Wednesday, October 13, 2010

Foreclosure Fraud: Systemic, Negligent, Criminal

With a 225% YoY rise in foreclosures in this area, the ongoing local private sector job desert, and many homes that will never sell because the market's gone down the toilet, foreclosure issues loom large in this market. 

Experts now caution the mortgage fraud issues will be a bigger shock to the financial system than the 9/08 bankruptcy of Lehman Brothers.

*VA Attorney General Ken Cuccinelli to Join 40 50 States AGs Investigating Foreclosure Fraud.  KC may not be popular in this area due to other "investigations," but this particular look-see is at a creature whose legs grow longer by the second.  ALL 50 AGs now...Oct. 13.

*Ally Financial has called a foreclosure moratorium in all 50 states.  (Formerly GMAC, and now majority owned by Uncle Sam).  Ally joins BofA in putting foreclosures on hold. 

*Unclear Titles Will Sideline Buyers of Foreclosed Properties For Many Months - Mish 

*Death of the Housing Market? Larry Kudlow gets worried - video - includes WSJ's Brett Arends.

"Anyone Who Says the banks will fix this in a few months is seriously delusional" says Diana Olick, Realty Check, CNBC.  Olick spoke with Adam Letvin, a Georgetown U law prof, who limned the issues:
"The mortgage is still owed, but there's going to be a problem figuring out who actually holds the mortgage, and they would be the ones bringing the foreclosure. You have a trust that has been getting payments from borrowers for years that it has no right to receive. So you might see borrowers suing the trusts saying give me my money back, you're stealing my money. You're going to then have trusts that don't have any assets that have been issuing securities that say they're backed by a whole bunch of assets, and you're going to have investors suing the trustees for failing to inspect the collateral files, which the trustees say they're going to do, and you're going to have trustees suing the securitization sponsors for violating their representations and warrantees about what they were transferring."
 *And...What if middle-class Americans just start saying Fuckit to the banks?

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