Note that the "law-makers" are doing but "scolding".
Also that Bank of America and BP are huge advertisers, trying to improve their image.
We need better lawmakers, and probably a lot fewer of them.
Much reform is necessary.
Maybe a 100 million dollar lawsuit by wronged home-owners....it does take something strong and radical to make these rich SOBs sit up and take notice.
Scolding....HA!..our Senators have so little to be proud of recently, if ever.

I want someone to point me to a person who has never missed a loan payment, who has been forclosed upon. It just does not make sense.
Can anyone on this forum honestly say that they personally know someone who was thrown out of their home even if current on their payments?

"There are no official statistics for these homeowners, but lawyers, real estate agents and consumer advocates say their ranks are growing."

I lost a lot of faith in the journalist after this sentence. It is the sure tipoff to the "bogus trend story." There are no stats , but someone said it is happening.

"Maybe a 100 million dollar lawsuit by wronged home-owners....it does take something strong and radical to make these rich SOBs sit up and take notice. "

Well, lots of people are trying this and that is why most lenders have either halted or dramatically slowed the foreclosure process. It is pretty clear that many banks were not following the law by skipping the final review of documents. However, that isn't the same thing as saying there were factual errors in those documents that caused someone to lose their home. Out of the millions of foreclosures, there have been a handful of true errors. I'm sure that is little consolation to those few people who really were wrongfully evicted, but 99.9999% accuracy is better than just about any part of our legal system.

If you take into account the foreclosures that have not been approved by judges due to the lack of paperwork proving the foreclosure owns the mortgage, the admission on the part of BofA employees that paperwork was not even read, never mind checked for accuracy, the testimony of a Countrywide employees who stated that Countrywide held on to the note instead of passing it on to the "purchaser(s)", and the fact that when the number of buyers started to drop, that Wall Street sold the same mortgage over and over again, and even created them from nothing...which means they had to use names and SS#'s..aka identity theft..I think that anyone who assumes that these are isolated occurrences is only fooling themself.

This has served to nulify the integrity of entire mortgage process, therefore making ALL mortgage paperwork suspect. Most won't see that as a big deal until it affects them personally and they have to pay through the nose for an attorney to prove they are in the clear.

Try asking to for original proof of who owns your note, and see what you get as a reply. BofA's position is that they don't have to provide such proof, and they will decline.

As far as the scolding is concerned...it is nothing but yet another dog and pony show, as the politicians will not..I repeat not...bite the hand that feeds them billions.

The continued denial of the this reality does not change the fact that people are paying billions of dollars in mortgage payments with no way of knowing if they are being paid to the true legal entity that to which the debt is owed.

Your right Logic. I keep reading more and more stories about this. David Stern, foreclosure lawyer in Florida is just one arrogant b@$tard who is making the news nationwide for his blatant disregard for the law for taking people's home without proper documentation.

Florida’s High-Speed Answer to a Foreclosure Mess
By GRETCHEN MORGENSON and GERALDINE FABRIKANT
Published: September 4, 2010

Doctored or dubious records presented in court as proof of a bank’s ownership have become such a problem that Bill McCollum, the Florida attorney general, announced last month that his office was investigating the state’s three largest foreclosure law firms representing lenders.
“Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the allegedly improper actions of these law firms,” said Mr. McCollum in an interview. “We’ve had so many complaints that I am confident there is a great deal of fraud here.”

A link that might be useful:

www.nytimes.com/2010/09/05/business/05house.html

Even people who have NEVER had a mortgage with ANY lender and paid cash for their home are being targeted.

Homeowners Wrongfully Foreclosed Upon Go Through Legal Wringer
MICHELLE CONLIN
Dec 8, 2010

"Warren Nyerges opened his front door in Naples, Fla., to find a scraggly-haired summons server standing on his stoop. He plopped a foreclosure notice from Bank of America in Nyerges' hands. But Nyerges had paid for his house in cash. And he'd never had a checking account, much less a mortgage, with Bank of America.

After going to court and serving as his own lawyer, Nyerges got Bank of America to drop its foreclosure action. All along, he had been showing employees of Bank of America a copy of the $165,000 cashier's check he used to pay for his house in September 2009. "No one at Bank of America could wrap their brain around this concept that I had no mortgage," he says. In September, the court awarded Nyerges $2,500, plus 6 percent interest, for his costs.

