The Second Leg Down Of America's Death Spiral

[Joanne98]

So this is what happened, more or less—the short version:

In the crazed frenzy to get as many mortgages securitized during the Oughts, banks took shortcuts with the paperwork necessary for the Mortgage Backed Securities. The reason was because everyone in the chain of this securitization mania got a little piece of the action—a little slice of the MBS pie in the shape of commissions.

So in the name of “improved efficiencies” (and how many horror stories are we finding out, carried out in the name of “improved efficiencies”), banks digitized the mortgage notes—they didn’t physically endorse them, like they were supposed to by the various state and Federal laws.

Plus—once the wave of foreclosures broke, and the holes in this bureaucratic paperwork became evident and relevant—some of the big law firms handling the foreclosures for the banks started doing some document fabrication and signature forgery, in order to cover up the mistakes—which is definitely illegal.

Long story short (since this is the short version): A lot of the foreclosed properties might not have been foreclosed legally. The people evicted might still have a right to their old houses. The new buyers might not actually own the REO’s they bought off the banks. The banks could be on the hook for trillions of dollars, and in the sights of literally millions of lawsuits.

In short: This could become another massive oozing sore, complete with yellow-green pus drip-drip-dripping out of some unmentionable places on the Body Economic.

Now—the long version:

Read more: http://www.businessinsider.com/the-second-leg-down-of-americas-death-spiral-2010-10#ixzz12XCIs000

[unhappycamper]

1. The mortage meltdown is nothing more than a Paulson/Bernake/Geithner ponzi scheme. n/t

[Orrex]

2. Two things about that:

1. It can't be a Ponzi scheme, because rich assholes got richer by it. Social security is a Ponzi scheme because rich assholes do not get richer by it. (See how it works?)

2. Can we throw Greenspan onto that shitpile along with Paulson, Bernanke, and Geithner?

[grasswire]

4. I'm beginning to wonder if it's a plot to totally crash America.

Beyond fixing.

Total FUBAR.

Chaos capitalism.

[barb162]

21. Jungle capitalism

And I agree, it's beyond fixing

[pokercat999]

22. It's not beyond fixing...it's actually easy, it's just

GOING TO COST FIVE TRILLION DOLLARS!

[unhappycamper]

18. I must be having short term memory loss.

Of course Greenspan belongs in that shitpile.

[tularetom]

3. Interest rates were kept artificially low by the Greenspan Fed

To keep money moving and make it appear like the "bush tax cuts" were having a stimulative effect on the economy.

[dixiegrrrrl]

5. Also, current homeowners who ARE paying the mortgage may not have clear title.

Since title note was not shifted to the bond trusts, as they should have been, and apparently were destroyed.
Good chance my note is gone, MERS popped up on my mortgage papers at the County.

BOA and Fannie Mae...not on the title. But Fannie has the mortgage.
( Fannie Mae has 80% of the securitized mortgages, at least in name.)

I am testing the wind on this one.
My bet:
Congress will pass a law, in record time, clearing the banks of any liability.

[Angry Dragon]

6. "Congress will pass a law, in record time, clearing the banks of any liability."

If they do this there will be a revolution
and I do not think it will be pretty

[dixiegrrrrl]

7. Do you really think so?

Personally I HOPE so, but I am not confident that enough people have a serious clue as to what this mortgage mess really means.
Or enough: ( pick one ) energy. money, time, ability to march.

Fed up, that I am hearing. What to do about it, that I am not hearing.

And we have elections in just a few weeks. After that, lame duck everything.

[Celebration]

10. there is a larger problem

The larger problem for the banks is that there was fraud in their selling of the securitized loans, as they were not what they were purported to be. The problem was not only that the paperwork was not handled correctly, but there often were fewer of the "good" loans in them than claimed. Thus the buyers of these loans have a good case for being made whole.

Of course, Fannie and Freddie (us!!) own a lot of these, and I pretty much feel like they won't be plaintiffs in lawsuits. So that is an under the radar bailout by us.

[Angry Dragon]

12. It is often said

That when a person has nothing else to lose, they are unpredictable.

[bvar22]

8. There is great Bi-Partisan Support in Washington to ensure that...

...the Very Rich NEVER know a day of discomfort.
The Working Class WILL pay for their mistakes once again.

Paulson with Co-Conspirators

Now THIS is “Bi-Partisanship” !
Better get used to it!!
Hahahahahahahahaha!

[dixiegrrrrl]

14. I remember that pic well.

Dog and pony show , indeed.

My blood pressure STILL rises when I look at it.

[lonestarnot]

9. Someone took it away and I just gave it back!

K & R

[westerebus]

11. MBS

Multiple Batches of Shit.

And if the banks are forced to buy back the MBS?

How can the banks do it?

With the reserves the Fed is holding for them.

Pension funds? You guys are going to have to wait in line.

Absolute corruption!

Systemic!

Structural!

Corruption!

[no_more_yesterdays]

15. yer damned skippy on that! - yahtzee!

the bankers have been at the table too long.

time to let the lawyers eat.

what'd be sweet justice is if the lawyers find a way to turn all the damned mortgages from secured debt, to unsecured debt and then show folks the way to daylight through bankruptcy.

kinda like jamming "Cramdown" right down their throats!

Let's hope for Rule of Law.

[westerebus]

17. Hi. Welcome to DU.

We shall see. Just waiting for the spin cycle.

[blue97keet]

23. no doc loans and no paper trail for who owns the no doc loans - no doc everything

It's shut down and re-boot time.

[northernlights]

13. it's also about the securitization process

the owners of the trusts that bought those mortgage-backed securities got screwed too. Can Congress quick pass a law to protect the banks from those lawsuits?

[westerebus]

16. Lame duck on its way.

Not that I would bet on it happening. The Congress passing something in the middle of the night attached to a military spending bill for cover. As if that's never happened.

How's about the US AG decides to federalize the case? They can all settle out of court if they promise to behave, pay a fine and laugh about it all the way to the bank.

[fasttense]

19. I just don't see how any law passed by lame-duck Congress, or

a Congress that truly represented the people, would make a difference.

Here is the bottom line. You can NOT trust that you own your own property. Are title search companies going to insure a property if they are not convinced that the title is clear? NO

What law can Congress pass? That title companies can issue title searches as free and clear no matter if the note on a property is forged, missing or held by two or more entities? Then the law would be challenged in a heart beat.

What kind of Frankenstein monster law could the evil doctor of a congress pass that would heal this note and property title problem?

I don't see a way out unless every single person who got a mortgage files suite and a judge unwinds every single case.

Even years from now, you could go to buy a home and find out the title is all messed up.

[westerebus]

20. The law of unintended consequences.

Title of the Bill:

The Homeowners Trust Us, We're Here To Help Act of 2010.

3000 pages to tell us: STFU, we own you.

And god bless America.