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Gonzalo Lira on Mulligan Mortgages—The Banks' Only Way Out

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Submitted by Gonzalo Lira

Mulligan Mortgages—The Banks’ Only Way Out

“Would you give this man a mulligan?”
Photo by Mark Pain of the Daily Mail. The man with the cigar was an actual bystander.

We’ve seen this movie so many times already, we can practically recite the ending: The Too Big To Fail banks are once again in the middle of another crisis—another mortgage crisis—that’s breaking like a bad rash. And this new scandal has so many moving parts!
 
Robo-signings!—Foreclosure mills!—Forged documents!—Attorneys General huffing and puffing!—Too Big To Fail banks tottering!—Foreclosures suspended!—Bond holders freaking out!—Credit default swaps shooting the moon!—
 
Aaaaaahhhh!!!!! Again.
 
As I explained in a long piece discussing the current Mortgage Mess, all of these different issues are all symptoms of the same disease: The Mortgage Backed Securities—America’s Herpes: The gift that just keeps on oozing.

Because of how the MBS’s were structured, there was an inherent ambiguity as to who actually held the mortgage notes. This is crucial, because only the note-holder has standing in court to foreclose and evict a delinquent homeowner. No tickee, no laundry applies doubly to mortgage loans: No notee, no standing.
 
The banks, MERS and everyone else in the sausage factory that created the MBS’s were sloppy and/or greedy, which led to them failing to cross the I’s and dot the T’s. (Did you catch that? Just checking.)
 
They realized this screw-up during the current Global Depression. In order to foreclose and evict the massive number of delinquent homeowners, the banks hired “foreclosure mills”—bottom-feeding law firms that specialized in foreclosures.
 
Since the documentation was either hinky or lost, the foreclosure mills routinely and systematically fabricated and falsified documents: The “robo-signing” scandal is a part of this part of the Mortgage Mess scandal—the thing is as complicated as a Rube Goldberg device on acid. (Yves Smith at naked capitalism has been all over this; the woman should get the Pulitzer—not just for her reporting, but for keeping it all straight in her head!)
 
Anyway: In the piece I wrote, I argued that we could quite likely be seeing this Mortgage Mess turn into a Foreclosure Crisis, whereby homeowners refuse to pay their mortgages, let alone accept a foreclosure, unless and until the banks produces the note of their mortgage loan. Show Me The Note, Mo-Fo!!, could become the rallying cry of this homeowner revolt.
 
Since the chain-of-title on many of these notes is broken because of the process that created the Mortgage Backed Securities, and because in many cases the foreclosure mills irretrievably tainted so much of the documentation, the litigation could draw out for years, not to mention multiply like a cancer.
 
This of course would affect Mortgage Backed Securities. After all, MBS’s got their moniker for a reason: Because they’re backed by mortgages. If the bundled mortgage loan notes that created the Mortgage Backed Securities are no longer legally tethered to them, then the MBS are secured by nothing but air.
 
All the TBTF banks still have boatloads MBS’s on their balance sheets. There are literally tons of Credit Default Swaps that were written on these MBS’s. So you see, this Mortgage Mess could well get the banks to teetering and tottering once again—it could be the trigger for Global Financial Crisis, Part Duh!: Bigger!—Wider!—Uncut!
 
Like I said: A movie we’ve seen before, and whose sordid ending—TARP-2 anybody? Maiden Lane CCLXVIII?—we can very well predict.
 
In the zoo called Washington, everybody’s making loud noises about this blossoming crisis—but nobody in that God-forsaken town is coming up with a practical solution that would actually work.
 
The pundits are doing no better: Paul Krugman—who advocated a housing bubble back in 2002—can hardly contain his glee at the Mortgage Mess, even as he condescendingly tut-tuts about the bad banksters who caused it.
 
From the Department of I’m-So-Not-Surprised: The solution Krugman proposed in a New York Times op-ed is a vague lunge at giving “mortgage counselors and other public entities the power to modify troubled loans directly.” In other words, he’s arguing for more government intervention, while blithely ignoring the fact that government regulators—Treasury, the Fed, the SEC, etc.—helped create this mess by not doing their jobs in the first place.
 
