GMAC/Ally crisis

[loosecannon]

yeah well, I am increasingly becoming convinced that global resource wars/trade wars are the geopolitical growth management tools of the near and enduring future.

The whole of the western world is near a seizing point from which variations on the theme of global martial law will be tolerated by most of us.

Let the new and improved cold wars begin!

 

[william the wie]

Reinhardt and Rogoff's "This Time is Different" summarizes the possible outcomes and "martial law" is one of them but there is a very long list of other possible outcomes that are more probable.

 

[loosecannon]

Reinhardt and Rogoff's "This Time is Different" summarizes the possible outcomes and "martial law" is one of them but there is a very long list of other possible outcomes that are more probable.

Yeah but a lot has happened since that was written. A lot has happened since august, the whole world has changed since April.

Edited to add that during WWII the whole US was under a sort of martial law. At the end of a long depression.

 

[loosecannon]

BoA follows suit, again in only 23 states. WHAT is with these 23 states?

Bank of America, the nation's largest bank, on Friday became the latest lender to put foreclosures on hold in 23 states because of concerns that court documents it submitted were improperly prepared.

washingtonpost.com

here we GO!

The 23 states where Bank of America, J.P. Morgan and Ally suspended some foreclosures require a court order before a home can be seized. This approach is considered favorable for homeowners because mortgage companies must submit more extensive documentation before they can foreclose. Connecticut is on that list, but California is not.

What I heard today is that not only have the banks been shoddy in processing mortgages and defaults without requisite scrutiny, but courts as well have processed foreclosures as if with a rubber stamp machine, never reviewing the documents.

If you have ever been to traffic court you have seen this happen: You and everybody else waits for hours to appear before the judge while 3 attorneys walk in at any random moment and get streamlined service at the bench's first opportunity. With no scrutiny of the paperwork whatsoever the judge merely signs whatever the attorney presents.

 

[loosecannon]

Foreclosure Furor Rises; Many Call for a Freeze (on all foreclosures)

The uproar over bad conduct by mortgage lenders intensified Tuesday, as lawmakers in Washington requested a federal investigation and the attorney general in Texas joined a chorus of state law enforcement figures calling for freezes on all foreclosures.

Representative Nancy Pelosi, the House speaker, and 30 other Democratic representatives from California told the Justice Department, the Federal Reserve and the comptroller of the currency that “it is time that banks are held accountable for their practices.”

In a request for an investigation into questionable foreclosure practices by lenders, the lawmakers said that “the excuses we have heard from financial institutions are simply not credible."

Officials from the federal agencies declined to comment.

chalk this up to campaign posturing, but it may stick

http://www.nytimes.com/2010/10/06/business/06mortgage.html?partner=rss&emc=rss

 

[william the wie]

What no one wants to say is that this lost paperwork is the only out for defaulted properties found in two or more CDOs. Well an out for the mortgage agents. To take one example Merril Lynch and other Bear Sterns counter parties got stuck with a lot of toxic assets for collateral, then Merril was taken over by Bank of America while Bear Sterns was taken over by Morgan Chase and a lot of the assets were taken over by the Fed and Treasury. While the proper documents for foreclosure may still exist (or quite likely no longer exist) finding them may take years. If the mortgage agents want to commit financial suicide and cooperate with investigators then maybe documents adequate to go forward with say 50% of foreclosures pending may be found. I wouldn't bet the rent money on that happening. 60% of foreclosures will most likely be thrown out and some past foreclosures will be reversed. This will make the meltdown look tame.

 

[loosecannon]

Obama won't sign bill that would affect foreclosure proceedings

Amid growing furor over the legitimacy of foreclosure proceedings, White House officials said Thursday that President Obama will not sign a two-page bill passed by lawmakers without public debate after critics said the legislation could loosen standards for foreclosure documents.

The bill, named the Interstate Recognition of Notarizations Act, would require courts to accept document notarizations made out of state. Its sponsors intended the effort to promote interstate commerce. But homeowner advocates warn the new law could allow lenders to cut even more corners as they seek to evict homeowners.

White House press secretary Robert Gibbs said the president did not believe Congress meant to undermine consumer protections regarding foreclosure challenges. Still, Obama will use a "pocket veto," which will effectively kill the legislation.

Democratic leaders on the Hill were scrambling to figure out how the bill managed to sail through both chambers of Congress without any objection. The episode may prove embarrassing for Democrats who in recent weeks have been calling for federal investigations into flawed paperwork, forged documents and other kinds of misconduct in foreclosure proceedings initiated by big lenders.

washingtonpost.com

 

[loosecannon]

Bank of America widens foreclosure freeze to all 50 states

Foreclosures halted: Bank of America to halt foreclosures nationally - latimes.com

 

[william the wie]

Bank of America widens foreclosure freeze to all 50 states

Foreclosures halted: Bank of America to halt foreclosures nationally - latimes.com

All of the others are expected to fall in line. A real witches brew is building up because everybody is hiring lawyers. with a statute of limitations that generally goes back 20 years for real estate this will get real nasty and stay that way for a very long time.

