MERS Judge Sets Aside Bankruptcy Court’s Critical Ruling

Thom Weidlich, Bloomberg

Merscorp Inc., operator of the electronic-registration system for about half of all U.S. home mortgages, got a court to set aside a bankruptcy judge’s opinion criticizing its right to transfer the mortgages among members.

U.S. District Judge Joanna Seybert in Central Islip, New York, yesterday vacated part of U.S. Bankruptcy Judge Robert E. Grossman’s February 2011 decision in the bankruptcy of Ferrel L. Agard. Merscorp, based in Reston, Virginia, runs Mortgage Electronic Registrations Systems, or MERS.

“The issue of whether MERS had authority to assign the mortgage was no longer before thebankruptcy court,” Seybert wrote. “There was no longer a live case or controversy.”

Merscorp was created in 1995 to help county officials cope with the growing volume of mortgage transfers, the company has said. It tracks servicing rights and ownership interests inmortgage loans on its electronic registry, allowing participating banks to buy and sell the loans without having to record the transfer with the county. MERS helped Wall Street to quickly bundle mortgages together in securitized trusts.

“I thought it was a poor decision because it was decided only on procedural grounds,” George E. Bassias, a lawyer for Agard in Queens, New York, said of Seybert’s ruling in a phone interview today. “In my opinion she’s wrong on the procedure too.”

Foreclosure Sale

Agard filed for bankruptcy in September 2010, the day before her Westbury, New York, home was to be the subject of a foreclosure sale. The mortgage servicer, Credit Suisse Group AG (CSGN)’s Select Portfolio Servicing, asked Grossman to allow it to continue with the foreclosure. Grossman ruled that Select Portfolio should be allowed to do that.

Grossman then went on to say that Select Portfolio and U.S. Bancorp, which had been assigned the mortgage by MERS, wouldn’t have been given the relief had a state court not already granted a foreclosure judgment.

That was because MERS’s “nominee” status didn’t give it the authority to assign mortgages, Grossman said.

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Our Friend Jeff Thigpen was profiled on Rachel Maddow

Standing up to banks, putting who-owns-what back in order

In a TRMS exclusive, Rachel Maddow reports on one North Carolina town standing up to the big banks that destroyed the housing market and the lives of many local families with foreclosures that may turn out to be fraudulent.

>>> don’t leave your home because when those companies say they have your mortgage, unless you have a lawyer that can put his finger or her finger on that mortgage, you don’t have that mortgage. you’re going to find they can’t fientds the paper up there on wall street . i say to the american people , you be squatters in your own homes. don’t you leave.

>> you live somewhere. maybe you live in a city or a town or in an unincorporakorpcorporated rare. the ground you live on is owned by someone or corporation or maybe a government. one of the first things americans did as citizens was set up public registries so keep track of who owned what land. the answer to where that fence can go is in books like these. how it’s mortgaged and paid for or not. this is important stuff. the public record is a clear thing or it should be when the system works right. i want you to meet lorie linear. this is her driving. this is in greensboro . she drove us to her neighborhood to one particular house where she was friendly with the owner. it’s a normal house in a normal neighborhood. she works in real estate in this neighborhood and she says they are going through a new round of foreclosur foreclosures. there’s been a couple of suicides in families that have lost their homes. thehouse is boarded up being abandoned takes a toll on a house . on the door there’s a sign to tell you to call the bank if you have any questions.

>> if this property is not vacant call your mortgage servicer immediately. . we have date. they were just here. this is new to me. please call wells fargo .

>> the owner of that particular house ended up in the newspapers last month after he got into a 15 hour stand off with police. he was a regular guy and now you can direct inquiries about his house to wells fargo . they’ve got his house now. stories like that grew lorie to go to occupy greensboro . 400 people show second-degree up. a few of them telling about how they lost their homes. it can be not just upsetting but embarrassing. you can feel like you’re the only one. that night last week a couple of occupiers screened a movie to try to explain the foreclosures and why this is a crisis. they are trying out new ways of acting out how the banks wrecked the economy. how the banks lured people into loans they couldn’t afford and loans that didn’t make sense. how they traded those loans like they were casino chips . they’re looking for new things to do about it here and across the country. in greensboro they have started formal training for volunteers to examine the documents in new foreclosures and look for signs that the bank has not got the right to kick that particular family out on the street.

>> you’ll be trained to seek out evidence of fraud including robo signing.

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Steven J. Baum Agrees To Be Financially Spanked By Schneiderman

Agrees To Pay $4 Million To New York AG’s Office

Carolyn Thompson, Associated Press

Baum pays out $4million to AGNew York law firm that was harshly criticized after pictures surfaced from a company Halloween party where people dressed as homeless has agreed to pay $4 million in a settlement with the state over some of the tens of thousands of foreclosures it filed, attorneys said Thursday.

The agreement settles allegations that the Steven J. Baum Firm, one of the state’s largest-volume foreclosure companies, engaged in “robo-signing” and other paperwork shortcuts to process a huge number of foreclosure cases for clients including Wells Fargo,JPMorgan ChaseBank of AmericaHSBC and Citibank, according to Attorney General Eric Schneiderman’s office.

Schneiderman said his office has been investigating the suburban Buffalo firm since April 2011, months before the company drew withering public criticism over pictures from its 2010 Halloween party that were published in TheNew York Times.

They showed part of the office decorated to resemble a row of foreclosed homes. In one picture, a person had a sign around her neck that read: “3rd party squatter. I lost my home and I was never served,” apparently mocking the explanation of some homeowners facing foreclosure. The Times said a former employee provided the pictures.

The firm’s president, Steven J. Baum, who was labeled as insensitive and held up by the Occupy movement as a symbol of corporate greed, later apologized. The firm announced in November that it would close.

Between 2007 and 2010, Baum attorneys filed more than 100,000 foreclosure actions, about 40% of all of those brought in New York courts. Examiners determined the firm prepared complaints in “assembly-line fashion,” enlisting the services of an affiliated document processing firm, Pillar Processing. Pillar, which Baum started, also is named in the settlement, along with Brian Kumiega, the Baum firm’s managing partner.

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More Whistleblowers Are Rewarded In Mortgage Settlement

Lynn Szymoniak and Four Others Rewarded

Cora Currier, ProPublica

Buried in the sweeping mortgage settlement with banks, for which final documents were filed this week, are five whistleblower cases that shed light on the litany of foreclosure abuses by the banks.

According to one suit, Bank of America allegedly passed bad loans on to the Federal Housing Administration. According to another, the bank allegedly denied qualified homeowners access to HAMP, the government’s loan modification program.

The suits were all settled as part of the overall $25 billion mortgage deal. They were filed under the False Claims Act, which provides incentives for whistleblowers to come forward in cases in which someone has defrauded the government. Whistleblowers can net up to 25 percent of the total settlement from False Claims suits, and in some of these cases, the reward is in the millions.

Details are available for four of the cases; documents in a fifth, against JPMorgan Chase, have not yet been filed in Massachusetts. While the cases were settled as part of the overarching agreement, they still have to be accepted by the courts in which they were originally filed. In reaching the settlements, none of the banks admits or denies the lawsuits’ allegations.

We’ve laid out the details of each case.

Countrywide Defrauded the FHA

Kyle Lagow worked at LandSafe, a contractor of Countrywide, which Bank of America bought in 2008. He brought a suit in 2009 alleging that the company systematically undermined the appraisal process for home loans in order to approve as many as possible:

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