They didn’t regulate before—so now according to Krugman, they’re gonna get bright magic and Solomonic wisdom, and all of a sudden do their jobs right? Puta huevón, please . . .
 
(And please don’t bother telling me that Krugman’s the smartest economist in the world. That’s like saying, “He’s the smartest moron in the world”: Impressive, until you stop to consider that a bright 12 year-old makes more sense than him.)
 
From the Department of I’m-So-Even-Less-Surprised: The Left might be putting out stupid ideas, but the Right is putting out no ideas.
 
Anyway, it’s an open secret that the politicians on the Right are all in the banksters’ collective back-pocket. Who do you think tried to make law the Interstate Recognition of Notarizations Act, which would essentially have made it legal for banks to commit perjury in order to foreclosure on a homeowner?
 
Talk about violating the Rule of Law! By passing that act (via a cowardly voice vote, so as to collectively hide their hand), the Republican senators and congressmen didn’t just try to violate the Rule of Law—they tried to gang-bang it, murder it, and leave it in a heap by the side of the road!
 
The American political Right is corrupt—beholden to the banksters and the money men. There’s really no other way to look at it. 
 
Whatever the politicians might say, no solution is going to come out of Washington. Intellectually, both parties are exhausted—they have no new ideas. The only idea both parties cling to is Spend Money!—and that’s no idea at all.
 
Washington can’t throw money at the TBTF banks, to fix this problem: Politically, another bailout of the banks is untenable—I think. Actually, I’m not sure. In any other country, I’d say with confidence that another bank bailout would cause widespread rioting. But with the fat, slovenly, slatternly, pathetic American people? Placid as cud-chewing cows, peacefully going through Temple Grandin’s curving contraptions, on their way to their slaughter without a thought in their pretty little bovine heads . . .
 
Come to think of it, another bank bailout might fly.
 
But while the pundits and political riff-raff hee-haw and trumpet like donkeys and elephants, but with none of the sense of those fine animals—lo and behold!—the banks themselves are quietly fixing the problem.
 
They’re doing it through Mulligan Mortgages.
 
I got a first sense of it with the story of Brian and Ilsa—my retired friends in the Southwest, whose home had gone underwater. I wrote about them here, as well as here.
 
Brian and Ilsa qualified under HAMP, the Home Affordable Modification Program—yet though they were at first allowed to modify their loan, they had been later denied the benefits of the program after three months.
 
HAMP in many ways has turned out to be a scam for the banks and servicers to make money off the Federal government: For every mortgage accepted into the HAMP, the banks and servicers received a fee from the government. But after 90 days, the banks and servicers could claim that a person did not qualify for HAMP—and therefore exclude them from the program, while keeping the Federal government fee.
 
Brian and Ilsa were caught in the middle of this HAMP scam, when they decided to demand to see the note on their home loan—this nice suburban couple said, Show Me The Note, Mo-Fo!!
 
Suddenly, frantically, a loan officer from their bank appeared, and magically, their problems were solved: They qualified, they qualified! And soon, they were signing a new mortgage loan—and a new note—with a new mortgage payment close to $700 a month less than before the loan modification.
 
I wrote about this—and a flood of other people wrote telling me similar stories.
 
For various reasons—occasionally for no reason at all, just out of the blue—the TBTF bank would suddenly expedite a mortgage refinance. The principal would remain the same, but there would be a substantial decrease in their monthly mortgage payment.
 
One of these stories came by way of Lars Larson, the terrific radio host in Portland, Oregon. A listener of his, Tim Hope, had had the same thing happen with his mother’s loan. As he told it: “No costs, simply fill out the paperwork (I think they offered to do everything), and ‘presto’ new mortgage and new lower monthly payment (I believe by several hundred [dollars] — $200, $300 — per month).”
 
