A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.
This is a potentially gigantic story. It seems that a court has ruled that about half of the mortgage market has been run as a criminal enterprise for years, which would invalidate any potential forelosure proceedings for about, oh, 60 million mortgages. The court ruled that the electronic transfer system used by the private company MERS — a clearing system for mortgages, similar to a depository, that is used for about half the mortgage market — is fundamentally unreliable, and any mortgage sold and/or transferred through MERS can’t be foreclosed upon, at least not in Kansas.
Coincidentally I’d been working on something related to this all day yesterday. All over the country, lawyers are contesting foreclosures because of similar chain-of-custody issues. I have some material about this coming out in my next Rolling Stone story, so I can’t get into this too much, but suffice to say the lenders and the banks were extremely sloppy about their paperwork (at best — there is a fraud angle as well) and jammed up the system with missing and/or mismarked mortgage notes. Since a sale isn’t legal unless there’s full transfer of the physical note, a lot of the sales of mortgage-backed securities were not entirely legal, since the actual notes were often not transferred.
Nothing like waking up in the morning and finding out a whole sector of the economy is completely screwed. Are these good times or what?
Although this particular case pertains to MERS, non-MERS mortgages were often even worse. Anyway I have more on this coming next week. Thanks again to Eric at MonkeyBusiness for the heads-up.
The federal minimum wage increase that took effect could prolong the recession, some economists say, by forcing small businesses to lay off the same workers that the pay hike passed in better times was meant to help.
The increase to $7.25 means 70 cents more an hour for the lowest-paid workers in the 30 states that have lower minimums or no minimum wage. It also means higher costs for employers who feel they’ve already trimmed all their operating fat.
“How will they absorb the increase?” said Rajeev Dhawan, director of Georgia State University’s Economic Forecasting Center. “They will either hire less people or they will do less business.”
More than in any period before, businesses are likely to lay off employees and reduce hours, further fueling the economic slump in states seeing double-digit unemployment rates, fiscal conservatives and some economists say.
At Bench Warmers Bar and Grill in the southeast Kansas farming town of Chanute (pronounced sha-NOOT), owner Cathy Matney has decided to let some of her dishwashers go rather than pay all 22 of her employees more.
“It’s bad timing,” said Matney, whose waitresses and cooks will have to pitch in with scrubbing pots and pans. “With the economy like this, there’s a lot of people who are out of work and this is only going to add to it.”
Ryan Arfmann, who owns a Jamba Juice shop in Idaho Falls, Idaho, will be cutting hours to his staff, which is made up largely of college students, high schoolers and homemakers who want to make a few bucks.
The effects could be especially harsh in the seven states — Alabama, Florida, Georgia, Indiana, North Carolina, South Carolina and Tennessee — where the pay increase coincides with double-digit unemployment.
“Wherever you have the higher unemployment rates, that’s where the business conditions are bad — and that’s where a minimum wage increase will have an impact on the negative side,” said Dhawan, the economist at Georgia State.
Dhawan said the strain could be felt equally in metropolitan areas, where fast-food chains and franchises employ large numbers of minimum wage workers, and in smaller towns where the bulk of the work force may be concentrated in one, low-earning sector.
Fewer workers employed, meanwhile, reduces the amount of money in circulation — dampening any consumer spending spike the wage boost could have created, Dhawan said.
“The increasing power from the higher wages will be swamped by the losses from the people who lost jobs,” he said.
One of Obama’s campaign promises included raising the minimum wage to $9.50 an hour by 2011.
On June 11, 23 state attorney generals signed and sent a letter to Attorney General Eric Holder advising him that they are opposed to renewal of the 1994 Clinton administration’s ban on semiautomatic firearms, erroneously dubbed “assault weapons” by proponents of the ban.
A list of those attorneys general is included below, and surprisingly, it does not include Washington Attorney General Rob McKenna.
This is a remarkable letter, made public by the National Rifle Association. It follows three months after 65 House Democrats sent a similar letter to Holder, admonishing him for remarks made earlier this year suggesting that the Obama administration would like to see the ban renewed. That March 17 letter took issue with Holder, and others, who at the time were using the drug cartel wars in Mexico as an excuse to push for renewal of the ban, which expired in September 2004 after having accomplished pretty much nothing.
As the states’ top law enforcement officials, we share the Obama Administration’s commitment to reducing illegal drugs and violent crime within the United States. We also share your deep concern about drug cartel violence in Mexico. However, we do not believe that restricting law abiding Americans’ access to certain semi-automatic firearms will resolve any of these problems.
McKenna is not generally thought of as an anti-gunner. His office did, after all, advise Seattle Mayor Greg Nickels – poised to be elected president of the U.S. Conference of Mayors Monday – that his blustery promise to ban legally-carried handguns from Seattle city property by executive order would be illegal. Nickels has some other problems as he heads into another campaign for re-election (the guy has never held a job in the private sector), and it will be interesting to watch whether he tries to bully people with his new national status, or make good use of his new position to address such pressing needs nationally as municipal infrastructure at times of economic downturn, public transportation, and urban decay.
It is not “bullying” in which the pro-gun attorneys general are engaging with Holder, but frank conversation about a subject that should be dead and buried. All 23 of these chief law enforcement officers concur that “additional gun control laws are unnecessary” and that the individual right to keep and bear arms protected by the Second Amendment “should not be encroached upon without sound justification – and a clear law enforcement purpose.”
Because fully automatic machine guns have already been banned, we do not believe that further restricting law-abiding Americans’ access to certain semiautomatic firearms serves any real law enforcement purpose.
The only logical purpose of reinstating the ban, expanding it as proponents desire and making it permanent would be to strip American citizens of their legally held property and make it seem acceptable. Once the gun prohibition lobby can sell the notion that banning a specific type of firearm is okay, they will wait a while and then move to ban another specific type of firearm, all under the guise of public safety.
As with the case of the letter from the 65 Democrat congress members in March, this letter did not get any news coverage, at least not yet. You can rest assured that if 23 attorneys general had signed a letter calling upon the Obama administration to push for renewal of the ban, it would have occupied all of the Sunday morning news/talk programs.
The 23 state Attorneys General who signed the letter are:
Arkansas – Dustin McDaniel
Alabama – Troy King
Colorado – John W. Suthers
Florida – Bill McCollum
Georgia – Thurbert E. Baker
Idaho – Lawrence G. Wasden
Kansas – Steve Six
Kentucky – Jack Conway
Louisiana – James D. Caldwell
Michigan – Mike Cox
Missouri – Chris Koster
Montana – Steve Bullock
Oklahoma – W.A. Edmonson
Nebraska – Jon Bruning
Nevada – Catherine Cortez Masto
New Hampshire – Kelly A. Ayotte
North Dakota – Wayne Stenehjem
South Carolina – Henry McMaster
South Dakota – Lawrence Long
Texas – Greg Abbott
Utah – Mark L. Shurtleff
Wisconsin – J.B. Van Hollen
Wyoming – Bruce A. Salzburg