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Bank Of America In Complete Denial Over Foreclosure/Putback-Gate

Tyler Durden's picture





 

In an ironic twist of events, last night Bank of America's Chris Flanagan, head of MBS strategy penned an article titled: "Foreclosure Issues Pose Risks, Should Be Resolved With Time" in which the Bank of American proudly reports the following piece of supreme denial: "While that resolution should involve time, effort, and cost, we do not believe it will result in a major long–term disruption to the housing or mortgage markets...Additionally, the allocation of additional costs due to advancing and legal fees will have to worked out. We do believe that the tenets of securitization, MERS, extensive legal foundation that has been established over the last 30 years, and REMIC eligibility will stand." Well isn't it ironic, as Alanis would say... To think all this occurred when Bank of America was still just above it 15 month lows. After today's festivities, not so much. As for the tenets of, well, all those things that are supposed to stand, we are sure that is the case: after all would Moynihan wouldn't risk perjury if he was concerned that a multi-decade culture of perjury, fraud and lies could ever be overturned. The alternative of course would be jail time. And recall what happened to his securities-fraud committing predecessor. Regardless, here is the full MBS defense as presented by the bank with the most to lose when things finally get out of hand. Oddly enough, even this most KoolAided  of defenses admits that "the end result will likely be a further extension of foreclosure timelines." Which makes one wonder: just what gives the bank the confidence that it will be able to lift the moratorium within a week? And just what will happen to the firm if it is unable to sweep all these tens of billions in future losses under the rug.

Complete KoolAid, er, report:

Foreclosure Issues Pose Risks, Should Be Resolved With Time

Summary

Recently, some issues surrounding foreclosure sale proceedings have come to the forefront, leading several large banks to halt foreclosure sale proceedings in many states. The purpose of this note is twofold: to clear up some confusion on what exactly the issues at hand are and to bring some perspective to those issues. For instance, we note that the “foreclosure issue” that we are addressing here is separate from considerations surrounding potential bank loan repurchases. After the JPMorgan Chase earnings call, in which the company announced increased repurchase reserves, the two issues seem to have been muddied.

With respect to the issues surrounding foreclosure sales, while there are some outstanding risks, we think the issues that can be definitively addressed suggest a resolution could be possible over a matter of months. While that resolution should involve time, effort, and cost, we do not believe it will result in a major long–term disruption to the housing or mortgage markets.

Background

The issues surrounding foreclosure sale proceedings were initially brought to light on September 17, when GMAC/Ally halted evictions and REO sales in 23 judicial foreclosure states. Since that time, GMAC has extended their review to all 50 states, and four other large banks have halted foreclosure sales or launched internal reviews of their foreclosure processes: Bank of America has halted foreclosure sales in 50 states, JPMorgan Chase in 41 states, PNC in 23 states, and Litton is reviewing proceedings. Wells Fargo has stated that they are reviewing all pending foreclosures, but not halting the process and are confident their processes are robust. Attorneys General from all 50 states announced Wednesday that they have formed the Mortgage Foreclosure Multistate Group to review some of the practices around foreclosures proceedings.

The “foreclosure issues” being discussed at this point seem to encompass a few distinct problems, which we think it is useful to break down: robo-signers, MERS, and trust transfers.

The Robo-Signer Issue

While judicial foreclosure proceedings vary from state to state depending on different laws, many involve the presentation of an “affidavit of debt” before the court, which certifies that an employee of the mortgage servicer is familiar with the mortgage and borrower under question. Across several servicers burdened with an increasing number of foreclosures, there were employees who allegedly signed large numbers of affidavits without “personal knowledge” of the stated information. In addition, some affidavits were not notarized at the time of affidavit signing. These deficiencies created became a problem when brought before judges.

Importantly, however, although these deficiencies introduce risk, the issue does not seem to be insurmountable. We believe that the likelihood for widespread outright forgiveness of debt in cases where affidavits were signed or attested improperly is low. The details behind resolving cases such as these are not clear from a legal standpoint, but they seem likely to be, in part, a matter of rectifying the affidavit, issues of time, effort, and cost. Similar issues exist for fixing faulty foreclosure processes from the start; it may be possible to solve the robo-signer issue by staffing up teams or via other efforts. While more costly, and likely to delay foreclosure processes a few to several months, again, in our view, the issues do not seem to be insurmountable.

The MERS Issue

A second issue that has arisen questions the validity of MERS, an electronic registration system for mortgages meant to simplify the process of transferring mortgage ownership. In the past, there have been court rulings in support of the MERS model, e.g. that holding title for the benefit of another party was valid or that foreclosure initiation in the name of MERS was valid. There have also been cases in which the model was not supported (e.g. Landmark v. Kessler in Kansas), but in most instances it seems those efforts have failed or been overturned. In the event the matters challenging MERS succeed, resolution seems to be a practical issue; while the process is unclear at this point, it may simply be a matter of assigning the mortgage from MERS to the foreclosing party in cases where foreclosure in the name of MERS is ruled against or of simply foreclosing in the name of the bank instead of in the name of MERS. There has been at least one case (U.S. Bank v. Ibanez) in Massachusetts, which calls into question the separation of legal and beneficial title holding, similar to that used in the MERS model. That case is currently under appeal.

In addition, there also seems to be some misinformation about the MERS system itself and whether some banks are utilizing it or not. MERS put out a press release yesterday to address some of these concerns, citing the fact that Chase registers their correspondent loans in MERS, but does not register their retail loans.

The Trust Transfer Issue

A third issue that has arisen concerns the validity of the trust as the owner of the mortgage for loans that have been securitized. When the  note is transferred to a trust, it is endorsed “in blank”, meaning that the owner of the note is not assigned. The note is only endorsed to the trustee or servicer on behalf of the trust if they need to institute foreclosure proceedings. Our understanding is that this is a common practice when notes are transferred to a trust. With respect to physical documents, those are delivered and held by the designated custodian for the trust. Both the seller and the custodian should have verified the existence and validity of the notes upon transfer. If there were any deficiencies, the custodian should have notified the seller to remedy any deficiencies or if they could not be remedied, put the loan back to the seller. The transfer of the notes is governed by the loan purchase agreement which also provides for evidence of ownership of the loans by the trust. Also, when the notes are transferred, the servicer records the ownership of the loans with MERS.

The Risks

The primary risk in our view is not that the affidavits issue remains unresolved, but how much time and effort the resolution will take and how far the scope of investigations expands beyond this issue. As mentioned, the Attorneys General from each state have formed a task force to look into the affidavit matter to determine if they were processed correctly under state laws. However, given that AGs from non-judicial states have joined the task force, the scope of their investigation may expand beyond this issue and lengthen the timeframe for resolution. Complicating matters is that servicers have to abide by individual state regulations with respect to foreclosure processing.

In the end, we believe that the vast majority of foreclosures will stand assuming that the actions were taken against borrowers who were delinquent. However, the end result will likely be a further extension of foreclosure timelines. We believe that the incremental increase in loss severity should be minimal if these issues can be resolved in the next 3-6 months. For servicers this means additional staffing requirements as well as increased costs. With respect to investors, headline risk will remain the predominant near term concern. Additionally, the allocation of additional costs due to advancing and legal fees will have to worked out. We do believe that the tenets of securitization, MERS, extensive legal foundation that has been established over the last 30 years, and REMIC eligibility will stand.

