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It seems that the bankers were willfully muddying the waters by failing to leave a chain of title to the property that could lead to the other holder[s] in interest besides the homeowner.
The foreclosure debacle was caused 100% by the intentional negligence of the large banks and the mortgage banking industry with Freddie Mac and Fannie Mae, which are private banks just like the Federal Reserve, standing first in line to give the public a royal screwing!
They would like to blame the welfare moms with too many kids and/or the irresponsible borrower expecting too much out of life, and Americans' caught up in dreams of making it into the leagues of the thieving psychopaths falling for it hook line and sinker.
To quote John Lennon:
There's room at the top they are telling you stillThe adjustable loans were not to blame because there are borrowers of those loans that are not in default. Furthermore, if the conveyance had been properly recorded and insured, it would have preserved the chain of title. If there was a default, the home would have gone to the investor.
But first you must smile as they teach you to kill
If you want to be like the folks on the hill...
However, the mortgages were not returned to the secondary market so that they could be recycled. I believe that was what caused the crash. In the past, when a loan was packaged, the lender would sell it on the secondary market and when it changed hands it would be sold to Fannie Mae or Freddie Mac. Moreover, the transfer would be recorded and guaranteed. With federal backing of Fannie and Freddie the payments would be funneled through to Fannie and Freddie and they would pay the originating bank so they could make loans on more real estate.
What the Banks did this time instead of selling the loan to the secondary market is they bundled it without title insurance or recording or a legally obtained assignment from the homeowner. Furthermore they did not follow through with the process because they were more interested in taking the asset to trade or gamble on the derivatives market so there was nothing left to lend. Then the assignment ended up with an entity called M.E.R.S. and, without standing to foreclose or knowledge of who had the right to the monthly payments, there was a cloud on the title.
To assess the damages one must take into account the facts that the real estate market was inflated through rice fixing resulting in some violations of anti-trust laws. Furthermore, appraisals which were pushed by the banks that were unrealistic and the real estate was intentionally funded with trash loans to borrowers who could not afford them because of the way that many of them were structured.
The worst loans were offered to the poorest and most disenfranchised minorities such as single mothers of color who have always been the scapegoats of these types of singularly evil plans. Many other borrowers were unable to refinance as they had been promised because of prepayment penalties and other manipulations that were foisted upon them in order to keep them from refinancing even if they qualified.
That was because the loan would have to be re-conveyed and there was no note with which the bank could accomplish that. In all cases, when borrowers had questions about these loans, they were reassured that there would be an easy way to refinance them in the future.
Let's take just one home as an example where the borrower is not in default and is not behind on the property taxes or insurance. What can be done?
1) The borrower should get a new appraisal on the property to set value and discern what is owed by whom.
2) The next step for the homeowner would be to file a quiet title action to restore the property back to what it should be. This would be a title that is free and clear of other claims so that it is freely transferable as required when defined as a fee simple absolute title.
3) Then there should be an accounting of all payments made regardless of which side of principal or interest it was supposed to go to. This should accrue to a credit side of the borrower's equity in the home while a restructuring and amortization of the rest of the payments is done to set up a schedule to pay off the rest as remaining principal.
4) This should be based on real market value rather than inflated market value, and the monthly payments should be at what can reasonably be met by the homeowner.
5) However, the monthly payments must be made to the authentic beneficiary or not at all.
