THE LEGAL LIGHTS ARE BEGINNING TO SHINE IN GEORGIA

For the last 6 years during this terrible housing meltdown with Georgia becoming Number 1 in the nation in foreclosures the legal landscape has remained gloomy and depressing for homeowners. Borrowers have struggled to find anyone with the big banks, the servicers, and even the government to help them with their housing problems to work out something, anything, to save their homes. However, few have been able to get loan modifications despite government hype and banker promises, and millions have lost their homes or are facing foreclosure.

Georgia is a non-judicial foreclosure state. This means that the alleged secured creditor only has to give proper notice to the homeowner of default, whether true or not, whether in the middle of a loan modification or not, and after 4 consecutive weeks of advertising once a week, the alleged secured creditor can foreclose on the property, and sell the home on the county courthouse steps to the highest bidder. A non-judicial foreclosure means just that; no judge and no court is involved in reviewing the foreclosure. Home financing and foreclosures are viewed as contract disputes, and where the deed empowers the alleged secured creditor to foreclose upon default with notice, there has been little until recently that homeowners could do about it.

Old court decisions from decades ago when S&Ls handled mortgages have had an adverse impact on openness, transparency, and honesty that the General Assembly has tried to improve for consumers and homeowners. In 2002 the Georgia General Assembly passed the toughest consumer law in the nation on mortgage lenders and foreclosure. But after threats from Wall Street bankers and the rating agencies like Moody and Standard and Poor the Georgia Legislature backed down and in 2003 took the fangs out of the law leaving consumers worse off. In 2008 the Legislature again tried to add more transparency and openness to foreclosure notices and communications with homeowners prior to foreclosure. But banks, mortgage bankers and mortgage servicers have dodged the law, ignored it, or presented an interpretation that violated the very transparency the Legislature was trying to provide for consumers and homeowners.

Moreover, in addition to ignoring Georgia statutorily required transparency concerning foreclosures, mortgage financing has become far more complicated.  Real estate financing has changed dramatically since the Savings & Loan days with mortgage securitization, hidden investors, mortgage pooling, servicers, lenders, REMICs, tax-free mortgage pass-through trusts, and predatory lending, luring into default, Robosigning, absolute fraud being conducted against homeowners, and banker business models that knowingly violate the law.

Further with the advent of securitization bankers arranged the circumstances where all the bankers were paid off quickly, thus having no risk as they sold mortgages to others and turned them into securities traded on Wall Street. The result was that the personal relationship homeowners had with the S&L bankers who owned their note and were interested in their welfare was replaced by a total depersonalization of housing and mortgage lending so that when times went bad there was no one there for homeowners to call.

As the no risk huge profit potential of mortgage securitization exploded in the early 2000s greed and avarice seized bankers everywhere and the American home became viewed as a lucrative quick money scheme rather than the family home which many feel is the foundation of our success as a country; the right to own and enjoy real property.

But over the last decade or two amassing great wealth at the homeowner's expense and sacrifice became the norm on Wall Street and elsewhere until the bubble burst. The banks became hyper extended, the real estate market collapsed, and the banks turned to Washington to bail them out. They were bailed out to the tune of a trillion dollars or more from taxpayers through the TARP program, which the banks used to bail out their friends and get their gambled money back from credit default swaps at full price by bailing out AIG. If you were not their friends, like Lehman Brothers, you were forced to go bankrupt and lose everything.

Further, because the bailout did not require them to increase lending to consumers, instead of helping beleaguered homeowners banks used the federal bailout TARP money to buy other banks and build up their balance sheets for the next debacle. Even the medium sized banks followed this path, and despite all the banker illegal foreclosures, consent orders, consent judgments, federal HAMP and MHAP loan modification programs and other incentives, nothing has been done for the consumer and homeowner.

There are a few bright lights beginning to shine for homeowners however in the legal arena in Georgia and elsewhere. Recently, the federal district courts in decisions by Judge Totenberg in the Northern District of Georgia in the Morgan case and the Stubbs case have challenged bank dismissiveness of consumer complaints, forced them to follow the law, and corrected the banks’ misguided interpretations of Georgia foreclosure law and its transparency. And on July 12, 2012 the Georgia Court of Appeals issued a stunning decision, following up on Judge Totenberg’s decision in Stubbs, requiring that the secured creditor identify itself to the homeowner in foreclosure notices, or else the foreclosure will be set aside. The case is Reese v. Provident Funding . Finally someone is actually reading the law, the statutes, and the legislative intent, and issuing good court decisions to help struggling homeowners when certainly no one else is doing so.

