This catchy title is to an article by Christopher Ketcham in the current issue of Harper’s Magazine (January, 2012):
STOP PAYMENT!
A homeowners’ revolt against the banks
Introduction:
OWS is still fresh in our minds, with Time Magazine chiming in by declaring The Protester as the Person of the Year. So who could resist (at least) skimming an article about a homeowners’ revolt? I did more than skim it, though. I read it – three times – after buying the magazine.
Disclaimer: I didn’t buy the magazine because corporate Harper’s reeled me in with an enticing headline; I bought it to support the local, non-corporate, ma and pa bookstore I happened to be in at the time.
I had to read this article three times in order to learn as much as it had to offer me. I can’t quite put my finger on it, but I feel the author failed to convey what was the problem with MERS’s approach.
MERS
MERS stands for “Mortgage Electronic Registration Systems, whose role will soon become clear. In preparation, I will now quote from Ketcham’s article, which will segue to MERS (NOTE: All of the material I quote in this post is from that article):
QUOTE:
…there was another strategy that we could follow: attack the banking industry with the fine print of real estate law. For a bank to foreclose on a homeowner, the law requires the bank to show it owns the loan secured by the mortgage against a house. To do that, the lender needs to produce a chain of title as documentary proof that it has legally acquired the loan….In the frenzied mortgage markets of the past decade, the chains of titles on the loans of tens of millions of homeowners had been “clouded.” If homeowners sued to quiet the title – demanding proof of who really owned their loan there was a chance they could get their house back. They could even separate their house from the debt against it. The debt then would be unsecured, non-collateralized, and the bank could not take the house even if the homeowners never repaid the money. “And why should we pay it? What are they gonna do?” Mantor [the presenter] struck a defiant pose… “The fight going forward is about the title,” he went on. “We need to do it together or it won’t work. Pack the courtrooms with quiet-title actions.”
:UNQUOTE.
My comments, by the colors:
Focus on the two sections I yellowed (above), and ask yourself this question: If “the law requires the bank to show it owns the loan,” then why would a homeowner have to sue to “quiet the title?”
Now look at the words in green, starting with “the debt.” The basic fact of the matter is, the homeowner is in debt, went into debt knowingly and as a result of being in sound mind, and for a reason. He had been dutifully making his monthly payments until circumstances dictated otherwise. At no time while he was making his payments did he question why he was doing this – to eventually acquire full ownership of the house. At no time did he raise the question as to whether he was paying the appropriate party or if that party “really” had title to his house.
The bank that loaned the money and the (borrowing) homeowner had an understanding. Why should it make any difference if that particular bank sold that debt to another party? As for simply refusing to pay (“What are they gonna do?”), I wish the author would have tried to answer that question. If it’s true that “the bank could not take the house even if the homeowners never repaid the money”, does that mean the bank wouldn’t have any other legal remedy?
Last but not least: “We need to do it together or it won’t work. Pack the courtrooms…” Mr. Mantor seems to be a bit of a rabble-rouser here (as well as earlier, when “He said there were 50 million handguns in America.”) Why should we need to do it “together?” Why? Does his strategy hinge on packing the courtrooms (backed up by the implied threat of those 50 million handguns) or does it hinge on the righteousness of his legal argumentation?
QUOTE:
MERS was created in 1995 as a privately held venture of the major mortgage-finance operators…Its stated purpose was to manage a confidential electronic registry for the tracking of the sale of mortgage loans between lenders, which could now place loans under MERS’s name to avoid filing the paperwork normally required whenever mortgage assignments changed hands. No longer would the traffickers in mortgages have to document their transactions with county clerks, nor would they have to pay the many and varied courthouse fees for such transactions. Instead, MERS was listed in local recording officers as the “mortgagee of record,” the in-name only owner, a so-called nominee for the lender, so that MERS would effectively “own” the loan where the public record was concerned, while the lenders traded it back and forth.
:UNQUOTE.
More color-coded objections:
· Confidential – Suppose this registry wasn’t confidential, instead being open for public inspection. Would that have made MERS more palatable?
