Don't underestimate foreclosure crisis, watchdog warns

[chill_wind]

Source: WAPO

Don't underestimate foreclosure crisis, watchdog warns
.
By Brady Dennis and Ariana Eunjung Cha
Washington Post Staff Writers
Tuesday, November 16, 2010; 12:18 PM

A congressional oversight panel warned on Tuesday that a widespread problem of flawed and fraudulent foreclosure paperwork could upend the housing market and undermine the nation's financial stability. The report comes just as the issue is drawing greater scrutiny this week in Washington.

The report, issued by the Congressional Oversight Panel, which monitors the government's bailout program, marks the first time a federal watchdog has weighed in on the nationwide foreclosure mess.

The panel echoed concerns raised by consumer advocates and financial analysts who have said that although the consequences of the foreclosure debacle remain unclear, the problems could throw into doubt the ownership not only of foreclosed properties but also the millions of ordinary mortgages that were pooled and traded by investors around the world.

On Tuesday afternoon, the Senate Banking Committee will hold a hearing on the matter. Lawmakers are considering several legislative responses to the findings.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2010/11/16/AR2010111600022.html?sid=ST2010111600056

[chill_wind]

1. Here is the Congressonal Oversight Panel Report

http://cop.senate.gov/reports/library/report-111610-cop.cfm

Examining the Consequences of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation

The Congressional Oversight Panel's November oversight report, "Examining the Consequences of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation," reviews allegations that companies servicing $6.4 trillion in American mortgages may in some cases have bypassed legally required steps to foreclose on a home. The implications of these irregularities remain unclear, but it is possible that "robo-signing" may have concealed deeper problems in the mortgage market that could potentially threaten financial stability and undermine foreclosure prevention efforts.

In the best-case scenario, concerns about mortgage documentation irregularities may prove overblown. In this view, which has been embraced by the financial industry, a handful of employees failed to follow procedures in signing foreclosure-related affidavits, but the facts underlying the affidavits are demonstrably accurate. Foreclosures could proceed as soon as the invalid affidavits are replaced with properly executed paperwork.

The worst-case scenario is considerably grimmer. In this view, which has been articulated by academics and homeowner advocates, the "robo-signing" of affidavits served to cover up the fact that loan servicers cannot demonstrate the facts required to conduct a lawful foreclosure. The risk stems from the possibility that the rapid growth of mortgage securitization in recent years may have outpaced the ability of the legal and financial system to track mortgage loan ownership. In essence, banks may be unable to prove that they own the mortgage loans they claim to own.

Full pdf at the link.

(bold edits mine)

[Lagomorph]

8. The way the laws are written....

...(and for a very good reason, I might add) is if the paperwork does not provide an unbroken chain of ownership, with all the right people, in the right position, doing the right things, the chain is broken.

If you can lose the house because of some technicality, so can the bank. In this day and age, it takes corporate losses in the billions to make a point.

If the banks couldn't be bothered to do things legally, boo fucking hoo. They've been taking advantage of that for the last century. Darwin economics.

[naaman fletcher]

2. don't worry,

congress will pass a law giving the banks a do-over and making all their past fraud a-ok.

[Proletariatprincess]

3. This is an outrage.

I wish I had confidence that the Senate will introduce serious legislation to address this issue, but it won't. In fact, chances are they will give the banks a pass and actually enable further abuse of the Economy. After all, the US Government...all three branches, are wholly owned by the malefactors of great wealth.

[chill_wind]

9. Dodd-Frank gave govt the tools already

with resolution authority.

There is Only One Way Out of the Foreclosure Crisis

We're the fish.

The giant "too big to fail" banks are the bird. They've got their talons in the American consumer and the economy.

The only way out for us - the fish - is if someone "shoots" the bird ... or at least captures it and removes its talons from our hide.

In other words: Unless the mega-banks are broken up and reined in, we're in quite a pickle.



As I've previously noted, virtually all leading independent economists have said that the too big to fails must be broken up, or the economy won't be able to recover, and that smaller banks actually lend more into the economy than the mega-banks (and see this).

Unless we break up the mega-banks:

* Competition will remain impaired, there will be less loans extended to Main Street and larger banker bonuses, our debt problem will worsen, markets will be rigged and derivatives will never be reined in

* Unemployment will keep rising

* The big banks will continue to dominate American politics, destroying any chance of restoring a representative form of government

And now there's the foreclosure crisis.

http://georgewashington2.blogspot.com/2010/10/there-is-only-one-way-out-of.html

A lot more at the link.

