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Massive Mortgage Mess Update: Title Companies Stop Insuring Foreclosed Properties

Tyler Durden's picture


Today's latest chapter in what is now known as the new 3M: the Massive Mortgage Mess, is that Fidelity National has told lenders to halt foreclosures, and to stop sales of bank owned properties. The reason, and this should be no surprise to anyone, is "possible document flaws." Fidelity is merely the next of, well, all. And while the WaPo reports that the John Walsh, acting director of the OCC has reached out to seven lenders including Chase, Bank of America, Wells Fargo, Citi, PNC Bank, U.S. Bank and HSBC, to review their foreclosure processes in light of the Ally and JPM Chase situations, the news of the day comes from the NYT that Old Republic National Title has stopped insuring title to Ally-foreclosed properties "until further notice." And once the insurers lost faith in the product they are supposed to have 100% confidence in it is game over: virtually no foreclosure transactions will take place going forward. We hope RealtyTrac will provide an update on what they may be seeing in foreclosure trends in the past two weeks : we are confident these have plunged off a cliff across the land.

From the NYT:

As more defaulting homeowners become aware of the lenders’ problems, they are expected to hire lawyers and challenge the proceedings against them. And if completed foreclosures were not properly done, families who bought the troubled homes could be vulnerable to claims by the former owners.

Apparently alarmed about such a possibility, one of the major title insurance companies, Old Republic National Title, has sent a bulletin to agents saying that “until further notice” it would not insure title to properties foreclosed upon by GMAC Mortgage, the country’s fourth-largest home lender and one of the two big lenders at the center of the current controversy.

GMAC declined to comment, and Old Republic representatives did not return calls.

As we have long expected, this merely means that as the foreclosure pipeline gets clogged beyond repair, and as mortgage losses accumulate at an exponentially growing pace, stocks of financial companies will likely surge as very soon their survival will become a binary bet on TARP 2. Very soon the investing public will realize that they are worth either nothing or infinity, which is what we affectionately call the Fed's price target for the US financial sector.

h/t Keith


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Fri, 10/01/2010 - 14:31 | 618841 Henry Chinaski
Henry Chinaski's picture

This thing could morph into some kind of October surprise...

Fri, 10/01/2010 - 14:46 | 618903 NOTW777
NOTW777's picture

yeah - huge increase in ipad sales, high end retail

Fri, 10/01/2010 - 15:17 | 619002 DarkMath
DarkMath's picture

Totally. Kind of makes me want to just stop paying my mortgage and roll the dice. Shit, I'd be like getting an extra paycheck every month. This could be the stimulus we've all been waiting for.

Dow 36,000 baby.

Fri, 10/01/2010 - 14:55 | 618926 NOTW777
NOTW777's picture

wonder if some politican doesnt suggest all mortgages just zero d out

Fri, 10/01/2010 - 15:12 | 618990 hambone
hambone's picture

Who cares about actual's time to ramp stocks into EOD!!!

Tue, 10/05/2010 - 22:38 | 628072 Henry Chinaski
Henry Chinaski's picture

Yes. That.

Fri, 10/01/2010 - 16:08 | 619177 whatsinaname
whatsinaname's picture

will the headline read - Foreclosure drop 50%, housing market stablizes and hits bottom. Buy Buy Buy.

Fri, 10/01/2010 - 16:31 | 619237 curbyourrisk
curbyourrisk's picture

Exactly....why would anyone pay their motgage at this point....  This means savings to the moon and that easily means DOW 20,000 by Christmas!!!!

Fri, 10/01/2010 - 17:29 | 619419 DonS
DonS's picture

Whats interesting in that Fidelity, LPS (Lender Process Services) along with Stewart, SMI, FAF First AM et al are directly involved with the workflow process that is responsible for the way in which the affidavits are signed, They do all the back end work, provide the necessary info so that the banks can than sign were appropriate.

The documents are generated by  going through a workflow que or engine, where the required title/property info is researched by these title companies and then automatically populated (by the title company via a web  based platform) into a template on the banks side, then the finally document is printed for bank signature and notarization. This process has been going on for 8+ years.Typically the bank requires no verification of the title companies research and relies on the info they provide as fact. The Quality Assurance Review, in the banks view, stands solely on the shoulders of the title companies.


This is the same workflow process that is done for releases of mortgages, assignments, modification (to an extent). These are massive workflow processes. I know first hand.

Fri, 10/01/2010 - 18:28 | 619600 MachoMan
MachoMan's picture

It makes no sense to stop providing insurance for loans because you're worried about the validity of the documents filed causing fraud on the court when you're the one drafting the documents/ensuring the right parties are in the action...