Tim Hope’s story wasn’t exceptional, but he did come up with a wonderful name for it: Mulligan Mortgage.
 
The clever turn of phrase captures it exactly: A mulligan is a golf term. It’s when your first shot pretty much sucked—so your golf partner lets you take another shot, with no penalty. It’s the gentlemanly thing to do, as it were. A way to keep a lazy Sunday afternoon game interesting.
 
Mulligan Mortgages seem to be how the TBTF banks are keeping their own game alive: They seem to be chasing mortgage holders—whether in default or not—and offering them an expedited refinance of their mortgage loan.
 
In order to convince homeowners to sign on the line which is dotted, the banks have to give them something: What they give them is lowered monthly payments of at least a couple of hundred dollars a month. The banks can offer this without touching the principal of the loan by either refinancing the mortgage at a lower interest rate, or a longer term of repayment, or usually both.
 
In other words, though the homeowner might still be underwater after signing the Mulligan Mortgage, they’ll still get a reduction in their monthly mortgage payment.
 
Now there are several advantages to these Mulligan Mortgages:
 
From the banks’ point of view, the Mulligans automatically fix the chain-of-title issue by creating a new note. The whole problem with the current scandal is that a lot of home loan notes were either lost, destroyed or mishandled, or else irremediably tainted by foreclosure mills’ unsavory business practices.
 
But all of that goes away, with a new note courtesy of the Mulligans.
 
(There are, of course, a whole host of administrative and legal steps that must be followed, in order for this to happen. In this post as well as in my previous post on the Mortgage Mess, I skipped a lot of these legal and administrative steps for two simple reasons: One, they add no insight to the issues at hand, and in fact clutter up the view of the overall situation; and two, the administrative and legal steps are often different in each state.)
 
A new note by way of a Mulligan Mortgage clears up the issue of standing, which would allow a bank to foreclose on a delinquent borrower. So once a homeowner signs a Mulligan, the bank will have clear standing to foreclose, if the homeowner becomes delinquent.
 
For bond holders of Mortgage Backed Securities, Mulligan Mortgages are also a fine idea: By re-establishing the chain of title, MBS holders are once again holding secured bonds—they’re not holding paper which might well be worth nothing.
 
This is a non-trivial issue: Considering how PIMCO and the New York Fed started making noises yesterday about the bonds Bank of America sold, I’d say there are a lot of bond holders and CDS underwriters who are very nervous about how this new outbreak of America’s Herpes will affect their MBS positions.
 
Mulligan Mortgages are the unguent that will keep bond holders happy—until they realize the cost that they’re payng (I’ll get to this in a moment).
 
These Mulligans are also great from the Federal Reserve’s and the Obama administration’s point of view: Mulligan Mortgages mean people will pay less for their home mortgages, and therefore have more disposable income. There’ll be a bump in consumer spending.
 
Mulligan Mortgages, of course, can’t fix REO’s that may or may not have been foreclosed illegally—but they’ll get the rest of the housing market back on track.
 
But it’s not all sweetness and light—there are some issues with Mulligan Mortgages:
 
First of all—and most obvious of all—the homeowners the TBTF banks are targeting for Mulligans are probably the very homeowners whose original note is lost or irretrievably ruined by someone in the sausage factory that created Mortgage Backed Securities. I’ll bet a buck to a nickel that they’re precisely the ones where the bank likely has no standing to foreclose.
 
So the banks have to do the Mulligans quickly, before people get wise. Homeowners can’t be allowed to realize what the banks are up, or why. If homeowners understand fully why the banks are suddenly so nice to them, they’ll realize that they’ve got the banks by the short-hairs—and then they’ll realize that they can have their way with them, up to and including doing the Show Me The Note, Mo-Fo!! dance. If that happens, the banks are screwed.
 
The second obvious issue is, Mulligans represent a severe hit to the TBTF banks’ revenues.
 
How much of a hit? Nobody knows—at least not yet—because nobody knows how many mortgages are affected by the current Mortgage Mess.
 
