BY ZERO HEDGE ON IRISH TAXPAYER PAYING GOLDMAN SACHS BILLS : Are Irish Taxpayers About To Bail Out Goldman? Is Peter Sutherland Stealing From His Own People To Give To The Vampire Squid? | zero hedge and also How The ECB Directly And Indirectly Monetized All Irish September Treasury Auctions | zero hedge
BY SUNDAY INDEPENDENT – DAVID DRUMM SPILLING THE BEANS ON ANGLO : Anglo’s Drumm: I did not act alone – National News, Frontpage – Independent.ie
BY HUFFINGTON POST – WHO OWNS THE MORTGAGES : Peter G. Miller: The Real Foreclosure Crisis: Who Owns the Mortgages?
BY SUNDAY INDEPENDENT – IMF MEASURES TO REINSTALL CONFIDENCE TO REINVIGORATE CONSUMERISM : Brendan Keenan: Slaughter of those sacred cows – Brendan Keenan, Columnists – Independent.ie
BY ZERO HEDGE – VISUAL ON EUROPE BANKS HANGING ON A THREAD : Visualizing Why The Future Of Europe’s Financial System Hangs By A Thread | zero hedge
BY ANON – MORTGAGE DEEDS MECHANICS
What alarms Americans is that they could be watching the complete demise of the capitalist system, which has always depended on trust supported by documentary evidence. These pieces of paper, when signed by the interested parties, form contracts that are accepted as evidence in courts of law.
Contracts can be reassigned to third parties, so long as each carefully drafted link in the chain of paperwork is endorsed, signed and countersigned by the interested parties.
American banks have apparently just realized (Thanks, John Mauldin) that this essential paper chain is irreparably broken in most of the Sub-prime mortgages issued by Freddie Mac and Fannie Mae.
As everyone knows, the loans were ‘bundled’ into REMICs (Real-Estate Mortgage Investment Conduits, a special vehicle designed to hold the loans for tax purposes), and then “sliced & diced”…split up and put into tranches, according to their likelihood of default, their interest rates, and other characteristics.
To handle this complex negotiation Fannie Mae and Freddie Mac established MERS…the Mortgage Electronic Registration System.
which was the repository of the digitized mortgage notes that the banks originated from the actual mortgage loans signed by homebuyers.
However, legally…and this is the important part…MERS didn’t hold any mortgage notes: the true owner of the mortgage notes should have been the REMICs. But the REMICs didn’t own the notes either, because of a fluke of the ratings agencies: the REMICs had to be “bankruptcy remote,” in order to get the precious ratings needed to peddle mortgage-backed Securities to institutional investors.
So somewhere between the REMICs and MERS, the chain of title was broken.
When a homebuyer signs a mortgage, the key document is the note. In order for the mortgage note to be sold or transferred to someone else (and therefore turned into a mortgage-backed security), this document has to be physically endorsed as assigned to the next person. All of these signatures on the note are called the ‘chain of title.’
The note can be endorsed as many times as you please…but you have to have a clear chain of title written on the actual note. If for whatever reason any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.
American banks are in trouble because, if they’ve been foreclosing on people they didn’t have the legal right to foreclose on, then those people have the right to get their houses back. And the people who bought those foreclosed houses from the bank might not actually own the houses they paid for.
What happens if American mortgage-paying homeowners realize that they may be able to get out of their mortgage loans and keep their houses, scot-free? Discovering faulty paperwork is a good reason to halt payments and tell their American banks to take a hike.
This is a major crisis for American banks because 10% of the 2008 mortgages are behind with their payments and four and a half percent of that total are already in foreclosure.
The hot news is that Bank of America has just halted all foreclosures, nationwide.