Naked Capitalism: Alabama Judge Sides With Homeowners in Foreclosure Case, Based on Bank's Non-Compliance of PSA

In Alabama they do both judicial and non-judicial foreclosures, though primarily non-judicial (according to this site).

Naked Capitalism (4/1/2011) reports that a judge in Alabama overturned the foreclosure action "based on the failure of the trust to comply with the terms of the pooling & servicing agreement".

So it matters after all? At least in Alabama? That these TBTF national banks, as loan originator, aggregator, servicer, trustee of the REMIC and trustee of the trustee of the REMIC (usually their affiliated company or 100% subsidiary), cannot ignore the PSA that they themselves had created and supposedly signed, according to the law of New York State, and never bothered to follow by actually properly transferring all the mortgages with proper endorsement within the time-frame as specified in the PSA? Really? I mean really?

From Naked Capitalism (4/1/2011; emphasis added):

Alabama Judge Accepts New York Trust Theory, Dismisses Foreclosure Action for Failure to Comply With Pooling and Servicing Agreement

Paul Jackson has been forced to eat a bit of crow. A judge in Alabama in a case called Horace v. LaSalle overturned a foreclosure action based on the failure of the trust to comply with the terms of the pooling & servicing agreement. As you see, the judge ruled that the borrower can assert rights under the Pooling and Servicing agreement as a third party beneficiary and that he was “surprised to the point of astonishment” that the trust had not complied with the terms of its PSA.

The ruling in favor of the borrower endorses an argument we have made since last year on this blog, that the pooling and servicing agreement stipulated a specific set of transfers be undertaken to convey the borrower note (the IOU) to the securitization trust within a specified time frame. New York trust law was chosen to govern the trusts precisely because it is unforgiving; any act not specifically stipulated by the governing documents is deemed to be a “void act” and has no legal force. So if a the parties to a securitization failed to convey a note to the trust within the stipulated timetable, retroactive fixes don’t work. In this case, the note had been endorsed by the originator, Encore, but not by the later parties in the securitization chain as required in the pooling and servicing agreement.

See the order and more at the link.

I have no idea how the State AGs or the federal regulators are going to "fix" the mess which starts with loan origination and securitization to sale of the certificates to servicing to foreclosure process, all of which, as far I have figured, are null and void.

Here's the vid I made some time ago about the whole process and post on Youtube. There are still so many homes going to foreclosure, and in more than half the states (non-judicial states) homeowners, even if when they do know about the fraudulent securitization that could invalidate the foreclosure, don't have recourse unless they can afford to hire a real estate attorney (who may or may not know much about securitization).

I wanted to create the sequel to this video, explaining the foreclosure fraud part. But alas, Xtranormal decided to charge users to create the vid. Oh well.

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Foreclosuregate: Federal Regulators to Step In, Without Waiting for State AGs to Settle With Servicers

Taking a rare break from the Japan earthquake/tsunami/Fukushima I Nuke disaster coverage...

Since the State AGs cannot seem to get their act together to settle with the mortgage servicers (i.e. big commercial banks in the US) and sell out homeowners (see my March 7 post on that "progress"), the federal banking regulators are stepping in with their own solution, reports American Banker.

Turbo Timmy and Blackhawk Helicopter Ben to the rescue of their beloved TBTF Wall Street banks! Ta-dah!

How could the federal government step in, with uniform federal solution, to what's essentially a state affair? More than half the states have non-judicial foreclosures where the homeowners' rights and recourse that they would have in judicial states do not even exist.

Oh I forgot; it's not about the homeowners. They step in so that the banks can move forward.

Much like Japan's Nuclear and Industrial Safety Agency, whose raison d'etre is to "safeguard" the nuclear industry... (See my post, regarding this agency practically blackmailing Japanese with blackouts so that they don't deviate from "nuclear power is good for you" dogma.)

From American Banker on April Fools Day, 2011:

Regulators Ready Enforcement Orders Against Servicers as State AG Talks Stall

By Cheyenne Hopkins

WASHINGTON — Frustrated by the lack of progress with a global settlement between the 50 state attorneys general and the top mortgage servicers, federal banking regulators are expected to move forward with their own enforcement actions against 14 servicers as early as next week.

The cease and desist orders are expected to establish best practices for the servicing industry, including new documentation verification procedures, oversight from third parties and additional legal counsel, limitations for dual tracking foreclosures and modifications simultaneously, and a comprehensive look back to uncover prior mistakes.

(The article continues.)

Banks will win, there's no question. Toward the end of the article, I see this snippets:

But they soundly rejected the primary push from the AG proposal — principal reductions.

Speaking to reporters after a U.S. Chamber of Commerce event on Wednesday, JPMorgan Chase & Co.'s chairman and chief executive, Jamie Dimon, put it bluntly.

"Principal writedowns for people who couldn't pay their mortgages? Yeah, that's off the table," he said.

Well Mr. Dimon, how about the banks, including yours, who never properly transferred the mortgage they originated or bought into the securitization trusts which then issued RMBS to investors even if the trusts had no mortgages to back those RMBS? Oh I forgot. Naked short-selling is the TBTF banks' specialty. (How are JPM's silver positions doing, I wonder.)

Make sure you view my vid on foreclosuregate that tries to explain from the origination of the mortgage to foreclosure.

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