When you add in the costs of defending themselves, it would probably be cheaper for MERS et al to just pay up!

I’ve always had a wish that an injured party would win such a suit and then charge the very same interest that the banksters use on their credit cards. You know, something like 28% compounded daily.

Hey, just like the banksters, the one who is owed the money gets to choose their own rates.

If I use the Branch county example ($100,000 over the last 10 years at 28% interest), I get the following when compounding daily:

$1,642,700.42

Then of course one could use “payday loan” interest rates instead. Say 400%. Using the numbers $100,000 over the last 10 years at 400% interest but we’ll give them a break and compound annually, I get the following:

$976,562,500,000.00

Yup, they’ll owe almost a Trillion dollars!

Here’s hoping the suit survives challenge to its status as a class action. The class action is a tool available to the unempowered that governments and this Supreme Court have taken great pains to spike. It leads to accountability, which can be so rude as to disrupt a Georgetown cocktail party.

@rugger9: I can dream, can’t I? *g*

@MadDog:
Usually the white collar guys can afford the good lawyers that will drag things out or turn the prosecution into a pretzel. After a few rounds of that, the prosecutors go for the easy marks to puff up the conviction rates for their future AG campaigns.

@emptywheel: “@Sojourner: Except then they’ll have to do so in every county and state in the country. Not gonna happen. ”

Oh, how I wish that the suit wins! I just hope that all of the “too big to fail” take a significant hit. If Geithner & Co. won’t break up the Bigs, I hope these lawsuits will. Their leadership during the real estate bubble all need to be utterly humiliated and stripped of all their illicit wealth.

Bob in AZ

@thatvisionthing: Just to clarify how confusing the confusion is, from transcript of Harry Shearer’s first interview of Yves Smith on Le Show, last December (long excerpt from an hour-long podcast — I think the proportions keep it fair use?) MERS is such an onion of a mess, I don’t know how to pare this better:

HARRY SHEARER: Now as I read what you’re writing, these mortgages don’t just go from the originating institution into the trust. A lot of them travel a very circuitous journey through a number of different sets of corporate hands – or at least in names of corporate hands, if hands can have names – and that each time the mortgages passed from one set of hands to another it would in ordinary practice go through the county recorder’s office in the county where the house the mortgage is on is located, and there’d be a fee, a recordation fee attached, and by doing what they’ve done, they’ve saved themselves some amount of money. There’s a court case in Massachusetts, I think, where the county recorder says, “Hey, you guys didn’t run your transfers though this office and you owe us $500,000, which doesn’t sound like a lot, times all the numbers of counties in the United States, still is like chump change to banks, though one wonders that they did it to save that. But on the other side of the picture, if I’m not mistaken, one reason that the lockbox as you call it, or the trust, has these specific restrictions on when the mortgages can be in there and you can’t be postdating them and getting them in late is for the tax implications of the trust – do I have that right?

YVES SMITH: That is correct. This is a whole multilayered issue. And that’s why it’s a little bit hard to peel all the layers of the problem back. You’re correct that there are a whole bunch of different motivations for why they skipped these steps, but basically, yes, the overview is correct that it was always a provision in these contracts that it would not go directly from, say, the Countrywide to, say, the trust, but they would always go through intermediary parties because they wanted to establish something called, I hate to say it, “bankruptcy remoteness.” They wanted once the mortgages got into the lockbox, that if Countrywide got in trouble, that people that Countrywide owed money to, or the FDIC, couldn’t say, “Hey, you guys sold it to that trust when you owed us money. You shouldn’t have done this. We’re going to go to the trust and grab it back.” Investors did not want to be exposed to that, and so the way to make sure that no one could go to the trust and grab the mortgage back from the investors was to have it go through several intermediary parties and each time it went through it had to be something called “a true sale,” and there were certain legal requirements for that. But basically, all the agreements say that it had to go through these parties and the note, which is – it’s like a check. It literally had to be endorsed by each party. So if it went from A to B, you’d have to show that A signed it over. And then you had to show that B picked it up and that B signed it over. And then if it went to a C, that C signed it over. And then that it finally went to D. The normal minimum chain was A-B-C-D. So you normally had at least two parties in the middle. That was hassle, and you’re right that the recording fees were a motivation.

