Monday, October 11, 2010

the foreclosure fraud fiasco

The banks admit to not reading the fine print on the crappy mortgages the American taxpayers now own.
The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Foreclosure Crisis
www.thedailyshow.com
Daily Show Full Episodes Political Humor Rally to Restore Sanity

to bring you all up to date on this mess, im going to include here the relevant section of my emailed weekly commentaries…

what had to be the biggest news the week ending Sept 25th was the directive by GMAC Mortgage (aka Ally Financial, the 4th largest mortgage servicer) to units in 23 states to stop processing all foreclosures because of a "technical matter"...seems all their affidavits of ownership when foreclosures were filed with the courts were signed by low level grunt workers with no knowledge as to their validity...the reason this action was limited to 23 states was the other states didnt require the affidavit to filed in court, but the other foreclosures could have been equally fraudulent...to see how this might have happened, one needs to look no further back to what we already know about the bundling of mortgages into CDOs of multiple level tranches, to be packaged and repackaged for resale in the wide variety of financial instruments at the wall street casinos...there was supposed to be an electronic tracking system, MERS, but that had largely broken down...so for a large number of mortgages, current ownership of the original notes is in doubt...thus this problems may not be limited to GMAC, and may mean some homes that have been foreclosed on in the past could have been taken fraudulently...once you realize that those home which are now occupied by new buyers may be subject of future legal action by previous owners, you can see that what might be shaping up is a major legal tangle, possibly insoluble, and certainly full employment for a large cadre of attorneys for the foreseeable future...yves smith at naked capitalism has been covering this in detail, with many inside sources, so if you want to keep up with this as it unfolds, check there daily...

from the week ending Oct 2: after GMAC opened the can of worms on its foreclosure procedures last week, the entire housing finance service industry has followed suit & deteriorated into total disarray this week...midweek JPMorgan halted all foreclosures, and they were joined by One West and BofA by friday; furthermore, the comptroller of the currency has ordered 7 major banks to review their procedures...recall that what this involves is the signing of affidavits by employees who had no knowledge of or who barely looked at the paperwork involved, and this calls into question not only those foreclosed on, but possibly also ownership of houses transferred as far back as 2004, as the documents were mishandled as mortgages were securitized and traded...the title insurance companies are now shying away from insuring any new mortgages on these properties until the dust settles, which some believe will take years...

& from last week: the developments in the foreclosure fraud fiasco has to be the domestic story with the greatest potential for long term systemic risk...in the first show of bipartisanship since TARP was passed, congress rose to the occasion and tried to pass a bill (with no media coverage) that would let the banks off the hook by allowing interstate notarizations in foreclosures...but whether it was some revelation resulting from his polling numbers, or the influence of elizabeth warren in the absence of larry summers, obama decided not to sign it, effectively vetoing it...meanwhile, another major bank, PNC, joined JPMchase, BofA, & GMAC in suspending foreclosures in the 23 judicial states, and late in the week BofA suspended foreclosures in all 50 states...attorney general eric holder is launching an investigation, as are AGs in 40 states....people in the unfortunate position of buying a once foreclosed house are being left out to dry, as that part of the housing market has locked up; chances are, if you've bought a house in the past 5 years and have title insurance, you should be safe, but the attorneys are smacking their lips at the possibilities...and if that werent enough, there is now speculation that the entire RMBS (residential mortgage backed security) market could be in jeopardy, as the actual notes may have never been rightly conveyed to the RMBS trusts, thus invalidating those instruments...

so who are the real victims in this fiasco: check this out:

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Mortgage Bankers Association Strategic Default
www.thedailyshow.com
Daily Show Full Episodes Political Humor Rally to Restore Sanity

the weekly notes above are taken from my intro to the package of links from my global glass onion that i email every sunday morning to 2 dozen friends who are stuck with me…anyone who wants my weekly emailing of selected links, along with my commentary, contact me...

2 comments:

  1. I am 2 months behind on our mortgage.
    I just got a letter from them wanting to know if I wanted to pay bi-monthly.
    LOL

    ReplyDelete