We all now know about the liar loans, the Ninja loans, and all the assorted garbage that contributed to the housing debacle which has all come to light as the tide has gone out.
We all know the banks both large, medium and small are playing the extend and pretend, delay and pray game. Well, it seems these banks learned nothing from their past transgressions. The phrase 'a leopard can't change its spots' is very true and in this case very appropriate.
It appears the banks caught up to their eyeballs in this toxic garbage are were and continue to play fast and loose with the rules.
So here is what has transpired, just in case you have you forgot, weren't paying attention or just got caught up in American Idol or Dancing With The Stars.
Banks lent money to people who could not pay it back.
Borrowers, with or without the aid of mortgage brokers, lie and embellish mortgage documents to get through approval.
Lenders knowing they won't hold the paper and simply will send it off to the processing plant (re: Wall St.) to be sliced and diced and be someone else's problem.
Okay now the piper is in town to be paid. Foreclosure city across the USA.
Remember back in late 2007 when the Ohio judge tossed out a bunch of Deutsche Bank (DB) foreclosures? It seems Deutsche Bank thought they could foreclose on people, in this case Cleveland, just because they showed up in court and verbally claimed they were the holder and owner of the note and mortgage. This judge, who we are we sorely need more of and they appears to be more around judging by some of the stories off the web, told DB that they needed to provide documented proof that they were the mortgage holder.
Can you imagine that? The gall of that judge demanding proof.
Okay, fast foreward to this week, where according to the Washington Post's article Lost in the System that took the House, which I highly recommend you read, it seems the banks are having some trouble finding said documents of ownership. And when they can't they simply doctor them up. According to the Post article:
"Luis Fernandez's foreclosure documents never looked quite right. Critical papers regarding his Orlando home were missing dates, and some signatures appeared to him to be forged. The mortgage had been sold so often - including once in the middle of the foreclosure process - that at times it was hard to tell which company was trying to seize the house. He challenged the foreclosure in court but failed.
A picture is emerging is of an industry - from loan officers in local offices in neighborhood strip malls to the financial titans of Wall Street - eager to purge bad mortgages from its books. To speed that process, documents and signatures were forged, notary witnesses were faked and those responsible for checking court filings never read the massive stacks that passed across their desks at a breakneck pace, attorneys and law enforcement officials say."
So if the documents were forged or fabricated I have to ask who would do this and why.
Could it be as some have suggested because the originals were intentionally destroyed so as to cover their (the banks) tracks?
Who had the most to gain from this?
The homeowner who may or may not have lied on the mortgage app with the assistance of the lender or broker?
The lender who may or may not have apprised the borrower of what potential obligation he/she was getting into via re-sets and the like if re-financing became unavailable.
Remember Wal-Mart greeters making $80k?
Remember mortgage apps being submitted 4, 5, 6 times till they finally were stamped approved?
Remember appraisers losing business if they did not meet the number to do the deal? They sent a letter to congress documenting this.
Okay so now we have GMAC, sorry Ally Bank and JP Morgan now halting foreclosures across the country due to this fiasco. Word is Bank America is doing the same or will be in short order. Do you really think these were the only two doing this shit? Sure, they were and the economy is improving too! Wells Fargo is solid as a rock Warren and Charlie, and heck if the ain't, bail em' out and us peons we should all just man up and take it, right?
Well, you can imagine the cess pool this is becoming due to the fact no one knows who the noteholder is on mortgage or note. Karl Denninger of Market Ticker blog reported that Old Republic Title was not insuring title to any property foreclosed by Ally Financial, Ally Bank or GMAC until further notice. I called Old Republic Thursday and was not able to confirm this with their public relations representative as the gal on the line would neither confirm nor deny the report, but it's accuracy would not surprise me in the least as everyone tries to protect themselves from the fallout.
I want to take a step back and address the halting of foreclosures across, what is it, 23 states now?
I have some questions/thoughts surrounding this moratorium on foreclosures.
Do the thugs running the banking system finally realize the true size, scope and magnitude of the problem now and that extend and pretend, or delay and pray (take your pick) is futile?
Do the Democrats in congress, the senate and the White House see the writing on the wall and view this as a hail mary pass before the mid-terms?
Remember this piece from Mish back in mid September referencing 8 million foreclosure bound homes to hit the market.
Or, is this massive, coordinated foreclosure moratorium simply collusion by the banks in a desperate, feeble attempt to conjur up some goodwill and, in their perpetual optimism, buy still more time from the economy for this situation to improve and make the problem go away? This is more commonly referred to as the hope method.
Remember the Bill Spiropoulos interview from CNBC a few days ago and his "double dip is nonsense" comment on the economy, many bankers buy this drivel lock, stock and barrel, in fact their very survival depends on it so who knows.
What my simpleton sized cranium does know is that the cancer of bad paper and debt paper that has no hope in hell of being serviced let alone paid back. Not only has it not gone away, with the employment picture not improving it is de-facto getting worse. Wall St. and its assembly line of shills on CNBC can dress it up any way you want it still remains what it is.
Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".
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