Gonzalo Lira On The Second Leg Down Of America’s Death Spiral

Gonzalo Lira On The Second Leg Down Of America’s Death Spiral | zero hedge #page { width: 95%; } body.sidebar-left #main { margin-left: -180px; } body.sidebars #main { margin-left: -180px; } body.sidebar-left #squeeze { margin-left: 180px; } body.sidebars #squeeze { margin-left: 180px; } #sidebar-left { width: 180px; } body.sidebar-right #main { margin-right: -315px; } body.sidebars #main { margin-right: -315px; } body.sidebar-right #squeeze { margin-right: 315px; } body.sidebars #squeeze { margin-right: 315px; } #sidebar-right { width: 315px; } body { font-family : “Lucida Grande”, Verdana, sans-serif; } @import “/themes/newsflash/css/ie.css”;
homeDARPAcontributorsnewsforumszh-tshirtstoredonaterssmanifesto Shadow Over Asia + Updated China/Japan presentation Posted by: Vitaliy Katsenelson Post date: 10/14/2010 – 09:26 Interview with Vitaliy Katsenelson on the challenges facing China and Japan and the implications to the rest of the world. Contemplations on Oil Posted by: madhedgefundtrader Post date: 10/14/2010 – 08:06 After a tumultuous 2009, oil has been one of the least volatile assets of 2010. It now appears that this crucial commodity is stretching its muscles, limbering up, and getting ready for a serious move. The net effect of the BP oil spill will be a cut of one million barrels a day of Gulf production, about 5% of US consumption. A serious run on the dollar is adding fuel to the fire. (USO), (XOM), (CVX), (OXY), (RSX) When Pigs Can Fly, the Devil Shivers in Hell, and 30% Gains in Western Stock Markets Will Mean Practically Nothing Posted by: smartknowledgeu Post date: 10/14/2010 – 05:04 Since March 6, 2009, the S&P 500 has seemingly been on a remarkable run, gaining 76.68% when priced in our favorite of monopoly currencies, the US dollar. However, when priced in gold, despite the daily rigging games of the government/banker cartel for the past two years, it has only managed to rise 21.64% over the same time span. When priced in silver, the S&P 500 has astonishingly lost 1.8% during the same investment period. To these enormous anomalies, we ask the question,”Will the real currency please stand up?” Navigation PollsDonate To Zero HedgeRecent posts Shopping cart View your shopping cart. User login Username: * Password: * Create new accountRequest new password Zero Hedge Reads Angry BearBearish NewsBoom Bust BlogChina Financial MarketsChris Martenson’s BlogContrary InvestorCoyote BlogCredit WritedownsDaily CapitalistDaneric’s Elliott WavesDealBookDealbreakerDr. Housing BubbleFalkenblogFibozachiFund My Mutal FundGains Pains & CapitalGlobal Economic AnalysisGonzalo LiraImplode-ExplodeInfectious GreedInvesting ContrarianJesse’s Café Américain Market FollyMax KeiserMinyanvilleMises InstituteNaked CapitalismOf Two MindsPension PulseShanky’s TechBlogThe Daily CruxThe Mad Hedge Fund TraderThe Market TickerThe Technical TakeThe Underground InvestorWall St. Cheat SheetWashington’s BlogWealth.netWhen Genius Prevailed Home Gonzalo Lira On The Second Leg Down Of America’s Death Spiral Tyler Durden's picture Submitted by Tyler Durden on 10/14/2010 10:19 -0500

Bank of AmericaFannie MaeFloridaFreddie MacGMACGonzalo LiraHousing BubbleInsurance CompaniesLehmanMortgage Backed SecuritiesMortgage LoansNaked CapitalismPresident ObamaratingsRatings AgenciesWhite House

Submitted by Gonzalo Lira

The Second Leg Down of America’s Death Spiral

I swear to God Almighty: Mortgage Backed Securities are America’s Herpes—the gift that keeps on oozing.
 
Last Friday, Bank of America announced that it was suspending all foreclosure proceedings, presumably until further notice. Other banks have already suspended foreclosures in a whole truckload of states. A nationwide moratorium on foreclosures might soon happen—which would be a big deal: Global Financial Crisis, Part II—Longer, Wider and Uncut.

But the mainstream media—surprise-surprise—has downplayed the whole shebang. They’re throwing terms out there into the ether, but devoid of context or explanation: “Robo-signings”, “foreclosure mills”, forged signatures, “double booking”, MERS—it’s confusing as all get-out.
 
So the mainstream media just mentions it casually—“and in other news tonight . . .”—like it’s no big deal: A couple-three lines, lots of complicated, unfamiliar terms, an attitude like it’s a brouhaha over paperwork of all things!—and then zappo-presto-change-o!: They’re showing video footage of a cute koala nursing in the arms of a San Diego zookeeper.
 
But even the koalas know that something awful is heading America’s way. Smart little critters, they’re heading for the treetops, to get away from this mess.
 
So what the hell is going on with the God forsaken mortgage mess in the United States?
 
It’s got a lot of bells and whistles, but it’s basically quite simple: It’s all about the fucking Mortgage Backed Securities (MBS). Again.
 
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:
 
Homeowners can only be foreclosed and evicted from their homes by the person or institution who actually has the loan paper—only the note-holder has legal standing to ask a court to foreclose and evict. Not the mortgage—the note, which is the actual IOU that people sign, promising to pay back the mortgage loan.
 
Before Mortgage Backed Securities, most mortgage loans were issued by the local Savings & Loan. So the note usually didn’t go anywhere: It stayed in the offices of the S&L down the street.
 
But once mortgage loan securitization happened, things got sloppy—they got sloppy by the very nature of Mortgage Backed Securities.
 
The whole purpose of MBS’s was for different investors to have their different risk appetites satiated with different bonds. Some bond customers wanted super-safe bonds with low returns, some others wanted riskier bonds with therefore higher rates of return.
 
Therefore, as everyone knows, the loans were “bundled” into REMIC’s (Real-Estate Mortgage Investment Conduits, a special vehicle designed to hold the loans for tax purposes), and then “sliced & diced”—split up and put into tranches, according to their likelihood of default, their interest rates, and other characteristics.
 
This slicing and dicing created “senior tranches”, where the loans would likely be paid in full, if past history of mortgage loan statistics was to be believed. And it also created “junior tranches”, where the loans might well default, again according to past history and statistics. (A whole range of tranches were created, of course, but for purposes of this discussion, we can ignore all those countless other variations.)
 
These various tranches were sold to different investors, according to their risk appetite. That’s why some of the MBS bonds were rated as safe as Treasury bonds, and others were rated by the ratings agencies as risky as junk bonds.
 
But here’s the key issue: When an MBS was first created, all the mortgages were pristine—none had defaulted yet, because they were all brand new loans. Statistically, some would default and some others would be paid back in full—but which ones specifically would default? No one knew, of course. If I toss a coin 1,000 times, statistically, 500 tosses the coin will land heads—but what will the result be of, say, the 723rd toss specifically? I dunno.
 
Same with mortgages.
 
So in fact, it wasn’t that the riskier loans were in junior tranches and the safer mortgage loans were in the senior tranches: Rather, all the loans were in all the tranches, and if and when a mortgage in a given bundle of mortgages defaulted, the junior tranche holders would take the losses first, and the senior tranche holder take the loss last.
 
But who was the owner of the junior tranche bond and the senior tranche bond? Two different people. Therefore, the mortgage note was not actually signed over to the bond holder. In fact, it couldn’t be signed over. Because, again, since no one knew which mortgage would default first, it was impossible to assign a specific mortgage to a specific bond.
 
