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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hedgie's picture

This is not an awful post, but anyone who wants people to believe that he has an IQ of 150 ought to try a little harder to master the rules of grammar and punctuation.  Lord and Master's writing is also full of infelicities.  Evidently he slept through that required expository writing class.

Fish Gone Bad's picture

My dog once had a bad case of infelicities, so we went and got him some infelicity spray and that fixed him good. </humor>

RichardP's picture

The point of annonimity at ZeroHedge, as argued in the startup days, is so that arguments would be debated on their merits - not on any star-power (or lack of same) attached to the author of the argument.

I think Lord and Master is having some fun with that concept.  If we can focus on the quality of the argument written by annonymous, can we also focus on the quality of the argument when written by someone with claims to greatness?  It is, after all, the quality of the argument that should carry the day - regardless of the perceived stature (or lack of same) of the author.

Why would anyone believe that someone has an I.Q. of 150 and went to Harvard just because they said so?  I didn't pay any attention to the claims, since I have no way to verify them.  I just went to the meat of his argument to see if he made any sense.  I think mostly he didn't, so he must be smart and talking over my head.'s picture

how do I play into this anonymous thing on ZH, dickyP? maybe I should start lying and stretching the truth I have fun telling any one that might be interested in real life experiences. I got some, I like how they are brought to consciousness.

Buzz Fuzzel's picture

This stands as further evidence that a Harvard/Ivy League education education is not so much an education as it is an indoctrination.

Glass Steagall's picture

Single dad, three kids (6, 7, and 9). They will be okay as long as I'm around, but then what? WTF can they look forward to?

Geoff-UK's picture

A LOT of camping, farming, hunting, and fishing--in order to eat

Won't be so bad...

Pondmaster's picture

Funny , it started with little snippets of singular judges in Fla. for example , throwing out foreclosure cases , due to no clear title holder . Here and there it happened ( hat tip Market Ticker ). The ball moving slow. Now an explosion !! The bigger the fraud , the larger the damage . And all before elections !! This is super , does America NOW see they have been conned ? And the Feds MBS purchases , Ha ! Worthless paper until proven otherwise . The wise crooks and been crooked ( and of course the taxpayer will pay for that ) Wheres the money coming from to fix all this ? We are tapped , wiped and tired . US soverign default is close . D... greedy fools .     

hamurobby's picture

I dont believe for a minute any sheep will think of this negatively. The consensus will be that it is good for home prices (less foreclosures) and the economy (more free spending money instead of paying mortgages), and part of me believes the whole thing was created to do just that.

dussasr's picture

I disagree - this will be bad for home prices.  This won't prevent foreclosures.  It will merely delay them.  The home owner is still not paying the mortgage and they are so far behind a delay won't help them keep the house.

The empty homes in "foreclosure limbo land" will fall into disrepair, get broken into, filled with mold and generally drag down the whole neighborhood.  Then, when the foreclosure finally goes through the bank owned houses will be coming on the market in bad physical condition and with clouded title.  The net result will be lower prices. 

-Michelle-'s picture

I'm leaning to this one.  We have one stunning example in our neighborhood.  The stucco is literally falling off the front of this superbly-crafted 5 year-old home.

I shudder to think what the inside looks like after a Florida summer with no a/c.

MsCreant's picture

Sounds like a good place to do a "House of Horrors" this Halloween. Scare the kids and the adults.

MayIMommaDogFace2theBananaPatch's picture

All you'd have to do is put up a sign that says "You could live HERE" -- that'll scare the @#$% out of them.

aerojet's picture

The sooner home prices correct to whatever their natural level is, the sooner we can beging to truly recover.

hamurobby's picture


The very short term is what I meant.

Longer term, you are absolutely correct.


pan-the-ist's picture

It's called a tipping point, and when the government can no longer hide the effects of our debt from the collective consciousness there will be another tipping point.

