LOL... Perfect !!! - 'The Foreclosure Crisis Explained – As Sausage Making' - FDL

[WillyT]

The Foreclosure Crisis Explained – as Sausage Making
By: Becca
Friday October 8, 2010 9:10 pm

<snip>

Let’s pretend mortgages are meat.

No, no — bear with me, this will make sense in a moment.

In the olden days (circa 1990s), banks and other financial institutions would write mortgages, which were backed by the asset — known as the house and/or property. A single piece of meat — say a porterhouse steak. Sometimes that steak would be sold to another entity, and along with it all the paperwork showing where that steak came from, who was responsible for it, and so on. If there was a problem with the steak, you’d just go back to the farm where it came from, deal with it there. If the product was no good, the farm would go out of business (be foreclosed), but otherwise it was a nice situation, and although not hugely profitable, it still made money. Simple, huh?

Then the banks and financial behemoths got a bright idea: Let’s turn all this meat into tasty sausage. We’ll just chuck it into the grinder, mix it all up, and let people buy pieces (shares) of the sausage. On average, it’ll be even better than meat because we can average everything — and we can throw in the nasty bits (the lousy properties, the poor risks), spice it up (give it AAA+ ratings) and it’ll all be the same. As long as our supply of meat is plentiful and keeps getting better and better, we’ll get filthy stinking rich.

Edited to conform to DU's fairuse policy for copyrighted material. Lithos, DU Moderator
<snip>

Much More: http://seminal.firedoglake.com/diary/75666

:rofl:

:beer:

:kick:

[Junkdrawer]

1. K&R - A must read. n/t

[WillyT]

2. Agreed...

Brilliant really...

:bounce:

:hi:

Interesting times at DU, eh Junk???

:shrug:

[Junkdrawer]

3. It has a very serious recommendation:

...

My friends: This mess is gonna put the 1980s S&L scandal to shame, and it’s going to be a very bumpy time, these coming months, possibly years. The big question will be whether the Feds are smart enough and have the huevos to step in now with something like the Resolution Trust Corp, before the whole economy crashes and burns. By time this thing is fully investigated, there are going to be millions of what they’re now calling "tainted" property titles. Investment funds will go broke. Those invested heavily in mortgage-based securities? It’s probably already too late. Remember "junk bonds"? These sausages (and the shit derived from them) are even more toxic.

...

Bill Black has been saying this for some time now.

[WillyT]

4. Yes... And That's What Truly Worries Me...

If they ain't paying attention to Black... the next crash is coming sooner and bigger.

I think they've been trying to hide this reality in order to buy time, but EVERYBODY is going to be on this story this coming week. And there will be no more hiding it.

:shrug:

[phasma ex machina]

7. A must read that remains mostly unread. Therein lies the true problem. nt

[WillyT]

8. Lots Of Heads In The Sand Here

:shrug:

:hi:

[LoZoccolo]

5. FDL gets an automatic unrec.

I'd like them to disclose their funding, for one.

[WillyT]

6. Well Hey... Thanks For The Kick !!!

BTW - You forgot the sarcasm thingy.

:shrug:

:hi:

[ThomCat]

10. Why? Can't you comment on their content?

:shrug:

[LoZoccolo]

12. I probably could.

That is, if I bothered to read it.

[ThomCat]

13. So you unrec'ed something you admit you didn't even read?

:wtf:

[LoZoccolo]

14. Yes.

Such is the nature of "automatic unrec".

[ThomCat]

15. What is the point of and "automatic unrec"

except to show that you can't be bothered to know anything about the stuff you disapprove of?

[LoZoccolo]

18. To encorage credibility in the liberal blogosphere.

If every story is judged on its own merit, there is little incentive not to publish falsehood just to see if people will fall for it.

On the other hand, if a story is true, other outlets with more credibility will probably cover it, so I can read it there.

[ThomCat]

23. That makes no sense because you'll never see

the truth or falsehoods without reading the articles. You're pre-judging everything from that site as false without even looking at it, and penalizing them despite your ignorance.

Your post sounds like a blatant rationalization after the fact to justify your actions.