Therefore, how to make sure the safe mortgage loan stayed with the safe MBS tranche, and the risky and/or defaulting mortgage went to the riskier MBS tranche?
 
Enter stage right, the famed MERS—the Mortgage Electronic Registration System.
 
MERS was the repository of these digitized mortgage notes that the banks originated from the actual mortgage loans signed by homebuyers. MERS was jointly owned by Fannie Mae and Freddie Mac (yes, those two, again, I know, I know: Like the chlamydia and the gonorrhea of the financial world—you cure ‘em, but they just keep coming back).
 
The purpose of MERS was to help in the securitization process. Basically, MERS directed defaulting mortgages to the appropriate tranches of mortgage bonds. MERS was essentially the operating table where the digitized mortgage notes were sliced and diced and rearranged so as to create the Mortgage Backed Securities. Think of MERS as Dr. Frankenstein’s operating table, where the beast got put together.
 
However, legally—and this is the important part—MERS didn’t hold any mortgage note: The true owner of the mortgage notes should have been the REMIC’s.
 
But the REMIC’s didn’t own the note either, because of a fluke of the ratings agencies: The REMIC’s had to be “bankruptcy remote”, in order to get the precious ratings needed to peddle Mortgage Backed Securities to insitutional investors.
 
So somewhere between the REMIC’s and the MERS, the chain of title was broken.
 
Now, what does “broken chain of title” mean? Simple: When a homebuyer signs a mortgage, the key document is the note. As I said before, it’s the actual IOU. In order for the mortgage note to be sold or transferred to someone else (and therefore turned into a Mortgage Backed Security), this document has to be physically endorsed to the next person. All of these signatures on the note are called the “chain of title”.
 
You can endorse the note as many times as you please—but you have to have a clear chain of title right on the actual note: I sold the note to Moe, who sold it to Larry, who sold it to Curly, and all our notarized signatures are actually, physically on the note, one after the other.
 
If for whatever reason, any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.
 
To repeat: If the chain of title of the note is broken, then the borrower no longer owes any money on the loan.
 
Read that last sentence again, please. Don’t worry, I’ll wait.
 
You read it again? Good: Now you see the can of worms that’s opening up.
 
The broken chain of title wouldn’t have been an issue if there hadn’t been an unusual number of foreclosures. Before the housing bubble collapse, the people who defaulted on their mortgages wouldn’t have bothered to check to see that the paperwork was in order.
 
But as everyone knows, following the housing collapse of 2007–‘10-and-counting, there’s been a boatload of foreclosures—and foreclosures on a lot of people who weren’t sloppy bums who skipped out on their mortgage payments, but smart and cautious people who got squeezed by circumstances.
 
These people started contesting their foreclosures and evictions, and so started looking into the chain of title issue . . . and that’s when the paperwork became important. So the chain of title became important. So the botched paperwork became a non-trivial issue.
 
Now, the banks had hired “foreclosure mills”—law firms that specialized in foreclosures—in order to handle the massive volume of foreclosures and evictions that occurred because of the Housing Crisis. The foreclosure mills, as one would expect, were the first to spot the broken chain of titles.
 
Well, hell, whaddaya know—turns out that these foreclosure mills might have faked and falsified documentation, so as to fraudulently repair the chain-of-title issue, thereby “proving” that the banks had judicial standing to foreclose on a delinquent mortgage. These foreclosure mills might have even forged the loan note itself—
 
—wait, why am I hedging? The foreclosure mills actually, deliberately and categorically faked and falsified documents, in order to expedite these foreclosures and evictions. Yves Smith at naked capitalism, who has been all over this story, put up a price list for this “service” from a company called DocX—yes, a price list for forged documents. Talk about your one-stop shopping!
 
So in other words, a massive fraud was carried out, with the inevitable innocent bystander getting caught up in this fraud: The guy who got foreclosed and evicted from his home in Florida, even though he didn’t actually have a mortgage, and in fact owned his house free-and-clear. The family that was foreclosed and evicted, even though they had a perfect mortgage payment record. Et cetera, depressing et cetera.
 
Now, the reason this all came to light is not because enough people were getting screwed that the banks or the government or someone with power saw what was going on, and decided to put a stop to it—that would have been nice, to see a shining knight in armor, riding on a white horse.
 
But that’s not how America works nowadays.
 
No, alarm bells started going off when the title insurance companies started to refuse to insure the title.
 
In every sale, a title insurance company insures that the title is free-and-clear: That the prospective buyer is in fact buying a properly vetted house, with its title issues all in order. Title insurance companies stopped providing their service because—of course—they didn’t want to expose themselves to the risk that the chain-of-title had been broken, and that the bank had illegally foreclosed on the previous owner.
 
That’s when things started gettin’ innerestin’: That’s when the Attorneys General of various states started snooping around and making noises (elections are coming up, after all).
 
The fact that Ally Financial (formerly GMAC), JP Morgan Chase, and now Bank of America have suspended foreclosures signals that this is a serious problem—obviously. Banks that size, with that much exposure to foreclosed properties, don’t suspend foreclosures just because they’re good corporate citizens who want to do the right thing, with all the paperwork in strict order—they’re halting their foreclosures for a reason.
 
The move by the United States Congress last week, to sneak by the Interstate Recognition of Notarizations Act? That was all the banking lobby—they wanted to shove down that law, so that their foreclosure mills’ forged and fraudulent documents would not be scrutinized by out-of-state judges. (The spineless cowards in the Senate carried out their Master’s will by a voice vote—so that there’d be no registry of who had voted for it, and therefore no accountability, the corrupt pricks.)
 
And President Obama’s pocket veto of the measure? He had to veto it—if he’d signed it, there would have been political hell to pay, plus it would have been challenged almost immediately, and likely overturned as un-Constitutional in short order. (The jug-eared milquetoast didn’t even have the gumption to veto it—he pocket vetoed it.)
 
As soon as the White House announced the pocket veto—the very next day!—Bank of America halted all foreclosures, nationwide.
 
Why do you think that happened? Because the banks are screwed—again. By the same fucking thing as the last time—the fucking Mortgage Backed Securities!
 
The reason the banks are fucked again is, if they’ve been foreclosing on people they didn’t have the legal right to foreclose on, then those people have the right to get their houses back. And the people who bought those foreclosed houses from the bank might not actually own the houses they paid for.
 
And it won’t matter if a particular case—or even most cases—were on the up-and-up: It won’t matter if most of the foreclosures and evictions were truly because the homeowner failed to pay his mortgage. The fraud committed by the foreclosure mills casts enough doubt that now, all foreclosures come into question. Not only that, all mortgages come into question.
 
People still haven’t figured out what this all means—but I’ll tell you: If enough mortgage-paying homeowners realize that they may be able to get out of their mortgage loan and keep their house, scott-free? Shit, that’s basically a license to halt payments right the fuck now. That’s basically a license to tell the banks to fuck off.
 
What are the banks gonna do—try to foreclose and then evict you? Show me the paper, motherfucker, will be all you need to say.
 
This is a major, major crisis. This makes Lehman’s bankruptcy look like a spring rain, compared to this hurricane. And if this isn’t handled right—and handled right quick, in the next couple of weeks on the outside—this crisis could also spell the end of the mortgage business altogether. Of banking altogether. Hell, of civil society. What do you think happens in a country when the citizens realize they don’t need to pay their debts?
 
If this isn’t handled right, then this will be the second leg down, in the American Death Spiral.

    Oh dear Lord, he said, calm yet despondent. Look at it, he said. I mean just look at it! Have you ever seen anything like it?!?

    No, said the koala—truthfully. And you know, uh . . . it’s . . . It’s pretty disgusting, actually. So would you mind putting that thing away?

