Tuesday, January 25, 2011

Virginia Foreclosure Bills Get Derailed: Republican Lawmaker Calls It 'Government of the Banks, By the Banks, and For the Banks'

The bills were supposed to slow the pace of foreclosures in the Commonwealth, which has one of the fastest "takeback" procedures in the nation.

In 2010, foreclosures in the Charlottesville area rose 225% over 2009.  2011 is expected to see even more foreclosures.

The bills sought to change the way property ownership is recorded, in an effort to bypass the controversial MERS, the Mortgage Electronic Registration System that banks use in lieu of holding physical notes. 

Read the transcript of what happened in the Virginia House when MERS counsel William Hultman testified.  Naked Capitalism's Yves Smith says  
"The overwhelming majority of statements he made about matters that can be verified are either untrue or at best disingenuous."  
See her article, "MERS Exposed II:  General Counsel Tells Whoppers in Testimony Before Virginia House."

Read the article about the bills fail here.

Read about the Ibanez Case, in which foreclosures were ruled null due to MERS impropriety.  These cases will have a nation-wide impact on foreclosure proceedings.

1 comment:

Montpellier said...

I've seen a number of articles about this MERS mess...and a lot of chatter for over a year now on CalculatedRisk regarding MERS.

I definitely believe in the rule of law and of forcing the institutions to play by the same rules (used against the rest of us) and abide by the letter of the law as well.

Here's the thing: while I have heard of some cases of improper foreclosures - in some cases where the house was owned free and clear - it does not appear that the MERS-related issues are really responsible for improper or incorrect foreclosures. It may well be true that the institutions initiating the proceedings never really bothered to fully acquire ownership, but it does not appear that many of the borrowers are actually current on their payments.

This kerfuffle would be more resonant if we found that lots of people were being foreclosed upon by institutions who didn't hold the note, while the borrowers had remained current with previous institutions. Even in the Ibanez case, you've got no assertion that the borrower was not in default of the original terms (ie, that the loan was economically sound or likely to pay off).

It seems like there are foreclosures in cases where the borrower is current, but not that MERS itself is really responsible. I'm all for using "technicalities" (as the law-and-order types are fond of calling them disdainfully) to muck up and slow down the wheels of the machine, and clearly this is nothing more than a battle over who will take the hit - the banks or the borrowers - the former certainly aren't a sympathetic bunch.

All that said, most folks on this blog have advocated the market-clearing role that foreclosures play. Prices did not start to break or drop in our MSA until lenders started to unload REOs at corrected prices. That's driven other sellers (who can afford to) to lower their prices. In a sense, we do need more.

Of course the MERS counsel lies...outright. It's going to be funny to watch the VA GOP finesse this conflict between their faux-populist rhetoric and their corporate--whore reality. Nice to see at least one Democrat stood up to the banks. Bob Marshall is just true-believer-crazy enough to be dangerous to the GOP. Cooch better be careful how close he gets to Taliban-Bob or he may find his ambitions curtailed by someone even more radioactive than himself!

Of course, that presumes anyone in the electorate even notices this...my money says this is unlikely to pop up on the radar in the next HOD election cycle.