Says Bank of America spokeswoman Jumana Bauwens, "This was an unfortunate error that was corrected when it was brought to our attention."

A link that might be useful:
www.huffingtonpost.com/2010/12/08/homeowners-wrongfully-foreclosed-upon_n_794194.html

An "unfortunate error". What crap. This 'slap on the wrist' judgement is an insult to the defendant and is in no way a deterrent for BOA to change its actions.

Logic writes: "The continued denial of the this reality does not change the fact that people are paying billions of dollars in mortgage payments with no way of knowing if they are being paid to the true legal entity that to which the debt is owed."
That sentence is sure different than your initial post that claimed banks were putting people on the street for no reason.
So Logic, how many people do you know whose home was sold by the banks, even if they were current on mortgage payments?

In Colorado we have a "Notice of Election and Demand" which requires an attorneys certification that all documents for filing are in order. The attorneys can lose their license if the wrong person or property is foreclosed on.

ncrealestateguy: So Logic, how many people do you know whose home was sold by the banks, even if they were current on mortgage payments?

And that is relevant how? I don't know any nuclear physicists, families with sextuplets, Olympic Gold Medal winners, etc. etc.

Does that mean because I don't know these people personally, they don't exist?

I don't even know anyone who is in foreclosure..past or present.

Now...your point is?

Homeowners Win Fights Over Mistaken Foreclosures
http://www.thebradsmithteam.com/Blog/Homeowners-Win-Fights-Over-Mistaken-Foreclosures

Bank's error is nightmare for family
http://www.stltoday.com/business/article_4e0371b1-85f1-5db2-862e-cf4966e2be68.html

Vegas jury awards couple $3.4 million for mistaken foreclosure
http://www.nctimes.com/news/state-and-regional/article_cb44b3d0-798a-5563-9f7f-59adfa29ee9b.html

Here is a link that might be useful: Mistaken Foreclosure, Just Ask BofA

"And that is relevant how? I don't know any nuclear physicists, families with sextuplets, Olympic Gold Medal winners, etc. etc.

Does that mean because I don't know these people personally, they don't exist? "

It doesn't mean they don't exist, it just means that the actual "victims" are a lot rarer than the article suggests. Obviously, personal experience is rife with sample bias, but if you can't find any "friend of a friend" connections on a public forum..... well, then there probably aren't many of them in society at large. For instance, I worked in a physics lab in college and knew numerous nuclear physicists. My stepbrother frequently met Olympic skaters when he went to school at northern michigan. I knew neighbors in my last home who were foreclosed on.

However, I've never met sextuplets. Of course, that is to be expected as there are only a couple dozen sets in the country. That is the type of rarity category that we are talking about for the "make all your payments but get foreclosed on " club.

Exactly. If it was happening in large #s, believe me we would be hearing from BO, Congress, and the media.

Logic
Sorry your bold posting of massive fraud is just not ringing true.
And this posting...

The continued denial of the this reality does not change the fact that people are paying billions of dollars in mortgage payments with no way of knowing if they are being paid to the true legal entity that to which the debt is owed.
I make monthly payment I also get monthly statements (and annual) showing my payments received, do I care if there if there is an internal "dropping of the ball", nope, not much to lose sleep over.

It can also be said, your continual denial does not change the fact that too many homeowners bought a house they couldn't afford then chose to default on their agreed mortgage, live free for many months, ransack their house before leaving, then play victim to anyone who will listen.

"...too many homeowners bought a house they couldn't afford then chose to default on their agreed mortgage, live free for many months, ransack their house before leaving, then play victim to anyone who will listen.."

cmarlin, are you aware that the number of original sub-prime mortgages were less that 10% of all mortgages in the US..and not all of those defaulted?

The problem was and still is what was done with those mortgages...leveraged 40 to 1, many of the same being sold over and over (aka fraud,but only if you are not a bank) which is why the whole system is without credibility.

The point being, for those who can't or don't wish to extrapolate, is not how often it happens...the point is that if it DOES happen, all of the paperwork is suspect, making it very costly for the home buyer to prove the bank wrong.

