With at least three major agents, GMAC/Ally, Morgan Chase and BOA, halting foreclosures some questions arise: Who owns the most senior tranches of the mortgages involved? Purportedly Far Eastern Sovereign Wealth Funds and EU insurance companies and pension funds but no one knows for sure because of the CDO E N problem. CDSs made possible CDOs squared, cubed and who knows how high. Why did this happen now? A CDO to the nth means that the income received by a bond holder is actually a CDS premium that returns nothing at foreclosure. That means a lot of unhappy bondholders are in for an extremely rude awakening come foreclosure time. So the agents may have deliberately lost paperwork and turned themselves in to avoid both bankruptcy and prison time. Owing full foreclosure yields to multiple recipients is fraud if they can't be paid. (I went over this with a lawyer I know to double check. If the house is sold, refinanced, paid off or the paperwork is inadequate for foreclosure no one goes to jail but successful foreclosure can lead to all sorts of unpleasant consequences for the agent. But loss of title simply means taking the principle paid to the bondholder minus the compound interest it has been accumulating and paying off the CDS.) Why only 23 states? Best guess, these are the states with the most stringent real estate laws. What about lawsuits for negligence? It depends on the state but since European and Far Eastern financial institutions would be the major plaintiffs and the legal fees are generally prohibitive it looks like most of the mortgage mess has been exported. Nolo contendre pleas and similar ploys can clear up the internal mess but the foreign mess is about to get huge. This could set off a trade war.