CoreLogic says there are something like 11 million underwater mortgages in the United States as of late August. The Wall Street Journal says about $154 billion worth of mortgage loans could be affected by the Mortgage Mess.
 
We could extrapolate ‘til the cows come home, but simply put, there is no way to know how many mortgages might be getting a Mulligan. The TBTF banks are completely opaque, ever since the Fed basically rescinded sane accounting rules in March of 2009; when the banks officially turned into zombies.
 
But any way you look at it, the Mortgage Mess—even with all the Mulligans needed to fix a lot of this mess—is going to take a bite out of revenues—
 
—and not just on the balance sheets of the TBTF banks: On the MBS bond holders too.
 
Nobody ever said Bill Gross was stupid: Regardless of how effective the Mulligans are, the Mortgage Backed Securities—and the CDS’s written on them—are all going to take a hit. That’s why PIMCO started making noises, trying to bully BofA into taking back the mortgage bonds: Even with the best solution to the Mortgage Mess, bond holders are going to take a forced haircut. Or a buzzcut, as the case may be.
 
Since the Federal government really does not have the political will or inclination to go for yet another round of bank bailouts, and since the bond holders have the political muscle in this corrupt system to get their bacon saved (where’s all that bullshit talk about “capitalism’s creative destruction” now, huh?), it’ll be up to the Fed to make MBS bond holders whole—just like they did the last time.
 
So although a lot of people are predicting that the Fed will start buying Treasuries when QE2 is anounced, I beg to differ: I think they’re going to load up on even more Mortgage Backed Securities. In fact, I think a big piece of QE2—maybe a trillion dollars’ worth—will be directed at Mortgage Backed Securities. And I think the Fed is going to pay top dollar for that garbage.
 
I think the way the Fed is going to do it is, they’ll go for another round of Stealth Monetization: Buying MBS and other toxic assets off the banks for newly conjured cash, the banks then taking that cash and parking it in Treasuries, thereby funding the Federal government’s deficit.
 
Because of the Currency Wars going on around the globe right now, I don’t think the Fed wants to be perceived as accelerating any weakness in the dollar. I think Bernanke and the Lollipop Gang at the Fed want to weaken the dollar, sure, but I don’t think they want the perception to linger that they are out-and-out trashing the dollar.
 
Also, I don’t think Bernanke has the votes on the Federal Reserve Board anymore. I think a lot of Board members are discreetly coming to the conclusion that Benny Boy’s strategy of ZIRP, propping up assets, and extreme market liquidity, is a losing one.
 
But they’ll be forced to vote in favor of a massive MBS buy, in order to keep the American Zombie banks on their feet. As predicted back in 2008 when they were saved rather than allowed to fail, the TBTF banks really have become “too big to fail”—because they’ve grown, like a cancer.
 
So you see, it all goes back to the Mortgage Backed Securities. America’s herpes. See, the problem with herpes is, once you get it, you can never be cured. At best, you can alleviate the symptoms—but the disease is always there.

 

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Thu, 10/21/2010 - 17:53 | 668308 Terra-Firma
Terra-Firma's picture

I call BS: I will never see the fraudsters settle up and neither will you.

Thu, 10/21/2010 - 18:32 | 668390 The Alarmist
The Alarmist's picture

Yeah, I tend to concur that most foreclosures will sail through "pragmatic" courts with nary a ruffle.

 

Thu, 10/21/2010 - 18:36 | 668405 sgt_doom
sgt_doom's picture

"When you screw up, you don't usually get a mulligan, you just LOSE."

What country do you happen to practise the law in????

In America, the US Supreme Court routinely makes up cases (Citizens United v. ..., the 1978 Rehnquist decision to dump out the crazies from the mental institutions, etc.), even though such is barred by the US Constitution.

No, justice is decidedly decided (no typo, I'm just repetitious) by that old wealth factor:  the richest tend to win.

Thu, 10/21/2010 - 21:38 | 668735 masterinchancery
masterinchancery's picture

The SCOTUS won't have anything to do with the disposition of these foreclosure cases, in which banks will not be very popular.