· Normally – What you mean by “normally,” white man? Ketcham should have expanded on that so we could make a better determination if MERS was acting outside the law.
· Traffickers – Ah, now there’s a loaded word! This does nothing but create negative bias in the reader. The better word – trader – would have been far more neutral.
· county clerks and courthouse – I fail to see how county clerks and courthouse staff would have overlooked being circumvented. Upon being notified, I doubt the 50 states’ attorneys general would have sat on the sidelines. That is, assuming MERS was acting illegally by bypassing county clerks and courthouses.
Current status of MERS in court:
Ketcham gives us some background as to how MERS fared after being sued – which was not well. However, toward the end of his article, he writes, “Over the previous weeks, MERS had been faring unexpectedly well in the courts.” Why “unexpectedly?” Does our author think MERS’s opponents have all the arguments on their side? On a hunch, I went to the MERS website at http://www.mersinc.org/ and noticed they’ve been doing quite well indeed…lately. This story is far from over.
Ketcham closes with: “The question before the Idaho court, and everywhere else, is when is the possibility of a cataclysm not a threat to be feared, but an opportunity to be embraced.” The “cataclysm” would come about by major lending institutions taking hundreds of billions of dollars worth of hits if the MERS business model were to be sufficiently condemned by the courts. I fail to see how this could even be remotely considered “an opportunity to be embraced.”
In fact, I severely chastise Ketcham for failing to elaborate on this highly leading and unsubstantiated statement, which seems to deserve an article all its own.
Beware of the False Revolutionary
Yes, that’s what I entitled this essay, and for good reason. There are people out there who will try to dangle false hope in front of the desperate – those about to lose their homes. There are those who will try to make money by leading the revolution. And there are those who will try to sell magazines by trying to hype one fringe movement or another as The Next Big Thing.
I didn’t walk away from this article with a very good feeling about the purity-of-motive of the leadership of this homeowners’ revolt. This is a sample, again from the article:
QUOTE:
They would provide a service to each of those homeowners, but they wouldn’t do it for free. They were broke. “An army travels on its stomach. You got to feed the people in the movement.” Trotter told me. “You got to eat if you want to destroy the banks.”
:UNQUOTE.
That might be where Trotter’s coming from – a wish to “destroy the banks” – but I tend to take a more sober view.
:UNQUOTE.
That might be where Trotter’s coming from – a wish to “destroy the banks” – but I tend to take a more sober view.
Going through the courts, as a revolutionary strategy, won’t work. Judges are overwhelmingly conservative creatures. They might see a need to reform the banks but they certainly won’t assist in destroying them. I want you to compare my approach (and personality) to Trotter’s and his fellow anarchists’:
· I don’t charge for my work. As a candidate for President in 2012, I’m not even accepting campaign contributions.
· While I too take due note of all the handguns in America, I don’t suggest trying to use them against the Man. In fact, quite the opposite: I urge non-violence, especially since the Man has more firepower than we do.
· I count on the persuasive power of my proposed reforms, as detailed elsewhere on this blog, not on trying to fire up the excitable to take ill-considered actions which cannot succeed in the long run.
· My suggestions are practical and easily implemented. For instance, if enough of us voted to skew the outcome of the upcoming GOP primaries, that might be enough to actually put one of the two major parties out of business. As I’ve said before, it’s perfectly legal for a Democrat to ask for a GOP primary ballot and vote for Herman Cain if they wanted to. An even better strategy? Vote against all incumbents, which can be done successfully if enough people realize they can really shake things up by bucking their programming. That last is probably our single greatest possibility for success.
There are a lot of ways each of us could participate in the upcoming revolution. But allowing ourselves to be swept up by the incendiary rhetoric of self-motivated revolutionaries is not one of them.
Steven Searle for US President in 2012
Founder of The Independent Contractors’ Party
“Unfortunately, there are a lot of fools out there who think they’ll be able to weasel out of making their mortgage payments by following scam artists. Not caring one whit for the revolution.”
Contact me at bpa_cinc@yahoo.com