Sat, 10/02/2010 - 00:25 | 620351 StychoKiller
StychoKiller's picture

True!  Sounds like the Title Co.s are in total CYA mode.  They sense that lawsuits are heading their way, and they're cutting off the fuel supply to the Sh!tstorm heading towards them.  Their belief is that the banks took their (Title Co.s) valid data and somehow corrupted it, but I'm betting that the Title Co.s probably received said data from an untrustworthy source, and the cookie jar has their fingerprints on it too!

Sat, 10/02/2010 - 11:26 | 620803 unemployed
unemployed's picture


   Makes you wonder if they can't document for  foreclosures, how they can document for normal mortgage payoffs whether for sale or final payoff.   Repeat for the Title companies.

Fri, 10/01/2010 - 18:20 | 619568 Freebird
Freebird's picture

This is a complete farce...

Fri, 10/01/2010 - 14:34 | 618852 SheepDog-One
SheepDog-One's picture

Its on like Donkey Kong Ver. 2.9.

Fri, 10/01/2010 - 14:34 | 618854 bugs_
bugs_'s picture

Going to need to nationalize the entire thing so nobody can sue.

Freddie Foreclosure was down in after hours trading.

Fri, 10/01/2010 - 14:40 | 618878 Rahm
Rahm's picture

I hear the blades ramping up to overdrive...

More handouts... bring in the helicopter!

Fri, 10/01/2010 - 14:54 | 618924 Bluntly Put
Bluntly Put's picture

Never waste a good crisis.

Fri, 10/01/2010 - 15:17 | 619004 faustian bargain
faustian bargain's picture

Rahm E. announced he's quitting, finally. Have fun with that, Chicago.

Sat, 10/02/2010 - 00:26 | 620354 StychoKiller
StychoKiller's picture

What WILL Obamatron do now?  It's SO hard to find good Decepticrats these days!

Fri, 10/01/2010 - 14:34 | 618855 cluelessminion
cluelessminion's picture

What a mess.  I can't help but feel envious of those people who own these homes;  I spent all these years packing my lunch so I could pay my bills and they default and end up getting a free house.

Fri, 10/01/2010 - 14:36 | 618861 SheepDog-One
SheepDog-One's picture

Just move into whatever vacant house you feel like soon.

Fri, 10/01/2010 - 14:45 | 618898 kaiserhoff
kaiserhoff's picture

+69 squatters.  We don't need no stinking badges.

Fri, 10/01/2010 - 14:37 | 618869 Bananamerican
Bananamerican's picture

if there's a chance in hell this will bring down the Bank$ I'll be cool with it....

-a renter

Fri, 10/01/2010 - 14:46 | 618902 NotApplicable
NotApplicable's picture

There is no way these people will be allowed to stay in these homes free and clear. While they may be benefiting short-term, they will always be living under the threat of a new fedgov cure, in order to make things "fair" (that 4-letter F word).

They start out as over-leveraged debt slaves, but will be transferred over to the political slave class, where they will learn what leverage can get them in terms of bondage.

Fri, 10/01/2010 - 16:09 | 619178 JLee2027
JLee2027's picture

There is no way these people will be allowed to stay in these homes free and clear

Court Rulings in Florida, Missouri, and (I think) Ohio say otherwise. Who you gonna pay when the only legal owner is yourself?

Sat, 10/02/2010 - 00:28 | 620359 StychoKiller
StychoKiller's picture

Lot's of law and legal precedent falls by the wayside under Martial Law!

Fri, 10/01/2010 - 16:11 | 619185 Saxxon
Saxxon's picture

notapplicable, agreed. 'A pox on both their houses' is a Shakespearean term reserved for unilateral malfeasance.  Completely, whoeheartedly agree that when this shakes out the people who are chortling with glee for not paying the Man will be living in Fed tent cities with a wrecked credit record.

And if somehow those same deadbeats wind up in the long run better off than people like myself, who are busting ass to work harder and be smarter and pay bills; then in my humble opinion the wheels will have completely fallen off in this country and we will have officials swinging from lampposts.

Sat, 10/02/2010 - 13:17 | 620981 ViewfromUnderth...
ViewfromUndertheBridge's picture

and in the tent next to them will be someone who bought a foreclosed house from a bank for hard-earned cash...only to have another bank demand later on to be paid and then THAT bank turfed them out when they couldn't pay and THAT bank could produce the note...

You are falling for the "deadbeat" argument that the banks want you to. This goes way deeper than that my tent-wary friend....

Good luck

Fri, 10/01/2010 - 14:58 | 618940 centerline
centerline's picture

There is just no way it could down like that.  It would be straight-up anarchy.  What will likely happen is that we all will suffer for it together.  Everyone gets f***ed.  

