Jim Sinclair’s Commentary
"What OTC derivatives do not do to the international investment banks, litigation will."
Courtesy of Greg Hunter’s USAWatchdog.com
With all the attention stories such as WikiLeaks and Irish bailout have gotten the last few days, a bombshell judgment against Bank of America in a New Jersey foreclosure case has been overlooked. The judgment happened 2 weeks ago in a case involving the home of John T. Kemp. His original mortgage company was Countrywide, but it was bought a few years back by B of A. U.S. Bankruptcy Judge Judith Wizmur rejected a claim by Bank of America to foreclose on Kemp’s home. According to a Bloomberg story yesterday, “Bank of America had failed to deliver the note to the trustee. That could leave the trustee with no standing to take the property, and raises the question of whether other foreclosures could similarly be blocked.” According to one witness, this was a common practice. The Bloomberg story goes on to say, “Linda DeMartini, a team leader in the company’s mortgage- litigation management division, said during a U.S. Bankruptcy Court hearing in Camden last year that it was routine for the lender to keep mortgage promissory notes even after loans were bundled by the thousands into bonds and sold to investors, according to a transcript. Contracts for such securitizations usually require the documents to be transferred to the trustee for mortgage bondholders.” (Click here to read the entire Bloomberg story.)
This is an earth shaking setback, not only for B of A, but for all banks involved in mortgage-backed securities. The Promissory Note is the actual proof the bank owns the home. No “note” means no proof of ownership. You must possess the original Promissory Note for ownership to be valid. I wrote about this enormous mortgage mess in an October post called “The 6 Trillion Dollar Problem.” I said, “The lack of the Promissory Note is the biggest of all the problems in this chain of chicanery. Here’s why. A Promissory Note is a financial instrument. It is in the same family as a Federal Reserve Note. For example, if you copied a $100 bill and then tried to spend that copy in a store, because you lost the original, is it still money?–Of course not. You need the original financial instrument (in this case a $100 Federal Reserve Note) to make a legal transaction in a store. The same is true for a Promissory Note. You need the original note to legally complete a foreclosure. A counterfeit or copy of a Promissory Note is not a financial instrument, just like a counterfeit or copy of a $100 bill is not a financial instrument!”