Prior to the year 2001, when consumers went to get home loans from their bank, the instrument they were signing, the promissory note, would stay in that local neighborhood bank.
After 2001, everything changed, the loans went into “securitization markets“.
Securitization is just a fancy word that means the loans went to the stock market.
The reason for this was very simple, it offered an opportunity to leverage these loans into even bigger loans and make more money globally.
As time went on a bubble in the US housing market ensued with prices steadily increasing. Equity grew. Borrowers continued to buy more properties and take more cash out.
These loans, in turn, were then packaged and sold off to secondary markets, eventually being sold off to completely different countries. It all seemed great at first. Almost too good to be true. That is, until the bubble burst in 2008-2009. The USA and the rest of the world became ensnared in a Global crisis and financial meltdown.
How Could Have This Have Happened?
The obvious answer was greed.
Pressing the issue further, and upon deeper inspection, there was a general negligence and lack of accountability which created a perfect storm for such a calamity to occur in the first place.
What Wall Street was doing was equivalent to taking a wad of $1 bills and wrapping it up with a single 100 dollar bill and then passing it off to other countries as if the whole stack was nothing but 100 dollar bills.
Wall Street was packaging sub-prime loans with A paper loans and selling them off to Hedge Funds and secondary markets who did not know any better.
There is actually an Oscar winng film called, “The Big Short“, starring big Hollywood actors such as Steve Carell, Christian Bale, Ryan Gosling, Brad Pitt, and Margot Robbie. It tells the story more in depth than I.
I highly recommend it.
So What Would Cryptography Do To Help?
It’s all about ACCOUNTABILITY.
After 2001, upon the advent of loan securitization, a very complex system called MERS (MORTGAGE ELECTRONIC REGISTRY SYSTEM) was devised to keep track of who is servicing the loan, who owns the loan, who is insuring the loan, etc.
As banks began to go out of business during the bust era different institutions had to take over for others, whether it was the government stepping on or other banks.
Things got messy and the legendary “Robo-signing” fiasco ensued where many millions of Americans lost their homes unjustly because of issues with who was in charge of their home loan.
If there was a cryptographic system in place with home loans and other forms of debt in this country on the Blockchain, it would do wonders in keeping things organized and accountable.
Never again would there be a question of how much is owed and to whom is the money owed. The same would go for the investors who are buying these loans and collecting money off interest.
U.S. Breaks Down $9.3 Bln Robo-Signing Settlement
Largest fine hits B. of A., which must provide $2.9 bln in assistance.
Federal regulators on Thursday detailed a $9.3 billion settlement with 13 banks over foreclosure abuses stemming from the so-called robo-signing scandal, a deal that government officials say is expected to help more than 3.8 million borrowers.
The settlement with ten of the banks was first announced on Jan. 7 and separate settlements with HSBC US:HBC and two other banks came later in the month.
At issue are deficient practices on mortgage servicing and processing, improper fees, wrongful denial of modification, and the robo-signing scandal — the practice of assigning bank employees to rapidly approve numerous foreclosures with only cursory glances at the glut of paperwork to determine if all the documents are in order.
The settlement includes $3.6 billion in cash payments to 3.8 million borrowers, some of whom went through foreclosures.
Banks have agreed to provide an additional $5.7 billion in other assistance to homeowners, such as modifications to their mortgages or cuts to the amount borrowers owe.
The Largest Banks, As Expected, Will Pay The Most.
• Bank of America Corp. was ordered to provide $1.1 billion into a fund to be used to provide cash payments to troubled borrowers and $1.8 billion in other assistance to homeowners, such as modifications to mortgages or cuts to the amount borrowers owe.
• Wells Fargo & Co. will pay $766 million into the fund and $1.2 billion in other assistance.
• J.P. Morgan Chase will pay $753 million into the fund and $1.2 billion in other assistance.
• Citigroup Inc. will pay $307 million into the fund and $487 million in other assistance.
• Morgan Stanley will pay $97 million into the fund and $130 million for other assistance.
• Goldman Sachs will pay $135 million into the fund and $195 million for other assistance.
• Aurora Bank will pay $93 million into the fund and $149 million in other assistance.
• PNC Financial will pay $69 million into the fund and $111 million in other assistance.
• Sovereign Bank, a unit of Banco Santander will pay $6.1 million into the fund and $10 million in other assistance.
• Metlife Bank will pay $30 million into the fund and $48 million in other assistance.
• U.S. Bancorp will pay $80 million into a fund and $128.1 million in other assistance.
• SunTrust will pay $63 million into the fund and $100 million for other assistance.
• HSBC, as previously reported, will pay $96 million into the fund and $153 million in other assistance to homeowners.
The cash being provided for other assistance, including foreclosure prevention, is due Jan. 7, 2015.
The agreement replaces an existing independent foreclosure review process where foreclosed-upon borrowers were permitted to request a review of their mortgage foreclosures to see if they are eligible to receive compensation or other remedies because of error. Read about banks in foreclosure settlement.