Thu, 10/21/2010 - 18:25 | 668300 Pegasus Muse
Pegasus Muse's picture

I was really grooving with you until you deposited this large pile of left-wing fecal matter:

"Republican senators and congressmen didn’t just try to violate the Rule of Law—they tried to gang-bang it, murder it, and leave it in a heap by the side of the road!
 
The American political Right is corrupt—beholden to the banksters and the money men. There’s really no other way to look at it." 

 

Not true. This was purely bipartisan corruption at its foulest.  Your boy, Patrick Leahy (D-VT), has stench all over him.  And that unanimous voice vote in the senate .... you suggesting the Dems did not participate?

   

Obama Should Veto Bill That Makes It Harder For Foreclosure Victims To Challenge Banks (UPDATED)

Yesterday, the Justice Department announced that it will investigate the foreclosure practices of several financial firms, after widespread reports of foreclosures being approved by bank “robo-signers” (employees who weren’t verifying the necessary documentation to legally okay a foreclosure). One Bank of America official admitted that he approved 7,000 to 8,000 foreclosure filings a month without reading them, while a Wells Fargo executive said that he would only check the date on up to 150 foreclosures he approved daily.

[skip] 

The bill, passed by unanimous consent, was shepherded through the Senate at the last minute at the behest of Sens. Patrick Leahy (D-VT) and Jeff Sessions (R-AL). Leahy’s staffers cited unnamed “constituents” who had pushed for passage, but wouldn’t say “who these constituents were or if anyone representing the mortgage industry or other interests had pressed for the bill to go through.”

http://wonkroom.thinkprogress.org/2010/10/07/obama-veto-banks/

 

You've been spending too much time with Max Keiser, Gozo.  It's affected your objectivity.

Thu, 10/21/2010 - 18:43 | 668419 sgt_doom
sgt_doom's picture

While I agree with the poster that all Republi-Cons are complete bankster stooges, the same can be said for the majority of faux crats, formerly known as democrats.

Obvious to anyone with a functioning brain, with Mueller heading the feebs (F.B.I.) who was first appointed to the Justice Dept. by Bush #1 to forestall the B.C.C.I. investigation from reaching then-VP Geo. H.W. Bushie, we can expect little in the way of "justice."

Certainly, with Eric Holder as A.G., the guy who defended the Chiquita-hired assassins of murdered labor organizers in South America, and the oil company-hired mercenaries who murdered protesters in West Africa, little "justice" will probably come from that direction, as well.

Nope, we in America have the Bankster Party, with one side pitted against the other, and both unanimously against the working people and Incredibly Shrinking Middle Class.

Thu, 10/21/2010 - 23:15 | 668919 Bob
Bob's picture

Mueller may, when all is said and done, be the rottenest apple of all.  He is, after all, the Nation's Top Cop.  What a sick joke.  With over ten thousand committed agents, the complete absence of well-developed and completed investigations must be due to instructions from the top, no?

Thu, 10/21/2010 - 18:04 | 668331 eatthebanksters
eatthebanksters's picture

I wonder how Gonzalo is so sure the right wing is in the banksters pockets...Wasn't the number two contributor to Obama's campaign, in fact, Goldman Sachs?  Are not the heads of GS, JPM/Chase and a number of the other dominant financial institutions Democrats?  Why would Republicans support bad boys from the other party?...Get real Gonzalo.

Thu, 10/21/2010 - 18:51 | 668436 sgt_doom
sgt_doom's picture

You said it, dude!

UBS CEO gave Obama the seal of approval, and John McToad had Phil Gramm, vice-chairman of UBS as his "economics" advisor.

And one of Obama's first appointments:  Diana Farrell -- the number one jobs offshorer in America (McKinsey Global Institute, and author of the phony McKinsey study claiming how profitable it was to offshore all the jobs in America).

Diana Farrell, a non-economist, was Obama's choice for economics advisor!