In other words: all shall be well, and all manner of thing shall be well.

 

 


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Tue, 10/19/2010 - 22:37 | Link to Comment lsbumblebee
lsbumblebee's picture

Dick Bove not in denial but under heavy sedation:

"Goldman Sachs and Bank of America are both buys for investors, though BofA faces more difficulties because of weakness in its consumer divisions, said Dick Bove, analyst at Rochdale Securities."

http://www.cnbc.com/id/39739758

Wed, 10/20/2010 - 02:40 | Link to Comment MisterMousePotato
MisterMousePotato's picture

I think everyone is missing the most interesting angle about this whole mess; namely, the problem (or opportunity, depending on one's point of view) of securitization of the note, or rather the lack thereof. The United States Bankruptcy Court for the Eastern District of California issued a ruling dated May 20, 2010 in the matter of In Re: Walker, Case No. 10-21656-E-11, which held, in pertinent part, that "any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law." In other words, the two (the mortgage and the note) have to be kept together for the security to be valid. The note, of course, is freely assignable, but left unsaid is what happens to the security when this is done. As a matter of 'hornbook' law, if I recall correctly, the mortgage/deed of trust is void, but it's been a looong time since I took Deeds and Trusts. I am not so sure that this is the case in real life. It might be, but some desultory internet research did not answer the question to my satisfaction. But, this case (as well as a smattering of others on the subject) begs the question: Does assigning the note on and on to ultimately be a part of this mbs and that cdo without a corresponding assignment of the trust deed (which I gather was never done in any case) thereby destroy the security interest in the property? If so, well, yeah, sure, someone (who knows who, but someone) is still owed money, but that person is no longer a secured creditor; instead, they are just another unsecured creditor. Now here's where it gets interesting ... suppose I'm right. That means I walk into bankruptcy court and, courtesy of the homestead exemption, I own the FIRST $75k-$150k (depending) of equity in the home, not the last, irrespective of whether the house is underwater, or would otherwise be subject to the claims of the mortgage holder. Interesting thought. Instead of leaving bankruptcy court with just your debts discharged, you leave with your debts discharged and clear ownership of a house that you'll probably have to sell, but you've got dibs on the first $100k or so from the sale. You won't have to sell it if it's worth less than $75k-$150k (depending), but, in California, that's not too likely. Still, you can take your $100k and move to Nebraska and start all over with a house bought with cash.

Wed, 10/20/2010 - 02:59 | Link to Comment MisterMousePotato
MisterMousePotato's picture

Here's the thing, from looking at MERS's website, I can see that my note and my deed of trust have taken different paths (Countrywide refinance> MERS> Fannie or Freddie [I forget]> BAC servicing ... the usual). Well, an assumption, I suppose, but a safe one. Anyway, because they have been separated, the current owner of the beneficial interest in the deed of trust is powerless under California law to assign their interest to anyone by virtue of their lack of "ownership of the underlying note," which has been assigned on and on and on and on. So they cannot get their interest in the deed of trust to the owner(s) of the note. Can the owners of the note get their interest(s) back to the owner of the beneficial interest in the deed of trust? And by doing so, even assuming that it is practicable and or possible (I guess we would need Blackrock's and PIMCO's cooperation now, too?), does that somehow 'reassemble' the note/deed relationship? C'mon ... someone's gotta know the answer to this?!?

Wed, 10/20/2010 - 06:06 | Link to Comment Careless Whisper
Careless Whisper's picture

high courts in four states have ruled that mers does not have the right to assign the note. so, when mers has the mortgage and a bank or trust has the note, there is a big problem because mers thinks it can assign the mortgage and note, and it can't (assign the note).

http://www.how2fightforeclosure.com/2010/09/oregon-federal-bankruptcy-co...

 

Wed, 10/20/2010 - 12:19 | Link to Comment Ripped Chunk
Ripped Chunk's picture

http://www.youtube.com/watch?v=g2bju39fTTI&feature=player_embedded

The new unregulated fee game for the banksters: buying delinquint property tax certs. then harassing the obligor with illegal collection actions and piling on fees.

Wed, 10/20/2010 - 09:45 | Link to Comment goldsaver
goldsaver's picture

How did you research your mortgage in MERS?

Wed, 10/20/2010 - 12:30 | Link to Comment MisterMousePotato
MisterMousePotato's picture

https://www.mers-servicerid.org/sis/

Make sure you have javascript turned on.

Wed, 10/20/2010 - 08:23 | Link to Comment Just_Another_User
Just_Another_User's picture

When asked to comment on Bove's statements, Jim Rogers said... "Let Mr. Bove buy it!"

Wed, 10/20/2010 - 08:41 | Link to Comment fallst
fallst's picture

BOA = AIG 2010?

 

Patsy, Fall Guy, Mark?

 

Did Paulson pressure Ken Lewis to buy CountryWide?

 

Ken Lewis is NTS (not that stupid)

 

So GS would be last man standing?

Tue, 10/19/2010 - 22:37 | Link to Comment Timmay
Timmay's picture

Smoke meet Fire. Fire, Smoke.

Tue, 10/19/2010 - 22:39 | Link to Comment frankTHE COIN
frankTHE COIN's picture

This is like The Monty Python Moynihan Hour. Its so hard to say goodbye to yesterday.

Tue, 10/19/2010 - 22:44 | Link to Comment Bob
Bob's picture

It's like seeing and hearing Nixon saying "I am not a crook" for the first time.  Deja vu, baby. 

But eerily calm in tone, sounds like benzodiazapines. 

Tue, 10/19/2010 - 22:41 | Link to Comment Atomizer
Atomizer's picture

How many customers will close their banking account based on the BAC CNBS reporting this morning?

 

Tue, 10/19/2010 - 22:51 | Link to Comment CPL
CPL's picture

Watching this all day, and yup, two words did come to mind.

 

Bank run.

Wed, 10/20/2010 - 00:53 | Link to Comment Triggernometry
Triggernometry's picture

My account with BAC will be closed by noon.

Wed, 10/20/2010 - 08:39 | Link to Comment snowball777
snowball777's picture

Hey and only two years too late.

Wed, 10/20/2010 - 09:03 | Link to Comment centerline
centerline's picture

Same thought crossed my mind last night.  If not closing accounts, maybe just pulling some big chunks of cash out - which would still hurt the deposit base.

Tue, 10/19/2010 - 22:43 | Link to Comment Jim in MN
Jim in MN's picture

So the banks believe that the states will be put firmly under the boot of the Feds and their digipals in New York.

No.....tried to site any interstate transmission lines lately?  Tried to tell states how to license their lawyers, teachers or dogcatchers?

Tried to tell the Supremes that interstate commerce requires them to end centuries of settled state jurisdictional practices?

Yeah.  Write another memo, see if it helps 'resolve' things.

Meanwhile, prepare to take back a world's worth of MBS trash.  That will 'resolve' things too.

