Category: Finance

We Are Going to See More of This

No Comments

The Cook County Sheriff has issued a statement that he and his deputies will not enforce foreclosures until he receives documentation from the banks that they have their sh%$ together:

Two of the largest U.S. mortgage servicers have said they will resume home foreclosures, but a big-city sheriff has news for them: he won’t enforce their foreclosure evictions.

The sheriff for Cook County, Illinois, which includes the city of Chicago, said on Tuesday he will not enforce foreclosure evictions for Bank of America Corp, JPMorgan Chase and Co. and GMAC Mortgage/Ally Financial until they prove those foreclosures were handled “properly and legally.”

While the Cook County Sheriff has been here before, he instituted a moratorium over lack of notifications to renters 2 years ago, but I think that this time, there is a distinct possibility that this will go viral, and that other county sheriffs will follow his lead.

Basically, this is a political winner for almost any incumbent charged with foreclosure service.

The standard disclaimer, that my powers of prediction suck wet farts from dead pigeons, apply.

What the Shrill One Says

No Comments

Paul Krugman, in discussing the response of the Obama administration to the foreclosure fraud crisis, a go slow and protect the bankster response, notes that it’s the same response that they have to every crisis:

As NAME ISSUE HERE has come to light, the Obama administration has resisted calls for a more forceful response, worried that added pressure might spook the banks and hobble the broader economy.

Whether it has been an excuse for inaction, such as financial reform, or the fraud perpetrated on desperate home owners with the HAMP, or the avoidance of the good for the mediocre, as with healthcare the administration seems to have a deep and abiding fear of effective action and good policy, even when it is good politics.

Mortgage Backed Security Holders Stir……A Little…

No Comments

Institutional investors who purchased mortgage backed securities issued by Countrywide, now Bank of America have sent a demand letter requesting that Bank of America repurchase their mortgages for non-performance.

What makes this a big deal is just who is writing this.

Pacific Investment Management Co. [PIMCO], BlackRock Inc. and the Federal Reserve Bank of New York are seeking to force Bank of America Corp. to repurchase soured mortgages packaged into $47 billion of bonds by its Countrywide Financial Corp. unit, people familiar with the matter said.

A group of bondholders wrote a letter to Bank of America and Bank of New York Mellon Corp., the debt’s trustee, citing alleged failures by Countrywide to service loans properly, their lawyer said yesterday in a statement that didn’t name the firms. The New York Fed acquired mortgage debt through its 2008 rescues of Bear Stearns Cos. and American International Group Inc.

Bank of America responded that it would, “defend its shareholders,” which might make for an interesting conflict between two groups of too big to fail financial institutions.

In either case, it makes Congressional Deus Ex Machina hail Mary play less likely, since the constituencies that normally bribe lobby the House and Senate appear to be fairly evenly divided.

My guess is that this is actually not as big a deal as it sounds.

I agree with Yves Smith, that this is primarily posturing:

  • This is not litigation, it’s just a nastygram that was release.
  • The claim appears to be an extension of a claim against trusts.
  • They are claiming that the lack of due diligence was because the former Countrywide is not going after Countrywide, that sold the loan.
  • That BoA/Contrywide has been too slow in forclosing. (!?!)

Still, if it prevents Congress from bailing out the banksters, it would be a good thing.™

The full press release from the bond holders is below the fold:

Institutional Holders of Countrywide-Issued RMBS Issue Notice of Non-Performance Identifying Alleged Failures by Master Servicer to Perform Covenants and Agreements in More Than $47 Billion of Countrywide-Issued RMBS

Oct. 18 /PRNewswire/ –Today, the holders of over 25% of the Voting Rights in more than $47 billion of Countrywide-issued RMBS sent a Notice of Non-Performance (Notice) to Countrywide Home Loan Servicing, as Master Servicer (“Countrywide Servicing”), and to Bank of New York, as Trustee, identifying specific covenants in 115 Pooling and Servicing Agreements (PSAs) that the Holders allege Countrywide Servicing has failed to perform.

The Holders’ Notice alleges that each of these failures has materially affected the rights of the Certificateholders under the relevant PSAs. Under Section 7.01 of the PSAs, if any of the cited failures “continues unremedied for a period of 60 days after the date on which written notice of such failure has been given … to the Master Servicer and the Trustee by the Holders of Certificates evidencing not less than 25% of the Voting Rights evidenced by the Certificates,” that failure constitutes an Event of Default under the PSAs.