Fri, 10/01/2010 - 15:01 | 618947 cossack55
cossack55's picture

Anarchy is the first stop on the road to Liberty. 

Fri, 10/01/2010 - 15:03 | 618955 centerline
centerline's picture


Fri, 10/01/2010 - 16:10 | 619179 JLee2027
JLee2027's picture


Fri, 10/01/2010 - 15:13 | 618992 SheepDog-One
SheepDog-One's picture

Right, theyre faced with any further move they make resulting in certain anarchy. Its all Farcism.

Fri, 10/01/2010 - 15:40 | 619057 Citxmech
Citxmech's picture

The thing is, who actually has the title?  If the Bank's title is voided - I'm not sure if the purported "buyer" would automatically get clear title [by what mechanism?] 

Arguably - title could go back to the original seller, albeit a clouded title now because of the lien the buyer could levy on the property for all those mortgage payments and reliance costs...

For properties that have been flipped multiple times - this might never be straightend out without some kind of title reset legislation...


Fri, 10/01/2010 - 16:11 | 619186 JLee2027
JLee2027's picture

Welcome to the Great Reset. No legislation required.

Fri, 10/01/2010 - 19:38 | 619777 Dirt Rat
Dirt Rat's picture

...title reset legislation...


Whoa, you're asking the government to get back in the land patent business.

Fri, 10/01/2010 - 15:46 | 619085 OpenEyes
OpenEyes's picture

And, those who have a mortgage on a rental property can roll the dice for double-payout by walking on the mortgage while collecting rent.  Even those with only a primary mortgage could consider renting out their home for whatever amount they could attract and move to a rental with a lower monthly nut, or even double-up with another family member.  This could all get really strange really fast.  I just can't believe that they'll get away with it in the end though.  

Sat, 10/02/2010 - 10:13 | 620725 Zerohedge fan
Zerohedge fan's picture

that's why I bought 20 000 ft2 mansion in Fl.

paid $50/sf2

It is just wealth transfer, nothing else.

All you need is good timing.

Life is beautifull.

American dream. Wow!

We've only just began:

Fri, 10/01/2010 - 14:34 | 618857 Ragnarok
Ragnarok's picture

QE2, TARP2, Stimulus 2................  R.I.P.  USD

Fri, 10/01/2010 - 14:37 | 618860 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

So this is the Black Swan before the who bought gold with doelarrs when it was less than $10K-$25K before the doelarr was worthless Black Swan before the Treasurie Black Swan?

Fri, 10/01/2010 - 14:39 | 618873 SheepDog-One
SheepDog-One's picture

At this point Im certain it wont be 'the markets' that do us in but some massive outside force. Review Tylers 'Stuxnet' articles...what if one morning the markets simply didnt open due to the worldwide infection by this Israel produced weapons grade computer virus, and didnt re-open for a long time or ever due to the ensueing world war?

Fri, 10/01/2010 - 14:46 | 618899 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You could be proven correct, as I agree that the "M"arket "M"akers do not want anyone to know.....the economy is a giant hoax.  Problem/reaction/solution wouldn't go over very well if this was revealed.

Fri, 10/01/2010 - 15:03 | 618956 cossack55
cossack55's picture

OH, quit teasing me with my long awaited event.  The freakin sooner, the freakin better.  Drool, drool.

Fri, 10/01/2010 - 15:35 | 619047 Conrad Murray
Conrad Murray's picture

"What the hell do you mean all of the money in our accounts is gone?!  We're the goddamn government!"

Sat, 10/02/2010 - 14:06 | 621050 tamboo
tamboo's picture

EMP bitchez!

Fri, 10/01/2010 - 14:43 | 618889 Ragnarok
Ragnarok's picture

Ebony Swan?


Pick your color:

Fri, 10/01/2010 - 14:48 | 618910 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Haha!  Yes with so many swans we may need to color coordinate this. 

Fri, 10/01/2010 - 15:16 | 618998 SheepDog-One
SheepDog-One's picture

Heather grey is nice! Just off-black but intriguing.

Fri, 10/01/2010 - 14:38 | 618870 the not so migh...
the not so mighty maximiza's picture

If you cannot get title guarantee insurance any buyer will walk away. 

Fri, 10/01/2010 - 14:45 | 618897 Bob
Bob's picture

Market to stop dead in its tracks.  Hopefully, somebody digs out the entire corrupt mess in lurid detail before the Government Cover Up, I mean, Emergency Action to "protect the integrity of the markets" by covering all losses and Barry declaring that we must not look back, but "focus on the road ahead." 

Fri, 10/01/2010 - 14:49 | 618912 the not so migh...
the not so mighty maximiza's picture

This is going to be bigger then any market.    Mass corruption at every level and both creditors and debters get steamrolled.  

