foreclosure

Sen. Jeff Merkley has unveiled a six-part plan to address the ongoing foreclosure crisis and boost the nation’s troubled housing market. David Dayen was at the announcement of the plan in Portland on Tuesday, and reports.

The “colossal disappointment” of the HAMP loan modification program, according to Merkley, necessitates a restart to the national conversation of how to heal the decaying housing market. The confusion in the market, as well as the continued flood of foreclosures, creates uncertainty for working families and the economy. “We’re not going to see a true economic recovery until we do something about the broken housing market,” said Senator Merkley at the event. “I met with Portland homeowners today who dealt with months of confusing instructions to get a mortgage modification, only to be told 10 months later they didn’t qualify and their home was facing foreclosure. My plan will put homeowners first and foreclosures last.”

Here are the six points to the Merkley proposal:

1. A national short refinance program. When a bank sends a home into foreclosure, it becomes an REO property, to be sold at auction at a large loss for the investors. Instead of going through the long process of resale, with the attendant upkeep that has to be spent by the bank on the home, and the disruption to the property values from having a vacant home in their neighborhood, this short refi program would allow qualified families facing eviction to refinance to an FHA-guaranteed mortgage based on current property values and interest rates....

2. Ending dual track. The family highlighted at today’s event, Connie and Michael Umphress, were current on their mortgage when they sought a modification with Wells Fargo. The servicer encouraged them to miss a payment to qualify for the private modification, and then reduced the loan in the trial period. But at the same time, they pursued foreclosure actions. So Connie and Michael got foreclosure notices while they negotiated the modification process. Merkley’s plan would end this highly stressful dual track process, and suspend foreclosure actions while families sought a modification....

3. Single point of contact. Borrowers aiming for a modification usually talk to a different person at their servicer every single time they establish contact. This means they have to explain their situation all over again, and increases the possibility for mistakes. Merkley would establish a single point of contact between the borrower and the lender.

4. Third party review. Similar in spirit to Sen. Al Franken’s proposed Office of Homeowner Advocate, this would create an independent third-party review process for families facing foreclosure. It would check to see if the borrower explored every option to avoid foreclosure, and possibly initiate a mediation process with a sit-down between the borrower and the servicer....

5. Lifeline bankruptcy reform. This is basically cram-down, the ability for bankruptcy judges to treat primary residence mortgages the same way they treat vacation homes, second homes, boats or virtually any other asset....

6. Homebuyer’s tax credit. I’m not such a fan of this proposal, but as Merkley describes it, he would generally target it toward first-time homebuyers purchasing “modest” homes....

Merkley hopes his proposal would spark a conversation in Washington about how to fix the housing market. HAMP has completely failed; as Merkley noted today, less than $1 billion has been spent to mitigate foreclosures, out of a promised $50-75 billion. “We are not through the foreclosure crisis, so we must have a second national conversation,” Merkley said. He invited other proposals from members of Congress.

Merkley is absolutely right--we do have to have the second national conversation. The housing crisis hasn't diminished as home prices continue to fall, and more and more homeowners become underwater on their mortgages. The next solution should focus on stopping the foreclosure crisis--and foreclosure fraud--and keeping borrowers in their homes, rather than on keeping the banks profitable.

His second sentence is completely wrong and tells us that either he didn’t read the opinion or did and didn’t understand it.

His second sentence is:

He explicitly acknowledged that this ruling sets a precedent that has far-reaching implications for half of the mortgages in this country.

From the ruling:

The Court recognizes that an adverse ruling regarding MERS’s authority to assignmortgages or act on behalf of its member/lenders could have a significant impact on MERS andupon the lenders which do business with MERS throughout the United States. However, theCourt must resolve the instant matter by applying the laws as they exist today. It is up to thelegislative branch, if it chooses, to amend the current statutes to confer upon MERS the requisiteauthority to assign mortgages under its current business practices. MERS and its partners madethe decision to create and operate under a business model that was designed in large part to avoidthe requirements of the traditional mortgage recording process. This Court does not accept theargument that because MERS may be involved with 50% of all residential mortgages in thecountry, that is reason enough for this Court to turn a blind eye to the fact that this process doesnot comply with the law.

from you:

(because the vast majority of the opinion is dicta – except for the part that finds that MERS can seize the house – it expressly doesn’t hold _anything_)

From the ruling:

Therefore, the Court finds that the Assignment of Mortgage is not sufficient to establish an effective assignment of the Note.

Therefore, the Court finds that Movant has not satisfied its burden of showing that U.S. Bank, the party on whose behalf Movant seeks relief from stay, is the holder of the Note.

The Court agrees with the reasoning and the analysis inBoulouteandAlderazi, and theother cases cited herein and finds that the Mortgage, by naming MERS a “nominee,” and/or“mortgagee of record” did not bestow authority upon MERS to assign the Mortgage.

The Court finds that the record of this case is insufficient to prove that an agencyrelationship exists under the laws of the state of New York between MERS and its members.

This Court finds that MERS’s theory that it can act as a “common agent” for undisclosedprincipals is not support by the law. The relationship between MERS and its lenders and itsdistortion of its alleged “nominee” status was appropriately described by the Supreme Court of Kansas as follows: “The parties appear to have defined the word [nominee] in much the sameway that the blind men of Indian legend described an elephant – their description depended onwhich part they were touching at any given time.”Landmark Nat’l Bank v. Kesler , 216 P.3d158, 166-67 (Kan. 2010).

Sounds to me like the court did make several findings regarding MERS…

That he misunderstands very, very basic stuff suggests you read him skeptically.

Indeed.

The Ruling: http://www.scribd.com/doc/48827432/In-Re-Agard-48750818-US-Bankruptcy-Court-New-York-Memorandum-Decision

The article: http://www.huffingtonpost.com/l-randall-wray/new-yorks-us-bankruptcy-c_b_824167.html

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