Where’s The Note? Shock and Awe for Big Banks


Michael Collins

The Mortgage Electronic Registration System (MERS) is ground zero for the current crisis. The very entity that was to bypass state and county laws and regulations and assume universal ownership apparently has a very limited or nonexistent basis in law.

Big banks have stopped foreclosures in 23 states due to legal challenges to their ownership of mortgage notes. On Wednesday, JP Morgan upped their total to 41 states in which foreclosure operations had ceased.

Why the halt in foreclosures? It seems that the banks have ignored long established state property and title procedures and may not actually own the title to the homes subject to foreclosure (and others subject to the same procedures).

Calculated Risk quoted a JP Morgan spokesman saying,

“We’ve identified issues relating to the mortgage foreclosure affidavits and those include signers not having personally reviewed the underlying loan files but instead having relied upon the work of others. … And there are circumstances where affidavits have not been properly notarized” Oct. 13.

Failing to “personally review” loan documents means that asserting that the review took place was perjury. This happened for countless mortgages. Failing to properly notarize mortgage signatures violates state property law. It could also be seen as negligence by investors in the mortgages, as well.

ForclosureGate – Shock and Awe

Those who saw the foreclosure and eviction movement around the country as inevitable may be in awe at this development. Citizens may be able to keep their homes longer, avoid eviction, and regroup financially. Rep. Marcy Kaptur (D-OH) was prophetic at the start of 2009 when she outlined what turned into a stunningly successful legal strategy.

Rep. Marcy Kaptur “Make Them Prove They Own Your Loan!” — January 2009

ForclosureGate and Real Estate Armageddon

Michael Collins

I wrote the story below in response to an outrageous trick Congress just tried to play on the public.   As many of you know, the Senate passed HR 3808 The Interstate Recognition of Notarizations Act of 2010 unanimously on September 27.   The bill was a carefully crafted, stealth “silver bullet” for the big banks to deal with their increasing legal problems with foreclosures.   President Obama exercised a “pocket veto,” which means he let it die after Congress adjourned. (Image)

While my story  focused on the process and contempt shown to citizens by Congress in that process, I became aware of a much broader issue.   We may well  be on the verge of a real estate value meltdown as a result of very bad behavior, illegal in many cases, by the big banks combined with the legitimate push back of mortgage holders.

If banks can’t foreclose and people can do a strategic default and walk away (0r live free in their residence), what will happen to real estate values?

The larger question emerged in reviewing bank bad behavior.

If there are fundamental flaws in many, maybe most mortgage, flaws of a serious legal nature, what if a strategic default movement spreads beyond just those facing foreclosure?  That’s where Armageddon comes in

Why Does Congress Hate America?

Michael Collins

Oh, it’s just that Collins guy mouthing off again.

Actually, I was far too easy on Congress yesterday in Lawless Nation – Congress.

Here’s why:  HR 3808 The Interstate Recognition of Notarizations Act of 2010

The bill is the response to the events outlined in a story that  Numerian scooped on foreclosure problems.  The banks are in big trouble.  They failed to follow the law and rules in handling mortgages.  Instead of foreclosing on home owners, those upside down and under water can consider strategic defaults on the mishandled notes.  Legal efforts have reached a point where there’s a “tsunami of legal action against mortgage servicers” as Tyler Durden calls it.

A clever Mandarin somewhere figured out that by changing the law on notarizations, after the fact, Congress could stop the tsunami by “making it more difficult for homeowners to challenge foreclosure proceedings against them.”  (See Ellen Brown)

HR 3808 passed both houses of Congress with ease.  How? (See “Major Actions”) On April 27, it passed the House by a voice vote.  On September 27, it passed the Senate unanimously.   It took just minutes for the bill to pass in both chambers.  Things move right along when there’s no debate.

It was more important for Congress to fix things for the bankers than to keep constituents in their homes in the midst of a relentless financial crisis, as a cold winter approaches.  Congress has inherent contempt for the people.   We’re probably not even important enough to hate.

