Many crazy things in the hopper today:

Task force probing whether banks broke federal laws during home seizures: Federal law enforcement officials are investigating possible criminal violations in connection with the national foreclosure crisis, examining whether financial firms broke federal laws when they filed fraudulent court documents to seize people’s homes, according to people familiar with the matter.   Now THATS what I am talking about

FBI looking at foreclosure mess: A federal law enforcement official says the FBI is in the initial stages of trying to determine whether the financial industry may have broken criminal laws in the mortgage foreclosure crisis. The law enforcement official says the FBI is at the start of a lengthy sorting-out process in which agents will look into what caused the financial institutions to mishandle the flood of paperwork in the historic avalanche of foreclosures. The official says the question is whether financial institutions were acting with criminal intent or were simply overwhelmed by events in the wake of the housing market’s collapse.

MERS Mortgage Registry Comes Under Fire in Foreclosure Crisis:  The case highlights a debate raging in courts on the role MERS has, if any, in home foreclosures. How it’s resolved will determine whether MERS’s involvement produced a defective process and clouded millions of property titles. A definitive ruling against MERS might slow any future bundling of mortgages into securities since the company played a role in that process.

“MERS is the central device by which the banks have tried to opt out of the legal system and the real-property record system,” U.S. Representative Alan Grayson of Florida said in an interview. “They have taken it upon themselves, with the supposed consent of the borrowers, to violate a system of property record-keeping that we’ve had going back centuries.”

Bondholders Pick a Fight With Banks:  As banks restart foreclosures they had suspended, bondholders are stepping up efforts to recoup losses on soured mortgage portfolios amid concern about sloppy mortgage servicing and underwriting practices. In a letter Monday, a group of institutional bond investors raised objections to the handling of 115 bond deals issued by affiliates of Countrywide Financial Corp., acquired by Bank of America Corp. in 2008. The investor actions, which seek to have certain loans be repurchased among other things, come as Bank of America on Monday took steps to defuse claims that its foreclosure troubles are deep-seated. The bank on Monday said it was restarting the foreclosure of more than 100,000 homes.

Mortgages Were Pledged to Multiple Buyers at the Same Time This is like the movie ‘The Producers’. Banks were selling the same loan over and over to multiple investors. It’s why property right protections are not just ‘paperwork’, they actually protect property rights. (naked capitalism)

Top Bank Regulator Doesn’t Believe Consumers Harmed By Foreclosure Fraud Scandal The nation’s top bank regulator doesn’t believe homeowners are being harmed directly by an ongoing foreclosure fraud scandal, despite multiple reports of banks mistakenly evicting homeowners who aren’t even in foreclosure. (HuffPo)

•  Letter from Conyers, Kaptur, Grayson, Grijalva to Special Inspector General of TARP Asking for Audit of GMAC, Fannie, Freddie SIGTARP is run by Neil Barofsky. Barofsky is a very serious investigator and public servant. His group has actually put multiple TARP recipients from smaller banks in jail for white collar crimes. As far as I know, his is the only law enforcement body in DC to do so.

Six Democratic Senators Send Letter to Administration Over Foreclosure Errors (Brown, Harkin, Boxer, Stabenow, White, Begich) – This situation has stirred up notice all over the place, including on the Senate Democratic side.

BofA Will Fight Against Mortgage Buybacks Bank of America has suspended its foreclosure moratorium, because everything’s apparently fine. The bank will also furiously respond to investors who are suing. (Bloomberg)

ACLU Seeks Public Records To Determine Constitutionality Of Foreclosure Proceedings In Florida This investigation is looking at the foreclosure fraud issue as a criminal matter, five days after Rep. Grayson sent a letter asking for this action.

This is why you must verify documents! House, homeowner caught in a mortgage meltdown:  Edwards’ predicament represents a confluence of the fraud, document forgery, and suspicious foreclosure practices that have plagued South Florida’s housing market from the housing boom after Hurricane Wilma in 2005, through the current “robo-signing” scandal. In the midst of a new national foreclosure crisis, Edwards’ story stands out as a case study of the housing and banking systems’ laundry list of problems. The 63-year-old retiree says her housing troubles began five years ago when her ex-husband, legally blind and illiterate, was duped into taking out a $102,000 mortgage on the house by his adult son and daughter-in-law. The couple forged Edwards’ signature on a document that stripped her possession of the home, and then made off with the money in January 2006, she said.

Fed Is Monitoring Mortgage Foreclosure Process The leader of the Federal Reserve Bank of New York addressed the ongoing saga of mortgage foreclosures, saying “the Federal Reserve actively encourages efforts to find viable alternatives to foreclosure, like loan modifications, or deeds in lieu.” But he added, “we also support due process and access to legal counsel for homeowners facing foreclosure, for instance through legal aid programs.”

