Source: https://www.amvona.com/featured/economic-analysis/item/4575-henrietta-eaton-and-the-boston-foreclosure-party?tmpl=component&amp;print=1
Timestamp: 2019-04-24 02:14:03+00:00

Document:
The vast majority of these loans were sold into securitization trusts and are merely endorsed "in blank" (if they can even be found in the trust at all). Most schedules attached to the trust documents include little or no information on the details of the particular loans (as was the case in Ibanez), or sometimes include the address of particular properties, but no information on the borrowers, or curiously the loan amounts. Other failures include post-dated or otherwise invalid notarizations, and fraudulent signatures etc., which are all suggestive of fraud.
"In accordance with these principles, and against the background of the common law as we have described it in the preceding section, we construe the term "mortgagee" in G.L. c. 244, § 14, to mean a mortgagee who also holds the underlying mortgage note. The use of the word "mortgagee" in § 14 has some ambiguity, but the interpretation we adopt is the one most consistent with the way the term has been used in related statutory provisions and decisional law, and, more fundamentally, the one that best reflects the essential nature and purpose of a mortgage as security for a debt... ("The function of a mortgage is to employ an interest in real estate as security for theperformance of some obligation.... Unless it secures an obligation, a mortgage is a nullity")."
Needless to say the defendants in Eaton complained loudly about the possibility of a retroactive ruling, why? Because there have been an average of 1.6 million nationwide foreclosure starts per year for the past five years - the vast majority of which in all likelihood began with an invalid notice of foreclosure sale (and subsequently an invalid sale) under the Eaton ruling.
"The defendants and several amici argue, to varying degrees, that an interpretation of "mortgagee" in the statutes governing mortgage foreclosures by sale that requires a mortgagee to hold the mortgage note will wreak havoc with the operation and integrity of the title recording and registration systems by calling into question the validity of any title that has a foreclosure sale in the title chain. This follows, they claim, because although a foreclosing mortgagee must record a foreclosure deed along with an affidavit evidencing compliance with G.L. c. 24, § 14, see G.L. c. 244, § 15; see also G.L. c. 183, § 4, there are no similar provisions for recording mortgage notes; and as a result, clear record title cannot be ascertained because the validity of any prior foreclosure sale is not ascertainable by examining documents of record. They argue that if this court requires a mortgagee to have a connection to the underlying debt in order to effect a valid foreclosure, such a requirement should be given prospective effect.
In the exceptional circumstances presented here, and for the reasons that we have discussed, we exercise our discretion to hold that the interpretation of the term "mortgagee" in G.L. c. 244, § 14, and related statutory provisions that we adopt in this opinion is to apply only to mortgage foreclosure sales for which the mandatory notice of sale has been given after the date of this opinion."
Even if you are just a bitter "dead-beat" homeowner, you have to concede those American bankers are enterprising. If they can take down an entire country like Greece using something complex such as currency swaps, do you think they can't take down your local county recorder (John O'Brian excepted) with something as simple as a private database?
If bankers were the athletic type, you could think of them celebrating the decision sort of like "Chuck Liddell" celebrates in the "Octagon".
Ok, ok, the banks won, they got away with fraud, the party is over, everyone can go home (or to their car, or the shelter, or the park bench or wherever they sleep at night) - right?
It may be relevant that these 9 M folks (who defaulted between 2007 and June 22nd, 2012) probably did not fully understand that they had been paying their monthly mortgage payments (before they defaulted) to a party that had absolutely no interest in the debt they committed to repaying. In other words, their cash was depleted through payments to a stranger to the loan transaction. This mysterious party (usually called a "sub-servicer") that they had been paying had no legal interest in their property and parenthetically no legal right to foreclosure either. Finally it is far from clear that this group understood that they had purchased their largest asset at a radically inflated value as a result of a securitization process that rehypothecated the debt time and again - most had no hope of knowing the financial alchemy that can cause home prices to rise by double digits for so many years.
The result: the largest decline in real estate prices in US history, that even Nobel laureates in economics couldn't forecast, and that caused one of the greatest shifts in wealth to only the smallest percentage of society's members.
Eaton is part of a trifecta that also includes the recent Ibanez and Bevilacqua rulings, and which make the Massachusetts SJC a beacon of light for other state Supreme courts to follow in what otherwise has seemed at times an indifferent, nescient, or corrupt judiciary.
Maybe there was something to Moody's recent downgrade of (JPM), (BAC), (C), (GS) and (MS) after all. Of course it may be impossible to calculate what the exact losses to the nations five larges banks would be if the number of foreclosures in the next five years only mirrored that of the last, but needless to say it has the prospect of reaching beyond mere Billions since it is estimated that approximately 8.5 trillion in securitized mortgages remain outstanding. The potential expense would stem not only from fraudulent foreclosures, but the fact that it may become altogether impossible to foreclosure on American families using existing "naked" mortgage liens and it seems the value of homes with clouded titles is not very high given Uncle Sam's planned "Real Estate Fire Sale".
But all is not lost - whatever the banks might lose on foreclosures, if anything, they hope to make up for in other ways.
"Who are some of the other high-rollers lining up for the restricted Fannie/Freddie/HUD fire sale? According to the Wall Street Journal, they include Lewis Ranieri, regarded as “the godfather” of mortgage finance for developing mortgage-backed securities (MBS) and collateralized mortgage obligations (CMOs), the financial weapons of mass destruction that played a key role in the economic meltdown.
Forbes magazine, which in 2012 listed Paulson as #61 among the world’s billionaires and #17 among the “Forbes 400,” says that he “became a billionaire in 2007 by shorting subprime securities, earning a $3.5 billion payout.” What Forbes doesn't mention in its flattering profile is that Paulson, like Ranieri, was a major architect of the house of cards built on CMOs and other fraudulent debt instruments — euphemistically called “synthetic derivatives” — that Paulson marketed through Goldman Sachs.
These privileged mega-investors could “instantaneously become the largest improved real estate owners and landlords in the world,” notes Roger Arnold. “The U.S. taxpayer will get pennies on the dollar for these homes and then be allowed to rent them back at market rates."
What about the other 50 M homeowners who assigned their mortgages to MERS (not knowing the implications) that now have bifurcated mortgage loans that can likely never be re-coupled thanks to the complexities of the securitization process and the desire of the banks to make the (tax exempt) Trusts entirely bankruptcy remote? These homeowners will find out about Eaton sooner or later. These 50 M souls may begin to ask important and valid questions about where exactly their mortgage checks go every month and whether or not they will ever obtain clear title to their home sometime between June 22nd, 2012 and the next thirty years.
What the SJC reveals is that the "homes-for-rent" market is not new at all, it was established with modern mortgage securitization practices. 50 M Americans may eventually know that they have been part of this new market all along, and that they can not be legally foreclosed on with any conventional understanding of the law. Above all they may come to see that it is only through their choices that the spectre of American serfdom may yet be halted.

References: § 14
 § 14
 § 14
 § 15
 § 4
 § 14