GMAC/Ally crisis

Discussion in 'Economy' started by william the wie, Sep 22, 2010.

  1. william the wie
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    william the wie Gold Member

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    This subject was taking over another thread on a different subject so I created this separate thread. Post anything about new allegations of mortgage fraud here. Many foreclosures have been stopped and I have heard it claimed that many reversals of foreclosures will happen.
     
  2. Paulie
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    Paulie Platinum Member

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    My boss went through a really bad divorce and has seen slower business activity the last few years, which together have hurt his financial position to the point where he hasn't paid a cent on his mortgage in over a year.

    The bank simply doesn't want his house. I assume they'd rather let him live there and maintain it rather than leave it and have it sit stagnant and deteriorate.

    I'm not sure if it completely relates to this thread, though.
     
    Last edited: Sep 22, 2010
  3. Trajan
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    Trajan conscientia mille testes

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    My cousin is a lic.mortgage and RE broker and has been doing bus here in the bay area for over 30 years. The stories he can tell, its unreal.
    Annnywayyyy...

    I have heard same and there is a form of fraud going on here.......in that the minute they close the occupant out, the bank/firm are on the clock, the debt. the responsibility, etc.

    That being said- they have closed off any chance of the occupant making a go it, suckering them into paying anything further even knowing they will not stay in the end and, this is key, getting another gov. subsidized hand out for a BS principal reduction or modification scheme, in the form of basis points etc....they know the occupant will re default for instance but get 300-500 basis points on the federally guaranteed deal to make it happen and extend the clock on their having to take on the weight of writing off the loan.
     
    Last edited: Sep 22, 2010
  4. Trajan
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    Trajan conscientia mille testes

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    as to GMAC Ally


    well this is the tip of the iceberg, I assure you.


    and I found this particularly interesting for those that weren't aware;

    GMAC was created in 1919 to provide financing for buyers of General Motors Co.’s vehicles. GMAC converted into a bank holding company in 2008 as it received more than $17 billion of government funds during the financial crisis. It rebranded itself Ally Financial last year, and continues to offer auto loans and mortgages.

    Ally's GMAC Mortgage Halts Home Evictions in 23 States - Bloomberg

    now look, GMAC was into mortgages before they and GM went belly up, and we got involved. One might ask why is an Auto manufacturer involved in a co. that finances homes? I mean they could into even make their core business profitable...right?

    It was part and parcel of the host of issues with GM mgt. etc...that our gov. continued to buy off on their financing of mortgages etc. growing their portfolio in any way shape or form on our dime is criminal.

    Mark my words- in 5 years ALLY or whatever POS entity they morph into next will be fire-saled with us suckers holding the bag for at least 17 Billion.
     
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    Last edited: Sep 23, 2010
  5. william the wie
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    william the wie Gold Member

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    Thanks for the posts. I would have replied earlier but I have to fast from midnight EST to 7 AM tomorrow for blood work so I am filling up on soup and salad to avoid breaking the fast while I am waiting. But yeah great posts. What I am hearing elsewhere is that literally millions of foreclosures might get overturned and that most of the investors in the MBS market are clueless about English common law in regards to land, notes and derivatives. This could get monumentally ugly quickly, a large proportion of the collapse in real estate since 06 is attributed to the learning curve of German bankers and lawyers in handling US foreclosures.

    Even if the learning curve is behind us I would expect serious tranche dumping overseas. Japanese and EU responses to this story seem much stronger than the US reaction.
     
  6. loosecannon
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    loosecannon Senior Member

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    I looked into this Willie and as best as I can tell nobody knows how meaningful this will be.

    But a worse case scenario is that foreclosures will be delayed by months as paperwork processing and legal filings get log jammed. But all of the same foreclosures will still proceed after considerably more expense is incurred in preparing them.

    Somebody still has a deed, and a right to foreclose. They just have to prove it.

    If anything this only proves the completely irrational character of the mortgage securitization industry. As in, should it even exist?

    Why shouldn't banks be required to retain accounts that they originate?
     
  7. uscitizen
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    uscitizen Senior Member

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    All those outfits converting into banks overnight. What a bonus for them to be able to do that.
     
  8. william the wie
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    william the wie Gold Member

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    Actually deeds and notes get lost with dismaying regularity. Misfiling, accidental shredding and all sorts of other crap happen all of the time only usually prior to 2006 it did not matter. Up until that time homeowners either defaulted within one year of purchase or otherwise 1% of the time. Losing documents 20-30% of the time after the first year had little or no consequences. "Your Honor, my client lost the note and deed of mr. and mrs. Smith will you authorize issuance of replacements?" That use of the courts cost less than storing the documents.
     
  9. loosecannon
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    loosecannon Senior Member

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    well if 20-30% of the US property deeds have been lost at least local registrars have back up copies. Except in the case of quick deeds which banks don't deal in.

    There is a whole industry intent on guaranteeing the validity of deeds. Escrow agencies. They rely on public records for their data.

    That system has been almost bullet proof.

    So it will take a lot more time and money to establish some facts pertinent to foreclosure. The world will wait, unless something more emerges.
     
  10. william the wie
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    william the wie Gold Member

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    the deeds and notes didn't even need to exist prior to the bust. 99% of the time the house was sold or refinanced within five years and many of the lawyers in the country treat escrow accounts as piggy banks not all and maybe not even a majority but quite a few. Real estate was a cozy little industry where one hand washed the other. When it turned into a sales mill a lot of corners were cut. What happened with Ally was that gaps in public records developed. The rest of this is speculation based on widespread problems with other companies and Ally was primarily an MBS packager not an originator so some of what follows probably happened to them too.

    One lung title insurance companies with their back office in India sprang up but no one flew there to check to see if the legal office actually existed. This scandal has not yet broken so far as I know so maybe all those firms did exist and did competent work. But I suspect that some owner did not sign some deed and word got around. It would be very hard to get 23 states in a lather without something major like an entire subdivision with a missing signature on the land purchase. The title company would be the prime suspect in such a case.

    Documentation was forged or obtained fraudulently, that can cause problems. Divorce and remarriage is the main culprit here. But 23 states are not going to go nuts over something like this without extremely good reason like forgery by Ally employees.

    Mortgages were bought and paid for without any check on whether the buyer or property actually existed. This could have been the trigger unlikely but possible.

    Any of the above or other cases could be the trigger. But 23 states dropping the hammer on one company? Something really off the wall happened in this case.
     
    Last edited: Sep 23, 2010

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