Democrats versus Republicans versus Administration Strategies on Foreclosure Mess The administration, liberal Democrats, and Republicans in DC all have different approaches to the foreclosure fraud mess. (Politico)

Republican leaders have said little about the foreclosure problems, except for House GOP Whip Eric Cantor, who warned that a moratorium threatened to destabilize the housing recovery.

Behind the scenes, Republicans are consulting with the banks, which are hoping to reach a quick settlement with attorneys general from all 50 states who have announced a joint investigation into home foreclosures. The settlement would involve a sizable fine and some basic reforms to the foreclosure process.

Judges asking for more evidence on foreclosures Despite the suspension of the foreclosure moratoria, judges aren’t going to be as creditor friendly going forward.

Polling Data I don’t generally trust Rasmussen, but it is the only public polling data out there on this topic. I found this particularly striking since it shows that the deadbeat is at fault narrative has taken a big hit.

Fifty-two percent (52%) say Wall Street investors and mortgage companies are to blame for most of the problems in the lending industry, while 35% blame individuals who borrowed more than they could afford. Those numbers have changed drastically from July 2008, when slightly more voters blamed borrowers than Wall Street investors and mortgage companies.

What other related links have you found?

>

by Tom Toles

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

57 Responses to “Bank Trouble Linkfest”

  1. VennData says:

    Ray Ozzie departs Microsoft.

    http://www.computerworld.com/s/article/9191860/Is_Ozzie_s_Exit_Good_or_Bad_for_Microsoft_in_Cloud_Race_

    Related? Yeah, hire this guy to dump the powdered wigs, parchment and quills …and computerize the mortgage system.

  2. call me ahab says:

    [Federal Task force] examining whether financial firms broke federal laws when they filed fraudulent court documents to seize people’s homes

    since when are fraudulent documents against the law? Good thing they’re examining- can’t wait for the report-

    in any event- if someone defaults on a mortgage- we can’t say their home is being seized- now can we?

    c’mon BR- who you trying to be- Che Guevara?

  3. AG Sage says:

    The bank will also furiously respond to investors who are suing.
    Attorneys and paralegals . . . to the ramparts!

    Whistleblower speaks on fraudclosure

    Four charged in $2.8 million mortgage fraud scheme
    In four instances, they obtained equity lines of credit on residential properties that did not actually exist but where represented to be located in Rockland County. (The banks apparently last checked the documentation on anything related to a mortgage sometime in 1998 . . .)

  4. NormanB says:

    The US gets a second chance to properly punish the banks. The first time around TARP money and forebearance of legal issues saved the bond holders and equity holders whereas they should have been taken to the mat. If that would have happened these banks would be managed much better today. But now, we have another chance to render corporate punishment. Save the lending and investment entities but send a message to investors that they better pay attention to who is running these banks and how well they are doing it.

  5. TakBak04 says:

    THE CRAP THAT WENT ON in ’08! Memory Refresher!

    ——

    updated 1/11/2008 2:55:46 PM ET THIS IS FROM 2008!

    CHARLOTTE, N.C. — Bank of America said Friday it will buy Countrywide Financial for $4.1 billion in stock, a deal that rescues the country’s biggest mortgage lender and expands the financial services empire of the nation’s largest consumer bank.

    The acquisition will make Charlotte-based Bank of America Corp. the nation’s biggest mortgage lender and loan servicer.
    In aggressive dealmaker who has already snapped up behemoths FleetBoston Financial and MBNA, Bank of America chief executive Ken Lewis this time isn’t buying a financial winner. Delinquencies and loans in pending foreclosure are rising in Countrywide’s loan portfolio, and Lewis said Friday “there are near-term challenges” in the nation’s housing market.

    But Countrywide’s troubles have allowed Lewis to sweep in and add a major business line to his supermarket of financial products on the cheap.

    “Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation’s premier lender to consumers,” Lewis said in a statement.
    It also places Lewis in the position of a market savior. By buying Countrywide, he’s keeping the industry and regulators from the messy task of figuring out who would take on the responsibility of collecting payments for the 9 million U.S. home loans serviced by the Calabasas, Calif.-based lender. Lewis said Friday there was no government support for Countrywide’s loan portfolio.

    -snip-

    While there are some regulator hurdles to close the deal, they are hardly insurmountable. The buyout would require approval from the Federal Reserve, and possibly other agencies, but analysts believe regulators are more concerned about a Countrywide collapse than industry consolidation.

    A Countrywide failure would be a huge blow to government-sponsored mortgage finance companies Fannie Mae and Freddie Mac, which are major buyers of Countrywide’s loans.

    Federal law also bars banks from acquisitions that would increase market share above 10 percent of U.S. deposits, a limit that Bank of America is nearing. Bank of America chief financial officer Joe Price said because Countrywide Bank us a federally regulated thrift, it “doesn’t play into the deposit cap.”