Tue, 10/19/2010 - 22:43 | Link to Comment williambanzai7
williambanzai7's picture

Tue, 10/19/2010 - 22:47 | Link to Comment John McCloy
John McCloy's picture

William please. When I was 10 years old I watched this mini-series on TV with my father and I could not take a shower for 2 weeks..Why show this now when I am about to go to sleep?

  "We all float down here bitches"

Tue, 10/19/2010 - 22:48 | Link to Comment Atomizer
Atomizer's picture

You made my evening complete. Still laughing. Thanks WB7

Tue, 10/19/2010 - 22:59 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Is that Leo ?

Put a set of nutz in his mouth Lol' :-P

Tue, 10/19/2010 - 23:05 | Link to Comment williambanzai7
williambanzai7's picture

There is no solar power down there ;-)

Tue, 10/19/2010 - 23:35 | Link to Comment The Real Fake E...
The Real Fake Economy's picture

lmao!  oh man, i'm in fucking tears crying

Wed, 10/20/2010 - 00:10 | Link to Comment fudstampz
fudstampz's picture

a banker in hiding after the collapse, circa 2011

Wed, 10/20/2010 - 00:56 | Link to Comment Cammy Le Flage
Cammy Le Flage's picture

Cookies.  cookie monster william....   chocolate chip.

Wed, 10/20/2010 - 01:26 | Link to Comment Calculated_Risk
Calculated_Risk's picture

I must say, you are on a roll today..

Wed, 10/20/2010 - 04:22 | Link to Comment williambanzai7
williambanzai7's picture

Tnx everyone, keep your spirits up!

Wed, 10/20/2010 - 07:44 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Wait, isn't that storm drain in Dallas ?!?!?!

Tue, 10/19/2010 - 22:47 | Link to Comment Charles Mackay
Charles Mackay's picture

Don't see this mentioned at ZH today, but REMICs should follow specific rules to be eligible for special tax treatment.  At least 95% of the mortgages held must, to over-simplify, be foreclosable at the present time - if necessary.

 

The implication of a 'put back' is that the REMIC's securitization is defective, and therefore it follows that 95% of the mortgages may not be foreclosable.  Therefore the REMIC gets only a limited tax break, and the REMICs themselves itself, well, may owe billions in taxes.

 

I suppose if the mortgages are actually put back and the REMIC liquidated, the taxes may not come due before the Feds show up.  But then again, don't count on it.  So there is some extra incentive for B of A to settle - that is if they have enough capital to settle.

 

 

Tue, 10/19/2010 - 22:44 | Link to Comment tony bonn
tony bonn's picture

i might hate asshole of america more than golman sucks....i would love to see both squids broken up.

Tue, 10/19/2010 - 22:44 | Link to Comment RobotTrader
RobotTrader's picture

Now all we need is Meredith Whitney and Nouriel Roubini to come on CNBC in the morning and issue massive downgrades and warnings on the sector.

But that won't happen.

In fact, I'm sure that both are under armed guards as we speak, quarantined from the media.

I stand by my prediction.

Moynihan and Desoer will be gone by Christmas.

Unfortunately, they will both receive lavish exit packages and will never have to work again.

Tue, 10/19/2010 - 22:55 | Link to Comment CPL
CPL's picture

We have their names and photo's.  Collect names for the new book of the dead.

Tue, 10/19/2010 - 23:19 | Link to Comment TemporalFlashback
TemporalFlashback's picture

Is that a post-op picture of Barb?

Tue, 10/19/2010 - 23:41 | Link to Comment williambanzai7
williambanzai7's picture

These two have never heard the words Banzai7 yet...

Wed, 10/20/2010 - 00:30 | Link to Comment Johnny Yuma
Johnny Yuma's picture

WB7, is there any way you could look to morph Brian Moynihan into Roger Lattimer (real name = Bradley Whitford) from Revenge of the Nerds II? They were clearly separated at birth. BofA = greek council? Lol!

Wed, 10/20/2010 - 02:08 | Link to Comment fuu
fuu's picture

Seven seasons of West Wing as well.

Wed, 10/20/2010 - 04:16 | Link to Comment williambanzai7
williambanzai7's picture

Yes, I know exactly who you are talking about!

Wed, 10/20/2010 - 00:17 | Link to Comment Problem Is
Problem Is's picture

"Moynihan and Desoer will be gone by Christmas."

Yep. Moynihan has that constipated "Will I get my bonus before I am ousted?" look on his face...

Back to you WillB7...

Wed, 10/20/2010 - 05:26 | Link to Comment TooBearish
TooBearish's picture

Moy dont have the poker face for this buz - when he lies is just so clear he's sprewing BS and he shows it - gone!

Tue, 10/19/2010 - 22:44 | Link to Comment John McCloy
John McCloy's picture

"While that resolution should involve time, effort, and cost, we do not believe it will result in a major long–term disruption to the housing or mortgage markets"

There is the answer you seek for everything that has occured over the past 18 months. Either the banks and the Fed are all fucking crazy and believe these homes will return to their prior levels or they are lying.

  If record low mortgage rates, ZIRP, record stock rally for the time interval on low volume, falling home prices cannot revive a bubble over this time frame then why on earth do they not understand the core of the issue for why it is not occuring.

  • Home prices were entirely too expensive
  • Those home prices were the result of MILLIONS OF FALSE PRICES THAT RESULTED FROM NOT VERIFIABLE INCOME MORTGAGES
  • The American economy was finally reaching the service sector pinnacle
  • Record home flippers buying homes at absurd prices with the hopes of passing them off for a quick profit
  • Credit scores were fairly intact and had not undergone the deluge of default we have just seen
  • 10 Trillion dollars was lost in the 2008 collapse..that is decades of savings and it cannot be recreated with ponzi magic. It takes hard work and savings
  • Wall Street was raking in record profits along with the mortgage servicers which were the result of securitizing unicorn assets in an environment that will never occur again so much as the Fed tries. 
  • The jobs are gone permanently and will not exist again until American begins to produce amongst itself and consume amongst itself.

 And in closing why would you want to recreate a scenario rife with fraud the proved unsustainable. Now how are these prices going to return now that we have a record level in Students with massive debt who cannot attain jobs and a shadow inventory that will drive prices down further endangering holders of HELOC loans?

Tue, 10/19/2010 - 22:53 | Link to Comment geminiRX
geminiRX's picture

You should do a coast to coast tour about this in Canada. Our population think "it's different here"

Tue, 10/19/2010 - 23:12 | Link to Comment CPL
CPL's picture

Our fellow countrymen in Canada are a lost cause.  Most look at the exchange rate and make a determination that they are smarter/better than our cousins to the south (worldwide in some cases, goody two shoes horseshit).

 

Fact is if our cousins sink, we're on the same boat in a different cabin.

 

Seriously though if you are in a city.  Leave as soon as possible.  Toronto is in big trouble.  Jamacians and the Muslims will burn the place down.  Vancouver, Triads/Tongs and the muslims will burn the place down.  Montreal, Haitians and Muslims will burn the place down.  Winnipeg already is native to the core and it plays a good fiddle but booze is something some cultures should avoid altogether.  It's been running around the same murder rate as DC and highest car theft in the world.  It's a dump.  Well meaning leaders, shitty population.