Fri, 10/01/2010 - 15:02 | 618950 willien1derland
willien1derland's picture

Well said - Lloyd Blankfein would call this "Timberwolf II - the return of the SH*TTY Deal' --> Dear Ben, Send $$$$ Love TBTF

Fri, 10/01/2010 - 16:14 | 619193 JLee2027
JLee2027's picture

Well since Lloyd wouldn't do it, God did it himself.

Fri, 10/01/2010 - 15:11 | 618988 FEDbuster
FEDbuster's picture

Grayson is on this like stink on shit.  Others will join the cause when they smell the blood. The phones at Congress must be ringing off the hooks with reminders from the banksters of "remember who you work for!"  

The FED and Treasury must be going ape shit right about now.  Jamie Dimon and ilk must be buying Depends by the case lot.

No title insurance for foreclosures means the bulk of the real estate resale market shuts down. 

Fri, 10/01/2010 - 15:20 | 619009 SheepDog-One
SheepDog-One's picture

I would certainly think behind the curtain its utter chaos! Banana Ben frantically pulling levers to keep markets green, Blackberry blowin up with emails from panicked PD banksters who have AGAIN been selling mortgages they dont own and keeping the foreclosure fees and leveraging them 40X begging him to do something about Grayson. Then theres the ashen-faced Congress clowns panicking over this election BS...all in all, TOTAL CHAOS!

Sat, 10/02/2010 - 00:33 | 620366 StychoKiller
StychoKiller's picture

All hail Eris!! (Greek Goddess of Chaos)

Fri, 10/01/2010 - 16:13 | 619190 Arkadaba
Arkadaba's picture

I would advise Grayson to stay out of small planes and hot tubs.

Fri, 10/01/2010 - 16:40 | 619271 Calculated_Risk
Calculated_Risk's picture

and walking near traffic.

Sat, 10/02/2010 - 10:27 | 620741 Zerohedge fan
Zerohedge fan's picture

and stay away from WTC 7

Fri, 10/01/2010 - 19:41 | 619788 Dirt Rat
Dirt Rat's picture

Most buyers, who buy the average 3 to 4 homes in their lifetime, have no clue what title insurance is.

Fri, 10/01/2010 - 23:17 | 620241 JLee2027
JLee2027's picture

I disagree...the name makes it clear what it is. Plus, its explained at settlement certainly if you ask about it, sometimes just voluntarily.

Fri, 10/01/2010 - 14:39 | 618874 old_turk
old_turk's picture


Don't think so, judicial foreclosure states ... this could well be but non-judicial foreclosure states ... the beat shall go on.

As far as clear title goes ... that's a fact jack, so enjoy that 'free house' because you'll never sell it.

Fri, 10/01/2010 - 14:51 | 618916 Bob
Bob's picture

Surely any plaintiff's claims are subject to demands for proofs in any and all US courts? 


Fri, 10/01/2010 - 19:23 | 619732 old_turk
old_turk's picture

In a judicial foreclosure state ... Yes!!

In a non-judicial foreclosure state, proofs are baked in to the deed of trust. (Proof of lien, and originating lien holder)  ... and the rights of lien are assignable.  No defendant. No judge, no jury, you no pay ... prove it to the county clerk and it's foreclosure process on ....

I repeat, for the umpteenth time, no your states rules or hire somebody whod does.

It'll save you a lot of wear and tear.

Sat, 10/02/2010 - 09:21 | 620687 Bob
Bob's picture

Ah.  Thanks for the nitty gritty.  It's the first time I've seen it defined/explained, and simply yet!  Live and learn.  Man, what a fucked up process in non-judicial states.  Is there no way for the homeowner to take it into court as plaintiff?  That doesn't seem possible . . . please advise. 

Fri, 10/01/2010 - 14:40 | 618880 Charles Darrow
Charles Darrow's picture

Who wants to place a bet that the Dodd-Frank act already lets these guys off.

Fri, 10/01/2010 - 15:33 | 619041 weinerdog43
weinerdog43's picture

I'll take your bet.  All insurance companies (except perhaps AIG) are known for copying each other.  All they're selling is a promise, so it's hard to differentiate.  The other title insurers are going to be follow suit.  Regardless of what abomination Dodd-Frank provides for, title insurers are going to want some sort of promise (TARP II hint-hint) before they sell another policy on foreclosed properties.  This will indeed grind to a halt. 

Fri, 10/01/2010 - 16:06 | 619163 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

I believe this just guaranteed that housing prices will drop at least another 20%. And for those areas with big fcl rates, they just guaranteed 100% drop in sales.