The linked article is very well written for any who wish to understand the full picture.

Here is a link that might be useful: Anatomy of Mortgage Fraud, Part II: The Mother of All Frauds

You and I simply have a different view of the "full picture".

Nothing new with that.

You see massive fraud by the banks, I don't.
Posting different links will not change that.

I view homeowner personal responsibility on a higher scale, nothing new there either.

Selling a mortgage or leverage of a mortgage does not change the terms of the original mortgage.

There really is no doubt that lenders are not keeping paper records how they are required to by law. Like pretty much every business in the US, they entered the data into computer systems instead. They rely entirely on these systems and are/were having employees just rubber stamp whatever the computer spat out. That is illegal. The law requires them to verify the physical documents.

Of course, that doesn't mean the computer records are inaccurate. Data is cross checked a bunch of ways - like taxes and insurance. That actually decreases errors verses a human doing it by hand. That isn't an excuse for not having the final step of a human check though.

That is entirely different from claiming that lots of people are being wrongfully foreclosed on. That seems to be incredibly rare.

Sigh. It is not about deadbeats...nor is it about the number of times that banks have foreclosed on people where they had zero legal standing to do so.

The point is that most state AG's as well as the SEC have evidence that mortgage fraud has been and is being committed by the large banks..in more ways than just one.

The fact alone that the banks have admitted that the paperwork was "incorrect" and/or not transferred to the trusts and that they had to review it and rewrite it etc. etc is an admission of guilt on their part.

Would you or any one individual be allowed to change a legal document that you had used to commit fraud to obtain monetary gain? Thousands of times?
Hardly.

Read on:

By Matthew Goldstein and Rachelle
Younglai

updated 2 hours 55 minutes ago

NEW YORK� U.S. regulators have
opened a new line of inquiry in
their mortgage foreclosure probe
and are asking big Wall Street
banks about the beginning stages
of mortgage securitization, two
sources familiar with the probe
said.

The Securities and Exchange
Commission launched the new
phase of its investigation by
sending out a fresh round of
subpoenas last week, the sources
said. The recipients included some
of the nation's biggest banks: Bank
of America Corp., Citigroup Inc.,
JPMorgan Chase & Co., Goldman
Sachs Group Inc. and Wells Fargo
& Co., they added.

The SEC's subpoenas focus on the
earliest stage of the mortgage
securitization process, said the s
ources, who requested anonymity
advertisement
advertisement

Citigroup is among a number of large U.S. banks on the receiving end of fresh subpoenas from the Securities and Exchange Commission in a new phase of its investigation in to the mortgage foreclosure process, sources told Reuters.

SEC sends more subpoenas in mortgage probe � sources
Citigroup, Bank of America among a number of banks said to be drawn into the inquiry because the probe is not public.

The sources said the SEC is asking
for information about the role of
so-called "master servicers" �
specialized firms that oversee the
selection and maintenance of the
large pool of home loans that go
into every mortgage-backed bond.

In many cases, Wall Street banks
that underwrite mortgage-backed
securities either own their own
master servicing firms or are
closely aligned with one.

In the fall, the SEC began looking
into the banks' foreclosure
practices following allegations that
mortgage servicers like Bank of
America were using shoddy
paperwork to evict delinquent
borrowers from their homes.

The Justice Department, banking
regulators and the attorneys
general in all 50 U.S. states are also
probing potential wrongdoing.

The state of Arizona sued Bank of
America on Friday, accusing the
bank of misleading consumers
about its home loan modification
process. The lawsuit accuses the
bank of violating a 2009 consent
judgment in which it committed to
widespread loan modifications,
according to a draft copy of the
complaint obtained by Reuters. It
also accuses the bank of violating
the state's consumer fraud act.

In the federal investigation, one
source said the SEC is seeking
information about the role banks
had in mortgage securitization.
The regulator is also looking at the
role trustees for the trusts that
issued the mortgage-backed
securities had in monitoring the
performance of the underlying
loans.

The SEC is looking at whether
loans were properly transferred to
the trusts that issued the securities
, the source said.

The renewed look at the
securitization process is an
extension of the SEC's preliminary
probe into the mortgage mess. The
SEC's regional offices are all
looking at some aspect of the
foreclosure crisis.

