EconoMonitor

Great Leap Forward

Join the Protest Against Hometheft

It has been a while since I blogged about MERS–the banking industry’s creation to streamline the theft of homes. MERS is the “electronic registry” system that was created to subvert 500 years of Western property law. The bankers would destroy the written records of who owned what and who owed what to whom. That way they could claim that you owed them, and that they really owned your home–no matter whether you’ve paid off your mortgage. They could sell, and resell your home out from under you.

They’d keep only electronic records in a database that only they have access to. And they would enter the data–with virtually no way to check its accuracy. MERS had a total of 50 employees, with somewhere around a dozen of whom were supposed to do some checking of the tens of millions of mortgages handled. Heck the typical ballpark has more people hired to tally up the strikes and balls. To say that this was a disaster waiting to happen–even if the banksters had been good-intentioned (which they were not)–is an understatement.

More importantly, if you really did have a mortgage, they could package and repackage and re-repackage that mortgage upteen times into as many securitizations as they felt like originating and selling, earning fees as they duped investors into believing that each had a unique claim to your monthly payment.

You  see, the advantage of shredding the paperwork and moving to an electronic registry system is that you can copy and paste the data as many times as you want. If you have a computer and a mouse, you’ve got all the equipment you need for replication–suddently that single mortgage can be sold as many times as you want.

And any 10 year old can doctor the electronic entries–a mortgage against 7825 Main Street becomes, prestO-changeO, 8825 Main Street–so that mortgages are easily placed against properties.

At foreclosure time, the only thing protecting a homeowner from theft would be a quizzical judge (and only then in judicial foreclosure states), asking to see the paper docs. There aren’t many quizzical judges, since most judges are already deep in the back pockets of the banks. Still, when that happened, the banks were ready with the BurgerKing robo-signing kids to fabricate the needed docs.

It is not an overstatement to say that the Global Financial Crisis would not have happened without MERS. MERS was absolutely essential to the “efficient” securitization model that led up to the crisis.

It is all illegal. There was never any law that permitted the industry to create MERS to evade US property law (and to avoid paying recording fees in local jurisdictions). Many brave homeowners have fought against the banksters, taking their cases to court.

The banks have lost some cases, but have also won some. So, predictably, our lawmakers and other policymakers are moving to legalize home theivery. Make it all completely above-board. Create a national electronic registry along the model created by MERS. The intention is to destroy property law and to undermine local property records that protect American homeowners. It is led, of course, by the banksters, but also–I guess not surprisingly–by the Fed.

You see, the Fed does not like local proptery law. It acts like sand in the securitization-foreclosure cogwheels created by the banksters. They want the cheapest, quickest way to turn your home into a money-making machine. Making money for them, that is. They do not want local yokels slowing that down by actually trying to protect the interests of local homeowners. What, you want accurate property records? You want to know who owns your mortgage? You want to know when a bank sells your mortgage to some foreign bank? You want to be able to track down who you are supposed to make payments to, and whether they actually received them? No, the Fed and the Bankers do not think you have a right to this sort of information. They’ll keep it for you in a national electronic registry. No more going down to your local recording office to find out.

In truth, you cannot do that any more. MERS and the banksters already destroyed the chain of title. The Fed wants to rubberstamp what the industry already did.

The Fed wants to keep securitization cheap–indeed, the Fed is quite open about that. It wants to reboot 2004 all over again. It wants to bring back the subprime bubble. Steamrolling a new–legal this time–MERS is part of the plan to boost another real estate bubble. It was so much fun last time around! And there are still some Americans among the 99% who still own their homes. The banks need to mortgage those so they can foreclose and move the rest of the real estate to the top 1%. Here’s an excellent piece summarizing the issues: http://www.marinkapeschmann.com/2014/07/10/exposed-federal-reserve-doc-go-from-paper-homeowner-instruments-to-electronic-foreclosure-fraud-what-fraud/.

Some people are standing up, trying to slow down that steamroller.

Here’s a link to a protest that begins at noon today: http://www.rollingrebellion.org/protest-at-the-uniform-law-conference/.

If you are in the Seattle area today, show up.

10 Responses to “Join the Protest Against Hometheft”

Hysteresis5July 14th, 2014 at 1:27 pm

"More importantly, if you really did have a mortgage, they could package and repackage and re-repackage that mortgage upteen times into as many securitizations as they felt like originating and selling "

Randall -is this the same as what is known as 'rehypothecation'? (The Greek words are the one's that hide the corruption best).

Here in the UK our 'inspired' Government has created a Help to Buy Scheme (Help to Bubble) which has sent house prices climbing at a daily rate higher than official inflation in the London area. The Brits are so infatilistically obsessed with getting on the housing ladder that they have failed to notice the rungs have been removed and the sides taken away! We love our debt peonage on this side of the pond.

Incidentally, do you know of any studies that have been done on rehypothecation and its socio economic costs? Maybe the levy Institute has done this.

Thanks

Hysteresis5July 14th, 2014 at 5:13 pm

"More importantly, if you really did have a mortgage, they could package and repackage and re-repackage that mortgage upteen times into as many securitizations as they felt like originating and selling "

shelleystotalbodyworksJuly 14th, 2014 at 11:44 pm

It is vital you all take a stand against this bill that will enable the worst crime in our history to go unchecked and become legal. Evil prevails when you dont take a stand. Please share and join us. Please write Breetz the head of this committing to produce an evil bill to enable the theft of property to become legal.

L. Randall Wray L. Randall WrayJuly 15th, 2014 at 2:17 am

Hysteresis: Not exactly the same. What I mean is that the banks fraudulently included a mortgage in more than one security. Probably some of this was by mistake (the docs are a mess, after all) but some was intentional defrauding of investors. On rehypothication yes there is some good stuff; read Thorvald Moe at Levy (www.levy.org) for info and for further citations.

ChangsijinJuly 15th, 2014 at 11:09 pm

Dear Randall,
thank you for bringing this shocking development to our attention. Doesn't that mean that if it passes, whoever sells his/her property the transaction won't be able to pass as the person selling will be shown to NOT be the owner as the chain of Title is hidden? In which case the issue will come to light very quickly.

rik_respondsJuly 17th, 2014 at 10:00 pm

I did work in the financial services industry prior to the crash. Most of the work was in architecting and developing IT systems to support financial services, including mortages. Consequently, I needed to know a great deal about the computational and data requirements of the models that backed these systems, hence learning a great deal about the models themselves. The biggest problem is the lack of understanding of what constitutes a complete and reasonably correct system. No one in charge in the industry either appreciated or gave a damn about what was required to make securization work as a sound system. There was no review process to insist that the system be sound. Most of the gotchas from poor quality control of loan origination data, to the so-call black swan problem, to the inability of most to even calculate an accurate price, the network effects of hedges were known by thousands in the industry, but as the money rolled in no one in authority was interested, government or industry. The only way forward is to mandate that these systems from architecture to api to work flow be open source with an independent engineering review process. Otherwise we'll keep on building "bridges" that fall down even as a solid sound bridge wold be very useful.

L. Randall Wray L. Randall WrayJuly 17th, 2014 at 10:25 pm

Thanks rik. We need the insights of those who were inside the vampires squids. Note I distinguish between the top CEOs and the math/engineering/physicist techies creating models and even products. The top CEOs raked in tens or hundreds of millions, and they knew what they were doing. They should be investigated, indicted, convicted, and imprisoned (in that order, of course).

MarinkaJuly 21st, 2014 at 5:04 am

Professor Wray,

Thank you so much for the link to my article. As you know, this is one we really have to keep an eye on. Thanks again.

All best, Marinka