Fri, 10/01/2010 - 14:41 | 618884 Cammy Le Flage
Cammy Le Flage's picture

Tipping point....domino....I guarantee a whole lot of people aint gonna be paying their Oct. mortgage oh and some lawyers are getting ready to have their law licenses questioned and possibly sanctioned.....eeks.....I am in one of those homes and I paid 170 cash on a 350k loan that was "interest only" so it is not "free".  It is now worth 50 k tops and I cant get insurance on it because of the Fla insurance debacle....further even if I could get insurance it would only be through the state run insurance debacle called Citizens which is bankrupt.   One hurricane and that entity is GONE.  Citizens still has not paid the 2005 Wilma claims and you cant sue them because they are run by the state.  It aint that simple.

Fri, 10/01/2010 - 15:11 | 618987 PicassoInActions
PicassoInActions's picture

Doing short sale on one of the properties in South Florida

Title is the mess and it actualy was the mess when i bought but nobody at that time told me.

Now short sale aproved 4 month ago but due to the few lines that got cut off from the deed at the end, its becomming nightmare.

And the old republic is refusing to provide the info tought it is insured trough them.



Fri, 10/01/2010 - 14:42 | 618887 Cammy Le Flage
Cammy Le Flage's picture

Oh and I cant sell it because the loser cos lost the paperwork and we cant figure out title etc. - Oh and no one wants to pay any money for anything that is not brand new in Florida since so much construction occurred in the past 5 years....why buy old when you can get brand new for nothing.

Fri, 10/01/2010 - 14:44 | 618890 bullandbearwise
bullandbearwise's picture

Begs the question why I should make my Oct 1 GMAC mortgage payment today on my 60% LTV loan when I'm not really sure anyone knows where my title is located.

Fri, 10/01/2010 - 14:45 | 618896 Ragnarok
Ragnarok's picture

Can you walk in and ask to see it?

Fri, 10/01/2010 - 15:41 | 619064 Nathan Muir
Nathan Muir's picture

I called BOA yesterday and asked who had title to my house - BofA, BofA Loan Servicing LP, the investor who bought the MBS, Fannie/Freddie?  They have no clue, said they would get back to me.  I responded that I will not make another payment until they can prove they hold title.  Fuck it.  The ponzi is unravelling, the game is about to be up.  If I skip a few payments my credit goes down, I don't even care anymore.  I don't plan on financing anything for a long time anyway, own my truck, have cash/PM in savings.  Again, fuck it and fuck these crooked banks.  I'm done playing by their rules.

Fri, 10/01/2010 - 17:11 | 619371 Taint Boil
Taint Boil's picture

B of A - I hate them. The are are foreclosing on me and I didn't even know it (out of the country). They returned 2 payments with no explanation. Only way to stop foreclosure was to wire the money - no other payment accepted. Oh and don't forget the $1200 attorney fees etc. What a scam.


I hope the Banksters get what they deserve. They have their business model and we have ours. Check out this guy who has a business model that (finally) worked for the little guy.


Fri, 10/01/2010 - 19:11 | 619708 ToddGak
ToddGak's picture

Interestingly, I tried to do a wire transfer from my BofA account to APMEX to buy some PM's, and when I entered the information in my online banking account, I got the error response "the merchant APMEX is not on our list of approved wire transfer accounts" or some such.  Basically making it as difficult as possible remove money from your account to purchase more stable assets.  Eventually I got a cashier's check and executed the transaction that way.  I'm sure since the check was made out to APMEX I got put on some list somewhere.

Sat, 10/02/2010 - 00:38 | 620375 StychoKiller
StychoKiller's picture

Why worry about minnows when a school of sharks is munching on yer @ss?  Given the content of this article, your purchase from ApMex is gonna get lost in the flood!

Sat, 10/02/2010 - 10:47 | 620765 Zerohedge fan
Zerohedge fan's picture

keep us posted

sound like a movement


"....I had a dream"

Fri, 10/01/2010 - 14:46 | 618901 Citxmech
Citxmech's picture

If ALL foreclosures are halted to avoid the nightmare litigation scenerio,  Why should ANYONE pay their mortgages anymore?

Fri, 10/01/2010 - 15:09 | 618980 merehuman
merehuman's picture

 We have a reverse mortgage on our house. I did that to protect us from this uncertain future. Now i wonder did i make a mistake? We built this house in 2001. It was 220,000.00  2 years ago , now probably 120.000. In any case we have no rent to pay, except the 2000.+ taxes and insurance.

Sat, 10/02/2010 - 00:41 | 620379 StychoKiller
StychoKiller's picture

The wife and I only have 24 more payments on our house, but if the Govt. doesn't start jailing the guilty and allow this crap to go on, I'm thinking to NOT pay the mortgage and don't bother filing another tax return either!