The SEC had no comment.

Bank of America, Citigroup,
JPMorgan and Goldman had no
comment. Wells Fargo said it is
"always working with regulators
and others who are interested in its
servicing business" but declined to
comment on whether the bank had
received a subpoena.

Copyright 2010 Thomson Reuters. Click for restrictions.

Here is a link that might be useful: SEC sends more subpoenas in mortgage probe � sources

One More:

Trapped in Bank of America Hell
Mary Bottari

Are you one of the lucky ones? Have a good job, live in a nice neighborhood, enjoy your cozy home? Think foreclosure only impacts the reckless or the unemployed?

Think again.

George Mahoney worked and saved and built his cozy, colonial-style home in Lynnfield, Massachusetts, in 1981. There, he and his wife raised three lovely daughters. For many years, the Mahoneys paid down their relatively small mortgage with their local bank -- a division of Bank of America (BofA). In 2007, they took out a second mortgage to help a daughter start a small business. Two wage earners, a great credit record -- the loan was a breeze. That was when the trouble began.

About a year after getting the second mortgage, BofA started notifying George that his payments were late. Soon they jacked his credit card interest rates from 7 percent to 28 percent. Next, they ruined his credit record. His Sears card dropped from a $10,000 limit to a $500 dollar limit. Then one day in the fall of 2009, BofA initiated foreclosure on the house he had built and owned for 28 years.

The only problem? The Mahoneys had never missed a single payment on either their first or second mortgage.

Initially, George thought the problem would be easy to fix. He went down to his local branch to get help, but the local employees were rebuffed by corporate headquarters. So he started getting a receipt for each mortgage payment and faxing it to BofA headquarters. He also started the first of thousands of calls. Usually, BofA staff would readily concede that he was right. But even if they initiated a "fix" it never lasted more than 90 days, when the saga would start over again. In the last few years, he has received foreclosure notices twice -- most recently in October 2010.

"Banks shouldn't be allowed to ruin people's lives this way. My stress level for the past year and a half has been a 10 and my wife is a wreck," George explained. His wife Marianne confirms the toll the trial has taken on the family.

"The whole thing is a nightmare. The stress we live under is unbearable and it's embarrassing too. No one can help us, no one can do anything and it's ruined our credit. I have always been proud to have perfect credit," she adds, the strain evident in her voice.

After receiving a foreclosure notice in October, hiring a lawyer to send urgent letters to BofA, and even after repeated talks with top-level staff in the office of BofA President and CEO Brian Moynihan, the Mahoneys are still in jeopardy.

Bank of America Fraudclosure Central?

Recently released data from the Federal Reserve shows that BofA received almost one trillion dollars ($931 billion) in taxpayer assistance during the financial crisis. The Fed has also been investigating snowballing allegations of fraud in the foreclosure process, allegations that include false notarizations, false affidavits, accounting fraud, abusive fees, false practice of the law and more. Fed Board Governor Daniel Tarullo told Congress that the problems identified "raise significant reputation and legal risk for the major mortgage servicers... requiring immediate remedial action." But will it come in time to aid the Mahoneys?

The Mahoney's experience indicts endemic accounting problems at BofA. Payments are misapplied constantly and the default position is abusive foreclosure. The bank reports some 1.3 million customers behind on their payments, but can regulators trust any data coming out of BofA? How many of these people are trapped in the same hell as the Mahoneys?

In a lengthy interview with the New York Times this weekend, Brian Moynihan reviews his first year as BofA chief. "I feel proud of what we have done," he said. "You never want to have a customer feel that something isn't right." But given BofA's track record, Moynihan's cheerful "there is not a better job in the world!" tenor strikes a surreal note.

Help May Be on the Way

On Tuesday, Iowa Attorney General Tom Miller, leader of the 50-state task force on mortgage fraud, met with more than 100 people from 15 states. In the crowd were representatives from community, faith, and labor organizations, foreclosure victims and struggling homeowners from across the country.

Led by the feisty folks at PICO National Network, National People's Action and Iowa Citizens for Community Improvement, the participants presented Miller with hundreds of case files documenting foreclosure fraud, abuse and plain malfeasance.

