Wall Street Begins To Fear Nightmare Foreclosure-Gate Scenario Where All Of Housing Finance Is Wreck

[RKP5637]

Wall Street Begins To Fear Nightmare Foreclosure-Gate Scenario Where All Of Housing Finance Is Wrecked

Business Insider
Joe Weisenthal
Oct. 12, 2010

http://www.businessinsider.com/foreclosure-fraud-worse-than-you-think-2010-10

"A great report from Diana Olick at CNBC titled: Foreclosure Fraud: It's Worse Than You Think.

The gist: industry folks are getting really nervous that all this robo-signing and document fraud could infect the entire housing finance ecosystem.

She cites Georgetown Law Prof Adam Levitin who recently went on a Citigroup call to discuss the issue with investors.

<snip>

The mortgage is still owed, but there's going to be a problem figuring out who actually holds the mortgage, and they would be the ones bringing the foreclosure. You have a trust that has been getting payments from borrowers for years that it has no right to receive. So you might see borrowers suing the trusts saying give me my money back, you're stealing my money. You're going to then have trusts that don't have any assets that have been issuing securities that say they're backed by a whole bunch of assets, and you're going to have investors suing the trustees for failing to inspect the collateral files, which the trustees say they're going to do, and you're going to have trustees suing the securitization sponsors for violating their representations and warrantees about what they were transferring.

If this were to come to pass -- and plaintiffs lawyers will certainly be eager to show that their clients were paying the wrong mortgage holders -- the value of all instruments (including the performing ones) could plummet."

http://www.businessinsider.com/foreclosure-fraud-worse-than-you-think-2010-10

[Mimosa]

1. Interesting.

[Ozymanithrax]

2. This is going to lead to a massive bailout...n/t

[Amonester]

14. They R Too Big To Fail

After all...

Me Thinks They Want A TARP 2.

Because They (still) R Too Big To Fail. :argh:

[Ozymanithrax]

15. There are valid reasons to save the Housing Finance Industry...

Of course, if the Republicans take over, I am sure they will let them all fail.

[Amonester]

16. Even if the republics don't take over, I doubt they will be let to fail.

It's not like anyone would ever think of 'breaking them up into smaller pieces', unless some effectively do 'wake up' at long last.

[Ozymanithrax]

19. They have been allowed to operate unregulated...

and this is what we get.

At minimum, they need to be heavily regulated and the Industry must be watched. There should be prosecutions of people who were involved in wholesale violation of laws. It is a felony to falsify a legal document. It appears that has been a massive conspiracy to do so.

[Greyhound]

17. I don't agree with that statement, but are you sure that is an argument against the republiks? n/t

[Ozymanithrax]

20. You don't think there is a valid reason to save a major part of our economy?

republicans, if they should take over the House, will be under incredible pressure to refuse any more bailouts. They have been running on that. They would, I suspect, flat refuse to regulate the industry the way it needs to be regulated.

What needs to be done is wave of high profile court cases taking the CEO's who allowed widespread fraudulent processes to go on. I suspect they will offer a bunch of little people leniency for testifying against the higher ups.

It strikes me that this reminds me of all the prosecutions when Enron went belly up. The scale is much larger as will the economic effect.

[Greyhound]

25. Not that part, no. Banking, the creation and control of currency, is essential,

but that's not what these do and the nation would be far better off without them.

What they do today can't even be called investment as the investing part has been replaced by a system of a formalized short-cons where those with the means create and then destroy companies based on nothing other than the ability to extract money through manipulation of the 'market'.

It is destructive to the real economy. They should not be allowed to fail, they should be killed, and the officers and boards prosecuted.

[Marr]

3. So, wait a minute. We bailed them out, took their liabilities off their hands and

let them keep all the profits... and they responded by... robbing the system even more brazenly, and breaking it again.

[glitch]

7. Why not? They suffered NO consequences the first time.

And we all know sociopaths won't stop without consequences.

[hendo]

29. Heck, sociopaths rarely stop even if there are consequences

It's part of what makes them sociopaths ;)

[glitch]

38. True, the consequences should include life in prison. nt

[RKP5637]

8. I guess practice just makes perfect. IMO some of these crooks should already

be serving hard time. We gave them a slap on the wrist and hoards more cash, what a deal, what would one expect. As another poster said, these folks are sociopaths. Big smile and a knife in the back, super con-artists.

[csziggy]

23. I think these are the toxic assets that were originally the point of TARP

But somehow the financial industry did a bait and switch and this whole fraud situation was kept undercover for a while longer. I bet the guys who set up this whole scheme were messing their pants at the idea the federal government would find out the entire industry was now reliant on bogus mortgage transfers to keep going.

I would not be surprised if this is WHY the bankers have been sitting on their assets - they have known this was going to come out and their entire business model was going to be jerked out from under their feet.

[NutmegYankee]

24. This is additional fallout from the Crash.

The banks are now paying again for their reckless behavior pre-2008.

