Is A 90 Day "Mortgage Meltdown" Foreclosure Moratorium Imminent As The RoboSigning Scandal Goes Mainstream?

Tyler Durden's picture

The Massive Mortgage Mess as we affectionately call it seems to be getting new names with each passing day - the latest one is, quite appropriately, RoboSigning Scandal (funny how after the stock market, "robotic" technology will soon becoming equated with the biggest mortgage scam in history). During today's Kudlow segment, CNBC's Diana Ollick who is by and far the company's best (and only) investigative reporter, confirms various so far unfounded rumors, that the government is planning to institute a 90 day foreclosure moratorium as it deals with the realization of just how big and pervasive the mortgage problem is, and even worse, will soon be. It is so bad that even a typically ebullient Larry Kudlow is forced to note that this is the "housing equivalent of the credit financial meltdown" and that "this is going to go on for ever." The biggest issue that is now developing, as we noted last week, is the fact that title insurers (firms such as Fidelity National, First American, Stewart Info and Old Republic) are refusing to insure mortgages in foreclosure or otherwise, uncertain as to who actually owns the title. And for all those who believe this will merely keep prices artificially high, we have very bad news - the problem with the title insurers walking away on fears of lawsuits is that no lender will be willing to write a mortgage without title insurance, meaning that suddenly the up-front component of home purchases will either necessarily have to surge, or home prices will have to plunge by a like amount, as there is simply not enough equity (read money) to cover the resulting debt deficiency. Alas, this mess is just starting, and as people realize how bad it is, it very well may lead to a total collapse in the housing market.

For all those hoping on a quick resolution so that Americans can go back to watching Dancing with the Stars, you may wish to reconsider. Quote Kudlow: "We're not talking just a few weeks, or a few months. This sounds like a long, drawn-out, bureaucratic, robotic process with lawyers, and oh my gosh." Another implication: a veritable bonanza for both lawyers and defaulters, the former of whom will end up making billions in legal fees (collected from the same banks which are still sucking off the ridiculously low TLGP-funded, and thus taxpayer sponsored fees), while the latter will be able to live mortgage free for years, while continuing to buy useless trinkets instead of paying what is contractually their duty.

Another important topic discussed is the fact that due to decades of faulty securitizations, suddenly no bank knows who owns what. Courtesy of several trillion in now title-undefined mortgages, which in turn form the basis for thousands of CDOs, which in turn are split up into millions of tranches, and includes the complicity of Fannie, Freddie and private label, it is the banks and their clients that have shot themselves in the foot: as other have noted, very soon, the entire MBS process can and very may grind to a halt (if that happens, goodbye Pimco).

As mentioned earlier, Ollick confirms that according to rumors, the government is going to impose "some kind of 90 day foreclosure moratorium on the banks which would melt down the housing market." In fact Congressman Merkley already indicated he is for a foreclosure moratorium.

At the end of the day: the one true loser, is the law-abiding, conscientious, tax and mortgage paying middle class American, who is now preparing for TARP 2 as the banks will all almost definitely need to run to the bailout through because of this catastrophe.

Must watch 10 minute explanation for anyone who is still confused by any aspect in this massive story.


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Nolsgrad's picture


Everyman's picture


must...visualize..... leg......moving..

Kali's picture

Big doodoo hitting the fan.  The pervasive fraud is about to invade the sensibilities of J6P.  The sharks are starting to attack each other, the feeding frenzy is beginning. 

SWRichmond's picture

the feeding frenzy is beginning.

Do you know what's really fun, and frustrating at the same time?  Having stayed current by staying on ZH frequently, and (a little...) elsewhere, watching the masses finally freaking catch a clue.  I already have the positions I want, and I have already adjusted to them emotionally, and I know what my exit strategies are, and I know the signs I'm looking for, and I have enough discipline to hold what I have.  I know what to expect, I know how I will react emotionally to events, and I am prepared for it.  I've been studying this situation so long and so closely that it's damned humerous watching morons argue about it, knowing they don't fully understand, and even more than that, knowing their knowledge hasn't "matured" to the point they can confidently act on it yet and steel themselves for the turmoil ahead. 

In other words: got popcorn?