 

Move to a place with a well and at least 100km from the city.  Lots of cheap places.  While the Canuck cities will collapse into a shit storm, it won't last for long.  Most of the infrastructure that is working right now is kept running on a shoestring to cover pensions (reason why every second week you hear of "boil water" warnings in practically every major city in Canada).  All it would take is a bad water purification table and the populations will be taken care of because our hospitals act as overflow from the old age homes.

 

Bright future eh?

Tue, 10/19/2010 - 23:32 | Link to Comment bankonzhongguo
bankonzhongguo's picture

Saw an old friend, Yoram (East) Hamizrachi, just passed away when that heavenly body flew by the earth.  (Thanks Canadian health care.) I'd say the Winnipeg community better prepare for a far colder Winter for the next few years.  Time to take Yoram's Otter back up to Churchill to ride this one out.

Tue, 10/19/2010 - 23:47 | Link to Comment CPL
CPL's picture

I'm sure Yoram will be pleased in spirit.  Churchill is pretty country.  No better place for a fighter to claim home.  The norse gods that walk the place should welcome him to their table in honour regardless of religon.

Tue, 10/19/2010 - 23:57 | Link to Comment CPL
CPL's picture

And yes even the Ottawa Valley Irish know of Yoram.  He's helped out the Irish before.  I promise to raise a drink and two coppers for the ferryman for him.  My dad met him on occasion.  Mentioned that before he met him he thought he was meeting a Japanese guy..or more specifically "nip".

He was surprised when some tank of a white guy showed up.

Wed, 10/20/2010 - 00:23 | Link to Comment Problem Is
Problem Is's picture

"Our fellow countrymen in Canada are a lost cause."

A Constitutional Monarchy and cult of personality over those inbred, idiotic, parasitical Royals will do that...

They'll lay down and take it like Brits taking Bankster imposed austerity...

Come on Quebecers...
Put a stop to that shit...

Tue, 10/19/2010 - 22:45 | Link to Comment George Costanza
George Costanza's picture

There is one big difference between now and 2007.  The public is more informed and will not "do nothing" if the bailouts continue. They will vote out the incumbents, and the politicians do care about that.   Messages will be sent in two weeks.  Then again, in two years.
If the government does not get in line... social unrest (see France)

Tue, 10/19/2010 - 22:48 | Link to Comment Jim in MN
Jim in MN's picture

Bank of America, meet 'shrinkage'.

Shrinkage, meet BoA.

Tue, 10/19/2010 - 22:48 | Link to Comment williambanzai7
williambanzai7's picture

Yes, now they know that a CDO is not the same as COD.

Wed, 10/20/2010 - 00:27 | Link to Comment Problem Is
Problem Is's picture

What fuck-tard junked will?
It was an excellent analogy...

Wed, 10/20/2010 - 04:14 | Link to Comment williambanzai7
williambanzai7's picture

It was Brian Moynahan, and Charlie Munger.

Wed, 10/20/2010 - 07:50 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

More like DOA ...

Tue, 10/19/2010 - 23:23 | Link to Comment CPL
CPL's picture

Ummm, you are very much mistaken.

95% of you will just ignore it. Out of the 5% Maybe less than 1% will be willing to fight.

In france they strike every year for fucks sake. They strike because it isn't sunny enough.

EVERY

FUCKING

YEAR

A french man striking is as rare as broken glass in a new jersey parking lot. You see in France they get paid THE EXACT SAME AMOUNT ON STRIKE versus if they are actually at work.

The french get 8 weeks off a year, paid. At the end of September they strike until nov 1st. I swear I see one more fucking check out the french post, I'll buy the idiot stick a fucking plane ticket and tell them to stay in europe for two years and find out what the fuck is actually up versus the watered down communist horse shit of "the revolution coming".

The revolution won't be strikes. It will be a bloody mess.

Tue, 10/19/2010 - 22:49 | Link to Comment Milestones
Milestones's picture

My golly, if every thing is just so all spiffy clean, we had all best take our lollipops and have some puppydog dreams.

Where is my barf bag.     Milestones

Tue, 10/19/2010 - 22:56 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Go read Leo's crap up top, hes been hitting the bong hard.

Tue, 10/19/2010 - 22:50 | Link to Comment Mitchman
Mitchman's picture

This memorandum is incredibly superficial and seems to have been put out as a "hand holding" stop gap measure out to clients in a big hurry.  I can't see GS ever putting out a piece of crap like this.

Tue, 10/19/2010 - 22:51 | Link to Comment BenFranklinJr
BenFranklinJr's picture

" Which makes one wonder: just what gives the bank the confidence that it will be able to lift the moratorium within a week?"

 

An announcement from the Govt of some sort of legislative or executive fix? That would certainly give them the confidence to say this today while the shit storm rages around them.

Tue, 10/19/2010 - 22:52 | Link to Comment snowball777
snowball777's picture

You know. It's 'bad', but it's not 'systemic' bad...

Oh please don't break us up just because we're a bunch of certifiably insane, greedy assholes who can't be expected to do our jobs though we can break into your house on a humbug with little more than an "oops, our bad", if our documentation happens to have been fabricated from whole cloth.

Keep it up, Bank of Lynching Countrywide, it just adds to the sweetness of your destruction.

Tue, 10/19/2010 - 22:53 | Link to Comment LostWages
LostWages's picture

What a co-inky dink that Billy the PIMPco goes on margin to buy up this trash just in time to join the NY FED in the lawsuit.  Throw that asshole in jail for trading on inside information.

A total bullshit farce.

Tue, 10/19/2010 - 23:02 | Link to Comment Bob
Bob's picture

Total insider trading.  No get of jail card, either.  The Pimp appears to believe that he gets off by setting up the other crook.  And gets to keep all the cash on the deal gone bad plus winnings on all his side bets. 

Tue, 10/19/2010 - 22:56 | Link to Comment Timmay
Timmay's picture

WHERE IS THE TEA PARTY ON ALL OF THIS???

 

Crickets meet the Tea Party. Tea Party? Crickets.

Tue, 10/19/2010 - 23:13 | Link to Comment Atomizer
Atomizer's picture

The general public is aware of fraud. Class division doesn't work any more.

That should bring crickets back to you.

Tag, your it.

Tue, 10/19/2010 - 23:24 | Link to Comment i-dog
i-dog's picture

My guess is that "real" (ie. sincerely deluded, as distinct from Rep/Dem wolves in Tea Party clothing) Tea Partiers will gain a 1% voting block in the new Congress. That is, about 5 reps out of 535.

Even with that 'massive' victory, they won't have a clue what to do and won't have a chance in hell of achieving any relevant change. They'll be fighing for immigration restrictions and increased warmongering as the 'solution' to a systemic financial collapse.

The solution, IMHO, lies with the constitutional powers of the states and dismantling Washington altogether.

Wed, 10/20/2010 - 00:01 | Link to Comment minus dog
minus dog's picture

I find it amusing that people bitching about tea party types usually then go on to bitch about the same things as the tea party types.

Wed, 10/20/2010 - 00:13 | Link to Comment snowball777
snowball777's picture

The TeaPotDomeExpress:

- never bring up the MIC as a reason they're Taxed Enough Already.