How many times in a hundred years are we going to let the banks ruin our economy, wipe out our savings, erase 40% of our net worth in one month, only to listen to the banks scream for the feds to bail them out once again? Will Americans ever learn their lesson about greedy investment bankers and their national retail banker wannabees?

Thank You Mr. Bankster For Securitizing My Mortgage Debt Into A Great Investment And Paying It Off Too!

For the last 6 years during this terrible housing meltdown Georgia became Number 1 in the nation in foreclosures. During that time the legal landscape remained gloomy and depressing for homeowners struggling to contact someone to talk to about their housing problems and facing foreclosure. Old court decisions from decades ago when S&Ls handled mortgages have had an adverse impact on openness, transparency, and honesty that the General Assembly of Georgia has tried to improve for consumers and homeowners.

While the law has been slow to change real estate financing has changed dramatically since the S&L days with mortgage securitization, hidden investors, mortgage pooling, servicers, lenders, tax-free mortgage trusts, REMICs, MBS, CDOs, Credit Default Swaps, TARP, HAMP, MHAP Fannie, Freddie, and the loss of  trillions of dollars.  A peculiar aspect of the new real estate financing is that with securitization all the bankers arranged to be paid and have no risk as they sold mortgages to others and turned them into securities traded on Wall Street. The result was that the personal relationship homeowners had with the S&L bankers who owned their note and were interested in their welfare was replaced by a total depersonalization of housing and mortgage lending, so that when times went bad there was no one there for homeowners to call.

As the no risk huge profit potential of mortgage securitization exploded in the early 2000s greed and avarice seized bankers everywhere and the American home became viewed as a lucrative quick money scheme rather than a family home. Amassing great wealth at the homeowner's expense and sacrifice became the norm on Wall Street and elsewhere until the bubble burst. The banks had become hyper extended, the real estate market collapsed, and the banks turned to Washington to bail them out. It did to the tune of a trillion dollars or more which the banks used first to bail out their friends and get their gambled money back from credit default swaps at full price by bailing out AIG, and, rather than helping beleaguered homeowners banks used the tax-payer federal bailout TARP money to buy other banks and build up their balance sheets for the next debacle. How many times in a hundred years are we going to let the banks ruin our economy, wipe out our savings, erase 40% of our net worth in one month, only for the banks to scream at the feds to bail them out once again? Will Americans ever learn their lesson about greedy investment bankers and their national retail banker wannabees?

Apparently not, but we have found a silver lining. The Banksters caused the greatest housing meltdown in American history. Millions of homes have been foreclosed on and millions more will be in the next decade. This foreclosure crisis is about money and greed. It has never been about transparency and working things out with homeowners to save homes and families despite how parts of the government have tried to help. Case after case has proved that loan modification is something the banks loathe. They get paid for playing around with it, making homeowners run like rats in a cage to send and resend paperwork they have sent 20 times before, cruelly giving hope to homeowners that things will work out, only to foreclose on them first chance they get. Worse, the servicers often toy with homeowners about who the investor is, or the secured creditor; and they always blame the secured creditor for negative loan modification decisions without identifying the investor/secured creditor.

In fact banks, servicers and trustees are motivated to foreclose because they are obligated to pay the investors who bought their bogus mortgage backed (junk) securities. Secrecy is critical to foreclosure speed. The speed is important because the banks are terrified that the investors will discover that in their haste to securitize everything they violated every possible law in the process, leaving the investors with unsecured notes backing the securities, not secured, enforceable notes and security deeds. As a result most "mortgages" which are in these trusts cannot be foreclosed on because there is no secured creditor. No one is secured and no one is a creditor, because a creditor is someone who is owed money, who is at risk and who stands to lose if they are not paid. There are no creditors because all the banks have been paid through the trusts in mortgage securitization. No one holds mortgage notes because the notes were sliced and diced into tranches and the thousands of mortgage note pieces were put into multiple securities sold to investors. As such they are securities and can never be notes again. The investors are sold certificates not notes, so no one holds the notes anymore. The notes are now like cole slaw, and one thing about cole slaw is that once you make it you will never see that carrot again.

Further, these magic notes as it turns out are separated from their security deeds which are worthless without them, and many of the securities have been paid out to investors. That means that since the banks have no risk and the investors have been paid off, the notes had become unsecured anyway, the deeds are worthless pieces of paper, so the end result is that no one owes anything. As it turns out there is no secured creditor left to enforce the note, and many people's mortgage notes have been paid off without their even knowing it. So why do the banks still foreclose? Because they think they can and because many of us do not know any better, are used to begging banks for money, do not want to believe the banks will cheat us just for greed, and naively think the federal government actually regulates and controls the banks. If anything the reverse is true.