And the managers in the US Treasury, whether it be Republi-Con or Faux Crat, is vast majority (as in 93%) former Goldman Sachs.

We all get the picture now.....

Thu, 10/21/2010 - 18:51 | 668343 ATG
ATG's picture

Comparing MBS's to herpes creates neither joy, laughter nor money.

GL, Leo and MHFT seem to rival each other in deluded repetitive self-referential narcissism exceeding entertainment or information value available elsewhere.

When analyses and predictions lose correlation with financial market credibility and political economic reality, they degrade ZH.

Those calling for bond busts, dollar default, equity fails, runaway interest rates and $5000 gold since March 2009 are so far dead wrong, TG notwithstanding.

eg FXI down since May 2008, Dollar up since March 2008, Gold down -5% since 14 Oct 10, LT interest rates down since June 2009, solars down since May 2009 and TBT -50% since June 2009.

Maybe that will change before those betting on them go bankrupt?

http://stockcharts.com/charts/gallery.html?s=fxi

http://stockcharts.com/charts/gallery.html?s=%24usd

http://stockcharts.com/charts/gallery.html?s=%24gold

http://stockcharts.com/charts/gallery.html?s=tyx

http://stockcharts.com/charts/gallery.html?s=fslr

http://stockcharts.com/charts/gallery.html?s=tbt

Rollover with Fonda and Kristoffersen may offer more current value, and it was released 29 years ago.

http://www.youtube.com/watch?v=cDpsFPM2NF4 2:22

Anyone care to speculate if 0, whose funding support came from Unions and Wall Street, either reverses his 3808 Robo Notary veto just before the elections, or accepts another bill bailing out banks, AFTER the elections, still at homeowner, taxpayer and worker expense?

http://finance.yahoo.com/tech-ticker/obama-and-wall-street-an-unholy-all...,^dji,^gspc

http://www.govtrack.us/congress/billtext.xpd?bill=h111-3808

PS Nice photo shop ad (non) sense on Sharron Angle, more ahead of Harry Reid, now 57 to 43, after the Dirty Harry smears. Ditto Carly Fiorina and B Boxer, still in a dead heat despite twice the money raised or spent, not a good sign for an incumbent.

http://www.intrade.com/

http://voices.washingtonpost.com/thefix/morning-fix/-1-2-a-new.html

The most interesting race may be Billionaire eBay CEO Goldman Sachs Board Member Whitman, down 5 points from MoonBeam Brown in a 2:1 D registration state with many dead voters. Bloomberg she ain't, but still within spitting distance to win.

http://www.realclearpolitics.com/epolls/2010/governor/ca/california_gove...

Time always tells in criminal economics, markets and politics, particularly with uncounted absentee ballot boxes floating in the Bay and a convicted Mexican Presidential assassin illegally registered to vote twice in LA, whose family of 7 was granted asylum by a US Federal Immigration Judge after the Chief prosecutor was slain...

http://articles.sfgate.com/2002-01-07/news/17528873_1_lids-absentee-ball...

http://articles.latimes.com/keyword/mario-aburto-martinez

 

Thu, 10/21/2010 - 18:16 | 668360 single digit
single digit's picture

But I thought this was about the ponzi scheme that being perpetrated on us?  We really dont have any clue to the SIZE of this Puta Huevon!

Thu, 10/21/2010 - 18:23 | 668378 Rodent Freikorps
Rodent Freikorps's picture

Puta huevón, please . . .

My wife translated that for me. She is now a fan of yours. I think she is still laughing.

 

Thu, 10/21/2010 - 19:01 | 668394 MsCreant
MsCreant's picture

I admit to being a stick on purpose, but...

This guy is saying the whole foreclosure thing really is just a paperwork issue, that notes get lost all the time and there is a legal repair for it already in existence. Also says the robo signing is a big nothing that can easily be fixed by an existing procedure. His gripe is that Obama vetoed something that was a perfectly obvious thing that should be passed.

Stephen Meister on Kingworldnews. Rickards has one there too which says this is a problem.