Fri, 10/01/2010 - 15:07 | 618970 cossack55
cossack55's picture

Citipuke Mortgage keeps sending me offers to refi.  I'm beginning to think they can't find the title and want me to refi so they can get their mitts on a new one.  I'll just sit at 6% and wait for the baloon to pop.

Fri, 10/01/2010 - 16:19 | 619208 JLee2027
JLee2027's picture

Smart move.

Fri, 10/01/2010 - 17:32 | 619428 Arkadaba
Arkadaba's picture

Very smart. 

Fri, 10/01/2010 - 14:44 | 618891 No Mas
No Mas's picture

Sounds like everything is a mess except for gains in the market.  Not the market of course, it is no doubt a mess.  But still, gotta make some money.

I'm on board.  The worse the news ZH publishes (all of it accurate and truthful I believe) the more leveraged to the long side I am going.

Profit from insanity; it's not just for psychiatry any more!

Gentle Ben has again pushed it to the green.  More QE Sgt, More QE.  I like it, I love it, I want more of it!!

Fri, 10/01/2010 - 15:23 | 619015 SheepDog-One
SheepDog-One's picture

All safe and green lighted...well until tomorrow morning where perhaps Stuxnet fries all Wall St HFT computers. Sleep well!

Fri, 10/01/2010 - 14:46 | 618900 system failure
system failure's picture

Well geez, begeez, all of this bad news on the Tyler labeled (3M) sure explains why IYR is currently positive today. I mean come on maings, this party is just getting started....we should have even more bad news on 3M over the weekend, and on Monday as well, with the FRAUD, oops, I mean mis-steps the mortgage industry is having lately. And with that, the full HFT FAKING RAMP JOB should be under full steam throttle come Monday, so no worry maings. BUY>BUY>BUY with conviction. That is how the game it not???

Fri, 10/01/2010 - 14:49 | 618911 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Off topic:

Exclusive: Secret Shares Windfall At Goldman's

Fri, 10/01/2010 - 14:50 | 618913 TheGreatPonzi
TheGreatPonzi's picture

This is beyond ridiculous. The foreclosure and mortage mess is going to annihilate the banks and give free houses to millions of people. And the DOW will close green.

Fri, 10/01/2010 - 16:22 | 619217 JLee2027
JLee2027's picture

Yes, this will blow up the banks and the Dow eventually and most debts. Welcome to the Great Reset.

Fri, 10/01/2010 - 14:51 | 618917 kaiserhoff
kaiserhoff's picture

Now we are getting somewhere.  From now on, foreclosed houses will be almost free, because you're not buying a house.  You are buying an option, sort of a stub of a chance, and a maybe, someday, you might have a clear title.  Who's going to pay squat for that?

Fri, 10/01/2010 - 14:53 | 618922 williambanzai7
williambanzai7's picture

Essential Reading For Foreclosure Lawyers

Fri, 10/01/2010 - 14:57 | 618928 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Upgrade for me eyeballs!  WB front and center!

Fri, 10/01/2010 - 15:02 | 618952 Bob
Bob's picture

Much better!  Props, B.

Fri, 10/01/2010 - 15:03 | 618953 Implicit simplicit
Implicit simplicit's picture

Its as easy as it is for 16 yr. olds to forge Alcohol Beverage Commission cards (ABC).

Fri, 10/01/2010 - 15:59 | 619141 cossack55
cossack55's picture

Is this available on Amazon?

Fri, 10/01/2010 - 16:17 | 619198 Arkadaba
Arkadaba's picture

Congrats WB!

Fri, 10/01/2010 - 19:30 | 619749 Sisyphus
Sisyphus's picture

Congrats on the upgrade, WB7. Always loved your creativity!!

Fri, 10/01/2010 - 23:18 | 620243 williambanzai7
williambanzai7's picture

Thanks all, I consider it an honor. 

Fri, 10/01/2010 - 14:54 | 618923 bankonzhongguo
bankonzhongguo's picture

At what point do county recorders' offices start getting torched?


Fri, 10/01/2010 - 14:56 | 618927 wintermute
wintermute's picture

If foreclosures can't happen in a clear and consistent manner then this causes bigger problems to the wider market.

There are more people struggling to meet mortgage payments than 30, 60 or 90 days overdue. What incentive do they have to continue struggling? Why not stop paying safe in the knowledge it will be a couple of years before they have to leave their house?

This is yet more moral hazard in a rotten financial system - just like bailing out bankrupt banks or DK'ing trades from run amok algos. All these reward failure and disincentivize good practice.