In a previous release, the Holders emphasized their intent to invoke all contractual remedies available to them to recover their losses and to protect their rights. Kathy Patrick of Gibbs & Bruns LLP, lead counsel for the Holders, emphasized that the Holders’ notice does not seek to halt loan modifications for troubled borrowers. Instead, it urges the Trustee to enforce Countrywide Servicing’s obligations to service loans prudently by maintaining accurate loan records, demanding the repurchase of loans that were originated in violation of underwriting guidelines, and compelling the sellers of ineligible or predatory mortgages to bear the costs of modifying them for homeowners or repurchasing them from the Trusts’ collateral pools.

Patrick also noted that the group of Holders that tendered today’s Notice of Non-Performance is larger, and encompasses more Countrywide-issued RMBS deals, than were included in the August 20 instruction letter. When asked why the group of holders was larger, Patrick replied, “Ours is a large, determined, and cohesive group of bondholders. We have a clearly defined strategy. We plan to vigorously pursue this initiative to enforce Holders’ rights.”

The Notice of Non-Performance, which is the first step in the process of declaring an Event of Default, was issued on behalf of Holders in the following Countrywide-issued RMBS:

Deal Name Deal Name Deal Name
CWALT 2004-32CB CWHL 2004-22 CWL 2006-15
CWALT 2004-6CB CWHL 2004-25 CWL 2006-16
CWALT 2004-J1 CWHL 2004-29 CWL 2006-19
CWALT 2005-14 CWHL 2004-HYB9 CWL 2006-2
CWALT 2005-21CB CWHL 2005-11 CWL 2006-20
CWALT 2005-24 CWHL 2005-14 CWL 2006-22
CWALT 2005-32T1 CWHL 2005-18 CWL 2006-24
CWALT 2005-35CB CWHL 2005-19 CWL 2006-25
CWALT 2005-36 CWHL 2005-2 CWL 2006-26
CWALT 2005-44 CWHL 2005-3 CWL 2006-3
CWALT 2005-45 CWHL 2005-30 CWL 2006-5
CWALT 2005-56 CWHL 2005-9 CWL 2006-7
CWALT 2005-57 CB CWHL 2005-HYB3 CWL 2006-9
CWALT 2005-64 CB CWHL 2005-HYB9 CWL 2006-BC2
CWALT 2005-72 CWHL 2005-R3 CWL 2006-BC3
CWALT 2005-73CB CWHL 2006-9 CWL 2006-BC4
CWALT 2005-74T1 CWHL 2006-HYB2 CWL 2006-BC5
CWALT 2005-81 CWHL 2006-HYB5 CWL 2006-SD1
CWALT 2005-AR1 CWHL 2006-J2 CWL 2006-SD3
CWALT 2005-J5 CWHL 2006-OA5 CWL 2006-SD4
CWALT 2005-J9 CWHL 2006-R2 CWL 2006-SPS2
CWALT 2006-14CB CWHL 2007-12 CWL 2007-2
CWALT 2006-20CB CWHL 2007-16 CWL 2007-5
CWALT 2006-37R CWHL 2008-3R CWL 2007-6
CWALT 2006-41CB CWL 2005-10 CWL 2007-7
CWALT 2006-HY12 CWL 2005-11 CWL 2007-9
CWALT 2006-OA11 CWL 2005-13 CWL 2007-BC1
CWALT 2006-OA16 CWL 2005-16 CWL 2007-BC2
CWALT 2006-OA17 CWL 2005-2 CWL 2007-BC3
CWALT 2006-OA6 CWL 2005-4 CWL 2007-QH1
CWALT 2006-OA9 CWL 2005-5 CWL 2007-S3
CWALT 2006-OC10 CWL 2005-6
CWALT 2006-OC2 CWL 2005-7
CWALT 2006-OC4 CWL 2005-8
CWALT 2006-OC5 CWL 2005-9
CWALT 2006-OC6 CWL 2005-AB2
CWALT 2006-OC7 CWL 2005-AB3
CWALT 2007-17CB CWL 2005-AB4
CWALT 2007-23CB CWL 2005-BC5
CWALT 2007-24 CWL 2005-IM1
CWALT 2007-OA7 CWL 2006-10
CWALT 2008-2R CWL 2006-12

SOURCE Gibbs & Bruns, LLP

Because No Matter How Bad it is for the United States, It is Good for the Bankers

No Comments

Timothy Geithner has reiterated his support for Bob Rubin’s strong dollar policy:

“It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive,” Geithner added. “It is not a viable, feasible strategy and we will not engage in it.”