«««  •  »»»
 
Note: Next post, I’ll discuss a possible—I emphasize, a possible—silver bullet that will fix this whole Mortgage Mess—but it’ll have to be done soon, and have to be carried out fast, and sold under the guise that it’s this great new program that everybody—and I mean everybody—will simply just love to be a part of!—
 
—Streamlined Refinance.

 

4.64706 Your rating: None Average: 4.6 (17 votes)
» Share/Save Login or register to post commentsPrinter-friendly versionSend to friend

by Dagny Taggart
on Thu, 10/14/2010 – 10:22
#649294

a possible—silver bullet that will fix this whole Mortgage Mess

funny timing for the post, silver just blew through $24.55.

Login or register to post comments by Henry Chinaski
on Thu, 10/14/2010 – 10:28
#649323

Tough for those who are waiting to buy the dip.

Login or register to post comments by caconhma
on Thu, 10/14/2010 – 11:05
#649479

The situation is quite simple: both Bush and Obama administration together with the Congress declared that fraud and financial crimes are OK. Nobody will be punished, nobody goes to a jail, and everybody is entitled to keep the stolen loot and bonuses…

The situation will not have a “happy” ending without a collapse of US political and/or economic system. There are no silver bullets to fix it. It is not an economic issue anymore. It is a political collapse. It is a coming of guillotine times.

Login or register to post comments by Jean Valjean
on Thu, 10/14/2010 – 11:37
#649582

I remember the last guillotine times …. good times…., good times.

Login or register to post comments by Dr. Richard Head
on Thu, 10/14/2010 – 10:39
#649363

I just picked up a couple hundred oz this morn.  YEAHHHH

Login or register to post comments by Problem Is
on Thu, 10/14/2010 – 11:16
#649518

“silver just blew through $24.55.”

I love my silver… genuine coin of the realm…

Login or register to post comments by spdrdr
on Thu, 10/14/2010 – 11:29
#649556

Has anyone noticed that the recent gyrations in the silver price are moving at a regular 20:1 ratio with the PoG?

Gold goes up $4.00, silver goes up $0.20. Gold goes up $20.00, silver goes up $1.00.  Et cetera.

Given that the PoG/PoS ratio remains at 56:1 to 58:1, this creates significant leverage – is this a market based reaction to the true PoG/PoS ratio’s historical norms, and can we finally be seeing a return to the norm?

 

 

Login or register to post comments by NoBull1994
on Thu, 10/14/2010 – 10:22
#649295

Ruh roh, Shaggy.

Login or register to post comments by BobWatNorCal
on Thu, 10/14/2010 – 11:21
#649534

Ruh roh, indeed!

“And President Obama’s pocket veto of the measure?”
On another thread someone said that Sen Reid had technically left the Senate in session even though the senators had physically gone home.
Because of that the pocket veto did not apply and the law would go into effect when the time period expired.

Does anyone know how this turned out?

Login or register to post comments by iDealMeat
on Thu, 10/14/2010 – 11:51
#649650

The bill originated in the house..  so it went back to the house.. No one is home at the house..

I was seriously concerned that Pelosi would sneak in a recall session but I think we’re past the 10 days..

Login or register to post comments by AnonymousMonetarist
on Thu, 10/14/2010 – 10:28
#649305

‘Bernanke and his ilk are not just trying to boost the US economy, they are trying to salvage their reputations and theories. The crime is that they are savaging average Americans and have bet the country in a desperate attempt to prove that they know best.’
-Bill King, the King Report 10/14/2010

‘The effect of QE2 on interest rates could be small and limited to an announcement effect…many believe that the effect on output or employment would be small…unlikely to stimulate aggregate demand…little effect on aggregate demand implies a corresponding small effect on output and, hence employment. QE2 could have adverse effects.’
-Federal Reserve Bank of St. Louis

‘The folks at the Fed are frozen in fear. They don’t know what to do.’
-Chris Whalen

‘But they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in destruction and perdition. For the love of money is the root of all evil…’
– 1 Timothy 6:9-10

‘There hath no temptation taken you but such as is common to man…’
– 1 Corinthians 10:13

‘Don’t Task Don’t Smell’, the central plank of the ‘I Can’t Believe it’s Not Capitalism Plan’, has given us Sugar Mountain, where stupidity is cupidity.

Ringfencing the multitude through financial pulchritude is but Federales psych ops, masquerading debasement as growth, as the plutocracy sips sweet ambrosia from the skull cap of the common man.

Phat, Plummed and Cupid is no way to go through strife son. Mr. Hand’s strong dollar policy is the chimera of currency debasement masquerading as America’s wealth exporting machine that is regularly promulgated by our leaders as an exceptional example of America’s resiliency(AM Rule #5). Timmy G even takes credit for the creation of the ‘strong dollar’ policy.’Nuff said!

As the epigram, ‘Yes Virginia , there is no collateral’ becomes an accepted norm, as the metaphorical fork in the middle of the road er scratch that kicked can hangs with horsehair, the splinter of our disconnect in the deep bosom of our equity buried is proclaimed by the Federales as nothing but a thorn discovered as they fervently hope not to be cast to the lions.

Is it Back to the Future of folly and bubbles or Fade to Back as we peer down the chasm of the black diamond demographic? Building a bridge to nowhere is at least doing something, but please don’t peer down dear citizens lest ye randomwalkers realize the gravity of our situation.

The Oracle at Eccles and assembled throngs of Nancy Capitalists beseech their models that show 100% chance of ‘no fail’ when the money is easy and free to deliver them like Aesop’s Shepherd so when the masses see that which healed them, they will pardon and not attack.

Golden goose or scrambled eggs?

The answer it would seem as we destroy our standard of living to create a Potemkin recovery, is both, in an ever increasing divergent measure.

The insouciance of elites and the Antoinette economy.

Verily, let them eat debt.

Login or register to post comments by SWRichmond
on Thu, 10/14/2010 – 10:43
#649386

The Oracle at Eccles and assembled throngs of Nancy Capitalists beseech their models that show 100% chance of ‘no fail’ when the money is easy and free to deliver them like Aesop’s Shepherd so when the masses see that which healed them, they will pardon and not attack.

That one’s a keeper.

Login or register to post comments by Oh regional Indian
on Thu, 10/14/2010 – 11:19
#649527

AMet, your writing is just awesome. Ah laihks it, a lot!

ORI

Login or register to post comments by Papa Legba
on Thu, 10/14/2010 – 11:49
#649641

Just because you can always use a metaphor doesn’t mean you should.

Login or register to post comments by wintermute
on Thu, 10/14/2010 – 10:43
#649313

MERS is a computer system – not a company. It is just like Skynet, but destroys property (title and mortgages) instead of humans.

The big banks are Terminators using MBS as money-sucking weapons. But this time they are failing. The resistance has turned the tide. We may win a scorched earth littered with the skulls of foreclosure victims – but we will win!

Down with MERS-Skynet!

Up with Durden-Connor 🙂

Login or register to post comments by The Real Fake E…
on Thu, 10/14/2010 – 10:59
#649453

i’ve been thinking a lot recently about the Terminator and Matrix series and how it pertains to so much of what is happening now.  between the robo signings, high-frequency trading and all of the other tasks/jobs that have been outsourced to technology.  at what point do the robots/machines start taking over? 

Login or register to post comments by Oh regional Indian
on Thu, 10/14/2010 – 11:22
#649535

Hey Real, the age of machines is NOW:

http://aadivaahan.wordpress.com/2010/06/28/the-age-of-machines/

😉

 

Mr. Lira, worth every pound of truthy angst, less bodily references.