Sat, 10/02/2010 - 00:45 | 620384 StychoKiller
StychoKiller's picture

Not to worry!  It's NOT the slope that's slippery, it's the vaseline on your skis that is! :>D

Fri, 10/01/2010 - 14:56 | 618932 VWbug
VWbug's picture

next time foreclosure numbers are released, they will be waaaaaay lower, which should give a boost to stocks

Fri, 10/01/2010 - 15:44 | 619076 FEDbuster
FEDbuster's picture

The bogus media will try to supress the reasons why, but this is going to spread on the Internet like a wildfire with 80mph winds.  I think we are up to about 1 out of 8 mortgages are at some level of default (roughly 7 million).   That default number will double in the next 12 months given this news and continued downward spiral in the real economy.

This is PROJECT MAYHEM at it's finest.  Reset all mortgages to zero!

Fri, 10/01/2010 - 16:00 | 619143 OpenEyes
OpenEyes's picture

already showed up today on the NY Times most emailed articles ( iphone app)

Fri, 10/01/2010 - 14:57 | 618933 Problem Is
Problem Is's picture

The F.I.R.E industry is getting burned...
It couldn't have happened to a nicer bunch of schmucks...

Fri, 10/01/2010 - 14:57 | 618935 digalert
digalert's picture

Breaking News!!!

Economy improves, foreclosures plummet.


Fri, 10/01/2010 - 14:57 | 618936 system failure
system failure's picture

I must have it wrong, because if the majority of homes for sale are owned by the banks, and the majority of homes for sale will be taken off the market because of the stated above mess, then there will be less homes available to buy. Well that would draw one to conclude, that prices will rise for those homes with clear titles for sale or non-foreclosure homes. That would mean, with low interest rates, I should be out buying up these homes for the next 10% home price jump in the near future. Me and my no down payment strategies, awesome. 

Fri, 10/01/2010 - 15:04 | 618958 Commander Cody
Commander Cody's picture

Every home has a title, somewhere.  All they have to do is find it.  With the selling and packaging and reselling though, it might take awhile.  Mortgage servicing departments will be expanding.  That is a green shoot!

Fri, 10/01/2010 - 16:02 | 619151 wintermute
wintermute's picture

Clear title is at risk. And this will kill sales - because any property which has had previous loan documentation disputed - will be unsaleable - even to a cash buyer.

No buyer will pay money out if title is not crystal clear! Banks will not lend if title is not evident from previous seller. Who can safely buy a property when only a previous owner 2 or 3  back can demonstrate last clear title?

Securitization is a cancer on the property market.



Fri, 10/01/2010 - 16:28 | 619231 Arkadaba
Arkadaba's picture

Good point and I can see the beginnings of a new strand of businesses starting up ... like Carfax but for houses - Homefax?

Fri, 10/01/2010 - 16:57 | 619325 PhattyBuoy
PhattyBuoy's picture

Registered through:, Inc.
Domain Name: HOMEFAX.COM
      Created on: 01-Mar-99
      Expires on: 01-Mar-17
      Last Updated on: 10-Jun-08

Fri, 10/01/2010 - 15:34 | 619046 Eternal Student
Eternal Student's picture

And what do you think is going to happen when this mess is cleared up, and all of those homes come back on the market?

Buying at a time when there's no honest price discovery is foolish unless you play your cards very, very well. I.e. sell out to some sucker before all of the backlog comes back on.

Fri, 10/01/2010 - 18:00 | 619520 Geoff-UK
Geoff-UK's picture

Yes, please buy houses to flip them.  Also, buy more iPads.  Keeps my gold at a lower price so I can accumulate more.

Fri, 10/01/2010 - 14:58 | 618937 Cruel Aid
Cruel Aid's picture

I am waiting for the  'tear em down' strategy. With excessive oversupply and lack of mortgage proof being the justification.

China is doing it to stimulate growth...  Monkey see, Monkey do!


Fri, 10/01/2010 - 15:16 | 618997 Bob
Bob's picture

Yeah, so much better than living with the evil of people getting "free homes." 

It seems that neither the US nor "Communist China" can wrap their heads around that horror.

Fri, 10/01/2010 - 15:48 | 619090 FEDbuster
Fri, 10/01/2010 - 14:58 | 618938 LostWages
LostWages's picture

No title insurance, no loans, no over.

Clusterfuck of major porportions.

CONgress left town just in time....;-)

Fri, 10/01/2010 - 15:08 | 618978 Implicit simplicit
Implicit simplicit's picture

Congress will pass a law allowing the takeover of all foreclosed propreties by the goverment.

Then they will give census workers guns, and a rent with a right to purchase agreement. However, they must act as federal agents, and agree to work more detailed census taking every year.

Fri, 10/01/2010 - 15:13 | 618939 linrom
linrom's picture

Fuckers didn't think of that, did they? This just shows how little they think of the 'small people'. Confound and confuse them, the peons are not supposed to comprehend any endeavor that requires thinking or any knowledge of common law.