- never protest on Wall St (though they supposedly are upset about bailouts or something)

- are a PAC like any other (moneybombs to get money out of politics? uh huh)

- smell like astroturf (Dick Armey's Army)

- have their heads up their asses on immigration (as if walls don't require taxes to get built)

- back candidates that are apparently clueless on fundamental (pun!) constitutional law

..but they do occasionally bleat things that make libertarians sit up and say, "huh? wha?"

 

Let's just say you can agree on the problems while disagreeing on the solutions.

 

Wed, 10/20/2010 - 00:06 | Link to Comment snowball777
snowball777's picture

Ah, but which side of the aisle will those 5 seats come from?

Wed, 10/20/2010 - 07:05 | Link to Comment i-dog
i-dog's picture

I think that is the least of your problems!

Politico: Republicans put 99 Democrat-held House seats in danger

Wed, 10/20/2010 - 00:22 | Link to Comment I am a Man I am...
I am a Man I am Forty's picture

I predict all the states are going to secede from washington/federal government because it has become too much of a financial burden, and then everyone is going to leave new york because ny no longer has daddy warbucks (DC) as an income stream and it is going to be something like this...

http://www.youtube.com/watch?v=ckvDo2JHB7o

Wed, 10/20/2010 - 00:00 | Link to Comment snowball777
snowball777's picture

Probably yelling at a cripple or annoying the clientele of an Appleby's somewhere.

Tue, 10/19/2010 - 22:57 | Link to Comment monopoly
monopoly's picture

This is all becoming surreal. How can they continue to get away with this fraud and deceit and sleep at night.

Some think this is no big deal. I think it IS the deal.

Tue, 10/19/2010 - 23:00 | Link to Comment duo
duo's picture

because "finance" and "fraud" are synonyminous.

 

Tue, 10/19/2010 - 23:09 | Link to Comment calltoaccount
calltoaccount's picture

"The Foreclosure Crisis: Punchline to a Michael Lewis Joke from 2008? Posted on 18 October 2010 by Patrick Byrne “...In late 2008 Michael Lewis wrote a Portfolio article (“The End“) weaving together a story line concerning a then-recent lunch between himself, Michael Lewis, and John Guttfreund of Salomon Brothers and Liar’s Poker fame (thus, arguably, nemeses), and another concerning Steve Eisman, a money manager who bet heavily against the MBS market. The climax of this latter story runs as follows: “That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. ‘They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,’ Eisman says. ‘They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?’” ...If Lewis was right, banks packaging up mortgages did not just do a sloppy job in the packaging. They were also selling those packages several times over. Which, to readers of DeepCapture.com, may sound familiar. If this is really what is happening down below, how would things appear on the surface? Like this: a bunch of lawyers representing the interests of owners of these “mortgage”-backed securities would be going into court trying to foreclose on homes, but not be able to establish clear chain of title. Which is precisely what is happening. That’s not the same as saying it is why it is happening. However, if Lewis’ story about Steve Eisman is correct, then eventually this would have to happen. Whatever the cause (or amalgam of causes) of this foreclosure crisis, its effects could ripple into our financial system in a way that some say will become catastrophic (e.g., “The Real Danger from the Foreclosure Crisis“, George Washington, Zerohedge). Banks which believe that millions of people owe them money suddenly realizing that no specific people owe them money while millions of borrowers suddenly realize they don’t owe money to any specific bank; banks suspend foreclosures, but people thrown out of their homes by banks who lacked chain of title form classes to recover what is rightfully theirs; title insurance becomes impossible on a non-negligible fraction of homes. Etc…" http://www.deepcapture.com/is-the-foreclosure-crisis-the-punchline-to-a- michael-lewis-joke-from-2008/

Wed, 10/20/2010 - 03:41 | Link to Comment jeff montanye
jeff montanye's picture

thank you so much.  this is when i saw the real difference between (and this may be the wrong acronyms still) the original mbs and the derivatives based cdo:  one actually can at least pretend to have property to foreclose upon; the latter not so much.  the money line for me:  "that's why the losses are so much bigger than the loans."  

Wed, 10/20/2010 - 03:44 | Link to Comment StychoKiller
StychoKiller's picture

Sick joke perhaps, and NOWHERE NEAR FUNNY!  Wait till those CDS's start to activate, then the fun begins.

Wed, 10/20/2010 - 07:53 | Link to Comment New_Meat
New_Meat's picture

Who junked this?  In afterword to "Big Short" as well. - Ned

Tue, 10/19/2010 - 23:03 | Link to Comment Atomizer
Atomizer's picture

Roll, roll, roll your CDO

and create a new revenue stream

Merrily, merrily, merrily, merrily,

Life is but a ponzi scheme

Wed, 10/20/2010 - 01:46 | Link to Comment Oh regional Indian
Oh regional Indian's picture

:-) That is funny Atomizer.

ORI

Tue, 10/19/2010 - 23:09 | Link to Comment working class dog
working class dog's picture

The issue is all the banks took tarp money, and the fed is gifting them their profits with borrowing low interest rate and lending high interest rate, never mind all the dirty deeds we don't know about yet.

THIS MONEY IS TAXPAYER MONEY, ALL OF IT.

Tell the bondholders to go to hell, and claw back the bonuses from pre-bear sterns, close down the banks via a trust like the s&l 1990s deal. Throw Hank the Stank Paulsen in Jail, ban Greenspan from the financial markets, the bullshit media circle jerk is all about getting more of our tax money. Put a stop to it financial oversight committee if you have any sack left?

 

Tue, 10/19/2010 - 23:14 | Link to Comment tom a taxpayer
tom a taxpayer's picture

The FRBNY and PIMCO, two members of the TBTF fraternity, turning on BofA, another member of the fraternity, is suspicious. The FRBNY knows the yeoman's work BofA did, willingly and unwillingly, to keep Countrywide, Merrill, etc from sinking Wall Street/Fed/Treasury. There are so many skeletons in the closet that BofA could expose. Must be something extraordinary for the FRBNY to turn on a big TBTF bank. Having the FRBNY turn on BofA seems like a mother devouring her child. Something is rotten on Maiden Lane.

Tue, 10/19/2010 - 23:57 | Link to Comment High Plains Drifter
High Plains Drifter's picture

BoA was always a outlier to my way of thinking. They were in the fraternity but at the same time they still tried to create a air of independence. One way they did this was to have their headquarters in Charlotte.  This attitude of the "dixie mafia" as the leadership of BoA has been called, pissed off the pointy headed New York power brokers. In a way, the crushing of this bank, metaphorically , is symbolic of the crushing of the United States by the money interest.  Powerful white men must be destroyed and so it is now happening. It is symbolism of the power shift that is on-going. Also the destruction of this bank has ramifications worldwide since this is the last of the big United States banks to fall, is it not?  Citibank not withstanding at this point since they are a walking ghost of their former selves anyway.

Wed, 10/20/2010 - 00:10 | Link to Comment iconoclast63
iconoclast63's picture

I met Hugh McColl once. I was in a high class bar playing pool and winning and this dapper man with white hair came up and asked if I wanted to play him for money, he extended a $100 bill and I accepted the challenge. 