Login or register to post comments by Screwball
on Thu, 10/14/2010 – 11:49
#649638

Already been discussed.  From 2000 Wired Magazine – http://www.wired.com/wired/archive/8.04/joy.html

Written by Bill Joy, co-founder and Chief Scientist of Sun Mircrosystems.

Kind of long but a hell of a read.  I’m sure you remember Ted Kaczynski, the Unibomber.  Crazy Ted wondered the same thing, and did something about it.

Disclosure: Not advocating nor condoning what Ted did.

Login or register to post comments by papaswamp
on Thu, 10/14/2010 – 10:30
#649330

This could be the governments plan all along…what easier way to push through a fix than to say…well as you can see the whole thing is broken, so everyone will get a quickie refi down to 3.755% (or whatever)…right before the election.

Login or register to post comments by doomandbloom
on Thu, 10/14/2010 – 10:33
#649333

what is it about Lira’s writing that makes it all so clear?

 

Login or register to post comments by DosZap
on Thu, 10/14/2010 – 10:58
#649450

It’s called TRUTH, and REALITY BITES (Big Time).

And, like WE did not have enough issues already?.

If this is not handled properly, grab your ankles and kiss your ass bye-bye.

Login or register to post comments by -Michelle-
on Thu, 10/14/2010 – 11:00
#649457

I don’t know, but thank goodness for it.  I actually had a little animation playing out in my head as I read each line.

Thanks, Mr. Lira!

Login or register to post comments by Screwball
on Thu, 10/14/2010 – 11:50
#649643

He swears good. 🙂

Login or register to post comments by HarryWanger
on Thu, 10/14/2010 – 10:33
#649334

People still haven’t figured out what this all means—but I’ll tell you: If enough mortgage-paying homeowners realize that they may be able to get out of their mortgage loan and keep their house, scott-free? Shit, that’s basically a license to halt payments right the fuck now. That’s basically a license to tell the banks to fuck off.

Here we go again with the overly dramatic “if this happens, etc.” commentary. Look nobody’s going to get out of their mortgage and keep their house. Ain’t gonna happen. May be other shit to hit the fan but this isn’t part of it.

Login or register to post comments by SheepDog-One
on Thu, 10/14/2010 – 10:41
#649375

Mortgage, schmorgage, very soon youll just be able to pick whatever house you like and move into it, that is if you can defend against the Road Warrior bands of marauding motorcycle homo murdering rapist plunderers. Good luck!

Login or register to post comments by cossack55
on Thu, 10/14/2010 – 11:01
#649464

Peak Oil rewrite:

“marauding Moped homo murdering rapist plunderers”.

Login or register to post comments by cowdiddly
on Thu, 10/14/2010 – 11:43
#649609

+1388

Bands of knife wielding skateboard punks and attack rickshaws.

I find it most interesting that the Chinese are trading in the rickshaws and bicycles for new compact cars while the rest of the world starts to look at a bicycle as viable transportation.

Login or register to post comments by Tao Jonesing
on Thu, 10/14/2010 – 11:00
#649459

@Harry,

You’re right.  Lira is wrong.

If there’s no chain of title, all that means is the note is no longer secured by the property, and foreclosure is not available to the note holder.  That does not mean the debt is extinguished, as the note holder can still sue for breach of contract.  The debt still exists.  The borrower still owes the debt.  The note holder can still collect on that debt, it just can’t get the house directly (although suing the homeowner might force bankruptcy and the sale of the home to pay off the debt).

Login or register to post comments by weinerdog43
on Thu, 10/14/2010 – 11:11
#649502

Any who, pray tell is the note holder?  This is the essence of the point.  The mortgagee owes the note holder.  Who is that entity?  Tranche A, B or C?  In other words, show me the note and I’ll show you the money.

Login or register to post comments by ChanceIs
on Thu, 10/14/2010 – 11:47
#649625

Point of order:  It is the mortgagee who is the creditor.  The mortgagor created the mortgage (lien against the property) and offered it as security for the loan.  There are those who would challenge me (and I would not resist) that the mortgagee and creditor are not the same – at least not in this Brave New World.  I believe that it is the case that the creditor is the note holder, and the mortgagee holds the paper lien.  They are usually one and the same, but it isn’t any longer the case, or it may have started out that way but undergone strange mutations. Teenage mutant NINJA mortgages!!!!

 

mort·gage   noun, verb, -gaged, -gag·ing. –noun 1. a conveyance of an interest in property as security for the repayment of money borrowed. 2. the deed by which such a transaction is effected. 3. the rights conferred by it, or the state of the property conveyed. –verb (used with object) 4. Law . to convey or place (real property) under a mortgage. 5. to place under advance obligation; pledge: to mortgage one’s life to the defense of democracy.

 

Origin:
1350–1400;  earlier morgage,  ME < OF mortgage,  equiv. to mort  dead (< L mortuus ) + gage  pledge, gage1

Login or register to post comments by Boxed Merlot
on Thu, 10/14/2010 – 11:16
#649517

…(although suing the homeowner might force bankruptcy and the sale of the home to pay off the debt)…

 

Who would buy such an asset from the indebted homeowner?  The subsequent purchaser would not be given any assurance their possesion is legitimate.  This is the crux of the matter.  A clouded title is a clouded title. And the indebted homeowner did nothing to cloud the title, but IS the one who suffers for it.

 

As mentioned before, let the state’s AG keep their “fines”, the home owner/buyers deserve restitution!

Login or register to post comments by Winston Smith 2009
on Thu, 10/14/2010 – 11:35
#649574

“Who would buy such an asset from the indebted homeowner?  The subsequent purchaser would not be given any assurance their possesion is legitimate.  This is the crux of the matter.  A clouded title is a clouded title.”

Bingo!  And, thusly, the entire edifice comes a tumblin’ down…  The legal expense of resolution is terminal unless there is government intervention at which point more sheep might wake up to the systemic scam that laws apply only to them.

Login or register to post comments by Charley
on Thu, 10/14/2010 – 10:33
#649335

I love this guy…

Login or register to post comments by B9K9
on Thu, 10/14/2010 – 10:37
#649352

If you don’t understand that the US gov’t was behind the MBS fraud from the very start, then you will never be able to figure out the truth. Using Maslow, here is the USA’s priority list of essential needs:

OilOilOil

The so-called War on Terror was, is & will continue to be about securing ME oil supplies. In order to fund our overseas military empire and achieve these mission objectives, the USA needed & continues to need a growing economic base.

Since the US doesn’t have a ‘real’ functioning, productive economy, for the last 30 years we have utilized a faux, fraudulent bubble-economy in order to make the numbers work. To do so, the US gov’t had to get (even further) into bed with the bankster criminal class to pull off the world-wide scam.

After the .com implosion and 9/11, our critical need for a ‘growing’ economy took on even more importance. Hence the housing bubble, enabled by fraudulent mortgage securitization, guided and directed by the Fed, will full acquiescence of both the Bush administration & Congress.

When Obama came and was told the story, he of course went along with the program. After all, he really had no choice at all in the matter. What Ben & Timmy promised him was that they would be able to blow another bubble that would enable them to paper over the sins of the past.

Didn’t happen and it ain’t gonna happen. They had their 2 years, and now 11/2 is upon us. Does anyone really want to find out what happens when the deflationary collapse wipes out not only the last cycle of fraud, but the whole thing going back 30+ years? Well, hang on, ’cause it’s gonna be a very bumpy ride.

Login or register to post comments by Gully Foyle
on Thu, 10/14/2010 – 10:42
#649377

B9K9

Oil is a bit simplistic. Certainly rescources are involved. But every action TPTB takes has a number of implied results.

