I have a ton of errands to get to this weekend (including some WaPo stuff) but before I run out the door, I simply MUST direct your attention to the latest debacle du jour:

• Mortgage Practices Overhaul Proposed  (WSJ)
If no WSJ sub, then go here

• Mortgage Modification Overhaul Sought by States (NYT)

• Foreclosure Settlement Terms Sent to Banks by U.S., States (Bloomberg)

I believe the State Attorneys General do not realize they hold the upper hand, and are getting fast talked by Federal input as well as the bankers’ legal counsel. Start bringing criminal actions for perjury for the robo-signing of docs submitted to courts, and see how the balance of power shifts

On a related note, have a gander at these three articles:

• Behind the foreclosure crisis, big banks’ reign of error (Washington Post)

• Without Loan Giants, 30-Year Mortgage May Fade Away (NYT)

• What Do HSBC’s Foreclosure Moratorium and Robo-Signing Claims Really Mean?  (DailyFinance)

Category: Bailouts, Credit, Real Estate

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.

13 Responses to “More Mortgage Madness . . .”

  1. BusSchDean says:

    From the Wash Post article: “Of all the miscues, the highlight was when we were handed, at closing, a large check that we didn’t want for a new home-equity line of credit. I tried to redeposit it into the home-equity account but was told that the account did not yet exist. I tried to deposit it into my checking account, and the check was returned unpaid – while interest accrued.” Red flag! Red flag! Why did they take the check?

    Unfortunately consumers, even savvy consumers, have to get much, much tougher (as BR notes, so do states’ attorneys general). This isn’t your father’s bank industry. What would happen if consumers by the millions closed their accounts at major banks banks and switched to smaller local and regional banks?

  2. rip says:

    It just gets so increasingly depressing and frustrating. The only ones trying to fix things are doing it for money.

    And they will lose.

    As will all of us.

  3. rktbrkr says:

    Barrons has an article about second home prices rising in primo areas, it’s a puff piece with mostly pics of resort mansions, they show a 10% year to year price increase which is misleading IMO because of the more extensive foreclosure freezes this year stacking up foreclosures like a logjam, other articles have detailed how $1M+ homes have higher default rates than more modest homes. Those (former) $1M McMansions will have to clear the market eventually.

  4. teraflop says:

    Agree prison needs to be the weapon, not promises broken. It worked to improve industrial waste management practices (in the past) and it has served to work for financial shenanigans (in the past). Unfortunately the revolving government-financial services door and endless lobbyist funding leads to this reinforcing structure that won’t be broken until we get some more radicals elected.

  5. rip says:

    @BR: State Attorneys General don’t understand they have the upper hand?

    Of course they do. Show me the money.

  6. DeDude says:

    So they are ready to serve the consumers on a plate to the banksters. Who is surprised; the majority of them are GOPsters, so they are just serving their masters the way they always have done.

  7. farmera1 says:

    Trouble for MERS Keeps Mounting

    http://usawatchdog.com/trouble-for-mers-keeps-mounting/

    “Legitimizing documentation for foreclosures from MERS is meeting heavy resistance. Two months ago, homeowners won a landmark victory in the Massachusetts Supreme Court. The Huffington post reported,

    “The Supreme Judicial Court affirmed a lower court judge’s ruling invalidating two mortgage foreclosure sales because the banks, in their capacity as trustees for mortgage securities, did not prove that they actually owned the mortgages at the time of foreclosure.” (Click here to read the complete Huffington Post story.)”

    My impression is that just like OTC derivatives, the mess with MERS is TBTF (Too Big To Fail). The mess will be made ok retroactively (the way around the constitution and retroactive laws will be a show).

    So now we have the following things that are TBTF:
    -Banks
    -Insurance companies (AIG)
    -MERS
    -OTC Derivatives ($600 Trillion is a lot of money).
    -Auto companies

  8. rip says:

    @willid3: Definitely on topic.

    What a sad, sad state of affairs. Kind of like the three stooges, each pointing a finger at one of the others.

    Eliminating the ratings agencies makes perfect sense to me given the current state of affairs, but Sir Buffet ain’t gonna let it happen, and neither is Barney Frank’s gubermint.

    And where is BS Obama on these developments? And the Attorney General? Hiding out I suppose.

    Honey, not vinegar, gets those campaign contributions rolling in.

    We are so, so screwed.

    Perhaps this is an enlightenment that should have occurred long ago.

  9. rip says:

    And the Queen of Righteous, Sheila is hiding out too.

  10. cgb22 says:

    The assumption of many in the NYT piece about the 30-year mortgage is that it was a bad thing. Such a blanket assertion smacks of amazing ignorance about a good product that allowed millions of people to buy a home.

    The problem wasn’t the 30-year mortgage as a product.

    It was the decision of lenders and others to let lending standards melt away to nothing. It was the total lack of accountability up and down the system from loan officer to Wall Street. It was the fraud that became rampant because of no-doc loans. And the result was an ungodly orgy of overbuilding that left the United States with 4 million-plus new homes that neer should have been built.

    If you simply will the 30-year loan out of existence (or make it difficult to obtain by all but the most credit-worthy), there will be a large economic impact. So, this question needs to be examined very carefully.

  11. DeDude says:

    cgb22;

    The 30-year is for most people a poor product that they don’t understand. For the first 10 years you are basically a renter with ownership responsibilities. However, most people don’t understand it and are thinking in linear terms as “I get to own 1/30′th more or my house every year. The whole industry is incentivised to sell the most expensive house you can get the customer into (higher profits), so people are guided to getting 30-year loans rather than the much more cost-effective 15 or 20 year loans. It is very rare that the agent show you what you can get into with a 20-year loan vs. what you can get into with a 30-year loan and then discuss how much you end up paying in interest in each scenario. If it was presented that way, most people would understand what a rotten deal the 30-year really is and accept a slightly less self-indulgent lifestyle.

    The one case where the 30-year may make sense is for the young early career family who can get the experience of home ownership, responsibilities and pride a little earlier in life with a 30-year. I think the 10% down 30-year mortgage should only be offered to first time homebyers, and everybody else be offered 20% down 20-year terms from the GSEs. The private market can do what they want but make sure they have the capital to back their bets so only the gamblers not the taxpayers lose money when the bets go wrong.

  12. [...] On Saturday, I noted the first reactions to the proposed Fraudclosure Fiasco (More Mortgage Madness . . .) [...]