I remember that he was surrounded by 4-5 beautiful young women, concubines I assumed.

He won the game and when I tried to pay up he turned away ... one of his women approached me and said "Do you know who he is? He OWNS Bank of America!!" I replied that I knew exactly who he was and that he didn't OWN Bank of America he was just the C.E.O. and shoved the money into his breast pocket anyway.

I can honestly say that I played a game of pool with a member of the Trilateral Commission.

It may not be relevant, but it's a great story.

 

Wed, 10/20/2010 - 01:21 | Link to Comment tom a taxpayer
tom a taxpayer's picture

Did you have a chance to get a close look at the "4-5 beautiful young women, concubines I assumed." Just wondering if the concubines were Wall Street whores "Allie tally-up-my-alley" (Alan Greenspan), "Robin I'm-bobbin-for-u" (Robert Rubin), "Henrietta honk-if-you-need-me" (Hank your-Treasured-Secretary Paulson); "Benecia let-me-grease-ya" (Ben Bernanke); and "Timmyeeeeeeeeesha-i'm-your-geisha" (Timothy Geithner). 

Tue, 10/19/2010 - 23:23 | Link to Comment Hustler Elite
Hustler Elite's picture

This begs the question, if this is the course that is to be followed with BofA what about JPM & Wells?

Those two are indeed sacred cows but surely the question of why force only BofA to buy back everything and not even mention those two who albeit hold less but still billions worth of MBS will be asked.

Tue, 10/19/2010 - 23:23 | Link to Comment Bankster T Cubed
Bankster T Cubed's picture

fuckers

Tue, 10/19/2010 - 23:29 | Link to Comment Rob Jones
Rob Jones's picture

This is your pilot speaking. We are not going to crash. It is true that one engine is on fire and smoke is coming out of the other one. But this is nothing to worry about. We are also running a bit low on fuel and our navigation equipment is not working as well as we would like. These are not major problems. We understand things like this happen all the time. And even though the flight controls are frozen, we are currently on a level flight path and there is plenty of time to fix them.

So let me repeat: WE ARE NOT GOING TO CRASH! Please enjoy the rest of your flight.

Wed, 10/20/2010 - 19:36 | Link to Comment Fed Supporter
Fed Supporter's picture

Chris Flanagan said?

"Our understanding is that this is a common practice when notes are transferred to a trust." 

I love it when analysts are smarter than law professors.  Also glad this stain thinks he is an expert on state land laws.

See today:

 


Foreclosure Crisis Triggers Debate on Role of Mortgage Registry

http://www.bloomberg.com/news/2010-10-19/u-s-electronic-mortgage-registry-comes-under-fire-in-foreclosure-crisis.html  ------------------------------------------------- Excerpts: -------------------------------------------------------------------------- “The problem with MERS is it takes a public function and puts it into a private entity that doesn’t seem to have any clear accountability,” said Alan White, a law professor at Valparaiso University in Indiana. “And it does it on legal grounds that seem tenuous.”

Fees

"A big selling point for the company is its cost savings. It charges $6.95 for every loan registered, Lejarde said. With an average cost of about $40 for filing a mortgage assignment with local counties, MERS has saved the industry about $2.4 billion, Merscorp Chief Executive Officer R.K. Arnold said in a September 2009 deposition in an Alabama suit."

"The company is accused in two whistleblower suits filed this year of cheating California and Nevada counties out of millions of dollars in recording fees. In 2006, New York State’s highest court told one county it had to record MERS mortgages against its wishes. The county said MERS cost it $1 million a year."

 

"In a March 2009 ruling, U.S. Bankruptcy Judge Linda B. Riegle in Las Vegas decided MERS wasn’t a true beneficiary under a trust deed.

“If it doesn’t walk like a duck, talk like a duck and quack like a duck, then it’s not a duck,” she wrote.

Consumer advocates and bankruptcy attorneys who criticize MERS say it has no right to foreclose when it doesn’t hold both the promissory note and the security instrument -- the mortgage or trust deed. The U.S. Supreme Court ruled in 1872 that a mortgage has no separate existence from the note, Peterson wrote."

See also:


MULTIPLE TRANCHE ASSIGNMENTS; PARTIAL CROSS-COLLATERALIZATIONS; FRACTIONALIZED INSURANCE: THE WEB BECOMES THICKER AND THICKER, AND WE ARE ONLY SCRATCHING THE SURFACE

OCTOBER 19, 2010

October 19, 2010

FDN’s network now has the benefit of recently acquiring computerized mortgage loan investigation and securitized mortgage loan trust software and special computer terminals which can track a mortgage loan’s history including its assignment to specific tranches inside of a trust. The information being revealed by this unique research tool is both fascinating and disturbing.

A sample of what our researchers are finding: loans which were assigned to multiple tranches within one securitized mortgage loan trust; the assignment of the loan to different trusts; the divison of the loan into parts across tranches, and more. What this means to foreclosure defense discovery is nothing short of monumental.

If a loan is assigned to different tranches and/or different trusts, with each tranche or trust having its own series of credit enhancements and insurances, this means the possibility of multiple levels of insurance for the same loan, which goes to prove what we have been arguing for years: that upon securitization, the mortgage loans were insured with multiple layers of insurance so that when the loan went into default, those in the placement chain could reap untold profits by having the same risk paid over and over and over again through multiple claims or reserves. Anyone who read through the SEC v. Goldman Sachs lawsuit knows this.

As such, any foreclosure defense should now hammer, hard, on ALL available credit enhancements, insurances, tranche assignments, and all agreements relating thereto. We will make a predition here: that very soon, there are going to be a series of cases where it is revealed, in discovery, that mortgage loans were paid 2, 3, 4, or more times on default and that the foreclosing party is simply trying to get paid a 5th or more time by stealing the borrower’s house under false pretenses and with material omissions and improper objections as to discovery related to setoffs (which objections we predict will be overruled once the judiciary is educated as to these matters). Once that happens, we see a literal tsunami of fraud upon the court claims and damage claims against the current foreclosure perpetrators.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

 

 

Tue, 10/19/2010 - 23:30 | Link to Comment Xando
Xando's picture

Man there's a lot of words getting spilt here that I just can't follow. I think I'll just grab my ankles, and it'll be just like old times!

Wed, 10/20/2010 - 03:51 | Link to Comment StychoKiller
StychoKiller's picture

Read "The Big Short" by Michael Lewis, ISBN:  978-0-393-07223-5

 

Wed, 10/20/2010 - 08:03 | Link to Comment Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Also read "Traders, Guns and Money" by Satyajit Das. Das has written tomes on Structured Notes and Derivatives. In Traders, he shows how the game is played in real time.