Kali's picture

Popcorn and butter!  It is thrilling in a way to see the events unfold.  Yes, thanks to ZH and others, I am mentally and physically prepared the best I am able.  But, while fun to see the show, scary at the same time.  I am just glad I am older, have had a hell of a life.  I really feel sorry for young people today.

FEDbuster's picture

Lawyers will be battling gold dealers for commercial spots on cable TV.  "Foreclosed on in the past ten years, call 1-888-GET-EVEN".  Let the games begin!

Lord and Master's picture

I have a 150 IQ, I went to harvard, and the following are my thoughts on housing in America.  To my mind, most of the issue of the housing market rests upon the issue of crime.  Clearly when the dollar declines dramatically, or collapses, dollars will be dumped as part and parcel of that.  But when the dollars are dumped, where will they go?  They have to come back to America and buy something.  When Swedish krona are dumped, they eventually end up purchasing something made in Sweden by the Swedes, or otherwise native to Sweden.  Similarly for the dollar; during terminal decline currencies go home to roost (in some form or another).  Well what does America have, that is of value? 

Well historically speaking, a good answer might be people.  Though I dont entirely rule it out, it seems unlikely at this stage of history that global and also domestic reserves of dollars will be used to purchase Americans themselves.  There are two arguments in support however. 

The first is the notion that Americans as a whole have not definitively shown that they can en masse adjust to life working as (essentially) skilled peons in non-service sector jobs (for example).  This is an oft-overlooked fact-- i.e. that Americans at this stage in history are by nature and by constitution ( i mean their body/mind constitution) unemployable in a modern economy, except as slaves.  By slaves I mean effective chattel, property used to do largely manual labor-- as opposed to, for example, skilled factory labor.  I think they would see the former as invigorating, while the latter their minds and bodies would find intolerably boring.  And after all, as scientists would tell us, and in spite of the wear and tear, invigorating manual labor may very well be more healthy than sitting 12 hours a day at a sewing machine, as is the wont of 10s of millions in asia.  Of course many commentators will say that America has to restructure its economy, i.e. retool, and build up its manufacturing base again to the degree it can.  On paper this sounds pretty cool-- my only question would be, “Who would the factory laborers be?”  Surely not the Americans in my state.  The trend in America for 70 years has been towards greater profligacy in mind and body.  The mind can in theory adjust, and adapt where it needs to.  The body is another story; there a much deeper reversal is needed, obviously.  Seamstresses and coal miners we are no longer (for better or worse). (Incidentally, and in a similar vein, when some suggest the downturn here will be so dramatic that it will rival the Great Depression, and that there will be bread lines, I have to sharply dissent.  While I readily admit the former, re. the latter, I would sooner see a somewhat orderly line or gathering descend into a tumult within 15 minutes or so, followed eventually by screeching tires and flying bullets as a couple of SUVs drive up, a few men jump out and shoot or threaten the bakers, as it were, and take off with the whole supply all within 30 seconds.   The point being --  aint no muddafuckin Americans I know gonna be standin in no damn BREAD LINE!!  SHIITT! )  

The second argument in support of global reserves driving up the market for warm bodies in America relates to accounting efficiency, and maybe karma.  A large percentage of Americans (and Europeans) already have body markings which are not familial/tribal in origin.   Throughout history, which class of people have overwhelming bore bodily marks/brandings of non-familial origin?—slaves, of course.  In addition, many Americans already bear various Asian, and in particular Chinese, characters on various parts of their bodies, and so this might provide for greater market efficiencies.

Anyway, my point about housing was going to be—the world is overloaded with USD of decreasing value, and the US is overloaded with millions of badass luxury houses.  The irony is as clear as the solution is elegant and obvious.  But it remains a sort of tantalizingly resolution of the dilemma, that will presumably not come to pass, because in between then and now would likely lie abysmal levels of crime, and of course a geopolitical abyss.  The crime stats have , I know, not shown it yet… as goes the currency, so goes the crime level.  We are still in that gently Weimarian Deflationary trend in crime—and then, as the historians’ say-- the Witches’ Sabbath, where Americans find themselves stooping to pick up ANY work….  a Fellationary-- er-- Inflationary depression



………………    ………..        ……………….AHAHAHAHAHAHAAHAHAHAHAHAHAHA

i-dog's picture

Very perceptive piece (especially coming from a self-important gloater!).