And that's what Alan Grayson reminded them, too.

As Congressman Grayson wrote to Geithner, Bernanke, the SEC, FDIC, and the rest of the financial overseers:

The liability here for the major banks is potentially enormous, and can lead to a systemic risk. Fortunately, the Dodd-Frank financial reform legislation includes a resolution process for these banks.

(bold edit mine)

[No Elephants]

14. Et tu, Grayson?

[chill_wind]

4. Bloomberg: Bailout Panel Warns of Bank Mortgage Losses, Urges Stress Tests

Bailout Panel Warns of Bank Mortgage Losses, Urges Stress Tests
By Ian Katz and Lorraine Woellert -

Regulators should conduct new stress tests on banks because legal challenges to foreclosures and uncertainties in the housing market could threaten the financial system, a congressional watchdog said.

“If document irregularities prove to be pervasive and, more importantly, throw into question ownership of not only foreclosed properties but also pooled mortgages, the result could be significant harm to the financial stability,” the Congressional Oversight Panel for the Troubled Asset Relief Program said in a report today.

more:
http://www.bloomberg.com/news/2010-11-16/bailout-panel-warns-of-u-s-bank-mortgage-losses-urges-new-stress-tests.html

Yes, the s*#t is hitting the fan, for real.

[Po_d Mainiac]

12. Stress Tests are BS

Unless the Banksters are forced to write assets to market, instead of allowed to carry the crap at FV....The same goes for Blackhawk Ben.

[chill_wind]

13. Seems so. It would be easier just to ratify all the fraud:

UPDATE: JUST CONFIRMED WITH THE BILL’S SPONSOR STAFF IN WASHINGTON DC AND THERE WILL BE A VOTE TO OVERRIDE OR UPHOLD THE PRESIDENTS VETO WEDNESDAY NOVEMBER 17, 2010

http://4closurefraud.org/2010/11/16/action-alert-its-back-h-r-3808-interstate-recognition-of-notarization-act-of-2010/

http://thomas.loc.gov/cgi-bin/bdquery/z?d111:HR03808:@@@L&summ2=m&#status

[chill_wind]

5. Reuters:

US Foreclosure Mess Impact Could Be Severe: Panel
Published:

Tuesday, 16 Nov 2010 | 5:59 AM ET
By: Reuters

Widespread problems in how U.S. lenders documented foreclosures could spark a wave of legal challenges resulting in massive losses to banks and serious new troubles for the housing market, a federal watchdog warned on Tuesday.


The Congressional Oversight Panel, the overseer of the government's Wall Street bailout, in its latest report laid out a range of possible outcomes for the foreclosure paperwork mess that emerged in September.

In the best-case scenario, the watchdog said, concerns about the paperwork mess are "overblown" and banks would be able to proceed with foreclosures as soon as invalid court documents were replaced with proper paperwork.

But in the worst-case scenario, it warned that banks could face billions of dollars in losses.

more:
http://www.cnbc.com/id/40210972

[Vincardog]

6. There are consequences to allowing the banksters engage in illegal activities. Sometimes the F it

up so bad even THEY have to suffer for it

[chill_wind]

7. Dodd-Frank Resolution

Will they USE it?

http://moneywatch.bnet.com/economic-news/blog/maximum-utility/the-dodd-frank-financial-refrom-bill/725/

[No Elephants]

15. Don't bank on it. (no pun intended). It will come back on our grandchildren.

[defendandprotect]

10. Stimulus was only 25% of what was REQUIRED.....and its effects fading away.....

[Po_d Mainiac]

11. Could upend the housing market....

:rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl:

Where the fuck have they been the last 3 years! Next thing we'll hear was the whole housing bubble was just a ton of fraud by the banksters, real estate flippers, rating agencies and mortgage underwriters.

They must be really wired into the elite delivery service, of the Pony Express

Unfricken real!

TSHTF when the bond holders start clawing back the losses en-mass. BoA'holes is gonna find that the "good-will" they are showing on the books from Cuntrywide is worth less than brown and damp TP.

[chill_wind]

16. C-Span link to the Senate Banking Committee Hearing earlier today:

http://www.c-spanvideo.org/program/296595-1