    In addition, banking industry experts say Bank of America could easily lower the total amount of money held in deposits by decreasing interest rates and shedding deposits.
    Search Results

    1.
    Bank of America to acquire Countrywide – Business – Mortgage Mess …
    Jan 11, 2008 … Bank of America said Friday it will buy Countrywide Financial for $4.1 … Deal for country’s largest mortgage lender valued at $4.1 billion … Along with the $2 billion investment from Bank of America, Countrywide was forced to … But analysts said it wasn’t enough, with one noting this week that …
    http://www.msnbc.msn.com/id/22606833/ – Cached – Similar

    2.
    Business & Technology | BofA to Pay $4.1B to Buy Countrywide …
    Jan 11, 2008 … A buyout of mortgage lender Countrywide Financial likely would be approved by … Bank of America said Friday it will buy Countrywide Financial for $4.1 billion in stock, a deal that rescues the … Along with the $2 billion investment from Bank of America, Countrywide was forced to draw on an $11.5 …
    seattletimes.nwsource.com/…/2004119645_apcountrywide11.html – Cached – Similar
    3.
    Bank of America to Buy Countrywide : NPR
    Jan 11, 2008 … Bank of America Corp. has agreed to buy Countrywide Financial for … Along with a $2 billion investment from Bank of America, Countrywide was forced to draw on an … But analysts said it wasn’t enough, with one noting this week that … “We are aware of the issues within the housing and mortgage …

  6. DiggidyDan says:

    I believe this is the most sickening story I have read yet on the Foreclosure Front:
    http://www.bloomberg.com/news/2010-10-19/florida-attorney-buys-bugatti-yacht-mansion-with-his-foreclosure-fortune.html

    “His wealth is a reflection of his acumen and the tremendous volume of foreclosures,” Tew said in an interview yesterday. “He had something to do with the acumen part. He had nothing to do with the amount of foreclosures we have.”

    “He started from scratch and has built a wonderful legal practice and has made a lot of money,” Tew said. “That’s the American dream isn’t it?”

    “Employees repeatedly signed affidavits without reviewing them, forged signatures, and improperly notarized and backdated documents, she said, according to a transcript of the interview.”

    “This year, Stern made about $146 million when he sold his non-legal foreclosure operations to China-based Chardan 2008 China Acquisition Corp., a “blank check” company originally formed to do business in China. . . On Oct. 14 DJSP said it was laying off 10 percent of its workforce because foreclosure referrals had “declined dramatically.”

    Bloodsucking maggots are outsourcing Forgery now! Better start breeding miniature camels, pal!

  7. randy says:

    This is the only issue I can think of where the Dems are more in line with the sentiment of the voters. If I were a Dem candidate strategist I would have my candidate flogging the banks as loudly as possible for the next few weeks.

    Its going to cost them donations from the banking industry, but they should make up the difference from the trial lawyers.

  8. call me ahab says:

    you go Randy-

    and go Dems!

    (they’re so cool- and that’s what this blog is all about- right BR?)

  9. “Top Bank Regulator Doesn’t Believe Consumers Harmed By Foreclosure Fraud Scandal.”

    Well, now I feel better.

  10. DM RTA says:

    I’ve read all the posts in this series but I still do not understand how the following (clip below) could ever happen without an obvious check in the system catching it…I now understand the nature of a REMIC but at some point in the chain there has to be revenue payments missing unless one REMIC handles many issues.

    (from NakedCaptialism post) “The pledging of the same mortgage again and again to different trusts related to mortgage backed securities is just one result.”

    Can someone please explain how this might even be possible ?

  11. Winston says:

    Bravo! I am quite glad you have the time and the speed to assemble this fabulous list. As for Mickey Cantor’s comment: Of which housing recovery does he speak?

  12. Tarkus says:

    “35% blame individuals who borrowed more than they could afford”

    Sorry, but this always makes me scratch my head.

    A beach-bum asks a banker in a silk suit to borrow a lot of money and the banker in the silk suit says “Ok.”

    The beach-bum is irresponsible.

    Um. Ok.

  13. No. The beach bum is a victim. We all are victims of evil mortgage companies that force-fed us mortgage loans with an evil glint in their eye, knowing full well we’d all end up in foreclosure and we could funnel the foreclosure business to our favorite foreclosure mill attorney who would then take us for a ride on his cool yacht. You see, really, we’re like those forcibly- fattened geece that make tasty foie gras (roughly, French for goose liver). The bankers are just a bunch of French liver eaters.

    My god, BR, I can’t believe you haven’t got something up there for “show me the note” as the new black in being fashionably deadbeat.

    Ahab, if you don’t mind me doing so, I’m gonna quote you here:

    “c’mon BR- who you trying to be- Che Guevara?”