The group burst into a spontaneous round of applause when Miller said in no uncertain terms: "We will put people in jail." Miller also said he supports a settlement with the big banks that requires significant principle reductions, loan modifications, and compensation for victims -- key demands of the community groups.

As the holiday's approach, too many Americans will be losing their homes because of hard times. An untold number will be losing their home due to the fraudulent behavior and stark indifference of the nation's largest bailed-out banks. Let's hope the Mahoneys are not among them.

Here is a link that might be useful: Trapped in Bank of America Hell

Logic, Are you frustrated that we are too dumb to get your point? Do you think posting more articles will make us see your point?
Speaking for myself I DO get your point... I just happen to disagree with your perspective on this issue.

You think banks are evil, I don't...

We can each post a link to an article that agrees with our perspective, but it gets a little tiresome.

Carry on...

cmarlin20, why read something that seems to get you so annoyed?

I don't think banks are evil...but I do think that a double standard exists, as they are permitted to act in ways that would get the average person jail time.

That said, when people are made aware of what is happening the better prepared they will be to protect themselves if they should find themsleves on the receiving end.

Knowledge is power. If one chooses instead to bury their head in the sand...and/or shoot the messenger, they have a far better chance of being the victim....and of course of being denigrated by for being stupid in allowing themsleves to be scammed.

That is my opinion...to which I am entitled, and which is why I posted the information. If that is such a sore spot with you, please do yourself a favor and ignore what I post.

It's that simple.

A little self control goes a long way.

I think the people working in the banks are evil. One day they charge us $200 for a document, next week $350, the week after that $500, the same bank, for the same document. They do not return calls or e-mails and behave like no one can do anything about it. With the lack of regulations, I guess they are right. Screw the consumer.

WOW! All people that work in banks are evil... LAst time I walked into my bank, they seemd like really nice people. What documents are you speaking of berniek? Please share some details.
Don't forget, if you think banks are so evil, you have every option not to use their services nor products. Simple as that.
Please, give some details as to your example.

In truth, the banks and the people, particularly the CEOs, can "do it" better
Its a matter of attitude.
Our media is based on sensationalism, not the truth.
My experience with Bank of America was anything but pleasant, nor effective.

"My experience with Bank of America was anything but pleasant, nor effective."
I second that statement.
ncreguy I can't go into details, it has to do with subordinations by the lender, we are being ripped off!

cmarlin20, why read something that seems to get you so annoyed?
I don't think banks are evil...but I do think that a double standard exists, as they are permitted to act in ways that would get the average person jail time.
That said, when people are made aware of what is happening the better prepared they will be to protect themselves if they should find themsleves on the receiving end.
Knowledge is power. If one chooses instead to bury their head in the sand...and/or shoot the messenger, they have a far better chance of being the victim....and of course of being denigrated by for being stupid in allowing themsleves to be scammed.
That is my opinion...to which I am entitled, and which is why I posted the information. If that is such a sore spot with you, please do yourself a favor and ignore what I post.
It's that simple.
A little self control goes a long way.

I know the written word is difficult to interpret, it appears you interpret my posts to show I am annoyed or telling you not to post your opinion, that is not the case. Discussing disagreement is good, not something to be feared...

Just as you post your view, I post mine, simple ehh.

This makes for a good exchange of information for all readers.

No reason to take personal offense when we disagree about a banking issue.

"You and I simply have a different view of the "full picture".
Nothing new with that.

You see massive fraud by the banks, I don't.
Posting different links will not change that.

I view homeowner personal responsibility on a higher scale, nothing new there either.

Selling a mortgage or leverage of a mortgage does not change the terms of the original mortgage."

You don't see massive bank fraud? You haven't read anything about robosigners, you didn't read the stories posted about banks trying to foreclose on people they have never done business with?

Wow.

Are you saying it is ok for banks to foreclose on people without a mortage?

Sounds to me like someone thinks "personal responsibility on a higher scale" only applies to people, not banks.

dreamgarden, no, I do not see MASSIVE fraud by banks.

Where in my posts do you misunderstand me to day it is okay for banks to foreclose on people without a mortgage?

Strange thread to read as I wander into town, so to speak.

In my way of looking at the world, it matters what happens to a handfull of people. It matters what happens to any individual human life. Those lives are infinitely precious. The dismissal of any life as unimportant or insignificant because it may be fractional is scary, to say the least.