 

[loosecannon]

it may get real deep. I am quite surprised how quickly it is moving and really loved the intrigue of the house and senate fast tracking a bill to over rule it in complete secrecy with zero internal objection in these uber partisan times.

That alone, the bill being prepared 6 months ago, makes me think this actually could be a world class stinkstorm.

I also wonder how many of these mortgages are owned by China and Japan, and am tickled that Greece owns NONE of them.

I still think that the foreclosures will eventually all be executed.

But the whole process of securitizing and writing synthetic derivative contracts around them is in for a top down review.

Lawyers will just fuck this up, Obama will almost certainly do his unitary executive thing overruling established law....

 

[KissMy]

If this Interstate Recognition of Notarizations Act does not pass will this make home prices climb?

Can the 3 foreclosed homes I just bought last year from HUD be taken back by the foreclosed homeowner? One was foreclosed on by GMAC & sold to HUD & then to me. Another was foreclosed on by CitiBank, sold to HUD & then to me. The third I think was foreclosed on by Fannie Mae then sold to HUD & to me.

I guess my title insurance will kick in but if so will I get paid back for all the improvements & back taxes I paid on these properties?

Will the big banks go down or get another bail-out?

The mind starts to wander what the ramifications are.

 

[william the wie]

it may get real deep. I am quite surprised how quickly it is moving and really loved the intrigue of the house and senate fast tracking a bill to over rule it in complete secrecy with zero internal objection in these uber partisan times.

That alone, the bill being prepared 6 months ago, makes me think this actually could be a world class stinkstorm.

I also wonder how many of these mortgages are owned by China and Japan, and am tickled that Greece owns NONE of them.

I still think that the foreclosures will eventually all be executed.

But the whole process of securitizing and writing synthetic derivative contracts around them is in for a top down review.

Lawyers will just fuck this up, Obama will almost certainly do his unitary executive thing overruling established law....

Overruling the constitution is one thing, messing with several 1000 years of real estate law is quite another.

 

[loosecannon]

Good questions, Kissmy

washingtonpost.com

Momentum builds for nationwide freeze on foreclosures

Senior Obama administration officials said Friday that a nationwide moratorium on foreclosure sales may be inevitable, despite their grave reservations about the impact a broad freeze would have on the nation's housing market and economic recovery.

Their remarks were made as pressure for a nationwide moratorium mounted Friday when Bank of America, the nation's largest bank, halted evictions in all 50 states and Senate Majority Leader Harry M. Reid (D-Nev.), who is locked in a tight reelection campaign, called on other major lenders to follow suit.

The White House has so far resisted joining the election-season calls for action but convened two interagency meetings this week to discuss reports that banks filed fraudulent documents to evict borrowers who missed payments as well as fundamental questions about whether banks are seizing properties without having clear ownership of the mortgages.

One meeting was made up mostly of groups that regulate the housing industry, including the Department of Housing and Urban Development, the Treasury Department and the White House. The other, which involved the U.S. Securities and Exchange Commission, the Internal Revenue Service and U.S. attorneys from across the country, was focused on the question of whether financial fraud was committed.

With foreclosed properties comprising one in every four homes sold in the United States, the spreading moratorium could disrupt real estate deals in progress, slow down the process of clearing the backlog of troubled home loans and prolong the economic recovery, analysts said.

A freeze would also strike at the financial sector, just two years after it suffered one of the worst crises in its history. One government official who has been in discussions with several big financial firms said the banks are bracing themselves for a wave of lawsuits from homeowners who are fighting to keep their homes and from investors who had bought mortgage loans on Wall Street.

this has a creepy feel to it, like it is not a spontaneous event at all. More like an election season gimmick or worse yet some kind of political effort to manufacture crisis for convenience.

I heard about these underlying problems 3-4 years ago when the bankruptcy overhaul was plodding thru the bowels of Congress.

Why now, why so fast, why in lockstep, why as if scripted on the eve of an election? Why only after several attempts by team Obama to provide some kind of mortgage relief fell flat?

Why was this never covered by the extensive treatment of financial reform within Congress, the WH and the regulatory agencies? The new consumer safety commission never heard about this until this week? And they still aren't acting on it?

Will the Caped Crusader save the day?

 

[loosecannon]

it may get real deep. I am quite surprised how quickly it is moving and really loved the intrigue of the house and senate fast tracking a bill to over rule it in complete secrecy with zero internal objection in these uber partisan times.

That alone, the bill being prepared 6 months ago, makes me think this actually could be a world class stinkstorm.

I also wonder how many of these mortgages are owned by China and Japan, and am tickled that Greece owns NONE of them.

I still think that the foreclosures will eventually all be executed.

But the whole process of securitizing and writing synthetic derivative contracts around them is in for a top down review.

Lawyers will just fuck this up, Obama will almost certainly do his unitary executive thing overruling established law....