Tue, 10/19/2010 - 23:33 | Link to Comment LostWages
Tue, 10/19/2010 - 23:37 | Link to Comment Fed Supporter
Fed Supporter's picture

 

Disclosure:  I don't know Jeff barnes, I am just supporting his cause.---------------------------------------------------------------------------------------------------------- FDN LIVE SEMINAR SERIES TO BEGIN FRIDAY, OCTOBER 1, 2010; REGISTRATION INFORMATION AND FORMS TO BE AVAILABLE MONDAY, SEPTEMBER 13, 2010

SEPTEMBER 10, 2010

The FDN live foreclosure defense seminar series will shortly begin, with the first session being held on Friday, October 1, 2010 in the office complex where Mr. Barnes maintains his Newport Beach, California office. Each session is an entire day (9:00 a.m. to 5:00 p.m.) and will cover many topics in foreclosure defense litigation including analysis of foreclosure documents for defensive and offensive pleading, motions, and discovery; securitization, SBM (successor by merger), and bank acquisition issues; the state of the law as to MERS and MERS-related issues; motion practice; TROs, preliminary injunctions, and declaratory relief actions; forbearance agreements; mediation, and other techniques and strategies for defending foreclosures and assisting clients with mortgage and foreclosure-related issues.

The first seminar series is for attorneys only, with the series being held on the following dates:

       Friday, October 1, 2010;

       Friday, October 22, 2010

       Friday, November 19, 2010

       Friday, December 17, 2010

       Friday, January 7, 2011

Each hour of the course has been approved for 1.0 CLE hours by The Florida Bar. Each one-day seminar thus nets 7.00 CLE hours for those states which recognize CLE-accredited courses. The seminars are open to attorneys licensed in any jurisdiction.

Registration fee includes breakfast, lunch, afternoon snacks, beverages, and parking at the site. Enrollment for each session is limited to 15 participants. Announcements will be made on this website closing registration for each session as it reaches 15 confirmed enrollees. There is no on-site registration.

Registration forms will be available beginning Monday, September 13, 2010 by e-mail inquiry to jeff@wjbarneslaw.com.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

 

 

Tue, 10/19/2010 - 23:38 | Link to Comment doolittlegeorge
doolittlegeorge's picture

repeat after me, "it's not money laundering if it's done by the Fed.  it's not money laundering if its done by the Fed."  there...don't you feel much better now?  now excuse me while i fire up the lunar lander....

Tue, 10/19/2010 - 23:47 | Link to Comment bankonzhongguo
bankonzhongguo's picture

In all the hi-jinx these last years has anybody seen a bank "punished" for anything.

At this point, I think you could have the entire BOD of any of these pirate ships hijack and rape a bus load of children on the White House lawn with cameras rolling and nothing would happen to them.

Nothing.

The game is so rigged its not even a game anymore.  People are dropping out of the system in disgust and distrust.  Meanwhile, Obama and his entire crew fiddles while the Republic burns.

Wed, 10/20/2010 - 02:32 | Link to Comment JLee2027
JLee2027's picture

The banks will destroy themselves soon enough.  Afterwards we can rebuild. Hang in there.

Tue, 10/19/2010 - 23:48 | Link to Comment High Plains Drifter
High Plains Drifter's picture

I always figured  BoA would be sacrificed because their headquarters was down south and not in New York and for the most part, the company was always run by WASP's. So they had to go down and it looks like it is time. The squid will do whatever it takes to come  out on top.  Look what they did to Ken Lewis. Now it is time to crush this bank, and so to speak to crush America. 

Tue, 10/19/2010 - 23:49 | Link to Comment HarryWanger
HarryWanger's picture

Market will buy the "this will blow over" aspect will the help of a zillion talking heads and BAC will be up 5% tomorrow. The market will follow with Dow triple digits. 

Just how these things work.

Tue, 10/19/2010 - 23:59 | Link to Comment snowball777
snowball777's picture

Somebody gets the BIG bottle of prozac.

Wed, 10/20/2010 - 00:40 | Link to Comment Miles Kendig
Miles Kendig's picture

Yep.  Besides, it's a POMO day.

Wed, 10/20/2010 - 01:28 | Link to Comment HarryWanger
HarryWanger's picture

No tangible negative news tonight either. Market will regain most of what it lost. Dollar falling again will fuel yet another "buy on the dip" fury. 

And yes, it's a POMO day.

Tue, 10/19/2010 - 23:53 | Link to Comment snowball777
snowball777's picture

I wonder how many foreclosed on people are aware that they could sue their servicer for the false affidavits and settle for more than they owe on their houses (or negotiate a cramdown, as the case may be)?

Hopefully, the fact that the servicers and banks are admitting (and apparently unashamed) of having committed notary fraud (as if that were an accidental mistake on their part) will be introduced in many civil and criminal proceedings to come. Let's hope this ends up with something beyond perjury charges for the underlings and gets the full RICO treatment it obviously deserves.

Okay, lawyers: here's your chance to put those jokes to bed and finally prove your worth to society.

 

Wed, 10/20/2010 - 00:03 | Link to Comment Unlawful Justice
Unlawful Justice's picture

When brutal truth meet's up with cognitive reality, the mightiest man falls to his deepest fear and denies liability.

Wed, 10/20/2010 - 07:48 | Link to Comment Miss Expectations
Miss Expectations's picture

Well said.

My 8 year old just says, "It was an accident."

Wed, 10/20/2010 - 00:35 | Link to Comment Miles Kendig
Miles Kendig's picture

Regardless, here is the full MBS defense as presented by the bank with the most to lose when things finally get out of hand.

Oh, I don't know about that.  Wells is saddled with Wachovia/Golden West ninja pay option crap (Southwest & Southeast US centric no less) while JPM has the joys of Bear & WaMu (especially WaMu's & now JPM's reno action which I suspect will hit the wires soon enough collecting what, 500bp or more to service).  The boil is nasty everywhere and lancing it will be simply epic.  No wonder folks are so reluctant to give that lice & infection infested head a haircut.

Wed, 10/20/2010 - 00:45 | Link to Comment The Answer Is 42
The Answer Is 42's picture

Is GS really above all this? Maybe not putbacks per se. But if the ownership of mortgage CDO and similar SPV setups are legally questionable, all former investors of those structured products would have claims, and GS would be right on top in this dept.

Wed, 10/20/2010 - 03:59 | Link to Comment StychoKiller
StychoKiller's picture

When the herd stampedes out of JPM, Wells, Citi, and BAC, GS will be sucked down by the super-sonic slipstream!

Wed, 10/20/2010 - 01:29 | Link to Comment Cammy Le Flage
Cammy Le Flage's picture

I would suggest Xanax with a mix a mary jane.

Wed, 10/20/2010 - 01:32 | Link to Comment Fox Moulder
Fox Moulder's picture

Then there is Wells Fargo: "All Your Home Are Belong To Us"

http://marketsurfer.blogspot.com/2010/10/all-your-homes-are-belong-to-us...

 

Reading the attached insider memo from Wells Fargo sent a chill up my spine. It appears they are preparing an aggressive and vicious counter attack against underwater home owners who are challenging the legality and validity of their mortgage contract. While they are certainly legally permitted to challenge challenges to their paperwork, some of the things listed are clearly out of line. An example is the appraisal reevaluation. At the time of the note, the bank trusted and used an outside appraisal company. Now it appears they will be determining the past value based on inside analysts to search for appraisal fraud. Property appraisal is an art not a science--- going down this road will only give the banks the power to twist things anyway they wish. This is simply just one example of the viciousness of the memo against the public. Politicians and banks need to think long and hard before allowing or implementing draconian measures against an already stressed public. "All your homes are belong to us", says Wells Fargo regardless of legality it seems. This is how rebellions and revolutions happen. Don't say you were not warned.