Answering audience questions before the Commonwealth Club of California in Palo Alto, he said the United States needed to “work hard to preserve confidence in the strong dollar.”

The dollar is overvalued, particularly with regard to the Chinese Yuan, and it has been for years.

It’s been overvalued, because it makes the US position as a reserve currency more secure, which means more people paying American bankers to hold their money, even as it increases exports and decreases imports, harming the rest of the country.

Once again, when Timothy Geithner has to choose between the country and the banks, he chooses the banks.

This Explains a Lot

No Comments

Many years ago, Yves Smith worked for Goldman Sachs, AKA the Vampire Squid,* and she said that Goldman Sachs is actually a cult:

As important, Goldman is a cult. I say that as a former employee, based not just on my experience a very long time ago (boy, am I getting old, more than 25 years ago) but also on reports I get from recruits and what I can infer from press reports. If anything the firm has become more inward looking over the years

The people there honestly believe that working for Goldman is the most elevated calling (Blankfein’s bizarre-sounding “Doing God’s work” remark no doubt resonated within the firm) and doing anything else is a fall from grace. Seriously. People who exit Goldman typically take a year or two to get over it the deeply-inculcated belief that departure = failure (this isn’t my own response; I’ve had a number of men volunteer that to me). Similarly, the first person I met at Goldman, which was through personal contacts, made it clear he was blocked in her career (his boss was too close to her in age) said he couldn’t possibly work for another firm. It wasn’t that he had assessed the tradeoffs and decided on balance it was still better to stay; he literally recoiled on a psychological level from the idea of departing. That sort of deep indoctrination was not at all unusual.

And people who had managed not to imbibe the Kool Aid were viewed with some suspicion. I left as a pretty junior person; the only reason I was remembered was a woman in investment banking in the early 1980s was an unusual commodity. Someone who checked out my reputation years after my departure said the party line on me was “She could have made partner, but we would have had to break her.”

(emphasis mine)

I kind of thought that it was just ordinary greed, but this revelation says a lot.

In the United States these days, we tend to try to describe everything in terms of profit and loss, with greed as a motivator.

But profit and loss do not describe anything. If they did, then the Randroid nut jobs out there would be right, and discrimination would have ended, because it interferes with the most efficient flow of commerce.

Goldman Sachs is a cult, and really do believe that they are doing God’s work.

This is so f%$#ing creepy.

*Alas, I cannot claim credit for the bon mot describing Goldman Sachs as a, “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” This was coined by the great Matt Taibbi, in his article on the massive criminal conspiracy investment firm, The Great American Bubble Machine.

Factoid of the Day

No Comments

I would not have known, but when you think about it, it’s not surprising that over their history, banks have been a money losing enterprise:

He duly notes the key role banks had in the financial collapse and cites “one amazing statistic,” namely that “in the aggregate, banks have never made money over time.” Instead, “like the airlines, banks historically have seemingly made money hand over fist during good times, but they give it all back when the cycle turns.”

But he asks, “How many bankers suffer the same fate when it comes to their own personal financial affairs?” And the answer to that question, Dennis believes, was a major factor in setting the stage for the encompassing financial crisis we’ve recently suffered through.

The problem is that while banks have not made money over their history, bankers have, because, when the going gets tough, they get to keep their enormous paychecks of the go-go years.

If we did something simple, like saying that remuneration to officers and executives in excess of $400,000.00 a year, the President’s salary, would be subject to claims against the company which paid them for 5 years, and then partially subject to claims against a company for the next 10 years, we would find a lot more honesty and probity in the financial industry.

I Hope that He is Wrong, But I Fear that He is Right

No Comments

John Carney at CNBC says that Congress will make the illegal actions of banks retroactively legal in the lame duck session:

The put-back crisis is not driven by economics. It is driven by legal rights. And there’s simply zero probability that the politicians in Washington are going to let Bank of America or Citigroup or JP Morgan Chase fail because of a legal issue.

So here’s what I expect will happen. The lame duck session of Congress will pass a bill that essentially papers over the misdeeds of the banks that originated mortgage securities. Every member of Congress and every Senator who has been voted out of office will cast a vote for the bill. And the President will sign it.

He is suggesting that you buy stock in Bank of America, because when Congress does this, the stock will rebound.

He’s right, the bankers own our government.

It’s Bank Failure Friday!!!! (late again)

No Comments

And here they are, ordered, and numbered for the year so far.