  14. bocon007 says:

    “Treasury Secretary Timothy Geithner has warned that a widespread halt to foreclosures could create doubt about all home values and drive a vicious circle of declining prices. . . ”

    Let me get this straight – Last week, we were all concerned that the high volume of foreclosures was leading to a continued drop in home prices. Now we’re worried that a widespread halt to foreclosures might lead to a drop in home prices.

    Which is it?

    The double think required to make sure the banks end up on top is getting harder and harder to pretend into existence.

  15. Mannwich says:

    With all due respect curmudgeon, spare us all the sarcastic red herrings, but who bears the most resposibility in this dynamic? The bank or borrower? Who’s the more powerful entity in the transaction? Who bears most of the responsibility? Your answer will reveal a lot about you.

  16. Petey Wheatstraw says:

    DM RTA Says:

    Can someone please explain how this might even be possible ?
    ____________

    Fraud.

    The Curmudgeon and ahab:

    As someone said earlier: Original and/or certified copies of mortgage docs are like cash — if you lose them, they’re gone. The banks didn’t lose them, they destroyed them. Sane difference in practical terms.

    The only leg the borrowers have to stand on is that the banks have committed fraud throughout the process — from loan origination to securitization. I sat in lots of settlements, with lawyers, lender reps, sellers (in my case the seller was always the builder who was VERY cozy with the banks, and who grimaced that they lost culpable deniability under SarbOx). The trick was to threaten to keep the buyers deposit if settlement didn’t go through. During the entire process, the buyers, if hesitant, would be reassured that everything was on the up and up.

    Now, there were many serial flippers buying our homes (to the point that our contracts stipulated that a buyer could not post a ‘For Sale’ sign in front of any property in one of our communities until the builder had closed out. Typically, these are not the folks currently on the hook.

    Che Guevara would never have had to pick up a gun if the law had been on his side (as it is currently on the side of those being illegally foreclosed on).

    Regardless of a signature of the buyer on a piece of paper promising to pay for an asset, there is currently no legal counterparty that can claim either: a) that they hold title to the underlying asset, and/or; b) they are the counterparty on the loan. That’s the bottom line. The banks threw their money away when they improperly washed their hands of the loan.

    I hope all of these folks get free houses. It would be a lesson the banks would NEVER forget.

  17. Mannwich says:

    @Petey: That might be true but at what greater cost to the rest of us? Just playing devil’s advocate here. I would venture to guess that could tip this thing into a depression or at least another recession.

  18. call me ahab says:

    Petey-

    delusional-

    no way- no how- will folks who defaulted be deeded those homes-

    never happen-

    I would put serious money on that-

    sure the banks need to get it together- and take losses (and you know I was a big critic of all the bank bailouts from the very beginning)-

    but that doesn’t mean someone who has stopped paying has any right to the property at all-

    complete bullshit

  19. Petey Wheatstraw says:

    Manny:

    What’s recession or depression to a debt slave? The rest of us are already paying a greater cost (bail-outs, usury interest rates, devalued dollar, etc.). TPTB needs to understand that if the middle class goes down, we will damn sure take them with us.

  20. Tarkus says:

    The Curmudgeon Says:
    October 19th, 2010 at 8:45 pm

    No. The beach bum is a victim. We all are victims of evil mortgage companies that force-fed us mortgage loans with an evil glint in their eye, knowing full well we’d all end up in foreclosure and we could funnel the foreclosure business to our favorite foreclosure mill attorney who would then take us for a ride on his cool yacht.

    And the banker – who was holding the money at the outset of the meeting and responsible for it – was forced by the beach-bum to hand it over when the beach-bum threatened the cowering banker with his evil glaring stare.

  21. Andy T says:

    @Mannwich.

    This is really becoming a tired and silly argument. The banks who lent money to folks who couldn’t pay were irresponsible. The folks who took on a debt service they couldn’t afford were also irresponsible.

    The irresponsible lender loses money on the loan. The irresponsible borrower loses rights to whatever he assets he purchased with the loan (i.e. homes, boats, RV, etc) This is pretty “cut and dry” bullshit. Not even sure where the argument might be here.

    I think the better question is this: Who was the “smarter money” in some of these mortgage transactions? The guy who lived in a better place for a few years at ultra cheap rates, and then lived rent-free while the mortgage process dragged on? Or, the note holder who got his ass-kicked and lost 30-70% of the loan value?

    Note: I’m not casting any “moral judgements” one way or another with the last query. Just pointing out the the homeowner/speculator/userer of the “cheap rates” seems to be have been far smarter than the institution issuing the loan.

  22. DiggidyDan says:

    Curmudgeon. . .It isn’t the honest Mortgage Brokers, Lenders, and Attorneys we are talking about. . . It’s the rabble that blatantly abused the system as well as the dishonest (or retarded) folks who took out ridiculous loans they could never pay back or “cashed out” on their “equity” to buy dumb shit.

