Foreclosuregate: Mortgage Investors Join Outcry Against Banks

[tridim]

Homeowners, and at times the government, have long complained that banks and other companies that service mortgages aren't good at their job of collecting monthly payments, modifying loans and processing foreclosures. Now, a new cast of characters are piling on the criticism: the servicer's own clients, the investors that actually own the mortgages.

Servicers handle the day-to-day of working with homeowners on behalf of the investors, who bought bundled mortgages from Wall Street. But investors are now threatening servicers with legal action. Just like homeowners, investors are frustrated by the poor job in modifying loans that servicers have been doing. They also say servicers are looking out for themselves, not investors' interests as their contracts typically require.

Investor Bill Frey, who runs the securities firm Greenwich Financial Services, says servicers view investors as "A Thanksgiving turkey to be carved up and shared amongst themselves."

Investors can range from foreign governments and hedge funds to college endowments and pension funds. During the housing bubble, they gobbled up AAA-rated bonds created by pools of mortgages. Now that defaults and foreclosure are mounting, investors argue that flaws in how loans are serviced are costing them billions of dollars.

More: http://www.minyanville.com/businessmarkets/articles/foreclosures-mortgages-fannie-mae-freddie-mac/10/21/2010/id/30708?camp=syndication&medium=portals&from=yahoo

I think we're going to need a foreclosuregate sub-forum soon. These stories are breaking about once every 10 minutes.

[KansDem]

1. Uh-oh! Now the investors are getting involved!

Complaining homeowners? :boring:

Complaining government? :boring:

But, complaining investors? :scared:

Now we'll see some action! :woohoo:

[tridim]

2. Next up, complaining TBTF banks.

Just watch, they'll try to make themselves the victim.

I've never seen a more clear-cut case of guilt.