Great Leap Forward

LOUISIANA SUES BANKSTERS UNDER RICO LAWS: Will the Biggest Banks Finally Go the Way of the Gambinos?

It’s about time. One state has finally found the guts to go after the banks that created the MERS monster, invoking RICO laws.

Yes, MERS was part of a vast criminal conspiracy by the biggest banks (including the GSEs) to cheat counties out of property recording fees and to speed foreclosures while destroying the Western property law tradition.

Forget Washington. It sides with the banksters. The Obama administration has made it clear that it will continue to look the other way while banksters steal millions of homes in illegal foreclosures.

The banks do not have title to the properties they are stealing. Because MERS destroyed the chain of title. But Washington sees foreclosure as the only way out of the mess created by Wall Street.

The banks want to take the homes, quietly package them into bundles, and then sell them to the hedge funds at cents on the dollar. That will allow Wall Street to complete the transformation of our country to the “ownership society” sought by former President Bush. (For an early piece on the plan, see my 2005 article here: Yes, the plan all along was to transfer all ownership to the top 1%.

Just think of this amazing episode in US history. Step 1: destroy property records. Step 2: dupe borrowers into mortgages they cannot afford. Step 3: package the mortgages into trashy securities sold on to dupe pension funds and other investors. Step 4: foreclose the homes. Step 5: package the homes into bundles to sell on to Wall Street.

We’re almost there. Just a few million more houses have got to get foreclosed and sold to the top 1% so that they can rent them back to the dispossessed homeowners who lost their homes due to a decade of fraud promoted by Wall Street and allowed by Washington.

But the little state of Louisiana is throwing a monkey wrench into that scheme. It recognizes that MERS was at the very center of the criminal conspiracy. The state is invoking the Racketeer Influenced and Corrupt Organizations Act alleging wire and mail fraud and a scheme intended to defraud parishes out of recording fees. See here:

The banks sued include Bank of New York Mellon, Bank of America, Chase Home Mortgage of the Southeast, JP Morgan Chase, CitiMortgage, GMAC (now Ally), HSBC, Merrill Lynch, Nationwide Advantage Mortgage Company, Suntrust Bank, United Guaranty Corporation, Washington Mutual (absorbed by Chase), Wells Fargo, Deutsche Bank, U.S. Bank, and La Salle Bank. That is indeed a list of rogues to match any Mafia family tree.

Under RICO, they are liable for treble damages, plus interest and expenses.

Well, just what are the damages? That is very hard to know. It will probably take a decade to sort out all the damage done to US property rights. Hundreds of billions? Trillions? In truth we cannot know. Tens of millions of Americans could lose their homes before the mess is over.

And the problem is that the buyer of any foreclosed property cannot be sure there is any clear title—indeed, it is questionable that there is clear title on any foreclosed property. The courts will be filled with owners who lost their property to illegal foreclosures, suing the new owners for return of their homes.

I know the apologists continually pooh-pooh this, arguing “well nobody who pays their mortgage on time loses their home, so the foreclosures are legal”. The first part of that sentence is patently false—many people who were never behind in payments, even those with no mortgage at all, have lost their homes in foreclosure. But even if that were not true, a home is not like a car. A home cannot be foreclosed simply because the owner is behind in payments.

The holder of the mortgage note can certainly go to court to try to recover owed payments. But to foreclose, you’ve got to have title to the property. The banks do not have it, and cannot produce it.

Hence, robos-signers—which only adds felony forgery to the list of bank crimes.

OK, I know, the skeptics want more proof. A new report was released by Harbinger Analytics Group Real Estate Fraud Experts, authored by David Woolley, titled: MERS The Unreported Effects of Lost Chain of Title on Real Property Owners; go here:

According to the report, “thanks to the Mortgage Electronic Registry System’s (“MERS”) failure to accurately complete and/or publically [sic] record property conveyances in the frenzy of banks securitizing home loans and in subsequent foreclosure actions, neighbors to a foreclosed property (with a sequential conveyance) as well as the foreclosed property itself will have unclear boundaries and clouded/unmarketable titles making it difficult, if not impossible, for these homeowners to sell their properties and for subsequent purchasers to obtain title insurance on that property.”

Wooley goes on: “Courts have ruled against MERS’ standing to foreclose and have criticized the MERS model as being flawed, wholly inaccurate and not allowing homeowners to fight foreclosures because it shields the true owner of a mortgage in public records. States Attorneys’ General and federal bank regulators are investigating MERS practices including fraudulently robo-signing and back dating missing documents. A few County Registrars of Deeds are claiming that they are owed millions of dollars in lost revenue from mortgage assignment transfers that were not recorded because MERS was listed as the mortgagee in public land records.”

Yes, I know, that is just one state, and just one study. But the evidence and the lawsuits and the rulings are accumulating. Just you watch.

But forget about the Obama administration. It has no interest in prosecuting crime by banksters. Three months ago Obama created yet another Task Force to deal with complaints that his administration doesn’t do enough—The Residential Mortgage-Backed Securities Working Group—and appointed NY Attorney General Eric Schneiderman to head it. From what I can tell, that would be an excellent choice, as Schneiderman seems determined to actually go after banksters.

Yet, three months later, reliable reports say that this task force has done nothing; it has never met, has no office—not even a phone—and that some appointed members do not even know they are on the task force.

It looks like Schneiderman was chosen only to try to get NYState to sign-on to the “settlement” that the state attorney generals were being forced to support. It amounted to nothing but a little pat on the wrist of the banks.

It is yet another example of the “go away and leave me alone” approach of the Obama administration, which creates impotent task forces that appear to be doing something, but in reality never amount to anything.