    The honest people who were doing the right thing are all victims. . . including the good brokers who advised people not to get an ARM or a home or rate or HELOC they could obviously not afford as well as the honest people who bought within their means just for a place to live and now have seen their equity decline because of the retards and can’t refi because they’re too underwater to do so and also probably have less income to pay for other stuff they need due to collateral damage to the system and inflation in food, energy, and basic materials due to the printing presses.

  23. Tarkus says:

    Mannwich Says:
    October 19th, 2010 at 9:12 pm

    With all due respect curmudgeon, spare us all the sarcastic red herrings, but who bears the most resposibility in this dynamic? The bank or borrower? Who’s the more powerful entity in the transaction? Who bears most of the responsibility?

    ————————————-
    An interesting question is: Would YOU loan the beach-bum the money he asked for? ……

  24. Mannwich says:

    Fair enough, AT. I think this has been hashed and rehashed enough. I’m pretty worn out from all this crap, to be honest.

  25. Petey Wheatstraw says:

    ahab:

    They have possession of the home. Without a legit counterparty, that’s all it takes. Who will kick them to the curb? The government? The government has no claim to the asset as long as the taxes are paid. I understand your disbelief, but there’s really no other option (other than the banks opening themselves up to total losses, plus penalties and jail time, which seems to be the other horn of their dilemma).

    In support of my contention, I ask the following:

    Why have the banks let folks who have defaulted on their obligations stay in the homes for up to 2 years without foreclosing? Because they’re beneficent?

    Why have the banks resorted to fraudulent docs in order to commence foreclosures (think about it, man, why would the go to that length, what with the illegality of it)?

    Why did Citi (at least, I think it was Citi), disclaim proper and valid title to foreclosed homes they resell?

    One additional question: If someone who has stopped paying has no right to the property at all, who does?

  26. Petey Wheatstraw says:

    Andy T Says:

    “The irresponsible lender loses money on the loan.”
    ___________

    Not so. The lender sold and/or securitized the loan several times, and each time at a profit. Who owns that shit now? Who fucking knows? Thats who.

  27. Petey Wheatstraw says:

    BR’s quote of the day, above, is applicable:

    “The major difference between a thing that might go wrong and a thing that cannot possibly go wrong is that when a thing that cannot possibly go wrong goes wrong it usually turns out to be impossible to get at or repair.” -Douglas Adams, Hitchhiker’s Guide to the Galaxy
    _______________

    This is the essence of the current mortgage/title fiasco/crimefest.

  28. Mannwich says:

    Pretty compelling arguments as well, Petey. What a giant clusterfuck this is….

    How many honest people are continuing to follow this crap are now wondering if they (we?) are chumps fir trying to play things straight? This has the potential to have a truly corrosive effect on our culture and collective mores.

  29. call me ahab says:

    petey-

    valid points and we’ll see how it plays out-

    but- a lock it won’t be in the favor of the squatters- even if the USG ultimately ends up being the “landed gentleman”-

    the squatters will be renters

  30. Petey Wheatstraw says:

    Manny:

    That’s why some egghead (Hernando DeSoto, I think — and I always thought he discovered South America, or some shit), who has been in the news lately for postulating that clear title is the only reason capitalism has worked so successfully in the west for so long.

    Our collective mores don’t really amount to much, anyway.

  31. Petey Wheatstraw says:

    ahab:

    I agree that it just ain’t proper. But, before I’m too old to kick ass and take names, I’d like the opportunity to try to move the ball on a level playing field.

  32. TakBak04 says:

    @All…. It’s the NOTE…Contract between Buyer and Seller. Buyer signs note with seller…(mortgage loan officer at bank or wherever it was in the zoom ..zoom middle 2000′s.) Buyer signs, Seller Signs…Lawyers or Mortgage Officer for Seller is present.

    Note for Mortgage goes into “back room” then is sent off to somewhere else, then is carved up into Traunches and sold off to other parties.

    Bottom line. Contract Law goes way back. Agreement with Buyer and Seller and both sign on the Note.

    If the Mortgage was intended to be sold off to “other parties” in the “back room” then those parties needed to sign the Original Note…because they are owed money by the buyer and need to be listed so they get their proper share of the payment.

    THIS DID NOT HAPPEN…..but it’s a simplistic view of how many folks were suckered believing that the “Old Laws” of “Buyer and Seller” ….Contract Law were still in place. THEY DID NOT KNOW…the whole damned thing was a scam…and that the guys in the backroom were party to the deal also.

    BR has said over and over again on this blog. “It’s about the Note.” The Note and who signed is contract between buyer and seller. You can’t go off and sell a note in a backroom to others and expect the buyer to be obligated to those folks whose names aren’t on the NOTE.

    So…those folks with that situation do have legal rights…or we just toss out a couple of centuries of Legal Contracts standing in our system and say….WTF! Stupid People should have known they owed the guys in the backroom who held pieces of their Mortgage the same as the person who signed the paper on their behalf!