Just the price of doing business?

I don't know their names ... so it doesn't matter?

I would rather dismiss the sources than even be open to the possibility that maybe, just maybe, there's a gap between what banks are doing and what banks "ought" to be doing.

For my part I am thankful to have stumbled on the discussion here. It's not stuff I hadn't heard, but it reminded me to be mindful.

Once upon a time we lived in a world that would hold its breath while one life was saved and restored to the community. The horrors that happened -- and there have always been an ample number of horrors, as will always be the case in the human experiment -- might have been kept hidden for a while, but when we managed to wrestle the monsters out into the light ... things like death camps in Nazi Germany or slavery in our own history ... then we saw that the thing was wrong.

We saw that it was happening. That it wasn't imagined. That it was more than a few. That it did break spirits, bind and oppress, diminish or take life.

I am not saying that individuals who work for banks are at fault simply because they work for banks. Gross generalization.

But I am open to the growing view that what many corporations orchestrate does move toward the monstrous. Just because something is big doesn't make it right, does it?

We are thinking about buying a second home near relatives in Florida. I'm not sure what our final decision will be, but talking with hard-working locals about heart-breaking situations makes it difficult to sort out the right path.

Thank you, Logic, for the sources and comments.

WOW! Now banks are being likened to Slavery and the Nazis! Get a grip!
No one here has said that there are no instances of banks getting it wrong. What we are saying is that it is not a widespread fact that banks are foreclosing on people who do not deserve to be foreclosed upon, like logic's articles and editorials say.

cmarlin20-dreamgarden, no, I do not see MASSIVE fraud by banks.
Where in my posts do you misunderstand me to day it is okay for banks to foreclose on people without a mortgage?

I don't think I'm 'misunderstanding' anything. You said it, I'll repeat it.

"NO, I do NOT see Massive fraud by banks."

There have been numerous stories published in papers all over the country/world about people who are being illegally foreclosed on even when they DON'T have a mortgage. If you want to pretend this isn't happening then that is your perogative.

One more thing. Why do you feel the need to talk down to others like they are small children? Is your opinion the only one we should be listening to?

"Logic, Are you frustrated that we are too dumb to get your point?"
"I know the written word is difficult to interpret"

"Where in my posts do you misunderstand me"

Save the unhelpful tone for those who deserve it. Those banks that are doing the same thing to their customers while they are throwing them out of their homes.

Given the following:
1) This week the Massachusetts Supreme Court has upheld a lower court's ruling that Wells Fargo and U.S. Bancorp did not have the proper paperwork to foreclose on two homes.

2) Pension funds from New York, Connecticut, North Carolina, Oregon and Illinois that hold a collective 5.7 billion in stock in JP Morgan Chase, BofA, Wells Fargo and Citibank sent a letter demanding that those banks "conduct an independent review of Company's internal controls related to loan modifications, foreclosures and securitizations and to include a report to shareholders with findings and recommendations in the Company's 2011 proxy statement."

3)NJ Chief Justice Rabner has issued a show cause order to Bank of America/Bank of America Home Loan Services, Allied Financial, formerly GMC; J.P. Morgan Chase/Chase Home Finance, Wells Fargo/Wells Fargo Bank/Wells Fargo Financial of New Jersey, Onewest Bank FSD, and Citibank requiring that they prove the paperwork is correct or suspend all foreclosures.

That said, it seems quite clear that the lions share of the mortgage process was conducted illegally on a scale of which the size and scope is only now coming to light.
The bottom line is whether one owes on a mortgage or not, the mortgages are not worth the paper they are written upon. And, as most mortgage holders can't afford to hire an attorney, and the foreclosure is just pushed through the court system,no questions asked, there is no way to know which foreclosures have been done legally and which have not.

Assuming that only those who are actually in default have been nailed in this debacle is absurd at best given the garbage that has been passing for mortgage agreements.

Assuming this is a non-issue is simply the same as putting one heads in the sand.

And, dreamgarden, thank you for attempting to clarify. However, IMO, there are none who are so blind as those who will not see.

A large part of the problem has arien frm the 'electronic recording' of note.