Establishing that ring of bases and disrupting local ( and international) power structures are also important.

They kill many birds with a single stone.

 

Login or register to post comments by Hulk
on Thu, 10/14/2010 – 10:43
#649387

pegged…

Login or register to post comments by SDRII
on Thu, 10/14/2010 – 11:44
#649613

http://www.foxnews.com/politics/2009/04/22/freddie-mac-cfo-dead-apparent-suicide/

 

CFO commits suicide?

Login or register to post comments by Gully Foyle
on Thu, 10/14/2010 – 10:38
#649359

The first pundit/Economist who can predict exactly what will happen in two months wins.

Fuck these guys. You can’t even test them with punch a psychic.

Login or register to post comments by goldmiddelfinger
on Thu, 10/14/2010 – 10:39
#649361

CHI-Ley

CHI-Ley

CHI-Ley

Login or register to post comments by Henry Chinaski
on Thu, 10/14/2010 – 10:40
#649365

Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.

Arguably.

But with so much at stake, somebody will figure out who needs to get paid.

Login or register to post comments by HarryWanger
on Thu, 10/14/2010 – 10:41
#649376

Actually, I see it just the opposite with about 4 different banks knocking on your door ALL demanding money from you. 

Login or register to post comments by Boilermaker
on Thu, 10/14/2010 – 11:25
#649545

I see those same 4 banks being told to fuck-off and “I’ll see you in court”.

Login or register to post comments by Jean Valjean
on Thu, 10/14/2010 – 11:43
#649612

Harry is much to sophisticated to own a pistol.

Login or register to post comments by buzzsaw99
on Thu, 10/14/2010 – 10:40
#649370

merely a flesh wound. [/monty python]

Login or register to post comments by WaltzTangoFoxtrot
on Thu, 10/14/2010 – 10:41
#649373

So lets do some math to see how big the issue is.

100,000 foreclosures per month in Sept ’10 – lets call that peak, and use an average of 75,000 foreclosures.  And let’s count the “skankie” mortgage broker years as 2002 through 2007, or six years.    And let just say that the average note is $100,000 (we are talking Detroit and Akron, not Prince Georges County here people). and lets just say that ahlf are frauds.

75,000 foreclosure actions/mo x 12 Mo/yr x $100,000 note x 6 yrs x .5  =  $2.7 trillion.  

Wow.  

WTF

Login or register to post comments by WaltzTangoFoxtrot
on Thu, 10/14/2010 – 10:50
#649421

Another thought – even if only 10% are frauds, its still $540 Bn. 

Tarp III anyone?

Login or register to post comments by RobotTrader
on Thu, 10/14/2010 – 10:43
#649382

Definitely worth watching these…

Not looking good..

First sign of weakness we’ve seen in several months.

 

Login or register to post comments by wintermute
on Thu, 10/14/2010 – 10:45
#649401

The banks will have to buy back all $6 trillion of MBS. They are bust (again).

Login or register to post comments by packman
on Thu, 10/14/2010 – 11:44
#649606

“They are bust (again).”

Not sure why everybody keeps saying that.  I’ve been making this point for several days now, to no response for whatever reason:

The banks don’t have to write down the loss until the foreclosures goes through.

Solution for the banks?  Freeze foreclosures.  Then allow them through only at a trickle, and after housing prices have (once again) been artificially pumped up, and the loss that they do have to take on each foreclosure is minimal.

Problem solved.

P.S. You may ask – who the heck is going to be buying these foreclosed houses, at inflated prices, years down the road?  The answer – the U.S. government.  They will do it in response to the sudden “housing shortage” that will be declared about 3 years from now, in the name of affordability.  They’ll buy them at inflated prices from the bank, and offer them as section-8-style housing “temporarily” owned by the government and offered at low rental rates.

You watch.  I am almost certain this is how this is going to play out.

 

Login or register to post comments by Jean Valjean
on Thu, 10/14/2010 – 11:46
#649630

I see it playing out a bit differently but with the same outcome.

In a few years, the federal government will own 50% of the housing in the country.

Login or register to post comments by redpill
on Thu, 10/14/2010 – 11:49
#649639

 They already do, through Fannie and Freddie.

Login or register to post comments by Turd Ferguson
on Thu, 10/14/2010 – 10:47
#649407

Yes, and what is the % of the S&P that is made up by financials?

$30B more in POMO through 11/8 ought to help keep the rest of the market (AAPL) afloat but after that…..

Login or register to post comments by HarryWanger
on Thu, 10/14/2010 – 11:11
#649499

After that, Turd, more POMO.

Login or register to post comments by Turd Ferguson
on Thu, 10/14/2010 – 11:21
#649533

I hear ya, Harry. Every single sign says to go 200% short yet everyone who does will be at the mercy of Bennie and The Inkjets.

Bob Pissonme will undoubtedly call it a market “climbing a wall of worry”. What a fucking dumbass, arrogant stock pimp he is.

Login or register to post comments by HarryWanger
on Thu, 10/14/2010 – 10:48
#649413

Yet the second largest company in the world continues it’s climb higher. If AAPL breaks during all of this, we could see a major sell off. Remember, every fund on the planet holds AAPL, one little hiccup during this uncertainty and look out.

Login or register to post comments by Minion
on Thu, 10/14/2010 – 11:44
#649621

Indeed……. and there are no more shorts left to check the fall.  🙂 

Login or register to post comments by Skeebo
on Thu, 10/14/2010 – 11:49
#649642

Jeez this is getting f’ing old.  Apple is not the second largest company in the world, not even close, not even in the Top f’ing 25.

 

Apple has the second largest MARKET CAP in the world b/c of it’s insanely overvalued stock.

 

2nd largest Market Cap != 2nd largest company.  And such an insanely large market cap vs the size/value of the actual company?  Nuclear bomb waiting to go off (which I know you are alluding to in your post).

Login or register to post comments by MountainMan
on Thu, 10/14/2010 – 10:43
#649385

The fucking banks are doomed.

Login or register to post comments by SWRichmond
on Thu, 10/14/2010 – 10:51
#649423

The fucking banks have been dead men walking for years, zombified by regulatory forebearance, accounting forebearance, massive “injections” of stolen taxpayer capital, and the intertia of the vested interests.

TARP II: The Seizing of Private Retirement Assets.  5 minutes later, the shooting starts.

Login or register to post comments by 1100-TACTICAL-12
on Thu, 10/14/2010 – 11:19
#649529

Let’em Burn…. Well got to go reload my pressure cooker with green beans, mabye a couple of boxes of .270’s , Then i think I’ll count my silver for the hell of it..

Login or register to post comments by Problem Is
on Thu, 10/14/2010 – 10:44
#649395

“Mortgage Backed Securities are America’s Herpes—the gift that keeps on oozing.”

That’s Tyler worthy…

Login or register to post comments by Dagny Taggart
on Thu, 10/14/2010 – 11:20
#649532

Ick. I want to think of fuzzy kittens and flowers when I trade.

Login or register to post comments by williambanzai7
on Thu, 10/14/2010 – 11:39
#649599

G Rax

Use only as directed by your personal healthcare advisor

Login or register to post comments by Turd Ferguson
on Thu, 10/14/2010 – 10:45
#649400

“The move by the United States Congress last week, to sneak by the Interstate Recognition of Notarizations Act? That was all the banking lobby—they wanted to shove down that law, so that their foreclosure mills’ forged and fraudulent documents would not be scrutinized by out-of-state judges. (The spineless cowards in the Senate carried out their Master’s will by a voice vote—so that there’d be no registry of who had voted for it, and therefore no accountability, the corrupt pricks.)
  
