payment, and found a loophole. Hell, one person had mortgages on eleven houses in San Diego. Hmm, could it be that they were just a bit over-extended, and not victims of the evil banking system?
Now, I'm not hatin' on anyone mentioned in the article. Overall, I'm about as neutral as I would be watching two people I have no interest in have a fist fight, because I have no great love for banks, either. And if they succeed, good for them. But the state of ID, as pointed out by another commentor, seems to put this in the "don't pay income tax" bucket as well.
So the people in the story had an obligation: to keep paying their mortgage on time.
The banks also had an obligation: to follow all local and state rules regarding liens on property. Should the mortgage be sold the local county clerk would need to be informed, forms would need to be filled out, possibly a fee need to be paid. But they didn't. Instead they used MERS to make transferring mortgages webscale.
Who owns a debt seems like something that should be quickly and easily determined. This helps avoid problems like "I've been paying bank A for years, bank B just showed up and said I should have been paying since last year!" (and if you're reading student loan horror stories, that's a common refrain). For mortgages (a secured debt) it seems like the county clerk office should hold the canonical answer. But that stopped being true.
Maybe the homeowners here shouldn't get off scott free, but maybe the banks shouldn't either.
It was never generally held to be, and the US had (though not permanently) income taxes prior to the 16th Amendment.
> The 16th amendment had to be passed to make it constitutional.
No, it had to be passed to make income tax on revenues from certain forms of interest, dividends, and rents to be Constitutional under the (quite controversial) holding in Pollock v. Farmers Loan Trust Co. Income taxes moe generally were held by the Supreme Court to be excises rather than direct taxes and therefore Constitutional even prior to the 16th.
I think you're getting downvoted for typin' "hatin' on" rather than something that's grammatically appropriate for written discussion and more specific, such as "Not that I condemn...".
I appreciate your feedback. Though if I were to guess, it's more the "I have no sympathy..." than my street grammar. :-) I've got 10K points of imaginary Internet cred, I don't worry about a downvote or two except as a sanity check for the rare times I get out of line.
So, I was not surprised to discover that this did not exactly revolutionize the mortgage industry, and on some level I'm not all that disappointed. There is a problem, but getting "mad as hell" is probably not the solution.
However...it does remind me of my chief disappointment with the Obama administration's approach to rebuilding after the Fiscal Crisis, and that is that we did not really change the financial system very much. I have the very strong impression that it will all happen again.
Not quite sure what the relevance is today of this article from 2012. It's core message is a good one, though.
Americans are used to getting pushed around by "the machine". Bills come from various places (utilities, hospitals, banks, the government) and we pay them without thinking. Why think that much about it? You have to pay or your precious credit rating will suffer.
But the mistakes are so common it's likely that everyone has a personal example from some point in their lives. Credit card fraud, billing errors, mistaken identity, hidden charges on a phone bill, and on and on, and on again. The companies are faceless, emotionless, and completely without loyalty to their customers. It's rather insane that we grant them fidelity in return.
You've paid your insurance bill diligently for years, but as soon as they are needed, they start looking for ways to get out of paying the claim. They will happily screw you over the tiniest technicality. The insurance industry certainly isn't the only offender in that regard.
Some people might scoff at the ideas in the article. You took out a loan, only a deadbeat leech would default on that loan and expect to keep their house. Sounds about right, but that assumes we live in the world we all imagine. The "right" world, where business still resembles interpersonal relationships. It doesn't, and we don't live there.
It shouldn't just be about fighting Wall Street greed, or getting out of an eviction. Everyone should be on top of any business from which they have purchased a service. Be informed. Force them to deliver the service they promised. Force them to make you whole when you've been screwed. Force them to prove that they have accurately managed your account and they they truly do own your debt. Above all, make them actually compete again.
It would be nice if everyone did that, but I don't actually believe that they will. Oh well...
It would be nice if everyone did that, but I don't actually believe that they will. Oh well...
It would be nice if everyone had the wherewithal to. It would be nice if they did that it would have a lasting impact. There are a few problems though.
"The Machine" is set up so that we don't have the time or money to actually fight these claims. I certainly can't miss time from work to deal with much of this. Maybe if it'll bankrupt me either way, but for every little error I've come across, the lost time and wages aren't worth it financially. Am I going to go into debt to sue someone just to prove a point? No. That would be a terrible use of my resources.
Also, these agreements we enter into are written with technicalities built in. To expose them would take an intricate knowledge of contract law. Companies rely on this imbalance of knowledge and power to take advantage of us. Even if there is a successful claim it's not like it would automatically set a precedent or retroactively void existing contracts or prevent new loopholes to be written into new contracts.
Action from private citizens is a band-aid here. Something needs to come from a higher power. It would be great to have a government that works for us in this regard, but they side with big business here. It sucks, but it's a reality of the machine.
I want to know who all these people are who just thoughtlessly pay every bill they receive in the mail as long as it looks official. I have some bills I need to start printin’!
There already are people who take advantage of others in this way. You will need to differentiate yourself to be successful in this crowded marketplace.
This reminds me of when my health insurer, Anthem, refused to cover a test performed during annual screening. Once I called them, waited patiently on hold, then read them a portion of their own document "Preventive care services covered with no member cost-share", they promptly waived the fee.
Makes me wonder how many people simply accept these fraudulent charges, because they don't have the time, the energy, or the resources to fight "the machine". Over 73 million people are served by Anthem and its affiliated companies, so that can't be a small number.
If it happens occasionally it is an accident, if it happens frequently it absolutely is deliberate and fraud. Or the company is too incompetent to be in business.
