Reply #69: Daniel Pennell: Mortgage Shenanigans in Virginia

[Demeter]

http://www.nakedcapitalism.com/2011/01/daniel-pennell-mortgage-shenanigans-in-virginia-the-wall-street-%E2%80%93-washington-%E2%80%93-richmond-axes.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

By Daniel Pennell, a systems expert who has testified before the Virginia House of Representatives on MERS:

This week demonstrated how financial special interests have created an obscene and incestuous relationship with the leadership in the state legislature and the Governor’s office in Virginia. This cabal managed to kill off a bill (HB-1506) proposed by Delegate Bob Marshall, a bill designed to protect the integrity of the county property records and preserve the integrity of home owner’s title to their property. Simultaneously they attempted to alter the Uniform Commercial Code (UCC) with HB-1718, such that any “record” (the previous version said document) signed or unsigned by a person they claim owed a debt would be good enough for the banks to win a legal judgment against a person. In other words a spreadsheet from a bank would be good enough to take someone’s home or report someone to a credit bureau. This was in direct response to a Supreme Judicial Court decision in Massachusetts, Ibanez, where the court said that a bank had to have proof it owned a mortgage before it could foreclose....

Mortgage Electronic Registration System (MERS) gutted the public property records and left millions of homes with questionable titles. This was done without any government approval and against the recommendations of the title industry and the county recorders. MERS has been found by 10 state supreme courts to be acting illegally and is currently being sued by CA, NV, TN and 14 other states. The Federal Reserve, Office of the Comptroller of the Currency (OCC), regulator of the national banks and the FDIC are investigating MERS for questionable business practices and for the systemic risk it poses to the nation’s financial system. The CEO resigned last week. Speculation in Washington has the OCC taking over MERS and nationalizing our land records, a clear violation of states’ rights....

The banks wanted HB-1506 killed and HB-1718 passed to protect MERS and, I believe, to avoid providing proof to mortgage investors that they were defrauded. The requirement to record would have provided evidence to investors in mortgage backed securities (MBS) that what they bought was empty; the mortgages were never legally transferred to the MBS. In my humble opinion if you sell someone a security that you claim is backed by collateral when it is not then that would be securities fraud. Among these investors are Fannie Mae and Freddie Mac whose losses are being paid for with tax dollars to the tune of billion of dollars. Other investors include state and private pension funds. The total exposure to the banks exceeds $1.5 trillion. You can see why they would fight so to avoid a $21 fee and the right to use their own “records”.