And President Obama’s pocket veto of the measure? He had to veto it—if he’d signed it, there would have been political hell to pay, plus it would have been challenged almost immediately, and likely overturned as un-Constitutional in short order. (The jug-eared milquetoast didn’t even have the gumption to veto it—he pocket vetoed it.)”

Lots and lots of good stuff, here, Gonzalo, but the lines above are my favorite. The can be no happy ending. All will not be well. God help us.

Login or register to post comments by LostWages
on Thu, 10/14/2010 – 10:46
#649404

The homeowners won’t be allowed to keep the lottery ticket to win their house.

What should be more of a concern for the “too big to jail” banksters is the possible put-back from all the investors holding the trash.  If there is one court ruling stating the banksters didn’t perform their function properly, therefore have to buy back at par all the trash the pension funds are holding, it’s check-mate.

Login or register to post comments by bullwhip29
on Thu, 10/14/2010 – 10:47
#649406

I wonder what Corexit equivalent will be used to clean (uh, I mean bury) this mess? Things are getting very interesting…

Login or register to post comments by bullwhip29
on Thu, 10/14/2010 – 10:48
#649414

I wonder what Corexit equivalent will be used to clean (uh, I mean bury) this mess? Things are getting very interesting…

Login or register to post comments by bullwhip29
on Thu, 10/14/2010 – 10:49
#649420

I wonder what Corexit equivalent will be used to clean (uh, I mean bury) this mess? Things are getting very interesting…

Login or register to post comments by DosZap
on Thu, 10/14/2010 – 11:03
#649469

Stutter bad, or hiccups?

Login or register to post comments by bullwhip29
on Thu, 10/14/2010 – 11:08
#649489

Fat finger

Login or register to post comments by George Costanza
on Thu, 10/14/2010 – 10:52
#649426

I agree with Harry.  Folks are NOT going to end up owning a home by not paying their mortgage.   That is just silly.  

Login or register to post comments by deez nutz
on Thu, 10/14/2010 – 11:00
#649460

I thought giving an incarcerated man a mortgage of 500k was silly until I saw it happened in CaliPornia.  Its anything goes right now!!

Login or register to post comments by PlausibleDenial
on Thu, 10/14/2010 – 11:12
#649504

Oh, then I suggest you go to freeandclearin90.com that was posted here a couple of weeks ago.  I would not be so sure that it cannot be done. 

Login or register to post comments by Tao Jonesing
on Thu, 10/14/2010 – 10:55
#649436

“To repeat: If the chain of title of the note is broken, then the borrower no longer owes any money on the loan.”

That statement is simply not true.  The debt does not magically disappear, the note-holder’s recourse does.  That is, without a clear chain of title, the holder of the note cannot institute foreclosure, but it still can sue for breach of contract for failing to pay the debt.  This could very well force the debtor to enter bankruptcy and require the sale of the house.

Bottom line: nobody gets a free house.  The debt is still owed.

Login or register to post comments by Maos Dog
on Thu, 10/14/2010 – 11:13
#649507

I think you may be right, but, there are states where you can’t lose your house to bankruptcy by law, Florida being one of them. I wonder what happens in this case? A giant lien that never goes away until you sell?

 

Login or register to post comments by Boxed Merlot
on Thu, 10/14/2010 – 11:25
#649544

…This could very well force the debtor to enter bankruptcy and require the sale of the house…

 

Would You buy this house?  What is it about this that people don’t understand?  This house has a clouded title that due to no fault of the home buyer/ owner became clouded and thereby legally UNtransferable to Anyone else.

 

Let the state’s AG keep their “fines”, these people deserve restitution! 

Login or register to post comments by cossack55
on Thu, 10/14/2010 – 10:56
#649445

What do you think happens in a country when the citizens realize they don’t have to pay their debts?

 

Paraphrase:  What do you think happens in a country when the Government realizes it doesn’t have to pay its debts? 

Let me guess, Mortgage Backed Securities?

Login or register to post comments by Ieetseelmeet
on Thu, 10/14/2010 – 10:58
#649448

People still haven’t figured out what this all means—but I’ll tell you: If enough mortgage-paying homeowners realize that they may be able to get out of their mortgage loan and keep their house, scott-free? Shit, that’s basically a license to halt payments right the fuck now. That’s basically a license to tell the banks to fuck off. 

Then they start to think – Why pay municipal taxes?  Even if they could.

Then the town can’t pay off their bond issues.  The town can’t pay for police, fireman and teachers. I just finished reading “The Fourth Turning” and am looking for the gray old man.

 

 

 

 

 

Login or register to post comments by Andrew G
on Thu, 10/14/2010 – 10:58
#649449

“Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.”

From what I read on other websites, Gonzalo is wrong here. The mortgagee still owes the loan but instead of a secured loan it’s non-secured. The quick foreclosure process is therefore denied, and the bank would have to go through much more painful processes of debt recovery to see any money… which ultimately gives the debtor much more leverage in negotiations.

Can someone with proper knowledge on this topic clarify.

Login or register to post comments by Boxed Merlot
on Thu, 10/14/2010 – 11:34
#649458

What do you think happens in a country when the citizens realize they don’t need to pay their debts?

 

Funny you should ask.  Many will and do continue to pay because of their definition of “need”.  You see, there’s a DNA of “ought” built into them.  Not all of them, but enough to keep the US middle class the world’s golden goose.

 

However, I will agree with you this “can of worms” is changing the landscape because the servicing of these notes is now being seen as the “wrong” thing to do because it’s supporting a fraudulent and destructive industry that has killed the goodness of the nation. 

Personally, I support the proper application of existing laws with the chips falling where they may. If that means the financial wizards have to “suck it up and cope”  by evaporating into the ethereal world they created, then so be it.  Leave the “Real” estate to the productive elements of the nation.

 

Whether this can happen due to the political process of judicial appointments is the fly in the ointment.  imo

Login or register to post comments by Perseid.Rocks
on Thu, 10/14/2010 – 11:01
#649463

So where IS the note ? It’s not in MERS, and it’s not in the REMIC. Where is Saddam ? Let’s see, he’s not under here.. and he’s not back there.. hehehe..

Login or register to post comments by tip e. canoe
on Thu, 10/14/2010 – 11:06
#649480

where’s Osama?

Login or register to post comments by weinerdog43
on Thu, 10/14/2010 – 11:05
#649475

Excellent work Gonzalo!  It was your terrific articles on hyperinflation that finally got my 84 year old Dad to see the light on gold/silver.  I’ll have to redact some of the ‘naughty’ words for him, but otherwise this is a roadmap of what is on the way.  I wish you were wrong, but I’ll be darned if I can see where.  The only question is when this all blows up.

Login or register to post comments by -Michelle-
on Thu, 10/14/2010 – 11:05
#649478

I don’t as much see “free houses for all” as the opportunity for those in recourse states to walk away without the banks coming after them.

For many, that will be more than enough.

Login or register to post comments by Donutwarrior
on Thu, 10/14/2010 – 11:06
#649481

Exactly, I thought about calling Chase and offering to refinance and mention this issue as a form of leverage.  I am at water, or slightly under, and have no intention of defaulting, although the more I see the more angry I get….your last article (The Coming Middle Class Anarchy) certainly did give me pause.  Guess I’ll wait until the fees are thrown in and validity of the title chain is (will be) clearer.

Login or register to post comments by williambanzai7
on Thu, 10/14/2010 – 11:11
#649488

I just want to say when you refer to “big law firms” you are implying big Wall Street firms. But those firms don’t go anywhere near the foreclosure process. The big foreclosure firms you are referring to are really way down the food chain with ambulance chasers. They are really paper mills and the guys who run them look like reinvented Florida money launderers.