Clinteastwood's picture

Hey watch out for that genetically modified popcorn!

Samsonov's picture

SWR, don't forget to hit the tipjar!

Overpowered By Funk's picture

It's the shit calling the fan black.

purple's picture

think cannibalistic piranas...

Pondmaster's picture

Well.. so much for QE II . That money will have to go to the failing invisible un-underwriters . I really love this . It is finally blowing apart . Maybe we will yet see prison time from the top to the bottom of those causing and allowing this mortgage mix , remix, re-re-remix again . Yeild chasing fools. Thanx Benny Boy ! May you be the first imprisoned . Execution by lethal Bubba injection would be better .

whatsinaname's picture

they dont need 90 days just 28 days and the elections will be past. Then everything can fail.

Rusty Shorts's picture

I'm a Brain Scientist, split neurons in my spare time, fucking eh.

Lower Class Elite's picture

Oh yeah?  Well I have a 214.7 IQ and I attended Harvard, Yale, Princeton, Oxford, and ECPI simultaneously, and I can recite "Atlas Shrugged" backwards in Aramaic from memory while solving differential equations and playing Bach's Ciaccona on a violin which, incidentally, I hand carved from a fragment of the original Ark of the Covenant...

-Michelle-'s picture

My top schools where I want to apply to are Oxford and the Sorbonne. But my safety's Harvard.

hedgeless_horseman's picture

I'm the top divorce lawyer for professional athletes, and I have a 7 inch cock.


Geoff-UK's picture

Don't +7 people who are making fun of you, douchebag.

You went to Gopher Crotch Community College, MS--and you know it.

Thomas's picture

There also is no road to kick it down nor is there a "leg to stand on".

Moonrajah's picture

The can is a known unknown. The leg, on the other hand, is the unknown known. And, lastly, the road is the unknown unknown. Combine them all together and... Ahh, fuck, we're all going down!

Problem Is's picture

Are you making fun of the way Krud-low is blabbering away like he just came from his cocaine dealer???

Moonrajah's picture

Actually, that's more of a wink to Dick 'Gung-ho' Cheney. On second thought, you can leave the 'Gung' part out.

And regarding Kudlow. Well, he did go to his dealer, but the dealer said to him "You see the shit I'm in. And I need it like I need an asshole on my elbow. So piss off, I've got bigger fish to fry". Therefore Kudlow is slowly strating to realise that all is not well in the land of the White Lines (c/o WallSt), and it got him worried.


jimijon's picture

Besides the fact that I have a higher IQ than Mr. Harvard along with going to a competing school...

I think you meant Donald Rumsfeld.



jimijon's picture

Besides the fact that I have a higher IQ than Mr. Harvard along with going to a competing school...

I think you meant Donald Rumsfeld.



jimijon's picture

Besides the fact that I have a higher IQ than Mr. Harvard along with going to a competing school...

I think you meant Donald Rumsfeld.



MayIMommaDogFace2theBananaPatch's picture

Does the competing school teach patience or how to avoid repeating yourself?  ;)

Yeah, that was Rummy.  I think he was trying to verbalize what he got out of "The Black Swan."  He destroyed the message so thoroughly he seemed to have confused himself.

Moonrajah's picture

My bad! That was Donald. sure.

I think I'll go and pour ash on my head now.

OldTrooper's picture

Just the other day he was blathering on about how everyone can see the recovery is well established and it's just a bunch of doom and gloomers that think otherwise.

StychoKiller's picture

Don't try to kick the can, that's impossible, rather realize that it's you that's being kicked down the road! :>D

Janice's picture

I was commenting about this yesterday.  It not only effects foreclosures, but homes where the assignment was never recorded, such as mine, but the notes are current.  It we pay our house off, who will file the satisfaction? 

Kali's picture

Heeeheeehee.  Haaaahaho!  Why should ANYONE pay their mortgage?  I would be asking this of the bank I pay to.