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

Tyler Durden's picture

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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."

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.

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?!?

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).


Ripped Chunk's picture

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.

goldsaver's picture

How did you research your mortgage in MERS?

Just_Another_User's picture

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

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?

Timmay's picture

Smoke meet Fire. Fire, Smoke.

frankTHE COIN's picture

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

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. 

Atomizer's picture

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


CPL's picture

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


Bank run.

Triggernometry's picture

My account with BAC will be closed by noon.

snowball777's picture

Hey and only two years too late.

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.

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.

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"

Atomizer's picture

You made my evening complete. Still laughing. Thanks WB7

Spalding_Smailes's picture

Is that Leo ?

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

williambanzai7's picture

There is no solar power down there ;-)

The Real Fake Economy's picture

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

fudstampz's picture

a banker in hiding after the collapse, circa 2011

Cammy Le Flage's picture

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

Calculated_Risk's picture

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

williambanzai7's picture

Tnx everyone, keep your spirits up!

Dollar Bill Hiccup's picture

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

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.



tony bonn's picture

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

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.

CPL's picture

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

TemporalFlashback's picture

Is that a post-op picture of Barb?

williambanzai7's picture

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

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!

fuu's picture

Seven seasons of West Wing as well.

williambanzai7's picture

Yes, I know exactly who you are talking about!

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...

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!

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
  • 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?

geminiRX's picture

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

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?

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.

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.

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.

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...

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)

Jim in MN's picture

Bank of America, meet 'shrinkage'.

Shrinkage, meet BoA.

williambanzai7's picture

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