H.R. 3808 Interstate Recognition of Notarizations Act of 2010

The Library of Congress    THOMAS

Bill Summary & Status
111th Congress (2009 – 2010)
Major Congressional Actions

H.R. 3808  Title: Interstate Recognition of Notarizations Act of 2010
Sponsor: Rep Aderholt, Robert B. [AL-4] (introduced 10/14/2009)      Cosponsors (3)
Latest Major Action: 9/30/2010 Presented to President (who killed the bill)


10/14/2009 Introduced in House
4/27/2010 Passed/agreed to in House: On motion to suspend the rules and pass the bill Agreed to by voice vote.
9/27/2010 Senate Committee on the Judiciary discharged by Unanimous Consent.
9/27/2010 Passed/agreed to in Senate: Passed Senate without amendment by Unanimous Consent.
9/27/2010 Cleared for White House.
9/30/2010 Presented to President. (President Obama refuses to sign the bill  It dies…for now.)

From:  a civic project to track Congress


One Hundred Eleventh Congress

of the

United States of America


Begun and held at the City of Washington on Tuesday,

the fifth day of January, two thousand and ten

An Act

To require any Federal or State court to recognize any notarization made by a notary public licensed by a State other than the State where the court is located when such notarization occurs in or affects interstate commerce.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,


This Act may be cited as the ‘Interstate Recognition of Notarizations Act of 2010’.


Each Federal court shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the Federal court is located if–

(1) such notarization occurs in or affects interstate commerce; and

(2)(A) a seal of office, as symbol of the notary public’s authority, is used in the notarization; or

(B) in the case of an electronic record, the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.


Each court that operates under the jurisdiction of a State shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the court is located if–

(1) such notarization occurs in or affects interstate commerce; and

(2)(A) a seal of office, as symbol of the notary public’s authority, is used in the notarization; or

(B) in the case of an electronic record, the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.


In this Act:

(1) ELECTRONIC RECORD- The term ‘electronic record’ has the meaning given that term in section 106 of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006).

(2) LOGICALLY ASSOCIATED WITH- Seal information is ‘logically associated with’ an electronic record if the seal information is securely bound to the electronic record in such a manner as to make it impracticable to falsify or alter, without detection, either the record or the seal information.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.

The Devil’s in the Details – Foreclosure

By Numerian Posted by Michael Collins

It seems, therefore, that millions of foreclosures that have occurred in the past two years may be invalid. Investors who were part of the $8,000 tax credit program may not have valid mortgages and may not legally have the right to live in their home. Title insurance companies have stopped accepting mortgage titles from GMAC and other financial firms implicated in this situation. Numerian

THROW THE BUMS OUT – ALL OF THEM Senate Millionaires Kill Mortgage Assistance for Citizens


Senate Millionaires Kill Mortgage Assistance for Citizens

Michael Collins
Also published here

(Wash. DC, May 1, 2009)  The United States Senate took a swipe at the spirit of May Day in a spectacular show of callous indifference when it voted down a bill to provide limited assistance to citizens at risk for losing their homes.  The final vote was 45 in favor, 51 opposed to Senator Richard Durbin’s (D-IL) mortgage assistance bill.  The original version of the bill covered some but not all of those requiring assistance.  The final version was even more restricted.  It applied to only homeowners currently in foreclosure as a result of actions prior to the start of 2009.

The denial of assistance to citizens by Senators is ironic given the fact that the origins of the current economic crisis came from Senate legislative actions in 1999 and 2000.

While their avarice knows no bounds, their memory suffers.

Apparently these multimillionaire aristocrats of the Senate “gentlemen’s club” haven’t been watching the news.  The International Monetary Fund declared that the United States is in a depression almost three months ago.  Delinquency and foreclosure rates around the country are rising at spectacular rates.  Unemployment has jumped by 3.3 million in the last five months.  Economic growth has declined at a rate of 6.3% in the first quarter of 2009.

What part of economic crisis can’t they understand? Apparently all of it.

Memo to stingy Senators:  Workers and their families are in serious trouble or about to be in trouble.  That means they lack the money to pay for their homes (also known as shelter, a basic human need).  These citizens did nothing to bring on this crisis.