  1. Security Savings Bank, F.S.B., Olathe, KS
  2. WestBridge Bank and Trust Company, Chesterfield, MO
  3. Premier Bank, Jefferson City, MO

Full FDIC list

3 this week, which appears to be more or less on trend, which is a bit over 3, see graph.

My guess is that the final that the final number will be in the 150-160 range, though prognostic record is rather spotty.

So, here is the graph pr0n with trendline (FDIC only):

I would note that are now at the point where the utility of the least squares trendline is diminishing, but I’m keeping it here for historical purposes.

QOTD

No Comments

I think too often many of us have tried to come up with elaborate financial/economic rationalizations for why the banksters have approached all of this the way they have. The simpler explanation is that they’re sociopathic assholes who think that everyone else must suffer for their mistakes.

—Duncan Black

And yes, my prior post segues very nicely into this.

They Write Letters

2 Comments

Alan Grayson has written to the FBI requesting a criminal investigation of fraud by the bankers in their foreclosure proceedings.

He is correct when he says that, ” It is time for handcuffs. Fraud does not become legal just because a big bank does it. … This is absurd. This is deliberate, systemic fraud, and it is a crime.”

Full letter after the break:


October 14, 2010

Robert S. Mueller III
Director
Federal Bureau of Investigation
935 Pennsylvania Avenue, NW
Washington, DC 20535

Robert O’Neill
U.S. Attorney
Middle District of Florida
400 North Tampa Street, Suite 3200
Tampa, FL 33602
Dear U.S. Attorney O’Neill and Director Mueller,

When it comes to foreclosures, there is mounting evidence of a state of rampant lawlessness in Central Florida. There are increasing signs that big banks routinely evade laws meant to protect homeowners, in many well-documented cases of ‘foreclosure fraud.’ Despite the demonstrated existence, for instance, of ‘robosigners’ signing affidavits attesting to documents that they have never seen, the parties engaging in such misconduct are not being brought to justice. Big banks are mischaracterizing this as mere ‘technical problems,’ and apologizing only where there is clear and very public evidence of harm.

It is not enough for big banks only to apologize for fraud, perjury, and even breaking and entering – when they are caught. It is time for handcuffs. Fraud does not become legal just because a big bank does it.

On September 20, 2010, after my office found evidence of systemic foreclosure fraud perpetrated by big banks and foreclosure mills, I called for a halt to illegal foreclosures.

Since then, big banks such as Bank of America, JP Morgan Chase, GMAC, PNC and others have suspended foreclosures or foreclosure sales. These banks are still claiming that the massive fraud they have perpetrated amounts to nothing more than a series of technical mistakes. This is absurd. This is deliberate, systemic fraud, and it is a crime.

To give but two of the many available examples, attached is a deposition from an ex-employee of one of the largest ‘foreclosure mills’ in the state, the Law Offices of David Stern. In it, this employee testifies under oath that it was routine for that office to falsify documents regarding military records, in order to move foreclosure cases along more quickly.

The local media has reported on the case of Nancy Jacobini; a contractor for JP Morgan Chase broke into her home after the bank mistakenly foreclosed on it. JP Morgan Chase ‘apologized’ for terrifying her. But , US ; we have a system of laws. I am writing to ask you to enforce them.

The organized and systematic manufacturing of falsified documents to deprive people of their homes is not only a threat to the integrity of the legal system. It also aggravates and extends the weakness in the housing market. Who is going to feel comfortable buying a home if a big bank can simply take it, whether or not that bank has a right to it? Given the securitization of mortgage-backed securities, this misconduct is a threat to our securities markets as well. But fundamentally, this is a question of protecting basic property rights – if you don’t own it, then you shouldn’t try to take it. Without clear property rights, and a legal system that insists on clear proof of those rights before transferring ownership by force, the economy will fall apart.

If perpetrators of perjured affidavits and other systematic criminal activity can get off simply with civil liability – or even less, an insincere bureaucratic apology – the freedom that Americans enjoy will erode quickly in the face of lawless seizures of property. I appreciate your work on the joint Middle District of Florida’s Mortgage Fraud Initiative, and respectfully request that the efforts of your offices turn towards reining in this rampant criminality.

Regards,

Alan Grayson

Member of Congress

Foreclosures Hit a New Record in September

No Comments

I wonder how many of them were fraudulent or otherwise in error:

More than 100,000 U.S. homes were seized by lenders in September, a record number that probably will decline in coming months as major banks halt repossessions and review their foreclosure practices.