Exactly! If it’s happened randomly to you once, it’s probably happened to hundreds or thousands of other people. And besides that, when even completely innocent mistakes cost me two hours of time on the phone, I expect a VERY low rate of mistakes. A lot of big companies seem to take the view that it’s no harm, no foul if they fix it after a single call, but it’s easy to spend 20 or more hours a year dealing with this crap when everyone does it.
I've personally found emailing companies directly to be effective. Basically stating that I attempted to contact them, I was bounced around and put on hold and gave up. I've literally used the phrase "give me a holler" at my phone number and received calls back the next morning. If they want to get their money they can reach out to me. I just won't pay any part of the bill until the issue is resolved. And I am definitely not going to waste my time on hold.
I forgot to mention - this happens almost every time I use an insurance company. I understand this is anecdotal, but they surely seem to be making a lot of mistakes [always in their favor].
> Be informed. Force them to deliver the service they promised. Force them to make you whole when you've been screwed. Force them to prove that they have accurately managed your account and they they truly do own your debt. Above all, make them actually compete again.
Yes this could be done but it's a never ending battle and it drains all your productivity when fighting. And when you have your small victory after hours of being on hold, they might give you back what they owe you, but they do this en-masse and some people don't have the energy to fight back, people tire. That's why we should ALL fight back this systematic scamming so that it doesn't happen in the first place. Individual fighting back doesn't beat a machine set on a bad behavior.
Too bad class action lawsuits no longer benefit the consumers involved. If that system worked, it would be a way for consumers to fight back en masse. The alternative is legislation, but 'blah blah no more regulation blah blah.'
I agree that so many class action suits seem to result in peanuts for those in the class, but I also think it's difficult to assess how much that acts as a deterrent to even worse behaviors.
I think it does affect them but they would find ways around it because they are at the center of the operation. We are always one step behind, doing hard work trying to untangle what they machinated. I think we should fight politically, we should strive to make scamming more punishable than it is now such that if they're caught, not only should they give back what you stole but be taken out of business completely.
> Not quite sure what the relevance is today of this article from 2012.
This article was cited by "A million-dollar brownstone that no one owned" which was on HN yesterday [1].
> MERS is an entity that was created by the banks but has governmental power. This is both true and hard to believe, so here is a 7,000-word Harper’s piece that both explains it and doesn’t make this article any longer. The piece details MERS’s rise to power and also suggests that it is the single most-guilty party in the whole mortgage crisis.
...
> THE BEHAVIORS THAT RESULTED IN THE $25B 'NATIONAL MORTGAGE SETTLEMENT' IN 2013 HAVE CONTINUED UNABATED TO THIS DAY. IN FACT, THEY'VE GOTTEN WORSE.
>Not quite sure what the relevance is today of this article from 2012. It's core message is a good one, though.
I can't seem to find it at the moment, but it was linked in an article yesterday that was about clouded titles and how the mortgage crisis continues to have effects on the ownership of homes long after people thought it was over.
> It would be nice if everyone did that, but I don't actually believe that they will. Oh well...
That presupposes that billing errors are common enough that it's actually worth your time to ferret them out. I don't think you can take that as a given. In a country of 300 million people, with instant communication on the web, you can easily find thousands of instances of billing errors and other abuses. But what are the odds, statistically, of you actually being on the receiving end of one? Because that's what drives the equation of whether it's worthwhile to push back.
There are benefits to the ancient system of physically recording everything in the locale, and potentially good reasons to move to a more modern system. While I don't have enough info to form a final opinion, I do know that if they are going to centralize it, they should certainly be held to a standard of doing it right.
Instead of bailing out the banks after the crisis, the government could have decided to do something like this and sever the loans. Let people keep one home (the cheapest if they had more than one) and let the banks take the fall for what was completely their own fault. They didn't. They decided that these banks should continue to fuck people over in the same way, passed a few laws to prevent it for a few years and that's about it. They claimed these banks were "too big to fail," a moniker no one understands because it's absurd and doesn't make any sense. If anyone deserves to be fucked over it's these banks who fucked the rest of us over royally.
I agree with the sentiment but considering the bailout we got barely passed because of conservative outrage, anything with even a wiff more of "socialism" would've been doomed.
Reading about the crisis still pisses me off but I also am grateful there still is a system. Conservatives flirted with stupid in a big way in 2008 & 2009 and it could've been a lot worse.
> Adam Levitin, a professor of law at Georgetown University, told me that if the lawsuits are successful, the banks will be on the hook “for hundreds of billions of dollars” and will likely go bankrupt.
I'm guessing that these lawsuits were not, ultimately successful?
Referred to in yesterday's article "The million-dollar brownstone that no one owned" [1] with HN comments [2], about a particular building in NY with an ugly financial history through the mortgage crisis.
For those curious to see who the current Servicer (ie place that takes your monthly mortgage check) and Investor (ie the actual owner of the debt) of your mortgage is, the following site at MERS seems to work:
Not just not paying off your debts but being proud of it. You want Greece? Thats how you end up Greek. But the evil banks! Try buying a house without them then. But the evil system! You are living in it and you were enjoying the boom times.
This article reads like a Marxist manifesto. Which is fine if these people vote Communist next election.
I owned a house along with someone else, an okay house, bought it for $115,000, held onto it for 5 years, until it appreciated to $350,000 in those hurly-burly days.
At some point, and I forgot why it came up, we needed to figure out who owned the loan. And we never did. It the morass of paper work and nearly fraudulent claims by various people who claimed to own the loan, we stopped paying on the loan. We literally had more than one company claim to own it at one point. What was weird is it was kind of a slow burn, even after we stopped paying. No one really seemed to care as much as you'd think $900 a month would make you care.
In the end, we sold the house, never paid off the remaining debt, and split the cash. I told my lawyer I'd hold onto savings to cover the debt if they ever came back and could legally claim it.. It's been 11 years. Nothing yet.