Regulators conceded that the complexity of the foreclosure and loan modification processes were delaying and adding significant costs to the review process.
The OCC said as part of the deal, the participating banks would end their independent foreclosure case-by-case review and replace it with this approach where payments would go out to eligible borrowers more quickly.
However, even though more borrowers will potentially be assisted with this approach, many homeowners and lawmakers have questions about what happened to the review and whether individuals will receive an amount commensurate with the harm inflicted on them.
On Jan. 31, Sen. Elizabeth Warren and Rep. Elijah Cummings sent a letter to Federal Reserve Chairman Ben Bernanke and another regulator seeking documents about the cancelled review process asking for more details about the “scope of the harms found” to establish confidence in the sufficiency and integrity of the settlement.”
Mnuchin Lied About His Bank’s History of Robo-Signing Foreclosure Documents
Treasury nominee Steve Mnuchin is claiming that “OneWest Bank did not ‘robo-sign’ documents,” when there is abundant evidence to the contrary.
Treasury secretary nominee Steven Mnuchin lied in his written responses to the Senate Finance Committee, claiming that “OneWest Bank did not ‘robo-sign’ documents,” when ample evidence proves that they did.
Mnuchin ran OneWest Bank from 2009 to 2015 in a manner so ruthless to mortgage holders that he has been dubbed the “Foreclosure King” by his critics.
The robo-signing scandal involved mortgage companies having their employees falsely sign hundreds of affidavits per week attesting that they had reviewed and verified all the business records associated with a foreclosure — when in fact they never read through the material and just blindly signed off. Those records, in many cases, were prepared improperly, but the foreclosures went ahead anyway because of the fraudulent affidavits.
“Did OneWest ‘robo-sign’ documents relating to foreclosures and evictions?” Sen. Bob Casey, D-Penn., asked Mnuchin as a “question for the record”.
Mnuchin replied that “OneWest Bank did not ‘robo-sign’ documents, and as the only bank to successfully complete the Independent Foreclosure Review required by federal banking regulators to investigate allegations of ‘robo-signing,’ I am proud of our institution’s extremely low error rate.”
But even that review – which was not really so “independent,” since the banks hand-picked and paid for their own reviewers – found that nearly 6 percent of the OneWest foreclosures examined were not conducted properly.
And what sparked that review was a 2011 consent order issued by the federal Office of Thrift Supervision, which definitively stated that OneWest filed affidavits in state and federal courts “in which the affiant represented that the assertions in the affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not.”
This is the very definition of robo-signing. OneWest signed and agreed to the consent order, though it never admitted or denied the activity
However, in a Florida foreclosure case, a OneWest employee plainly admitted to robo-signing. On July 9, 2009 – four months after OneWest took over operations from IndyMac, with Mnuchin as CEO – Erica Johnson-Seck, a vice president with OneWest, gave a deposition in which she admitted to being one of eight employees who signed approximately 750 foreclosure-related documents per week.
“How long do you spend executing each document?” Johnson-Seck was asked. “I have changed my signature considerably,” Johnson-Seck replied. “It’s just an E now. So not more than 30 seconds.”
Johnson-Seck also admitted to not reading the affidavits before signing them, not knowing who inputted the information on the documents, and not being aware of how the records were generated. And she acknowledged not signing in the presence of a notary. This resulted in false affidavits being submitted in court cases that attempted to take borrowers’ homes away.
New York Supreme Court Judge Arthur Schack used the information provided by Johnson-Seck to invalidate OneWest foreclosure cases. He also dismissed a separate foreclosure where Johnson-Seck both assigned a mortgage to Deutsche Bank and executed an affidavit on behalf of Deutsche Bank in the same case.
OneWest continued filing sketchy documents for years, even after Johnson-Seck revealed the robo-signing scheme.
According to a Reuters investigation in 2011, OneWest issued “foreclosure documents of questionable validity,” including filing mortgage assignments that establish ownership of the loan months after the foreclosure action, meaning OneWest (by their own evidence) didn’t own the loan at the time they decided to foreclose on the property.
Tara Bradshaw, a spokeswoman for Mnuchin during the transition, said she no longer works on the matter and referred all questions to the Treasury Department. The Treasury Department press office did not respond to a request for comment.
Mnuchin’s definitive – though false — statement about robo-signing stands in contrast to some of his other responses to questions for the record. Those he just ducked.
Responding to Sen. Dean Heller, R-Nev., who asked how many Nevada homes were in OneWest Bank’s portfolio and how many Nevadans suffered foreclosure at the hands of OneWest, Mnuchin replied, “Because I am no longer employed by or affiliated with CIT Group, I do not have access to this information.” CIT purchased OneWest in 2015, and Mnuchin left the bank’s board in December.
That was the eighth time that Heller has asked these questions of Mnuchin, according to Senate testimony.