    Think about it…. I’m not talking about Flippers who were already in league with Contractors and anyone who would give a Mortgage to a Flipper Investor. I’m talking about REAL PEOPLE who really believed your bargain in a deal was with a loan between a Buyer and the Lender.

    The Banks and Mortgage Lenders who popped up in the Bubble obviously hoodwinked innocent people.

    So much has been written about this everywhere and TBP Site where folks are posting has so many articles and links going about this that anyone posting here Blaming “the Victim” would seem to either be clueless, not reading or have some agenda to defend a fucked up process that is almost impossible to defend given what seems to be overwhelming criminality foisted on those who were playing by rules they thought they knew while they were being hoodwinked!

  33. louis says:

    El Che would laugh at us. We all know what needs to be done to get at those “Capitalist octopuses.”

  34. DiggidyDan says:

    Petey – Why have the banks let folks who have defaulted on their obligations stay in the homes for up to 2 years without foreclosing? Because they’re beneficent?

    Probably because if they foreclosed and marked them as their true value, their balance sheets would have been even worse last year and the banking crisis would have killed them. . . they had to hold off keeping the ball in the air a little while until the Gubmint bailed them out and let them “shore up” the balance sheets by giving them cash at 0% interest they took from the people and then lent back to them for interest income.

  35. notakid says:

    what’s funny is you would think at least a couple of pugs would be upset by this and be calling for some investigations.

    I mean what better way to take back your country and all.
    Being an election season and all there must be at least 1 pug somewhere that would be on the side of the PEOPLE! ….and behind in the polls……

    maybe old ahab can dredge up a few that still care for the people and all that American dream like stuff.

    Oh and they were ALWAYS going to be renters, that was the system and the only way the system had a chance in hell to work.

  36. Petey Wheatstraw says:

    DiggidyDan:

    Don’t you think lack of cash flow (principal and interest) would kill them as certainly as marking the deteriorating asset to true market value and writing off the loss? If government adequately offset the lack of cash flow with bail-out money, why all of the criminality in trying to reclaim the asset now? Also, the houses that were successfully foreclosed on before the shit hit the fan have mostly sat empty. Why would that be? Defective title is the most likely answer.

  37. call me ahab says:

    takbak04-

    simplistic-

    never play out that way- but glad you have it figured out (in your own mind)

    notakid-

    pugs obviously don’t care about the people-

    whatever the fuck that means

  38. DiggidyDan says:

    Lack of cash flow WAS killing them. . . the tenants weren’t paying anyway. Then they got bailed out. . . now they are rushing to foreclose on those that they let remain occupied to get at least SOME cash flow out of the asset. The abandoned ones that have sat empty are now a lost cause and written off disrepair will not allow them to receive adequate cash flow from the asset to make it work.

    (remember we are looking at this in hindsight as well)

  39. Petey Wheatstraw says:

    I hate to cite a Denninger post on BR’s blog, but I do think his outrage (in this case) is justified, and his argument is reasonable, and his evidence strong:

    http://market-ticker.org/akcs-www?post=169697

  40. Andy T says:

    @Mannwich 9.56

    “How many honest people are continuing to follow this crap are now wondering if they (we?) are chumps fir trying to play things straight? This has the potential to have a truly corrosive effect on our culture and collective mores.”

    Indeed. I think that’s the crux of the Tea Party “movement,” which is more of an “anti-establishment” movement than anything else. There is large % of Americanos that are generally pissed off. [Note: I'm not a "tea-partier"]

    @ Mannwich 9.47

    Agreed.

    @Petey

    Was only trying to make a very straightforward and simple point, and yet you chose to obfuscate that very simple question by going down a different path. At some point in the mortgage process, somebody decided to lend money and take on that note. The “somebodies” who loaned the money on the foreclosed properties have been destroyed on that transaction. So, the question, AGAIN, is, who was the “smarter money” on the deal? The guy in the house or the person who loaned the money?

    Actually, no need to answer that question…I already know what you’ll say: “Neither is smarter than the other. The real smart money was the bank/originator who sliced and diced it all and tricked both the homeowner into buying the overvalued property with teaser-rates and also pushed the the pension funds to take on MBS to earn that extra juice to help cover the pension requirements.”

  41. Petey Wheatstraw says:

    Andy T:

    I don’t know, or care who is smarter (but I do think I know who is more criminally culpable). I also know that the “somebodies” (banks) who loaned the money on the foreclosed properties have been more than paid in full by the folks who purchased those securities fraudulently derived from the mortgages.

    Private capital invested in non-public home builders and land developers/speculators might have taken a hit, but that’s the risk of high stakes investing (but they didn’t lose their money in the mortgage securitization process — that’s the domain of the banks).