So as we take stock of the situation we need to thank the banks and Banksters for what they have done. Sound surprising? Consider this. The end of separation of investment and retail banking led to many things such as bringing greed en masse from Wall Street to Main Street. The big banks had legislation passed to create tax-free Real Estate Mortgage Investment Conduit trusts under the tax and securities laws (REMICs). Mortgages were created by the millions and trillions of dollars flowed tax free through the REMICs to bogus trusts created to turn mortgage pools into securities. The securities were vouchsafed to be true sales, bankruptcy remote, custodian-held mortgage notes and deeds. All of this was untrue. Banks were so haphazard in handling the notes and deeds, caring only for the notes, that they created void trusts with void transactions, out of time transfers, and illegal and inappropriate mortgages as part of the trusts which backed the securities issued.

Securitization which is fine for car loans, hospital receipts, and the like had a different effect on mortgage notes and deeds which represent real property; the fundamental basis of our Anglo-American legal system. While cars are chattel, real estate is special in American culture, life and law. Every state has significant laws dealing with real estate which ranges from raw land to our cherished homes. We strive for our homes, repair them, raise our families in them, love them, entertain in them, show off in them and often die in them. No other inanimate object has the special place in our psyche as real estate and the home.

So when wise Banksters took real estate mortgage notes and deeds and securitized them they changed the entire nature of the home buying and owning system. Instead of a mortgage being a debt that we paid off over time and then burned the mortgage note and deed, securitization turned mortgages from an illiquid debt obligation to a very liquid security, and debt transformed into assets. While they no doubt did not appreciate it at the time securitizers changed the entire concept of mortgages. Now, instead of its being a staid boring long-term debt obligation, mortgage notes have become a frenetic security. The mortgage notes were sliced and diced and turned into high-powered assets called securities to be bought and sold presumably backed by some other asset, the mortgage note and deed. But since mortgage notes were turned into securities, and deeds have no value on their own, what is backing the trust certificates?

As a result while S&Ls are gone, so is the concept of a long term debt instrument. Mortgage notes are now securities to be bought and sold while the original paper mortgage notes and deeds lie buried supposedly in a custodian's warehouse never to be seen again. The mortgage is gone. Only the mortgage note is alive and well, transformed into securities, being traded and paid off by inventive bankers who foreclose in order to reduce the obligations to investors, pay off the guarantees by lender insurance, credit default swaps, and multiple 30X insurance on mortgage note face amounts.

Accordingly with time the securities created by the trusts are retired as they are paid off and the investors paid out and satisfied. But that still leaves the jerk homeowners paying a mortgage that has already been paid off. Why? Because the banks think we are stupid enough to keep doing so since we still think we are in the 1950s paying the S&L.

No more. The Banksters turned our mortgage notes, being the assets they are, into quicker, speedier assets. The banks sold the securities and made fortunes. They bet against the mortgage backed securities and made fortunes. In the process our mortgages with the genius of securitization became investments like our homes, and like the mortgage backed securities. We, the homeowners, the banks, the trusts, the investors and the traders all became involved in the same investment; the REMIC trust securitization converting mortgages into securities where the cash flowing the time payments from the homeowners and the gimmicks and foreclosure tricks created by the Banksters kept the money flowing  to the investors. The banks were paid off first and as the securities were paid over time they too were eventually paid out as the investors were paid off. Since the mortgage notes were wholly converted into the securities, the securities were sold as investments, and were retired over time by the cash flow from mortgage payments, trading, insurance, and foreclosure money. When the securities which were made up wholly by the mortgage notes were paid off and retired that meant everyone was paid off; the banks, the investors, and the homeowners. Therefore, if by chance the securities paid out years before the scheduled mortgage payments of the homeowner, then the homeowner benefited from everyone's hard work and as the trust was closed, so should be the homeowner mortgages. As go the securities so go the mortgage notes backing them. If one is paid off so is the other.

So securitization of mortgages is an investment. If the securities are paid off so is your mortgage. Otherwise, our investment would not make sense. We all invested. The banks and trustees made fortunes. The investors got what they bargained for and we had our mortgages paid off by our own efforts and those of our unwitting partners the Wall Street and Retail banks. Thank you Mr. Bankster. We shall invite you to our mortgage note and deed burning party.