The Big NY firms, contributed to this whole cluster fuck by engineering the CDO securities.

Naturally, the bar is silent on this whole fucking mess, but they are right smack in the middle of it! 

So far i have not heard the words legal malpractice mentioned, but don’t worry, it will come.

Login or register to post comments by alexwest
on Thu, 10/14/2010 – 11:10
#649493

#Show me the paper, motherfucker, will be all you need to say.

ZEEEEEEEEEE THE BEST… :)))))))))))

alx

Login or register to post comments by Problem Is
on Thu, 10/14/2010 – 11:12
#649495

“What do you think happens in a country when the citizens realize they don’t need to pay their debts?”

Then Amerikan citizens become Rubin, Dimon and Blankfein…

Too Big To Fail Assholes…
What is good for the oligarchy/looters, is good for the… bitchez…

Login or register to post comments by MAGICWIZARD
on Thu, 10/14/2010 – 11:10
#649498

this could be the worst event in the history of not just the United States but the world.  Forget the black plague, world wars and famine.  Nothing short of us pushing the button has the potential to fk the system as much as this current mess with mortgages.

Login or register to post comments by Bluntly Put
on Thu, 10/14/2010 – 11:16
#649513

Now, what does “broken chain of title” mean? Simple: When a homebuyer signs a mortgage, the key document is the note. As I said before, it’s the actual IOU. In order for the mortgage note to be sold or transferred to someone else (and therefore turned into a Mortgage Backed Security), this document has to be physically endorsed to the next person. All of these signatures on the note are called the “chain of title”.
 
You can endorse the note as many times as you please—but you have to have a clear chain of title right on the actual note: I sold the note to Moe, who sold it to Larry, who sold it to Curly, and all our notarized signatures are actually, physically on the note, one after the other.
 
If for whatever reason, any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay.

 

That’s clear but the banks couldn’t have maintained a clear “path” of signatures as the note was transferred since then there would have been no reason for them to have acted as the “servicer” collecting fees. It was fraud from the get go. These guys should be in prison.

Login or register to post comments by Yossarian
on Thu, 10/14/2010 – 11:17
#649520

Wouldn’t it be just peachy for Ben and Barry if the TBTF Banks end up taking a huge hit for the benefit of their pension fund customers and debtor homeowners?  That way they can just shovel more funny money their way to enable them to “repair their balance sheets.”  Boom: consumers have a quick and painless (if you don’t count inflation and general undermining of confidence in property rights and the entire monetary regime) deleveraging just in time to leverage up all those TBTF reserves and drive up those pension plan assets. 

Tyler: I think we need to see a graphical representation of the process, where it went wrong, and where we stand now.  Who holds the note, who is owed what, what these parties rights are, etc.

Login or register to post comments by Jake Green
on Thu, 10/14/2010 – 11:17
#649524

If this entire sordid tale is true, then the banks would have had to know this would eventually blow up once the foreclosures began in earnest.

With all the lobbyist influence during the financial reform bill, surely the banks would have pushed through some cover-your-ass ammendments; no?

Login or register to post comments by Winston Smith 2009
on Thu, 10/14/2010 – 11:39
#649596

Oh, it’s true and the bosses knew.

Login or register to post comments by nwskii
on Thu, 10/14/2010 – 11:20
#649530

So what do you do when B of A or Wells Fargo goes bust? Who are you gonna pay your bill to? FYI Im stopping my auto withdrawal and paying by check

Login or register to post comments by Perseid.Rocks
on Thu, 10/14/2010 – 11:33
#649570

Meet the new boss, same as the old boss. You live and die by the leave of your master.. this whole freedom and democracy thing has been a myth for at least 100 years.. they simply found that you’re more productive and cooperative if you believe you’re free.

Login or register to post comments by High Plains Drifter
on Thu, 10/14/2010 – 11:26
#649546

One reads what Gonzo has to say, then one listens to CNBC and Scott Sperling, talking about  how great this recovery is.

Login or register to post comments by Winston Smith 2009
on Thu, 10/14/2010 – 11:44
#649619

“then one listens to CNBC”

Only to laugh at their cluelessnes.  There are a few exceptions, expecially in this GREAT video from yesterday where the “light bulbs over dumbshit heads” start pinging on after listening to the guy with a clue starting at minute 3:04:

http://www.cnbc.com/id/15840232?video=1614271234&play=1

 

Login or register to post comments by Caviar Emptor
on Thu, 10/14/2010 – 11:43
#649608

Gonzo, this will certainly rekindle the crisis atmosphere and could send markets into a tizzy. Again.

But it’s not the “next leg down”. That implies that once the mess is cleaned up that the sun will shine. 

While people argue about paperwork and legalities the economy is crumbling on a very steady downward trajectory with a few small bounces in between. It’s clear that it’s a structural, secular problem and not a cyclic one, correctable with the very next business cycle that comes along. 

The entire FIRE sector has an implicit backstop. So there’s a perception that more consolidations and bailouts is just business as usual. However while we’re focused on the hoopla, the economy is undergoing gradual irreversible damage. 

 

Login or register to post comments by Winston Smith 2009
on Thu, 10/14/2010 – 11:52
#649652

“the economy is undergoing gradual irreversible damage”

I think that the damage has already occurred, but it’s not “irreversible.”  It can be fixed only with a proper, but extremely painful correction which causes those who _should_ have gone bankrupt back in September of 2008 to go bankrupt and thereby flush the system of the massive amount of bad debt _they_ created.

Login or register to post comments by atomicwasted
on Thu, 10/14/2010 – 11:43
#649610

Gonzalo is 100% correct.  He’s one of the only people that really understands the foreclosure mass and its most serious implication: the title system in the US is completely fucked, courtesy of MERS.   Anyone who bought a home or refinanced a mortgage in the past 10 years now has no idea who owns the note, so they have no way to pay off the mortgage (whether by sale of the property, by refi or by just toughing it out for 30 years) and get clean title to their property.  As a result, millions of families may have no way to sell or refi their house.  Not just now, but forever – if the note’s gone, it’s gone.

Traditionally, title issues are handled locally.  Recordation of deeds and notes is typically handled at a municipal or county level.  So, traditionally title related issues such as quitclaim actions are handled in municipal, county, or state courts.  However, millions if not tens of millions of mortgages are at issue here.  There aren’t enough judges (or even lawyers, and that’s saying a lot) in the United States to clean up each mortgage individually over a time span of less than a decade, if not two.

As much as I hate federalizing local issues, the title mess is an issue of national scale that affects a significant minority if not a majority of Americans.  In order to solve that mass in a time frame that allows a house to be sold or refi’d before 2020, some kind of federal action is going to be necessary as a practical matter.

Perhaps the rational thing to do would be to establish some kind of Resolution Title Authority akin to the RTC in the savings and loan crisis.  The responsibility of the RTA would be to quiet title to properties across the United States.  The RTA would have to have a definite timeframe in which to accomplish its job and disband; I would propose one year.  The RTA would first have to establish which mortgages would be subject to its authority.  That may be up to the lender.  One could establish an RTA in which title to each property in the US would go to its current occupant unless the lender had its title validated by the RTA.  A better approach might be to set up the RTA such that only the mortgages handled by MERS would go through it, which probably makes more sense, given that it’s the MERS mortgages, by and large, that are all screwed up.  The lender would have, say, six months to submit actual non-forged paperwork to the RTA that establishes that it holds the note or otherwise is entitled to title to a particular property, the mortgage for which had been processed through MERS.  If the RTA accepted that paperwork as a valid chain of title, the lender’s title to that property would be confirmed.  If the RTA rejected that paperwork as a broken chain of title, the RTA could issue some sort of quitclaim deed to the mortgagee in possession of the property, so that that mortgagee would have clear title. 