You, the members of the Senate, are largely to blame and you know it. One of the most revealing remarks came from Democrat Ben Nelson (D-NE) who said:

“Do I want to have my rate go up so that somebody else might be able to cram down” their mortgage payment?” asked Sen. Ben Nelson, D-Neb., who voted against the bill.  Associated Press, Apr. 30, 2009

Nelson has never been regarded as the sharpest tool in the shed but he’s set a new standard for ignorance with this remark.  Nelson was worth at least $7.0 million as of reporting in 2008.  Obviously he needs to skimp on every penny to stay afloat.  He’ll offer no breaks for financially strapped citizens on the brink of ruin even if they are in trouble as a result of his support of Wall Street welfare.  The bill would have no impact on his or anybody else’s mortgage rate unless they qualified for help.  In those cases, the rate would go down.

The Durbin bill offered a reasonable change in bankruptcy law that would allow those in foreclosure to ask (simply ask) bankruptcy judges to invoke a “cramdown.”  In that process, the bankruptcy court would set a lower interest rates and longer terms on loans.  This takes the case out of foreclosure and allows citizens to keep their homes and the lets banks collect the money owed at a lower rate over an extended period.  (See this for a real cramdown to benefit all citizens)

The bill was hardly revolutionary since it presumed that homeowners at risk had the money to get in bankruptcy court; that the courts would be able to handle all those in need; and that the judge would accept the request for a cramdown to keep people in their homes.  But the bill might have helped as many as 1.7 million homeowners.

Even with those limitations, Sen. Durbin was forced against the wall and had to negotiate the bill to a lower level of protection.  The final bill rejected by the Senate.  Associated Press reported:  “The latest proposal would have restricted eligibility to homeowners already in foreclosure whose lender had not offered better terms. Homes would also have to be worth less than $729,000 and apply to mortgage loans originated before 2009.” Apr 30, 2009

Durbin’s last stand would have provided protection some homeowners but now there’s no protection for anyone.

William K. Black is the chief fraud investigator who untangled the 1980’s Savings and Loan fiasco.   His comments on the current economic meltdown are instructive and assign blame:

William K. Black: ‘We need some chairmen or chairwomen … in Congress, to hold the necessary hearings (on banking fraud) and we can blast this out. But if you leave the failed CEOs in place, it isn’t just that they’re terrible business people, though they are. It isn’t just that they lack integrity, though they do. Because they were engaged in these frauds … they’re not going to disclose the truth about the assets.”  Bill Moyers Journal, Apr 3, 2009

Senators, you allowed changes in banking regulations that turned Wall Street in to a big casino for the “in crowd” and wiped out millions of small investors and retirement funds.

You failed to monitor the new freedoms you gave the banks and Wall Street after you stripped away citizen protections in law since the Great Depression.

You created the current depression. And now, you’re so stingy you won’t even help a few of the many people victimized by the massive corporate fraud schemes, Ponzi schemes according to Black.

Is there any reason why even one single Senator of the 51 who voted down this assistance should remain in office to complete his or her term? I

s there any reason to hold back from demanding their resignations in every state that they represent? I can’t think of one.  Can you?


Permission to reproduce this article in whole or part with attribution of authorship to Michael Collins and a link to this article

Appendices:  Hall of Shame, Things to Come, and Resources

Hall of Shame

The votes lined up in the usual way, with the majority of citizens losing out on positive action.  Of note, the “moderate” Republicans Collins and Snow of Maine both opposed the bill.  The new Senator from Montana, Democrat Tester, voted no.  And Democrat “changling” Specter said no also.

Things to Come

See: Too Little Too Late – The Money Party at Work  Feb. 18,  2009

There are 4.9 million Alt-A and subprime loans.  Alt-A’s are loans to those with higher credit ratings that have special introductory features.  Subprimes are loans to people with marginal credit.

15% of Alt-A loans were at risk in at the start of the year.  30% of subprimes were at risk.

A majority of Alt-A loans will “reset,” increase interest, in the next 2 plus years.  25% of subprimes will do the same at a much higher rate.  That spells disaster since the “resets” are a major trigger for bankruptcy.

Some Resources

Bill Moyers Journal – Interview with William K Black  Bill Moyers Journal, Apr 3, 2009
(Transcripts:  PBS pdf Word.doc) William K Black in the News Stiglitz:  Capitalist Fools  (Essential Reading”
Economic Disaster — Are You Next?  Feb. 5, 2009
Too Little Too Late – The Money Party at Work  Feb. 18,  2009
Enough of Everything But Dollars Mar. 2, 2009

Enabling Acts for an Era of Greed – The Money Party at Work Apr. 14, 2009