The banks used an entity which was set up in the late ’90s called MERS to try to skip those recording fees. That’s part of this question. But yes, that they were supposed to go through this conveyance chain, that they did it to skip recording fees, they did it to save hassle, and they basically appear as a whole industry to have just decided they were going to change their procedures to save money and hassle and never bothered changing their legal contracts. I mean, that’s the crazy part. You know, so they had this huge gap between what they committed to everybody to do and what they didn’t do. And the tax issue, you’re correct, is one of the reasons.

The other reason that this is difficult to fix, because from a tax perspective, the reason they made everything so rigid was that the little legal lockbox was supposed to be passive and the tax laws required that the mortgages had to get in there by a certain point in time that’s basically subject to incredibly limited restrictions. It either had to be in there by the time the deal was sold to investors or, at the very worst across all these deals, 90 days after. And the window – you know, the subprime market died in 2007, three months past when that market stopped is long past.

HARRY SHEARER: Let’s take that detour that you offered for a moment, MERS, which as I’ve been reading about it in your blog is a fascinating little subworld. What do the initials stand for?

YVES SMITH: Mortgage Electronic Registration System.

HARRY SHEARER: And it’s a database of these transactions?

YVES SMITH: More or less. I mean, it actually serves two functions. One of the things it does is to track mortgage servicing rights. So if you’re, you know, the people who are “MERS members,” only “MERS members” have access to it, which basically means servicers, who are the guys who handle the payments every month – you know, they’re the ones who take the money from the borrowers and when they get the money they redistribute it to – they handle all the mechanics of distributing to investors, and they also handle the foreclosure procedure, so they have a lot of administrative duties.

HARRY SHEARER: So services – pardon me just a minute – servicers are the function that the bank used to have when it held onto the mortgage.

YVES SMITH: That’s correct. And typically – some of them are independent. A lot of them are departments within banks, which gets a bit confusing, because you’ve got – you know, for example, you’ve got a bank like Wells Fargo wearing its hat as Wells Fargo Servicing, but it doesn’t own the loan, the loan is owned by a bunch of investors. You know, so you do have people wearing sort of – what? you know, who am I today? – relative to all the different parties. So one role is they keep track of – you know, you punch a particular loan number into MERS and the MERS members are typically the servicers and the foreclosure mills. You and I can’t go to MERS and become a MERS member.

HARRY SHEARER: Aww.

YVES SMITH: Aww. So they keep track of who’s servicing the loan. They also supposedly keep track of who actually owns the loan. The problem with “they supposedly keep track” is that compliance by all of these little servicers is voluntary, and there are no penalties if they are slow to input the data. So, you know, one thing that everybody suspects but again can’t prove is that again when the note was supposed to move through all these intermediary parties, even if it was done – remember there was a period when it looks like this was done correctly – it doesn’t even mean the transfers were properly recorded in MERS. And there are cases – of course, we’re seeing these increasing number of cases coming to light – where the wrong party shows up trying to foreclose, or sometimes multiple parties show up to foreclose, and again, if MERS had any integrity, that should be impossible. So, again, we’re seeing evidence on the ground that the theory of what a great system MERS is versus the practice of how it works is not so hot. And needless to say, ordinary citizens don’t like the fact that in the old world, they used to be able to go down to their courthouse and see who actually held the mortgage. And now the whole thing has disappeared into the bowels of MERS and the public can’t find out what the heck is going on here.

HARRY SHEARER: How many employees does MERS have?

YVES SMITH: Uh, 47, and I think it may be up to 48.