  42. [...] Ritholtz's The Big Picture has a very good round-up of most recent developments in the continuing to unfold foreclosure-gate [...]

  43. formerlawyer says:

    TakBak04 Says:

    “If the Mortgage was intended to be sold off to “other parties” in the “back room” then those parties needed to
    sign the Original Note…because they are owed money by the buyer and need to be listed so they get their proper
    share of the payment.”

    I don’t believe that is correct. A note is a bill of exchange that can be assigned in law or equity to a different party by the lender who took the note without the consent of the borrower if the borrower has, as they usually do waive the notice and presentment of the note. Certainly all of the paperwork I ever dealt with was written in standard form entirely in the banks favour and would expressly allow for assignments.

    The difficulty comes in finding out who now holds the note as the paper trail can be absent during faulty securitizations.

    Foreclosure, whether in judicially administered jurisdictions (23 states) or on a power of sale jurisdictions (27 states) has to be conducted under the state law. MER only gives a federal shortcut. All of this requires proof of the trail of the note ie. the assignments into and out of banks, pools, tranches etc. That evidence trail for the note appears to have been fraudulently made or by perjured testimony in this mortgage “foreclosuregate.”

    This by the way applies to many mortgages that are not underwater. What happens if you want to payout the mortgage? Who do you pay? Do you have any risk associated with that payment?

    Finally to those who would counsel homeowners to stop making mortgage payments in any case (ie. the smart money scenario) you may want to look at the equities involved. If an innocent bank (they do exist!) forecloses on your “smart money homeowner” that homeowner would not come to court with “clean hands” and be dealt with appropriately. This of course applies in recourse jurisdictions but even some non-recourse jurisdictions (Florida may be one but I am not sure) may have fraud or equitable doctrines to tag the “smart money” guy.

    IANLAL consult a professional in your jurisdiction for legal advice.

  44. See this:

    Full Text of Letter to BofA from NY Fed (Maiden Lane), Freddie Mac, Pimco, Western Asset Mgmt, Neuberger Berman, Kore Advisors
    http://www.ritholtz.com/blog/2010/10/full-text-of-letter-to-bofa-from-ny-fed-maiden-lane-freddie-mac-pimco-western-asset-mgmt-neuberger-berman-kore-advisors/#more-59831

  45. formerlawyer says:

    Spitzer asks the question as to what the Banks knew about the results of their own investigator, Clayton Holdings but also what did the regulators/enforcement people know and when.

    http://www.slate.com/id/2271647/

  46. JT23456 says:

    Loved your Douglas Adams quote today – he’s closer to a religion “inventor” in my mind than Hubbard with his fake Scientology BS. In fact – “He was a staunch atheist, famously imagining a sentient puddle who wakes up one morning and thinks, “This is an interesting world I find myself in—an interesting hole I find myself in—fits me rather neatly, doesn’t it? In fact it fits me staggeringly well, must have been made to have me in it!”

    The biologist Richard Dawkins dedicated his book, The God Delusion (2006), to Adams, writing on his death that, “[s]cience has lost a friend, literature has lost a luminary, the mountain gorilla and the black rhino have lost a gallant defender.”

    http://en.wikipedia.org/wiki/Douglas_Adams

    Hey we lost a GREAT ONE at only 49 – and I’m still really really pissed off. Money & wealth is an easy thing – try really thinking on the outer reaches and 5-way humor -

  47. carping demon says:

    Didn’t the original fraud that underlies these foreclosure problems occur at the moment a mortgage was sold to buyer C by previous buyer B, who had not had the note conveyed to him when he supposedly bought the mortgage from A, which fact would have been so clear to buyer B upon simply looking at the note, that he could not help but know he was selling to buyer C a note he could not demonstrate to be his to sell (and for all anybody knows from that point forward, wasn’t his to sell)? The vast majority of attention has been paid to the “homeowner” as fool, knave or victim; fool to think that house prices could rise forever, knave for knowingly borrowing more than he ever could pay back, victim for being sold a deal he couldn’t possibly understand, and now a fool again for defaulting, or knave for defaulting and squatting, or victim of several kinds of servicing fraud–it’s all about “the homeowner” or “those borrowers”. This frames the problem in terms of individuals, and this serves to focus attention on the actions of individuals as borrowers, owners, squatters and jingle mailers, and deflect attention from the underlying fraud perpetuated by the securitisers and servicers whose victims, as a matter of fact, were investors, not homeowners. The liquidity crunch in 2008 resulted from bankers not knowing what was in the securities they held, not from the actions of homeowners. We called it a liquidity crunch and gave a lot of money to the banks while talking about homeowners. Now we’re about to do it again, framing it as individuals in foreclosures, and the banks still don’t know what’s in those securities they hold, and we’re getting ready to invite the them back into the vault. For the whole past decade the public has been looted. Looting doesn’t happen by accident or sloppiness or hubris or greed. Looting is done on purpose. Has Mrs. Peale’s motto, now that she is no longer here to object, been reissued as “ Find a Country and Loot It”?