One advantage of the RTA is that it would have access to a vast quantity of paperwork with regard to title transfers and murders, such that Robo signers could be easily identified and flagged.  The RTA could setup a process whereby the presence of a signature on a particular paper of a known Robo signer would kick that particular mortgage up a level of scrutiny.  Another “advantage” of the RTA (depending on one’s point of view) is that it would require literally hundreds of thousands of employees, providing year-long employment to people who actually need jobs.

The federal government would have to get the states to buy into this, but that’s never a problem; there’s always the stick of losing highway money if the states don’t play (and the states would do anything the federal government said to keep that highway money) or the carrot of giving away some kind of bribe (aka stimulus money) to states that played ball.

Don’t get me wrong.  I’m not in love with this solution.  I’m not in love with giving people title to their homes when they are deadbeats who should never gotten loans in the first place or who lied their way into their mortgages.  I’m not in love with a federal bureaucracy establishing a lot of federal jobs, or giving the government more power.  However, this problem is so immense, and has the potential for locking Americans into their homes for such an extraordinary duration, that I’m not sure there’s any other solution.  At least the RTA would be an attempt at trying to establish who’s actually entitled to a quitclaim deed and who needs to repay their mortgage, as opposed to simply forgiving everyone’s mortgage debt and handing them a deed.  And I say this as a homeowner and a mortgagee, for whom a quitclaim deed would be quite a gift.  Further, an RTA with a limited mandate and a limited life, and an RTA that is a separate branch of the government from the Federal Reserve, would be more palatable than adding this to the Fed’s bureaucracy or the Treasury’s.

Thoughts?

Login or register to post comments by kathy.chamberli…
on Thu, 10/14/2010 – 11:43
#649611

gonza lo, love your writing style. love your humor, cause that is the only way i got through that brilliant piece documenting the fraud in that industry. i experienced all of the above. including the foreclosure mill. you can’t even believe the mistakes they made. including sending me some woman named juanta gomez’s foreclosure document to my sister’s address in white ass, Cohasset MA. i copied it and sent it back to them. seems like my address was as good as any to use for all type of bad delinquent USA mortgage holders. plus i demanded the note. nope we don’t have to send it to you. demanded what amount of money i owed chase. couldn’t find that out in the amount of time they were required to send to me before foreclosure. demanded again for the amount i owed, cause i knew it had to be the absolute correct amount. nope they never ever got it to me. demanded to have title and a partial release of title. nope they couldn’t do that either. what a mess this was, on top of all the FRAUD at contract signing. i started writing letters by the galore, to CHASE HOME FINANCE. nope no fraud, look i proved it with documentation on file with the clerk in the county. nope we don’t admit to anything. look a appraisal was accepted by your underwriting team in texas for a property that didn’t exist and had no legal description let alone any comparables. every entry on the appraisal was fraud. nope, sorry it isn’t a fraudulent appraisal. oh look not signed final residential loan application. sorry that is ok if the mortgage broker just wrote in amounts so the loan would go through. we encourage that kind of behavior with our mortgage brokers using CHASE HOME FINANCE. look their was no title at the signing of the note at closing. well we will look for it and get back to you. no i went to the title insurance company and they tried to track it down. look, two different HUD documents. sellers have different numbers then the buyers. oh that is ok, we know them. look the sellers didn’t sign the bottom and final signature page of the HUD. that’s ok we got their signatures on other documents. look, the closer attached the entire buildings 2007 property taxes, that my condo was located in to my mortgage escrow account. the entire tax liability was fraudulently attached to my mortgage to show it had proof of value by paying $7000. in taxes. there was no other proof of value for the property cause it really wasn’t even in existence until 3 days before i closed. REALLY. how does that happen. you go under contract put down $20,000 and the property doesn’t even exist in the public records cause it hasn’t gone through finalized approval for condomization. damn, must know someone in high places to pull that off. image Chase underwriting not knowing the property doesn’t even exist that they are giving a mortgage for. no release of title at closing. damn. and to think i wrote Chase a letter a week for almost two and a half years. Colorado attorney generals office documenting all of this with real honest documents vs the fraud documents. no word. wrote HUD, called HUD a lot. RESPA laws pursued via QWR letters to chase, they never answered. complained about the no answer to OCC. it’s ok lady we know Jaime and he would not let anything that your describing go down at CHASE HOME FINANCE. gotten about 6 attorney’s, almost $100,000. later fighting my cause and
B O O M  guess they were bad, not me bad.

i have more about the fraud with contract, but save for another post. kiss kiss gonzo.

Login or register to post comments by drchris
on Thu, 10/14/2010 – 11:45
#649626

If you don’t pay your mortgage, you lose your home.  In NY, people go an average of over TWO YEARS of non-payment before their homes get foreclosed (http://www.zerohedge.com/article/bank-america-foreclosuregate-heightened-risk-more-dismal-scenario).  That seems more than fair to me.  To suggest that their punishment should be a free house or even further delays through litigation is insane.  

Login or register to post comments by bullwhip29
on Thu, 10/14/2010 – 11:46
#649628

People won’t get free houses out of this, but the banksters will somehow use this to get Tarp 2.0 rammed through.  Funny how the recent collapse of the USD coincides with all this.

Login or register to post comments Comment viewing options Flat list – collapsedFlat list – expandedThreaded list – collapsedThreaded list – expanded Date – newest firstDate – oldest first 10 comments per page30 comments per page50 comments per page70 comments per page90 comments per page150 comments per page200 comments per page250 comments per page300 comments per pageSelect your preferred way to display the comments and click “Save settings” to activate your changes. Search Search this site: Latest News From RAN Squawk 10-14 11:45: According to the Weather Insight service, temperatures for the next 6-10 days (20 – 24 October) 10-14 11:44: Moody’s revises US newspaper industry outlook to negative from stable 10-14 11:40: Seeking Alpha.com writes about the USD weakness today in an article entitled ‘Dollar Gets Punished’ 10-14 11:34: EU’s Rehn says exchange rates should reflect economic fundamentals 10-14 11:33: EU’s Rehn says Europe’s ‘economic crisis management phase’ ending 10-14 11:33: ExxonMobil (XOM) says operations at Chalmette refinery back to normal after leak 10-14 11:31: USD/CAD testing highest levels at 1.0058, trades 1.0048 last 10-14 11:23: AUCTION PREVIEW: USD 13bln 30y note auction The Zero Hedge Team

Tyler Durden – Founder

Marla Singer – Foil

Travis – Author

Cornelius – Author

Sacrilege – Senior Researcher

 

tips [ at ] zerohedge [ dot ] com – Our Reader Tips Mailbox

Make sure to read our “How To [Read/Tip Off] Zero Hedge Without Attracting The Interest Of [Human Resources/The Treasury/Black Helicopters]” Guide

ads [ at ] zerohedge [ dot ] com – Advertising Inquiries.

abuse [ at ] zerohedge [ dot ] com – Abuse / Infringement Issues

 

It would be very wise of you to study our disclaimer, our privacy policy and our (non)policy on conflicts / full disclosure.

 

Zero Hedge Offices:

United States:
888.qui.zero (888.784.9376)

Zurich:
+41 43 501 6717

London:
+44 20 3318 4753

copyright ©2009, 2010 zero hedge – limited reproduction (with attribution) permitted by request

zero hedge’s redundancy powered by:

Drupal e-commerce provided by Ubercart.

View the Original article

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s