Lenders took over 102,134 properties last month, RealtyTrac Inc. said in a report today. That was the highest monthly tally since the company began tracking the data in 2005, surpassing the August record of 95,364. Foreclosure filings, including default and auction notices, rose 3 percent from the prior month to 347,420. One out of every 371 households received a notice.

I’m dubious of that the, “number that probably will decline,” as, “major banks halt repossessions and review their foreclosure practices.”

The banks will rush the moratorium, and in any case the moratorium will be very porous, because the banks are evil, so I expect the numbers to rise.

Your Bank Foreclosure Fraud Update

3 Comments

Barry Ritholtz opens a can of whup ass on a clueless Diana Olick (@ 8:20 but watch the whole thing)

First, some perspective.

When I went to UMass, there was a murder case in the Amherst area. Someone bought some land, and they met on the property to exchange deed and money, and when he got the deed, he shot the seller, and took back the money.

At the time, I wondered how someone could be so stupid to think that this would still work.

The requirements of real estate transactions are such that, even if they never find the body or suspect you of murder, you won’t get the property, and it’s been that way since well before the Civil War, and possibly since before the Revolutionary War in Massachusetts.

That’s what all these transactions are about. They are the product of hundreds of years of social and legal development in order to ensure that someone does not just shoot you and take the deed.

But the bankers just want to shoot you and take the deed, so they take short cuts.

It’s why Barry Ritholtz calls the foreclosure fraud an assault on the basic property rights that make capitalism work in our society.

On a slightly less philosophical level, read Rortybomb’s Foreclosure Fraud for Dummies, Part One, Part Two, and Part 3. It’s clear, it’s concise, and it helps you understand just what is going on here with the fraudulent paperwork.

Additionally, Felix Salmon points out that the entire mortgage backed securities process was a deliberate fraud perpetrated on investors:

………

This is where things get positively evil. The investment banks didn’t mind buying up loans they knew were bad, because they considered themselves to be in the moving business rather than the storage business. They weren’t going to hold on to the loans: they were just going to package them up and sell them on to some buy-side sucker.

In fact, the banks had an incentive to buy loans they knew were bad. Because when the loans proved to be bad, the banks could go back to the originator and get a discount on the amount of money they were paying for the pool. And the less money they paid for the pool, the more profit they could make when they turned it into mortgage bonds and sold it off to investors.

Now here’s the scandal: the investors were never informed of the results of Clayton’s test. The investment banks were perfectly happy to ask for a discount on the loans when they found out how badly-underwritten the loan pool was. But they didn’t pass that discount on to investors, who were kept in the dark about that fact.

………

In any case, it’s clear that the banks had price-sensitive information on the quality of the loan pool which they failed to pass on to investors in that pool. That’s a lie of omission, and if I was one of the investors in one of these pools, I’d be inclined to sue for my money back. Prosecutors, too, are reportedly looking at these deals, and I can’t imagine they’ll like what they find.

The bank I talked to didn’t even attempt to excuse its behavior. It just said that Clayton’s taste-testing was being done by the bank — the buyer of the loan portfolio — rather than being done on behalf of bond investors. Well, yes. That’s the whole problem. The bank was essentially trading on inside information about the loan pool: buying it low (negotiating for a discount from the originator) and then selling it high to people who didn’t have that crucial information.

We should be looking at throwing these folks in jail. (read the whole thing)

In terms of shoes dropping, we now have Wells Fargo initiating a review of its foreclosures, and J.P. Morgan announcing in an investor call that it has stopped using MERS as its agents in foreclosures, which indicates that the big banks have real concerns about the legality of what is basically a database containing an incomplete record of scanned images:

JP Morgan Chase is a valued member of MERS. They currently have their correspondent loans registered on the MERS System. They do not, nor have they ever, registered their retail loans on the MERS System. As members of MERS and for loans registered on the MERS System, banks have the option of foreclosing in their own name, or MERS foreclosing for them.

Notwithstanding the people out there who are maintaining that this is just a bit of paperwork, one of the more savvy banks out there is clearly concerned.

Holy Crap

No Comments
LoL Cat approves of the investigation

State Attorney Generals have opened investigations into foreclosures.

No, really, I don’t mean that some of them, I mean all of them. All 50 state Attorneys Generals have opened investigation:

Top legal officers of all 50 states opened a joint investigation into home foreclosures, saying they will seek an immediate halt to any improper practices at banks and mortgage companies.