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/10/21_Stephen_Meister.html

Thu, 10/21/2010 - 18:33 | 668396 strannick
strannick's picture

Herpes and Chinese Laudress cracks, in the first 3 paragraphs. No wonder Lira is never in the papers...

Thu, 10/21/2010 - 18:38 | 668409 sgt_doom
sgt_doom's picture

The crucial thing to bear in mind regarding the MBSes:  they were pioneered by a guy named Larry Fink, who happens to head BlackRock, which is overseeing those TARP funds last time I checked.

And we all know the financial connection between BofA and BlackRock via Merrill Lynch (not to mention that BlackRock owns the controlling interest in Monsanto -- home of the Terminator Seed!).

Thu, 10/21/2010 - 19:00 | 668454 Rodent Freikorps
Rodent Freikorps's picture

Don't be a douche and just blame the right.

Hang them all.

God can sort them out.

Thu, 10/21/2010 - 19:05 | 668466 Bigger Dickus
Bigger Dickus's picture

I can't stand Gonzalo Lira. His article defending the Greek government cocksuckers should have been enough to ban him but no, he gets to post articles every other day.

Thu, 10/21/2010 - 19:08 | 668468 Gonzalo Lira
Gonzalo Lira's picture

You're all right—both Republicans and Democrats are in the banksters' back pocket. 

 

The reason I singled out Republicans for harsh opprobrium is because I am politically conservative. 

 

It doesn't bother me so much when Democrats show themselves to be whores for money. I sort of expect it. 

 

But it bothers me more when people purportedly espousing my same ideas and principles show themselves to be whores for money, and hypocrites in their principles. 

 

GL

Thu, 10/21/2010 - 19:13 | 668478 Rodent Freikorps
Rodent Freikorps's picture

I know how you feel.

People can't "betray" you until you give them trust. The vast middle needs to trim the rot at the edges.

The middle class needs to start taking scalps.

Thu, 10/21/2010 - 19:27 | 668507 treemagnet
treemagnet's picture

A guy up top was talking about the pension funds and another said its not the Feds concern.  Pretty interesting to wonder what better a way to get more of the masses addicted to big gov't then to smash their piggy banks.  They've already got seniors and the beggars, why not just chew through the crunchy outer layer to get to the juicy middle class?  I'm late for my tinfoil hat fitting...gotta go.

Thu, 10/21/2010 - 19:54 | 668568 Kina
Kina's picture

Rule of law. They will have to keep trying to murder it before they will get out of this.

 

Wasn't Obama some super legal mind? Of all people he will understand the fundamental importance of rule of law.

Will he help trash the one last line of defence for the American people?

Is there a not paid for politician in the US? And that goes for the watch-dogs regulators.

 

One thing you can be sure of, the Politician's masters won't lose, even if the US goes bankrupt these guys will walk away with billions. Geeze, the most monumental financial fuck up in American history and they still reward themselves with giant bonuses.

If it were China, half these politicians, regulators such as the CFTC, SEC and banksters would have bullet through the back of their heads by now.

 

 

 

Thu, 10/21/2010 - 20:04 | 668591 MsCreant
MsCreant's picture

Outsource that job to the Chinese? Would the sniper's union protest?

Thu, 10/21/2010 - 23:39 | 668978 StychoKiller
StychoKiller's picture

Ya really don't need a sniper for such close range -- Glock 9mm -- reach out and "touch" someone! :>D

Thu, 10/21/2010 - 20:03 | 668592 msjimmied
msjimmied's picture

Too many piranhas in the stream for the big fish to swim though unscathed. A friend of ours who was a mortgage broker got three calls from different banks asking him if he had any original paperwork from many old cases he handled. Interesting...in any case, this is not going to be a slam dunk for the banks, there will be no easy fix.

 

"If it is a mortgagee, Mr. Peterson added, it has the right to record mortgages in its own name, as it did. But since it does not own the actual loan, doing that could be seen as violating a long line of precedents that bar separating a mortgage from the underlying note in which the borrower promises to pay. He quotes from an 1879 Supreme Court decision holding that “the assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.”