 

<Click the link to read the memo>

Wed, 10/20/2010 - 02:50 | Link to Comment tallystick
tallystick's picture

No that's the process for putbacks from investors, not dealing with home owners.

Wed, 10/20/2010 - 06:24 | Link to Comment Tic tock
Tic tock's picture

The situation looks to have become reasonably serious

Wed, 10/20/2010 - 06:51 | Link to Comment Withdrawn Sanction
Withdrawn Sanction's picture

FD:  I am not a lawyer (one of the few good decisions I made in my life), but I can read.  From the Landmark v. Kesler decision of the Kansas Supreme Ct (2009):

“By statute, assignment of the mortgage carries with it the assignment of the debt. . . . Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust.”

So it would seem the banks are desperately using a straw man (MERS) to prop up a house of derivative cards (sorry for the mixed metaphors).

And Im sure it's all contained to just BAC...just like the problems in the housing mkt were contained to just a few bad sub-prime borrowers and a handful of discrete mkts.

Wed, 10/20/2010 - 07:06 | Link to Comment TooBearish
TooBearish's picture

FBI repoprted to be looking into criminal activity related to foreclosuregate

Wed, 10/20/2010 - 08:05 | Link to Comment Miss Expectations
Miss Expectations's picture

Great report, Bank of America...I especially like the phrases that you are trying to diminish by placing them in quotes:

"Foreclosure issue"

"Affidavit of debt"

"In blank"

You call yourself a "bank of opportunity"  hahahahaha

 

Wed, 10/20/2010 - 08:07 | Link to Comment spanish inquisition
spanish inquisition's picture

Question - Pimco bought a bunch of this stuff after they knew they were going to sue. I am guessing they are smart enough to know they are not going to collect in court on that stuff. So the question is why?

Theory - Any amount they take off the market reduces Bank of Americas liability. (no idea if they were asked to help clean up the mess for a later quid pro quo).

Another Q - If Pimco was asked to buy to reduce liability from the Fed, did they defraud the current holders out of being made whole and are in turn liable? ( I am definitely not a lawyer)

Wed, 10/20/2010 - 08:40 | Link to Comment Jim in MN
Jim in MN's picture

The idea going around here last week is that Pimco is simply front running the Fed prior to QE2; in fact this move by Pimco has been looked at as a strong signal of QE2's arrival, given that Bill Gross has shown he has immediate insider knowledge of the Fed's meetings and minutes.

Of course, this raises an interesting timing issue; how Fraudclosuregate may impact these assets vs. QE2.  Maybe Pimco gets hosed.  Maybe they get a lift from the Fed, quick bux, exit washing hands and praising Satan etc.

Wed, 10/20/2010 - 08:50 | Link to Comment H. Perowne
H. Perowne's picture

Wipe your hand across your mouth, and laugh;

The worlds revolve like ancient women

Gathering fuel in vacant lots

Wed, 10/20/2010 - 09:13 | Link to Comment fallst
fallst's picture

Jim Morrison?

 

oh, TS Eliot...I Knew That

Wed, 10/20/2010 - 10:07 | Link to Comment H. Perowne
H. Perowne's picture

Yep . . . "Preludes". Thought it was appropriate given Tyler's trenchant link to Four Quartets. 

Wed, 10/20/2010 - 09:01 | Link to Comment fallst
fallst's picture

No One Here Gets Out Alive?

They got the guns. baby, We've got the numbers?

Weird Scenes inside the Gold Mine.

I am glad we are all gathered here on this thin raft.

Wed, 10/20/2010 - 09:08 | Link to Comment Jim in MN
Jim in MN's picture

Photographers snip snap
Take your time she's only burning
This kind of experience
Is necessary for her learning
***
But Baby's on fire!
And all the instruments agree that
Her temperature's rising
But any idiot would know that.

--'Baby's On Fire', Brian Eno 1973

Wed, 10/20/2010 - 09:24 | Link to Comment Justaman
Justaman's picture

Don't worry, with PIMCO buying MBS' again, the Fed is probably going to announce that they will just buy the putbacks on behalf of BOA, C, and the rest of the fraud institutions.  Gotta love having the bat phone. 

Wed, 10/20/2010 - 09:38 | Link to Comment tom
tom's picture

If I understand right, this guy is ostensibly not speaking for BoA's interests, he is a sell-side analyst advising clients who own or are thinking of buying MBS on issues that affect MBS value. I'm not saying his employer doesn't matter, I'm just saying it's important to understand which department this is coming from.

That is why, in the "risks" section, he is only concerned with risks to the MBS holders from delays or possible inability to foreclose. It is not his job and this is not the place where BoA would discuss the risks to itself from push-backs, civil litigation, or criminal prosecution.

This guy suggests, without exactly saying so, that every mortgage not properly transferred to the Remic will be pushed back. I doubt very much that's BoA's policy. He doesn't mention *at all* the widely discussed issue that assets can't be transferred to Remics post-closing without invoking tax liability, which is a serious issue for MBS holders if they are unable to push back any loans that weren't properly assigned before closing.

He also reassures them on Mers, but massively exaggerates the extent to which courts have supported it. The fact is that despite its decades of history there have been very few challenges to its legitimacy, the results of which have been mostly but not overwhelmingly positive for Mers. And so far as I know no challenges have yet reached any state supreme courts. He's right that if Mers is ruled illegitimate in any states, the loans won't disappear - Mers would just need to re-assign them to some party that would be both nominal and beneficial owner, and thus have standing to foreclose. But who would that be? Could the Remics accept them without tax liabilities on the grounds that they already beneficially own them? Could the Remics use the illegitimacy of Mers to push back all Mers-owned loans in that state to the sellers? Or would all Mers-owned loans have to be sold off by the Remics to new vulture investors? It would be such a mess that I doubt any state supreme courts would have the balls to go there.

 

To the spanish inquisition: Why would you think Pimco's or anybody else's late purchasing of private MBS or knowledge of the faulty content of MBS prior to purchase in any way hampers their rights to enforce the MBS contracts? If that were true there would be almost no such thing as vulture investors.

Wed, 10/20/2010 - 12:00 | Link to Comment Husk-Erzulie
Husk-Erzulie's picture

Bank of America, the largest U.S. lender, resumed foreclosures on Oct. 18, after a 10-day nationwide pause to review more than 100,000 cases.

“Our assessment shows underlying information provided as the basis for our past foreclosure decisions is accurate,” Rick Simon, a spokesman for the Charlotte, North Carolina-based bank, said in an e-mailed statement earlier yesterday.

Astonishing review rate... 10,000 per day

Wed, 10/20/2010 - 14:02 | Link to Comment Stuck on Zero
Stuck on Zero's picture

Bigs guys on Wall Street speak with supreme confidence when they know they've bought off Washington and are about to be given full forgiveness plus a few trillion in bailouts.  Forgive their smugness.

Sat, 11/13/2010 - 08:29 | Link to Comment mark456
mark456's picture

Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic.
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