[ThomCat]

9. It's a damned good analogy.

But the government isn't going to step in to shut them down, or protect people from the fraud. If history shows anything, is shows that money and lobbyists are going to poison anything government tries to do.

What government is going to do is create another bail-out, and give a hell of a lot more money to the banks that are committing this fraud. They are going to pay the banks for the properties they can no longer steal. They are going to bail out the banks for the "lost profits" for the frauds that they can't commit anymore because of public scrutiny.

But I guarantee that the government won't be sharing any of that bail-out money with the people who have been defrauded. They won't be sharing that wealth with the people who have lost their homes and don't know whether it was legitimate or not.

The government certainly won't allow the courts to go back and re-open and retry every single foreclosure, and they definitely won't provide legal assistance to people who try to reopen foreclosure cased that they believe were settled fraudulently by banks.

That would be spending money to help people! That would be using the courts to help people! That just doesn't happen. Government resources are only used on that kind of a grand scale to bail out corporations in this country.

What we will see, I would bet good money, is government money given to the BANKS for programs so that the BANKS can "administer programs" to "help" people who have had "problems" with their foreclosures. What are the chances that the banks will use any of that money to actually help anyone, or administer any such program effectively, efficiently, or fairly?

[adamuu]

11. I appreciate the effort. n/t

[dixiegrrrrl]

16. I automatically rec the automatic un-recs.

Which makes as much sense as automatically unreccing something.

[WillyT]

20. LOL... Thanks...

I think I understood that...

:silly:

:hi:

[gratuitous]

17. Financial institutions' resistance to fixing this mess means one thing

It's even worse than they're letting on. Having thousands of properties out there totally unmarketable because nobody has clear title to them is a horrible thing. When properties can't be bought and sold, when neither buyers nor sellers have any confidence that their transaction won't go sour in a year or three years or ten years, it hurts everyone.

The only thing I can think of is that the financial institutions who make money off the trading of properties are crossing their fingers and hoping it all goes away. They're hoping courts and mortgagees will simply throw up their hands, declare the problem insoluble, and just let someone (guess who?) swoop in and take possession of the property so it can go back into the market mix. Bad paper on questionable properties will work itself out of the system (slowly, but at a pace that shouldn't affect all those lovely, lovely annual bonuses), the property titles will be rehabilitated, and everything will be right with the world again.

If your jaw isn't in your lap by this point of the description, you may have just as unrealistic estimate as the banksters do of what it's going to take to set things to right. For the people occupying these houses, it isn't just a property but their home. As folks organize and the word leaks out that the banksters weren't always as careful as they should have been about crossing the t's and dotting the i's, you can bet that foreclosure proceedings are going to get more and more complicated, and the farther and farther away from the original transaction an entity is, the less likely they're going to have a clear chain of possession.

This could take decades to sort out if the banksters don't want to facilitate the process and own up to their shoddy practices. Or, they can flood the system with a bunch of bribe money and hope to install a Congress more amenable to letting them off the hook. Given their track record, which path do you suppose they'll try to take?

[dixiegrrrrl]

21. Not to mention that this could sink the economy way below sea level.

Remember that Fannie and Freddie took these toxic Mortgage Bonds in exchange for money they gave to the banks,and the bonds had been sold all over the world.
So now the bond holders are looking inside the Trusts and finding they are essentially worthless, since the mortgage notes were not also IN the trusts at the time ( within 90 days) the trust was established.
Which makes the trust liable for billions in taxes, not to mention liable for investors money.

Meanwhile, the banks are not getting the money for the foreclosed homes if people are shy about buying clouded titles.
And people like me cannot sell our home if the title is questionable, tho we are keeping up with the mortgage just fine.
Did I mention the mountains of derivatives in mortgage bonds?

EVERYBODY is getting screwed in this mess.

[me b zola]

19. K&R

[Curmudgeoness]

22. Yikes, flashback to The Jungle. nt

[Rex]

24. Hmm for some reason this reminds me of a bits and parts thread

about using all the meat on the bones and turning it into baloney and hot dogs! The fact that you have to add flavoring and coloring and other things to make the meat (looks like a strawberry shake) viable for sale to the masses.