Legalizing Mortgage Theft? ULC’s Paper to Electronic Home Foreclosure Procedures Act
Urgent. While you were sleeping in the house that you think you own, flying under the radar is a group of distinguished luminaries, others might call a cabal, who are drafting the “Home Foreclosure Procedures Act” (HFPA) that could affect millions of Americans. They are the Uniform Law Commission (ULC).
The ULC, also known as the National Conference of Commissioners on Uniform State Laws, is made up of three hundred non-elected lawyer-legislators, attorneys in private practice, state and federal judges, law professors, and government officials, including from the American Bar Association, and prestigious law schools like CUNY, who are appointed by state governments from all the fifty states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.
If ULC’s 74-page HFPA proposal becomes “uniform” law, it appears to legalize what has always been illegal. HFPA could make the fraudulent mortgage practices that contributed to the 2008 economic collapse legal.
Among HFPA’s eyebrow-raising proposed legislative changes that are up for “discussion,” this part is especially priceless. In Section 402: “Assignment of Mortgage Unnecessary,” HFPA eliminates the need for banks to have original, hard-copy legal instruments required under the Uniform Commercial Code (UCC) to be able to foreclose on a homeowner.
“If the HFPA proposal becomes law, it will make the theft of real estate in America as easy as pushing a button,” Marie McDonnell of McDonnell Analytics, a forensic mortgage analyst and certified fraud examiner, said.
HFPA is slated for discussion during ULC’s annual meeting this July 11-17, in Seattle, Washington. A protest is already planned.
Get this: Section 401 in HFPA’s current drafters’ notes disingenuously claims, “A mortgage registry does not presently exist, but there is substantial interest in its creation. Thus, the Act contemplates the possibility of an electronic recording system where all notes are electronically generated and where, as a consequence, there is no paper note which might be possessed in order to satisfy the holder in due course requirements of UCC Article 3 (p. 29).”
At best these ULC lawyers—officers of the court or their staffers, are woefully misinformed or they are deliberately lying because a national electronic mortgage registry does exist. It has since the 1990’s. It is called MERSCORP, better known as MERS, the Mortgage Electronic Registration System, Inc. MERS has been named a defendant in countless lawsuits nationwide. (See ULC Drafting Committee members’ names and titles at the end)
MERS has also been accused of being the lynch pin of a pre-engineered Racketeer Influence and Corrupt Organizations Act (RICO) fraud enterprise that contributed to the 2008 economic collapse. Some have described MERS as the black hole to conceal mortgage fraud.
As Law 360 recently reported, “Louisiana parishes and Texas counties have urged the U.S. Supreme Court to revive their RICO suits accusing banks of defrauding them, alleging in a filing … that they were injured by the banks’ use of Mortgage Electronic Registration System Inc. (MERS), a database of residential mortgage servicer information.”
MERS shareholders are the big banks, like Bank of America, Wells Fargo, Chase, and government hybrids, Fannie Mae, and Freddie Mac. Although MERS supposedly does not “hold” the promissory notes, it has been foreclosing on innocent homeowners for years.
Moreover, in the current ULC’s UFPA Section 401 drafters’ notes we learn, “Subsection (b)(1) resolves the problem of who has standing to foreclose by designating the person who is entitled to enforce the obligation, to be determined under other law … When the obligation is not evidenced by a negotiable instrument, law other than UCC Article 3 will determine who is entitled to enforce the obligation. One example of other law set up by the mortgage industry is the Uniform Electronic Transactions Act (UETA), which grants to a person having control of a “transferable record” the rights to enforce a promissory note evidenced by an “electronic record,” as defined 2 in that Act (p. 29 PDF).”
Electronic data can always be manipulated.
Jack Wright of MSFraud.org, who has studied illegal foreclosures since 1997, and had his house stolen at gunpoint by rogue banks 20 years after his loan was fully discharged, is strongly opposed to HFPA.
Wright said to me: “Keeping real estate notes on paper, as it has been since the first explorer stepped off the boat, and forcing judges to accept only the original paper note is the last defense to protect a homeowner’s rights and property from illegal seizure. Removing that last safeguard will give the mortgage industry criminals the prefect tool to steal without detection.”
Does it look like some powerful group might be trying to replace the scandal ridden MERS et al with another electronic mortgage registry, perhaps with something called the Uniform Electronic Mortgage Transactions Registry—to wipe clean the problems and illegal foreclosures that occurred through MERS?
Looks like it might be possible. The ease and simplicity of electronic digital data manipulation that resulted in defrauding innocent homeowners should have been stopped years ago when it was determined that banks were creating documents out of thin air.
From the Supreme Court of Texas in 2007, Order Creating Task Force on Judicial Foreclosure Rules:
“Finding a document that says, “I am the owner and holder, and I hereby grant to the servicer the right to foreclose in my name” is impossibility in 90 percent of the cases (p.27).” (emphasis mine)
Judge Bruce Priddy adds: “And what the — happens is they just execute a document like Mr. Barrett says doesn’t exist. They just create one for the most part sometimes, and the servicer signs it themselves saying that it’s been transferred to whatever entity they name as the applicant (p.28).”
Meanwhile, the deception to conceal mortgage fraud has evidentially become a trademark for years. A couple of weeks ago, as National Mortgage News reported SunTrust agreed to a nearly $1 billion settlement over their illegal foreclosure mortgage practices, and “alleged” robo-signed mortgages.