It’s up to the states now. You Go, Louisiana!


10 Responses to “LOUISIANA SUES BANKSTERS UNDER RICO LAWS: Will the Biggest Banks Finally Go the Way of the Gambinos?”

Michael E PicrayApril 21st, 2012 at 11:02 pm

The first case that essentially voided MERS' rights in foreclosure was Landmark Natl Bank vs Kesler which was decided by the Kansas Supreme Court, which ruling was followed by similar rulings in other States. Essentially, since MERS doesn't collect any money, and has no actual legal property interest in the properties being foreclosed, it has no standing to sue for foreclosure. It is also my understanding that if an individual property is one of those that MERS is involved in, it may not be foreclosable at all. In such a case, since MERS may have destroyed the Deeds of Trust, the occupant may not even have to make payments, and cannot be thrown out. If such a situation obtained for a sufficient length of time, the "mortgagee" could then file for title under the Adverse Possession laws of their State.

That's what the robo-signing was all about – the attempt to get around the fact that the mortgage maker did NOT have title, so could NOT foreclose. The administration/banksters attempted to get Congress to pass a law allowing robo-signing, but in a rare burst of good sense, Congress failed to pass the proposed law.

areopageticaApril 22nd, 2012 at 1:30 am

Mr. Wray-

I hope we are moving towards agreement on some things. The Wooley report you cite estimates that about half of the mortgages in the country are in MERS. With MERS being the centerpiece of your feelings toward the mortgage industry, I am hoping you might agree that some bankers are not banksters and not all foreclosure is theft. I think that if you met the woman who originated my mortgage at our bank you would say she is more like a George Bailey than a Gambino, and you would be more cautious about making blanket indictments.

Curious about something else: If banks are able to unilaterally increase money and reserves even without the Fed, per your other posts, why the hatred for banks? Isn't that the sort of accomodative result you want to see?

LRWrayApril 22nd, 2012 at 2:56 pm

I have no hatred for banks or bankers. Note I carefully use the word "bankster" to refer ONLY to those banks engaged in fraud. The vast majority of our nation's 5000 banks did not engage in fraud. Note also fraud must be proven; most of the biggest banks have already been caught, with fraud proven–and they've paid fines and restitution numerous times. There is no doubt that they are "banksters". Still, we do not yet know the depths of their depravity because Washington refuses to investigate.

Finally, MERS is involved in much more than half of MORTGAGES MADE DURING THE REAL ESTATE BOOM–and those were the ones that are (mostly) being foreclosed. The problems are with foreclosures of recent mortgages. So your figure of half is grossly misleading–perhaps unintentionally.

LRWrayApril 22nd, 2012 at 3:09 pm

Yes, Michael, exactly.

Note a recent ruling against the Bankster, Wells Fargo, in which the Judge awarded three million in putative damages:
(These are the judges words, not mine):
Although its own representatives have admitted that it routinely misapplied payments on loans and improperly charged fees, they have refused to correct past errors. They stubbornly insist on limiting any change in their conduct prospectively, even as they seek to collect on loans in other cases for amounts owed in error.

LRWrayApril 22nd, 2012 at 3:10 pm

and here is the next passage, written by the judge:
Wells Fargo’s conduct is clandestine. Rather than provide Jones with a complete history
of his debt on an ongoing basis, Wells Fargo simply stopped communicating with Jones once it deemed him in default. At that point in time, fees and costs were assessed against his account and satisfied with postpetition payments intended for other debt without notice. Only through litigation was this practice discovered. Wells Fargo admitted to the same practices for all other loans in bankruptcy or default. As a result, it is unlikely that most debtors will be able to discern problems with their accounts without extensive discovery….

bgNMApril 22nd, 2012 at 3:18 pm

Just a side note. I was talking to a friend yesterday who last year sold a home she bought in 2005 or so. She made all of her payments on time and thought her credit was good, but she found out her score was low, so she checked into it. She finds that the home she sold last year has been listed as being in foreclosure in her name for the last 3 months.

This is an illustration of the MERS mess. I am curious how the title insurance for this property was issued at sale, and I wonder what happens to the new owner who may have no idea at all that the property is listed now as being in foreclosure under the prior owner's name.

When I mentioned this to my state AG, he said he would hope that there will be a mechanism for the original owner to get it fixed through the carve-out for MERS in the "settlement agreement" made by the AGs, but it could take years. He said people like my friend will have to pay for their own lawyers if they want to resolve it sooner if at all.

Robert P. CoutinhoApril 26th, 2012 at 7:35 am

I said it before, and I'll say it again: do NOT buy a house (or any other property) without first checking to make sure that MERS has not befouled the chain of title. Although this will GREATLY worsen the housing mess if followed by all people, it is in their best interests. Meanwhile, it may be that the banksters finally get to take losses they so richly deserve. It is quite possible, provided that our nation returns to rule of law, that the major banks and the various investors in MBS's will lose everything. The houses should be 'owned' by their occupants is short order.

Unfortunately, the oligarchs running the country may decide to once again bail out their constituents (i.e. the top investors/contributors) and retroactively change the foreclosure laws. Meanwhile, if you are in foreclosure, find out if the chain of title is either A) broken or B) fraudulent due to documents being added after the fact. If this is the case, get a really good lawyer and you should be able to get your house free and clear of any mortgage payment. That is the law.

SimonstarJanuary 3rd, 2013 at 7:03 am

It must have been a tormenting experience for majority of the homeowners to have been cheated of their own homes simply for the sake of the government's personal benefits. It is like robbing from your own citizens! I didn't think that such a modern and industrialized country is capable of duping its residents to accept the ongoing fraud and make it an obligation to acknowledge and abide by it.