  48. dss says:

    There would be no irresponsible folks who could not pay if the irresponsible lenders did their job. The onus is always, always, always on the lender to determine whether the borrower is able to repay the loan. Like another astute observer just said, the borrower put a gun to the head of the lender and MADE HIM give them a loan.

    The lenders were selling these mortgages before the ink was dry, right before the ratings agencies put the AAA stamp of approval on them.

    Some percentage of loans always go bad, that is why there are extra profits built into lending in the form of points, fees, higher interest rates for slightly less qualified buyers, but in the end the lender takes ALL of the blame for giving money to unqualified borrowers.

    No liar loans, no zero percent down loans, no 110% loans; the lenders decided that due diligence went out with bell bottom pants.

    I remember in the olden days when we bought our first house. 20% down, tax returns for two years, and the payments could not exceed 25% of the man’s income, as the wife’s income could not be counted.

  49. [...] – Bank trouble link-fest. [...]

  50. JerseyCynic says:

    “HURRY and lock in historically low mortgage rates NOW before they rise”

    how long have they been playing this tune?

    I swear I’ve heard these same “lender ads” on the radio for over a decade now

  51. Tarkus says:

    dss Says:
    October 20th, 2010 at 12:50 am

    The onus is always, always, always on the lender to determine whether the borrower is able to repay the loan.

    ————————————

    Precisely. Only if you’ve never loaned anyone (family or friend) any money could you miss that point (and I don’t mean house-buying money – I mean a few hundred to a few thousand dollars).

    With a family or friend you may even consider the loan a loss. But not when you do loans as a business – and hundreds or thousands of them over years.

  52. rktbrkr says:

    Well the can was kicked down the road for a couple of years but it never went away

  53. formerlawyer says:

    To dss:

    My take on lenders is somewhat different.

    Lenders are like the second oldest profession in the world – they are just selling money rather than sex when they make a loan. They can pretend that you must “qualify” or need to demonstrate your income, idea or what have you but that is just a canard. There are always other banks, bankers, lenders or whatever (i.e. loansharks) who can or will sell you money. Its just arguing over the price.

    Try and flip the power relationship around – get competing bids on your loan. Draw up a term sheet and send it to the various institutions in your area or those with whom you have a relationship. You may be surprised.

    Anecdotal dialogue
    Churchill: Madam, would you sleep with me for five million pounds?
    Socialite: My goodness, Mr. Churchill… Well, I suppose… we would have to discuss terms, of course…
    Churchill: Would you sleep with me for five pounds?
    Socialite: Mr. Churchill, what kind of woman do you think I am?!
    Churchill: Madam, we’ve already established that. Now we are haggling about the price.
    (This is a very old joke where the participants vary dramatically from each telling. It’s very unlikely though not impossible that the joke originated from Churchill.)

    for more see: http://www.barrypopik.com/index.php/new_york_city/entry/what_kind_of_woman_do_you_take_me_for_madam_weve_already_established_that_c/

  54. Tarkus says:

    formerlawyer Says:

    My take on lenders is somewhat different.

    Lenders are like the second oldest profession in the world – they are just selling money rather than sex when they make a loan. They can pretend that you must “qualify” or need to demonstrate your income, idea or what have you but that is just a canard. There are always other banks, bankers, lenders or whatever (i.e. loansharks) who can or will sell you money. Its just arguing over the price.

    —————————————————-

    That is an interesting perspective, however I think it is a mismatched analogy.
    Traditional lenders – even loansharks – expect payment. It may be cash or your kneecaps, but they expect payment.

    The “lenders” of the subprimes were not lenders in the traditional sense. Once the commission was received, they didn’t care. So they were lenders in name only (LINO’s?). Their only concern was to provide the back-end sausage factories with gristle.

  55. Sarge says:

    Well the “show me the note defense” is not holding up well in Virginia apparently:

    “But Virginia federal courts have not been receptive to what one Alexandria federal judge called a “show me the note” claim. Senior U.S. District Court Judge Claude M. Hilton said in Zambrano v. HSBC Bank USA Inc. (VLW 010-3-275), that the idea that defendants must come to court and prove their authority or “standing” to foreclose on the secured property is contrary to Virginia’s non-judicial foreclosure laws. Zambrano is just one of the foreclosure cases Brown is appealing to the 4th Circuit.”

    http://www.allbusiness.com/legal/legal-services-lawyers/15178240-1.html

  56. The Pale Scot says:

    “Longer timelines could reduce yields on some bonds by as much as one percentage point, it said, and “drastically” reduce cash flows to some bond holders in the next few months.”

    What? Are this folks actually thinking that they can resell the house at the price it was initially valued at?