[laughingliberal]

4. knr. nt

[Canuckistanian]

5. Diana Olick? Really?

She was earlier claiming that the banks made these sort of "paperwork errors" all the time. No biggie.

Here she is, sparring with Fusion IQ CEO Barry Ritholtz - "You're always going to see those stories," she said in response to the phenomenon of banks foreclosing on properties that don't have mortgages. "That's a very small minority of the cases we're talking about here."

http://www.huffingtonpost.com/2010/10/12/foreclosure-crisi_n_759372.html

NOW she's saying that fraud is "worse than expected"?

[glitch]

6. One of those oh shit moments the frivolous have from time to time. nt

[yodermon]

9. so who do I Short? Citi? BofA? JPM?

[RKP5637]

10. Good question! Anymore, I guess, use a dart board. n/t

[Gin]

26. good one.....turn it right back on them....wonder if they are shorting

themselves...does that question make any sense since I am not in the market

[ms.smiler]

28. Yodermon - Wells Fargo n/t

[yodermon]

41. hmm, they're all down this morning, and WFC the most..

http://chart.finance.yahoo.com/z?s=BAC&t=1d&q=l&l=on&z=l&c=C,JPM,WFC&p=s&a=v&p=s〈=en-US®ion=US

[Rex]

11. Why is it all ultra wealthy people know how to do is cheat, lie and steal?

Is that the real formula to mega-success in this country!? Fuck over everyone you can, cause an international disaster the likes of which no one has seen so you can - what? Afford 2 mega yachts and not just one? Buy your little girl a barn full of ponies!? Bathe in diamonds? I will never forgive the uber-wealthy for fucking up this country and after so many times we have come close to being a society on the up and up.

[RKP5637]

12. It seems it started about 30 years ago with the election of Reagan and his

trickle down voodoo economics. And here we are today with this fine mess.

[Rex]

18. I remember being 13 when I learned about RayGun and his bozo posse.

I foolishly thought it would be the last time Americans would elect a crooked politician into office. Boy was I young and stupid!

[Odin2005]

13. They can all eat shit and die all I care, fuck then those Bankstrer scumbags!

[uncle ray]

21. i think the foreclosure fraud is the tip of the iceburg.

why would the fraud start at foreclosures? the fraud started when the homes were sold, some many years ago. this has already been acknowledged to a very minor extent. the foreclosure fraud was merely an extension of the same techniques that have been in use for years, but ramped up because of the huge volume. the same damn people that lied and cheated to take homes from people are the same damn people that lied and cheated to get them into those homes in the first place.

[EFerrari]

22. Bingo. And it wasn't confined to mortgages, either.

These same people have been ripping people off via credit card interest rates and bank charges levied on checking accounts they cooked so they could rake in the OD charges.

[RKP5637]

27. And the same ones they buy and bribe our government... n/t

[hendo]

30. Yup, they are bribing our gov't with the same money we paid them

as part of the TARP bailout.

[RKP5637]

33. Amazing, isn't it. And we are the patsies / pawns supporting the effort. Some

democracy we have these days...

[hendo]

37. And when the banks can control us Alexis de Tocqueville is right

If you haven't read Democracy In America, I would suggest that you do ;)

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years."
— Alexis de Tocqueville

[RKP5637]

39. Thanks!!! n/t

[RKP5637]

35. Yep, my AMEX Blue card has gone from about 7% to 16% interest in one month. I don't even have

a balance on it and have a spotless payment record. Can't imagine anyone wanting to charge on that card w/o paying it off the same month.

[MadHound]

31. In other words, they want more money

If they fail, let them fail. We can't afford to have them around anymore.

[earth mom]

32. The worst part is that the banster gangsters aren't even done with us yet....

:nuke:

:grr:

[RKP5637]

36. I was reading wherein this could easily trigger a global depression involving

trillions of dollars. The companies / individuals that caused this need to be put out of business. These individuals need to do hard time and be barred from any future job giving them this leverage, The Lollipop marshmallow approach needs to be halted. And hard action needs to occur. I think it's a major national security issue, this left unchecked is going to eventually take this country down. This will be the greatest Ponzi scheme of all times. This is the grand finale!

[earth mom]

42. Totally agree with you. nt.

[phasma ex machina]

34. Imagine there's no mortgage... It's easy if you can... No one to lend you money...

Bring your cash in hand...

So bye-bye easy credit to buy
Learn to live with your house
that no other can buy

[hunter]

40. Nationalize them.

Protect housing for the middle class and the poor, protect pensions, protect Social Security, strengthen all the social safety nets, and throw the crooks who engineered this mess into prison.

Did all your shady "investments" collapse? Cry me a river. You can rejoin the working class.

Well look at that now, Mr. Rightwing Blowhard, suddenly things like Social Security benefits, food stamps, and single payer health care are important to you.