HARRY SHEARER: (laughs)

YVES SMITH: So they’ve outsourced all the database, I believe, to Electronic – EDS, Electronic Data Systems, so it’s really almost a virtual company and they have this very bizarre corporate structure which has been described as unorthodox to the point of being virtually fraudulent where the MERS members will temporarily put on a MERS hat and say, “Oh, even though I work full-time for _____ – again, say Wells Fargo – I’m going to temporarily be a MERS signing officer and do all these things in the name of MERS even though MERS never paid me a nickel. I mean, it’s just – there’s this whole crazy set of arrangements they’ve come up with which now that people have looked at it, they are beginning to question the legitimacy of a lot of the ways that it does business.

HARRY SHEARER: How many people have signed documents as supposed MERS officers?

YVES SMITH: Well, it’s kind of hard to know, because again MERS won’t tell us, but at any one point in time MERS has over 20,000 signing officers authorized on its behalf.

HARRY SHEARER: (laughs) Twenty thousand officers! And 47 employees. If you took it at face value, you’d say that’s a rather top-heavy organization, wouldn’t you?

YVES SMITH: Exactly. Exactly. That’s one of the reasons why this whole arrangement is so questionable. It’s obvious MERS can’t properly supervise these people. And then they claim, “Oh, well, we only give people limited authority. They can only operate in this teeny space, so how could they do any damage?” Well, again, there’s evidence on the ground that contradicts that. For example, they claim that they’ve got electronic procedures so that no one could possibly transfer a mortgage from one party to another without both sides authorizing it. It’s what they call an electronic handshake. Supposedly somebody on one side of the transaction has to authorize it before the party on the other side could move it. Well, you’ve got lots of evidence in courts that MERS signing officers have also shown up as the supposed signing officer on behalf of entities that went bankrupt a long time ago. So it is impossible for the entity that went bankrupt two years ago to have authorized this person to do anything on their behalf. There are lots of cases of that.

HARRY SHEARER: The only person who could authorize something once a corporation is in bankruptcy is the bankruptcy referee, right?

YVES SMITH: You’re absolutely correct.

HARRY SHEARER: (laughs)

YVES SMITH: And there’s no evidence that this happened. So there’s just so much chicanery going on.

…and then they go on for at least another 30 minutes…

@rugger9: The civil RICO statute allows treble damages and also authorizes a court upon a proper showing to impose an immediate freeze on all of the personal assets of named defendants and the assets of the RICO enterprise, which would be MERS and the defendant banks that profited from the unlawful scheme. The freeze would remain in effect pending the ultimate resolution of the case and likely put the defendant banks out of business since they cannot conduct business without access to the money.

Don’t know if the plaintiffs have alleged any RICO violations. Bank fraud and securities fraud are defined as predicate offenses under the statute. Plaintiffs would only need to assert that defendants committed two predicate offenses to survive a motion to dismiss a RICO count.

I’d have to review the complaint and do a little research to be certain, as I’m not absolutely sure that a RICO count would survive a 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, but I am intrigued, to put it mildly, by the possibilities (I’m not certain how or whether plaintiffs pled it).

@thatvisionthing:
yes but its worse than we think
they sold 10 mortgages on each house then sold those over and over
see http://www.kpfa.org/archive/id/74737 and http://www.kpfa.org/archive/id/74988 collateral fraud yes is prosecutable under RICO but also prosecutable under current laws. this is why banks want to fraudclose fast
so person getting thrown out doesn’t know there is 10 mortgages on his home
no, titles will not be clear as any 10 owners of mortgages on one house can later foreclose as its a criminal system. from top to bottom judges, police, politicians, district attorneys are all participants in the criminal activity its not a economic,political problem it is a criminal problem
>thatvisionthing yes Black has it right but because of fraud is why banks don’t want to show note you have no right to face your accuser
hey Maddog yes they should pay interest!

@Masoninblue: I reviewed the complaint to which Marcy thoughtfully linked, and it was filed in state court. There is no civil RICO allegation.