It ain't gonna be pretty when all the lard-asses are herded to the cotton plantation (or debtors' prison -- choose wisely!).

Lord and Master's picture

haha thanks :)  yeah its gonna be insane

WaterWings's picture

There will be a "tramp stamp" section in the FEMA camps where the Lords and Masters will visit at their leisure.

Lord and Master's picture

hmmm... maybe "state" instead of "section"...

Geoff-UK's picture

If you went to Harvard, did you miss the semester-long course on capitalization of your alma mater?

Popo's picture

"I have a 150 IQ, I went to harvard, and the following are my thoughts on housing in America."


That's where I stopped reading.

Lord and Master's picture

Right.  It's a reflexively-designed function whereby 'certain' readers self opt-out.

ColonelCooper's picture

My IQ is around a buck seven and I went to high school.  Yet somehow I am still perceptive enough to see that you are a douchebag.

MachoMan's picture

Inherently, I fail to see the ability of the dollar to come home to roost and purchase american goods and services when WE REJECT THE DOLLAR TOO.  You want to know what you can buy with dollars?  Ask China...  treasuries, treasuries, and more treasuries...  and with every treasury, we'll throw in an mbs or two.  These will ultimately be claims to see a disgruntled american flip you the bird...  no more.

PS, 107 IQ?  C'mon man...  aside from IQ not measuring dick.

Lord and Master's picture

Dollar like a hot wife turned oinker here... The world rejects the dollar more.  We reject the dollar too, but our laws currently require and enforce its acceptance as legal tender for 'all debts public and private.'  So grab the wife/kids, keys to your house and maybe a used car and washing machine/dryer or two and get ready for the...

tidal wave, bitchez.'s picture

i actually like you and didn 't junk you. you had me @ 150 IQ. my mom told me a had a high IQ but i am sure she was lying, just to boost my self confidence.

Lord and Master's picture

thanks kathy... yeah she probably was, but whatever, youre really positive and seem like youd be totally cool to hang out with ;)'s picture

voyeurism is the sexual interest in or practice of spying on people engaged in intimate behaviors, such as undressing, sexual activity, or other activity usually considered to be of a private nature.

are you familiar with this term? how exactly does one hang out?

reading's picture

I am going to opt-in here just to junk you -- your comments may be interesting however egotistical delivery is of no value.

Clark_Griswold Hedge Mnger's picture

I'm a European living in the US; have so for over 30 years.

Having experienced life on both sides of the pond, lived in both cultures and have a good understanding of the social/backbone mindset of both worlds I can honestly say with full heart, Mr. Harvard IQ

    Never, Ever, EVER Underestimate Americans.

   True they sometimes get lulled to sleep; but beware when they wake up.



ZeroPower's picture

I can kinda in EU now for the forseeable future, and slowly but surely im realizing how much (North) America is a big 'win' compared to anywhere in Europe.

Bob's picture

The Lord and Master character has been starting his posts with these words for a while now and no community efforts, whether nice or nasty, have swayed him from doing so.  While he makes some interesting points, including above, at this point--in this vitally important thread, from near its beginning--it is clear that he is a MAJOR distraction who derails discussion of the actual matters at hand. 

As a guy who claims to be a genius, he would seem to be doing so deliberately (hell, a sub-normal IQ guy who is a HS dropout would know better.)  This is an especially malignant troll. 

I would suggest that we would be better off ignoring him. 

i-dog's picture

Read some of his previous posts, Bob. As a matter of fact, I've just been looking at a few to see where he is coming from ... he is no troll. In fact, he is one of the sharper tacks in the carpet here ... and this carpet has some pretty sharp tacks in it!

Don't let your fellow slaves turn you into a meek and mild-mannered reporter. There is nothing wrong with pride or arrogance ... ask my friends (both of them). :)

The meek will not inherit the earth -- they will only inherit the leftovers.

However, on the interpersonal skills scale, you are way ahead of him.

Bob's picture

I and others have tried to reason with him.  There's no reason to start his posts in a manner that derails debate, whether intentionally or not.  Sorry, but look what actually happens. 

i-dog's picture

Quite frankly, Bob, I take everyone on the merits of their arguments and reasoning -- rather than on how clever their avatar/handle is, or how well they spell, or how gracious they are. I guess I have lived in too many countries -- and speak too many languages [badly] -- to care much about grammatical errors or social differences. Save all that for cocktail parties ... this is Fight Club!