Big win, right? Some say no. The bankers continues to generate billions of dollars by trading securitized mortgages at lightning speed, so $1 billion is a drop in the bucket for big banks, and these settlements never make the victims whole.
And just like last year’s $13 billion JP Morgan settlement, where the bank admitted that it, like every other US big bank, had engaged in mortgage fraud as routine business practices, no one went to jail.
Still, to comprehend the severity of what the ULC HFPA is considering, understand why maintaining a clear chain of title is critical for homeowners. Title searches are done using the documents recorded in the county recorder’s office in the county where the property is located. If there is one faked document recorded in that property’s records, the chain of title becomes broken and unmarketable. The homeowner’s rights are jeopardized.
This is not a bluff. This is one of the reasons behind illegal foreclosures occurring around the country.
This is the reason why former Triple A rated residential mortgage-backed securities (RMBS) are worthless junk.
This is why the ULC’s HFPA “discussion draft” must be stopped and overhauled before it becomes a “promulgated final statutory proposal.” Justice has not been served. The banks have already admitted to criminal activities yet no one has gone to jail. Meanwhile, innocent homeowners continue to battle the banks in court to save their homes.
Loss of confidence in US paper instruments
Why would lawyers even consider drastically re-writing the homeownership laws from paper to electronic and potentially legalize any misdeed by the banks?
Could it be because countries including Brazil, Russia, India, China, South Africa (BRICS), the Netherlands, and Australia have lost confidence in the US dollar and US paper instruments thanks to the toxic RMBS’ which as I previously reported are bankrupting pension companies, hurting economies around the globe, and have put 44 million American pensioners at risk?
Pesky paper proves fraud. Electronic records can vanish or be altered with a click of a mouse.
Do you think it is odd as I exclusively reported about the ResCap bankruptcy that 51 residential mortgages companies went simultaneously bankrupt and the media still has not touched this bankruptcy that is bigger than General Motors and affects millions of Americans?
Assignment of Mortgage Unnecessary
But still there is more for homeowners to be concerned with. According to HFPA’s Section 402: Assignment of Mortgage Unnecessary (p. 31-32):
“A person entitled to foreclose a mortgage pursuant to Section 401 does not have to obtain or record an assignment of mortgage from the initial holder of the obligation.
1. Existing state law conflicts as to (1) whether the foreclosing party must have an express assignment of the mortgage, or a chain of assignments running back to the original mortgagee, and (2) whether that assignment or the chain of assignments must be recorded in the county land records.
In some states, a statute explicitly requires a recorded assignment … This section resolves the conflict by following the principle that a transfer of an interest in an obligation secured by a mortgage also operates to transfer a corresponding interest in the mortgage. UCC 9-203(g) … However, the creditor is not required to obtain a mortgage assignment, nor to record any assignment, in order to establish a right to foreclose the mortgage…
2. By allowing foreclosure by an assignee or transferee who qualifies as the person to foreclose under Section 401, without a requirement of recording any documents in the real property records, this Act makes it unnecessary to follow the procedure authorized by UCC § 9-607(b), which grants a secured party the right to record a copy of the security agreement and an affidavit in the real property records. Compliance with the requirements of Section 401 is sufficient.
As part of complying with Section 401, creditors/bankers will have the right to foreclose on a property when the “negotiable instruments” have been lost, destroyed or stolen. In Section 403 the bankers’ burden of proof to foreclose on a homeowner has been virtually eliminated.
“If a negotiable instrument secured by a mortgage has been lost, destroyed, or stolen, the creditor may foreclose the mortgage only if … the creditor cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service (Section 403. Section A (3), p. 32).”
In the event of the above, according to Section 401, all the bankers need to provide is “a statement that the negotiable instrument has been lost, destroyed, or stolen and a copy of the negotiable instrument in its last known condition, in which case the [complaint] must include a lost-negotiable-instrument affidavit that complies with Section 403 (Section 401. p. 29).”
“The proposed Act eliminates the need for assignments of any kind that will demonstrate the complete chain of title to the ‘person entitled to enforce the note;’ and it eviscerates the purpose of the land evidence recording systems throughout the United States… the very institutions that have maintained real property records since the 1600’s,” McDonnell said. “This is MERS on steroids and it will further the disenfranchisement of the middle class at lightning speed.”
As the unaccountable mortgage fraud that led to the 2008 economic crisis knocks on more Americans’ front doors, it is becoming personal.
A group of homeowners, including many who are fighting the banks in court for illegally foreclosing on their homes, is being organized to protest the ULC’s meeting on HFPA in Seattle.
For more information about the protest click here.
The ULC has been crafting legislation since 1892 and provides states with “well drafted legislation” to bring “stability to critical areas of state statutory law” and strengthen “the federal system.”
As I previously reported, as Senator Chuck Schumer (D-NY) wrote in his 1987 New York Times op-ed, that banks would became casinos if Glass-Steagall was repealed. President Bill Clinton repealed it in the 1990’s. Schumer was right. They did and American homeowners lost.
Learn how to protect yourself and your property. If you have been illegally foreclosed on, www.Consumerdefenseprograms.com has a free e-book called, The Foreclosure Defense Handbook to help you. You are far from alone.