Overruling the constitution is one thing, messing with several 1000 years of real estate law is quite another.

That's a great point, for some reason I can't "thank" you for it. In many ways British common law and even Spanish real estate law supersedes the constitution even today. Not too many people know that Willie.

 

[william the wie]

If this Interstate Recognition of Notarizations Act does not pass will this make home prices climb?

Can the 3 foreclosed homes I just bought last year from HUD be taken back by the foreclosed homeowner? One was foreclosed on by GMAC & sold to HUD & then to me. Another was foreclosed on by CitiBank, sold to HUD & then to me. The third I think was foreclosed on by Fannie Mae then sold to HUD & to me.

I guess my title insurance will kick in but if so will I get paid back for all the improvements & back taxes I paid on these properties?

Will the big banks go down or get another bail-out?

The mind starts to wander what the ramifications are.

This unhappily is my point. I would contact a real estate lawyer licensed in the state of the purchases. What I would ask is someone who specializes in taking clause suits. Since you bought from HUD HUD is liable to you to some extent under the fourth amendment. As to how that works in your state and with your contracts I am clueless.

 

[loosecannon]

there is no way in hell that the federal government is gonna allow this whole arena to grind slowly thru legalese hell. Not during a recession. Not when recession spells doom for the Obama. Not when this could actually cause a crisis more real and severe than the feeble credit crisis.

 

[william the wie]

there is no way in hell that the federal government is gonna allow this whole arena to grind slowly thru legalese hell. Not during a recession. Not when recession spells doom for the Obama. Not when this could actually cause a crisis more real and severe than the feeble credit crisis.

Actually that is exactly what happened in the 1930s. The empire state building was completed and changed hands 2-3 times in the 1930s on the otherhand large parts of FL and parts of LI were tied up in court well into the 50s and 60s over documentation. At least three properly executed documents must be presented here in FL deed, promissory note and the loan app sheet (I forget the legal name) to get a foreclosure. A lot of loans have been thrown out when the numbers on the app sheet have turned out to be bogus and not in the applicant's handwriting or a required field is omitted or filled out with a different shade of ink. It's not automatic but there is an investigation with extreme prejudice of the loan originator once irregularities are found. There are a long list of documents that can be and are required of the mortgagee in order to transfer title once any irregularities are found. The non-existence of required documents is what is being alleged and that carries jail time in FL. This is going to drag on.

 

[loosecannon]

It can't. It would embroil the entire western financial sector in almost useless and never ending trauma. All over a lotta defaults that were perfectly legit but lacked the legal backing to prove as much.

The homeowners did miss enough payments and banks are required by law to write off bad loans.

You can't satisfy all of the legal requirements here. It isn't possible.

 

[saveliberty]

GMAC paid a price for becoming a bank and geting the $17B. It had to take over for Chrysler Financial. While GMAC may service the accounts, it does not mean they ownthe loan anymore. They nay have stated foreclosure because the current loan holder said they were not getting paid. Many layers here, but it still is a giant stinking onion.

 

[william the wie]

GMAC paid a price for becoming a bank and geting the $17B. It had to take over for Chrysler Financial. While GMAC may service the accounts, it does not mean they ownthe loan anymore. They nay have stated foreclosure because the current loan holder said they were not getting paid. Many layers here, but it still is a giant stinking onion.

The big question is whether the holder in due course is the sole and provable holder in due course. And that raises a host of questions:

Was there fraud in lending? The FBI taskforce on Real Estate Fraud was effectively muzzled in early 2004. I know of many cases where state and local law enforcement have uncovered fraud rings run by mortgage originators and in the cases I am aware of no forensic accounting was involved. If 0.01% of mortgages can be proved to be fraud by police officers or deputies with no training in bookkeeping much less accounting then an epidemic of massive fraud was going on. Cops are not paid to uncover what are normally civil offenses and are not trained in how to differentiate quickly between criminal (which they are permitted to investigate) and civil offenses they are supposed to stay out of. In other words the originators damn near had to put up a sign saying "Fraud is us." before the local cops could investigate.

Was the transmission of title maintained? Can the holder in due course be proven to be the holder in due course? With all of the synthetic CDOs out there who knows?

Then there is material misstatement of fact in the foreclosure fee. $29 billion of bad Bear Sterns mortgages plus more from their sponsored hedge funds are on the books of Morgan Chase as guaranteed by the Fed and Treasury. Those loans are required by federal law to be highly modified on demand. Failure to mention that fact may void foreclosure proceedings. With all of the other deals made during the meltdown that means that $5 + Trillion in illegal/highly impolitic foreclosures are on the line. If that information has not been given to the judge then many bad consequences can follow.

Were the new payment books sent out in a timely fashion when agency changed hands? Can the homeowner show evidence of a different chain of agency than the current agent asserts? That can void foreclosure too.

Trying to speed up the process puts the taxpayers like me on the hook for trillions not counting punitive damages.