The states will conduct a coordinated inquiry into whether banks and loan servicers used false documents and signatures to justify hundreds of thousands of foreclosures. The group intends to establish independent monitoring, Iowa Attorney General Tom Miller, who is leading the probe, said today in a statement.

Great googly moogly!

Every single one of them.

Still, I expect that the net result of all this will be that there will be changes in the law to wallpaper this all over, and leading the charge for banker amnesty will be the White House.

Seriously, when you have Virginia State AG Ken “Misuse my office to abuse climate academics” Cuccinelli joining in on this, the political and legal landscape is pretty unambiguous.

While it is clear that the United States needs a functioning credit system, it does not need these banks, who f%$#ed our whole country (with out lube), but little Timmy Geithner* is determined to shield the people who broke the law and defrauded the their customers, because he* is completely unable to see behind the needs of the megabanks.

*But remember, the Cossacks work for the Czar.

Economics Update

No Comments
Click for full size


Small Business Hiring Down


The index still sucks wet farts from dead pigeons

H/t Calculated Risk for the graph pr0n

Oh, those invisible bond vigilantes are at again, with the 3-year Treasuries hitting a record low yield, 0.57%. (!)

Meanwhile the National Federation of Independent Business released its September survey of small business optimism, and the numbers remain grim, essentially flat, up from 88.8 to 89.0 from August, still highly contractionary, and the businesses are looking to lay off more workers.

We also saw 30-year mortgage rates continue to fall, but no one is borrowing, because non one is buying.

What Atrios Said:

No Comments

When Atrios notes that Barack Obama had nearly complete freedom in designing the Home Affordable Modification Program. The money was allocated largely without strings, and he was free to do anything short of throwing it from a helicopter, or as he so pithily notes, “This program did not require President Snowe to sign off.

Still, as David Dayen at FDL notes, the program was designed to benefit banks and loan servicers, and in fact paid for the sort of foreclosure abuses and law-breaking at the expense of home owners in peril.

This is more than a policy failure, it is a deliberate betrayal of the basic ideals of liberalism, and an embrace of Bush/Cheney style crony capitalism.

If anything comes from the current foreclosure implosion, it will be in spite of the Obama administration, not because of it.

And the Obama Administration’s Response to the Widespread Foreclosure Fraud by the Banks Is…

No Comments

To take the side of the big banks who are ignoring the law, with Obama proxy David Axelrod on Face the Nation saying that he hopes that this, “moves rapidly and that this gets unwound very, very quickly,” meaning allowing the banks to continue breaking the law, while an “administration source is saying that, “the administration was also seeking the servicers’ help with modifying the home loans of millions of borrowers to help them avoid foreclosure.”

The translation here is that because the administration was perpetrating a fraud on homeowners on behalf of the banks with the HAMP, they couldn’t be expected to pursue them when they broke the law.

The most egregious quote is from Federal Housing Administration Commissioner David Stevens:

We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile housing market

(emphasis mine)

So, even if the banks broke the law, it is the victims who have to pay for this, because the banks own Barack Hussein Obama.

I would suggest that you read Yves Smith here, here, and here. She touches all the bases, and does it better than I am.

This is Getting Ugly Fast…

No Comments

Bank of America just suspended all foreclosures nationwide:

Bank of America Corp. imposed a nationwide moratorium on foreclosures and the sale of foreclosed homes after it came under intense pressure from a government-run housing-finance giant worried about documentation problems, people familiar with the situation said.

The bank called the halt as concern mounted from legislators and state prosecutors about procedures used by lenders to foreclose on homes. Many banks use so-called robo signers, employees who sign hundreds of documents a day, without carefully reviewing their contents, when foreclosing on homes. Critics say that could result in improper foreclosures.

Freddie Mac, the government-run mortgage-finance company that along with Fannie Mae owns many of the mortgages serviced by banks, pressed Bank of America to expand its search for problems with the foreclosure documentation process, said the people familiar with the situation.

A year ago, I wrote about potential issues with MERS, and I figured that there might be a fair number of cases out there, but the developments of the past few weeks, which, credit where credit is due, were spotted and covered with far more detail and intellect by Yves Smith than by me, have been remarkable.

This is all falling apart at a far greater speed than did the collapses of Bear Stearns and Lehman Brothers in 2008.

We had low key mainstream coverage on the brokerage houses’ issues in 2007, but the first mainstream coverage of the mortgage debacle is from just a month ago.

I would further note, that what is going on now has NOTHING to do with MERS, which remains the elephant in the room.

This feels like the first few pebbles hitting us from an avalanche.