He is no more grating (to me) than "Gold, bitchez", "It's Bush's fault", "The Republicans will save us", Geopol's incoherent ramblings, or half of the dim-witted and "levelling" responses to this particular post. Indeed, his self-aggrandizing opening means that he has to put up better arguments than normal just to avoid being shot down in flames ... and he usually does.

I'm sure he can defend himself ... in his own inimitable style. I'm just trying to make a few points about how I feel about socialist "levelling" and ad hominem responses to well-reasoned posts, no matter how they are phrased.

MayIMommaDogFace2theBananaPatch's picture

self opt-out

150 IQ

LMAO.  Sure.


Ethics Gradient's picture

I went to Cambridge. I had a lovely day.

apberusdisvet's picture

The fact that anyone went to Harvard and has a 150 IQ actually is a negative these days.  Too many of these idiots have totally fucked up our country.

snowball777's picture

That's where I stopped reading.

I stopped at "Lord".


Hephasteus's picture

He starts every post with that.

Papa Boule's picture

Seems like if your IQ is that high and you're so well schooled you'd know us lower-IQ, lesser-schooled dumbasses ain't never gonna read that much text.

geoffb's picture

News flash: There are bread lines forming in a Wal-mart near you. You need to spend a lot more time reading the articles here before you stick your foot in your mouth. Whoops too late.



Ying-Yang's picture

Here's how these dudes rank:

147 Franklin D. Roosevelt (D) 132 Harry Truman (D) 122 Dwight D. Eisenhower (R) 174 John F. Kennedy (D) 126 Lyndon B. Johnson (D) 155 Richard M. Nixon (R) 121 Gerald Ford (R) 175 James E. Carter (D) 105 Ronald Reagan (R) 099 George HW Bush (R) 182 William J. Clinton (D) 091 George W. Bush (R)

and what else?

President George W. Bush is the very first President to hold a Masters Degree in Business Administration. Even better (or worse, depending on your perspective), his MBA is from Harvard Business School.

Wonder if you to can compare notes.....

Don't lead with your credentials.. let your content speak to that... just sayin.

Fish Gone Bad's picture

A common failing of truly smart people is to think that since they passed a test showing how smart they are, that they are smart about EVERYTHING.  This is exactly why intellectuals are not smart enough to get elected.

Successful gifted and talented individuals will generally let people know that while they do know a great deal, they do not know everything.  Having once suffered from the "I'm the smarted person in the room complex" myself (when I was a teenager), I have moved on to trying to actually understand and solve issues. 

Lord and Master's picture

Wait wait wait, time out, Im taking notes here...  you say "common failing... truly smart people" and then "not smart enough" and then-- wait wait im lost.... what is smart?

aerojet's picture

Interesting way to  begin a post on ZH--"I'm smart, so I'm right."


The thing is, a lot of smart people, including Ben Bernanke, are crashing and burning this time.

RockyRacoon's picture

I have an unmeasured IQ and have only seen pictures of Harvard, or any other college for that matter.  So, my meager intellect is obviously inadequate to debate, or even comment on, your exposition of the problem or its solution.  I do, however, know how to curb the excess use of parentheses by constructing sentences with adequate and proper clause construction, and punctuation.  My guess would be that your junking would have been somewhat less brutal had you omitted the first sentence.'s picture

i suspect your holding back your personal information for privacy reasons.

Lord and Master's picture

Thought itself is an efflorescence of parentheses, so homo sapiens, to the degree that they are allowed to exist and allowed to better themselves in the future, might want to consider greater use of them.  The same would go for the ellipsis (three dots) possibly ... i.e. as part of a more true and more 'human(e)' real-time recording and transmission of thought. 

I hear you on the junking-- and truth be told, I was going to add in to my first line the phrase "you can't eat gold," but saw the market going against me earlier and thought better of it.  I also didnt want G. Lira's comment total to be challenged by something so silly.  That said, I would just note that if a god walked the earth, he might not be able to get out of bed, if he didnt think he would be subject to enormous censure and ridicule the moment he left his door (or passed through his hovel's doorway/aperture).