Instead of actually shuffling paper, an electronic database is used to 'record' ownership of the notes.

This was done to speed yup sale of the notes, and avoid the recording fees jurisdictions require to actually record the ownership of the note at the court house.

There have been hints of problems dating back a couple years.

Dutsche Bank created a shell company to securitize notes and issue bonds backed by the notes.

They then wanted to save even more money and rolled the shell company into Dutsche Bank.

When they then tried to foreclose on some defaulted notes, the court required them to prove they actually owned the notes.

All they had was ownership of the bonds, the notes were still in the name of the dissolved shell company.

It would be like you purchasing a Fannie Bond, and then claiming the right to foreclose a note 'included' in the bond.
You own a bond from Fannie, NOT the underlying notes.
Fannie owns the notes, and they are the one who must foreclose.

The electronic recording database is a private company, set up just to make buying and selling of the notes faster and less expensive.
Some courts have allowed the company status as the 'owner' of the notes, others have taken issue.

For may years the whole thing was handled on paper.
Each seller added a transfer of the note ownership to the paper file, and then had the new ownership recorded at the appropriate court.

This 'hampered' the secondary market, so the recording database was created.

At least some of the title insurance companies have had some heartburn with the lack of public record.
Only the actual owner of a note can release the note (or someone they directly designate like a settlement company for sales).

With ownership of the note not clearly and publicly recorded, how is anyone to judge if the release on full payment is valid?

Just as with a quit claim deed, you can only convey your actual interest in a property.

A quit claim for the Empire State building I might give you conveys nothing, since I have no interest in the Empire State building.

In the name of faster they have managed to cause clouds on titles that may take some time to unwind, and in the meantime owners who have defaulted will escape foreclosure until the courts are satisfied with clear ownership of the notes (and not simply a bond backed by the note).

brickeyee, you have provided a good overview of MERS (Mortgage Electronic Registration System)the brainchild of none other than Angelo Mozillo of Countrywide. The following article explains the problem very well.

Excerpt from link below:

"The functional effect of MERS is to create an obfuscatory wall between the homeowner and the actual owner of his mortgage loan. The problem with MERS is a paradox at the heart of the "ownership" question.

On the one hand, MERS is the legal assignee of a lot of these mortgage notes. On the other hand, it's not the "real" owner of the notes, in any way that could ever help you, or the state, or the investors in mortgage-backed securities.

In short, the mortgage industry considers MERS owner enough to foreclose on you, but not owner enough to be sued, or reasoned with, or even to provide basic customer service.

As noted in the above passage, the courts are beginning to disagree with the industry's position here, but it's a long process. In short this was the perfect ownership structure for a subprime industry geared toward massive fraud and predatory lending, in which mountains of dicey loans were issued factory-style and quickly sold off so that the original lenders could not be on the hook when they blew up.....
....Outrageously, MERS actually marketed itself to its customers as a way to save money by avoiding the payment of legally-mandated registration fees. Check out this MERS brochure from 2007. It brags on the face page about its fee-avoiding qualities ("MINIMIZE RISK. SAVE MONEY. REDUCE PAPERWORK") and inside the brochure, in addition to boasting about helping clients "Foreclose More Quickly," it talks about how clients save money because MERS "eliminates the need to record assignments in the name of the Trustee."

All of this adds up to a system that enabled the mortgage industry to avoid keeping any kind of proper paperwork on its frantic, coke-fueled selling and re-selling of mortgage-backed securities during the bubble, and to help the both the Countrywide-style subprime merchants and the big banks like Goldman and Chase pull off the mass sales of crappy loans as AAA-rated securities."

Here is a link that might be useful: An Extremely Long Metaphor to Explain Mortgage Chaos

"On the one hand, MERS is the legal assignee of a lot of these mortgage notes."

This is actually par of the MERS problem.

The only place that has MERS recorded as the owner is ... MERS (not the courthouse).

Given all the shenanigans that came out of Countrywide, I do not think I would trust anything they created further than I could throw it.

"And, dreamgarden, thank you for attempting to clarify. However, IMO, there are none who are so blind as those who will not see."

Logic (and brickeyee) thank you for posting. You both make a ton of sense. Just because people don't see what is going on, doesn't mean it ISN'T happening.