Mnuchin used the same excuse to decline to give information about nationwide foreclosures or federal investigations into OneWest to Sen. Sherrod Brown, D-Ohio.
Similarly, when Sen. Maria Cantwell, D-Wash., asked Mnuchin if he believes that his former employer Goldman Sachs “acted responsibly and ethically when it bet against the same securities it was selling to its customers,” Mnuchin declined to answer, saying “I left Goldman Sachs nearly fifteen years ago” and was not in a position to comment.
Mnuchin was forced to respond to The Intercept’s publication of a leaked memo alleging that OneWest committed numerous violations of California’s foreclosure processes, including routine backdating of documents to speed up foreclosures. Sen. Casey asked about that, but Mnuchin insisted that “OneWest did not engage in ‘backdating.’” He explained that the bank assumed control of foreclosures initiated under IndyMac, its predecessor, and had a power of attorney to “step into those actions effective as of the date they were initiated.”
But that’s not what the investigators in the California Attorney General’s office alleged in their memo. They claimed that the substitutions of trustee documents in OneWest’s name were not created on the effective date written on the document. They argued that was done deliberately to cover up the lack of a substitution of trustee earlier in the foreclosure process.
Australian Senate Committee Calls For National Blockchain Land Registry
Australia’s senate committee on technology and finance wants lawmakers to establish a national blockchain land registry.
An Australian senate committee has published a report calling for a blockchain-based national land registry, better clarity over laws relating to smart contracts, and continued efforts to establish international standards for distributed ledger technology.
The Select Committee on Australia as a Technology and Financial Centre’s second interim report offers 23 recommendations spanning blockchain, consumer data and corporate taxation.
Five recommendations deal specifically with blockchain and digital assets, including that the Council of Financial Regulators Cyber Working Group takes into account international data standards.
The committee recommended National Cabinet consider supporting a blockchain-powered national land registry as a pilot project for Commonwealth-State cooperation on regulatory technology to highlight ways to streamline administrative processes in both the public and private sectors.
“The committee was particularly impressed with the potential for blockchain to drive efficiencies in the area of land registries, and is recommending that this issue be further explored in the context of the National Cabinet.”
Zooming out, the committee noted there was a need for more clarity and certainty in digital asset regulations and highlighted concerns from industry stakeholders regarding “the uncertain status” of smart contracts under Australian law.
Despite hearing about the concerns, the committee didn’t hear many solutions:
“While the committee heard extensive evidence on the need for such regulation, it heard less on concrete ideas for how this regulation should best be crafted.”
Instead, it recommended the Australian Government “consider how best to improve clarity with respect to the standing of smart contracts.”
The report called on the Department of Industry, Science, Energy, and Resources to publish regular updates on the progress of the National Blockchain Roadmap and to review and update the roadmap as the space evolved.
Moving forward, the committee plans to review how capital gains are applied to cryptocurrency transactions and give deeper consideration to the regulatory implications of central bank digital currencies and stablecoins during the final phase of its inquiries.
Zambia’s Largest Land Titling Project Gets Blockchain Backing by Medici
“This program has the overall objective of ensuring security of tenure for our people,” said Hon. Jean Kapata, Minister of Lands and Resources.
Medici Land Governance (MLG), a subsidiary of Overstock, has inked a deal with the Zambian government as part of an ambitious land titling project within the African nation.
According to a press release shared with CoinDesk on Friday, Medici has signed a seven-year contract with the Ministry of Lands and Natural Resources of the Republic of Zambia.
The project will see the initial issuance of 4 million Certificates of Titles (COTs) over the life of the contract with a further 3.5 million (COTs) over the following three years.
The initiative forms part of the country’s National Land Titling Program which is expected to be the largest project of its kind within Zambia, according to the release.
The ministry, along with Medici, ran a pilot project in 2018 to collect 50,000 title-eligible properties using proprietary systematic land titling technology known as Enum in the country’s capital of Lusaka City.
MLG, which uses blockchain technology to support land governance, titling and administration with a public record of land ownership, will employ Enum to gather landowner information for processing and issuing title deeds.
Enum provides an array of tools that can be utilized by trained and locally hired enumerators with mobile tablets that knock door-to-door to collect the data.
The data collected includes items such as names, identification, co-ownership, administrators, sex, age, and picture of owners as well as high resolution aerial imagery and complete maps with boundaries, according to MLG’s webpage. Upon completion, the data will be uploaded into a government approval system built by MLG.
MLG will also provide a means of integrating a payment platform with Enum that will be used to collect titling fees from landowners on behalf of the ministry and in collaboration with the Smart Zambia Institute – a division under the Office of the President.
“This program has the overall objective of ensuring security of tenure for our people,” said Hon. Jean Kapata, Minister of Lands and Resources as cited in the release. “The government seeks to minimize displacement of citizens that genuinely own land.”
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