If an assignment of the mortgage alone is a nullity, then the mortgage can no longer be enforced. The borrower would still owe the money, but no foreclosure would be possible and the borrower could sell the home without paying off the mortgage. The lender could sue the borrower, but collecting money from distressed former homeowners might be very difficult in many cases."

http://www­.cnbc.com/­id/3974002­5

http://www­.ritholtz.­com/blog/2­010/10/why­-foreclosu­re-fraud-i­s-so-dange­rous-to-pr­operty-rig­hts/

http://www­.cnbc.com/­id/1584023­2?video=16­19469657&p­lay=1

http://pra­gcap.com/f­inally-swe­dish-model

 

So. Lawyers from the corporate level, investor's lawyers, every lawyer in every podunk town, all the AG's of 50 states, JP6 squatters or otherwise borrowers in good standing will be getting into the act. NY has asked the lawyers to verify the paperwork they submit, and if a homeowner wins in a foreclosure action, the bank has to pay the legal fees.

""Separately, New York Gov. David Paterson signed a new law Wednesday that will force banks to pay the legal fees of homeowners who successfully defend themselves against a foreclosure.

The idea, sponsors of the legislation said, is to give lawyers an incentive to take on cash-strapped clients who have a good case that a foreclosure is invalid, but can't afford an attorney.

"We cannot let people with valid defenses to foreclosure lose their homes merely for lack of legal representation," said Assemblyman Rory Lancman, a Queens Democrat who sponsored the legislation."

Obama has said it's the problem for banks and servicers to fix, and so it is, they created this pile of shit, let them sleep in it.

 

 

 

Thu, 10/21/2010 - 23:20 | 668931 Bob
Bob's picture

That's very encouraging news out of NY! 

Thu, 10/21/2010 - 23:42 | 668983 StychoKiller
StychoKiller's picture

The idea, sponsors of the legislation said, is to give lawyers an incentive to take on cash-strapped clients who have a good case that a foreclosure is invalid, but can't afford an attorney.

So, now the sharks need an "incentive", even when there's already blood in the water?  Just gobsmack me now! :>D

Thu, 10/21/2010 - 20:13 | 668601 rapacious rachel wants to know (not verified)
rapacious rachel wants to know's picture

another in what one could only hope was another in a series

t

Thu, 10/21/2010 - 20:43 | 668652 Al Gorerhythm
Al Gorerhythm's picture

Haven't time to read through the above posts, however, at risk of repetition, these refi approaches by the banks are a step down a well worn path to debtors doors. This is a ploy utilized by the banks from their playbook; to entice debtors into deeper debt by either extending the life of the loan or changing the interest load of the loan, a sugar offering so as to keep the debtor tied to the loan via short term relief.

This method is used at sovereign level as well, via the IMF, crushing countries with austerity measures to blackmail the borrowers (taxpayers) into accepting the loan. People are waking up to the ruse and are violently or vociferously rejecting their overtures, demanding that their governments reject those advances. See Iceland, Greece, next Great Britain, Spain, etc.

All of this is spelled out concisely in the book by G. Edward Griffin; The Creature From Jekyll Island. A second Look At The Federal Reserve.

A scary read.

 

Thu, 10/21/2010 - 22:12 | 668800 bugs_
bugs_'s picture

Looks like Lehman may be cruising for a mulligan too!

Thu, 10/21/2010 - 23:44 | 668985 StychoKiller
StychoKiller's picture

"The Dead Walk Among us!"  Lehman gives new meaning to "Zombie bank!"

Fri, 10/22/2010 - 11:19 | 669723 AchtungAffen
AchtungAffen's picture

So, a solution can't come from the government regulators because they already show they failed in favour or the banks. But then the solution GL paints here is to let the banks fix the problem. Those same banks who already failed the public. So, where do we go now?

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rocky89's picture

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mark456's picture

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