Fri, 10/01/2010 - 15:00 | 618945 Commander Cody
Commander Cody's picture

I'm sure that Congress will correct these wrongs and give banks unlimited power and more free money.  Its the American Way!  So, the seizures will continue.

Fri, 10/01/2010 - 15:01 | 618946 Implicit simplicit
Implicit simplicit's picture

GMAC should give AIG a call. They'll insure anything. The gov's got their back

Fri, 10/01/2010 - 15:03 | 618957 Waterfallsparkles
Waterfallsparkles's picture

If nothing else it creates a legal nightmare for the Banks.  Plus, the Title Companies that already insured the forclosures.  Hope the Buyers got the optional Title Insurance to protect their cash and the increased value of the Home.

Buyers have to beware because Title Insurance does not cover any improvements you make to the Home.  Many of the homes that get forclosed need new roofs, appliances, carpet.  This is not reimbursed to my knowledge in the title policy and your interest is not protected unless you took the optional Owners Policy.  I also do not believe that your closing costs and maybe Property Taxes would be reimbursed.

Fri, 10/01/2010 - 15:17 | 619000 the not so migh...
the not so mighty maximiza's picture

thats correct , it insures the property you buy is free and clear up to the day you buy/close it.  Most insurance covers future events.  I am surprised it in not mandatory by law for property purchases.

Fri, 10/01/2010 - 15:04 | 618961 davidsmith
davidsmith's picture

Posted elsewhere, posting it here:


Watch out!  Don't narrow the issue to whether the underlying fact support foreclosure.  That's what the banks want you to argue (I understand that this fraud is quite enough to get the foreclosure thrown out).




This is not a standalone fraud.  It is part of a conspiracy--reaching right into the White House--to hide bad debt on bank books. 


Why are these suits to overturn foreclosures?Why aren't they in Federal Court on a RICO charge, violation of Civil Rights charge, fraud, conspiracy charge? 


Wait til you find out the REAL truth: some time ago, the Government realized that there is 0 return to be had on foreclosures AND PROMPTLY FORGAVE THE DEBT.   This observation is the lynchpin in the correct understanding of what is going on.


 This is NOT an attempt to get property back in order sell it in order to make something on an investment.  The truth is that the United States KNOWS there is NOTHING to be made on this mortgage debt.  It is NOT SANCTIONING THESE ROBO-AFFIDAVITS IN ORDER TO GET MONEY.  IT IS DOING IT TO HIDE BAD DEBT ON BANK BOOKS.


The entire process--from HAMP denials through these robo-docs--is a conspiracy to hide bad debt on bank books. 


There is NO underlying economic incentive to foreclosure, and when the truth comes out, it will be revealed that the U.S. concluded this some time ago, wrote off the debt, and in FACT participated in foreclosures for one reason ONLY: to hide bad debt on bank books.


Get Timmy under deposition.  He knows what I am saying is true true true.

Fri, 10/01/2010 - 15:06 | 618967 chinaguy
chinaguy's picture

I'm making an offer on a Bank of America REO.

A few months ago ZH posted a report by Bank of America saying housing would not bottom until 2013.

Can anyone find me a link to it? I want to include it in the offer Addendum -



Fri, 10/01/2010 - 15:11 | 618985 centerline
centerline's picture

It continues to amaze me that more people did not take a couple of those mortgage payments that are NOT paid to the bank, and put it towards a nasty lawyer who would jam up the system by requesting documents.  Not that I am advocating anything here one way or the other - just asking, are there really so few people who just up and walk away quietly?  I am surprised.

Fri, 10/01/2010 - 15:25 | 619018 Bob
Bob's picture

I'm hoping that you'll get a more authoritative answer, but I think most people have been walking away.  That's the real big question, in spite of the intense bias toward financial rationality here: How many sheeple will really have the nerve to stand their ground with the banksters?

Debt collectors now threaten people with imprisonment, seizure of assets, loss of job, just to get them to pay their delinquent credit card bills--my daughter, a lawyer in the business, swears that 60% of her clients actually believed such absurd threats . . . and the remainder are just perversely determined to avoid bankruptcy, regardless of how patently impossible it is. 

Never underestimate the sheepliness of the average American.

Fri, 10/01/2010 - 15:40 | 619059 Commander Cody
Commander Cody's picture

Have to agree, Bob.  Its time for the sheeple to bone up, get a pair (or whatever the ladies do) and act on their 2nd Amendment rights.

Fri, 10/01/2010 - 15:28 | 619030 SheepDog-One
SheepDog-One's picture

Im amazed by it too! If I was getting foreclosed on in this mess due to no fault of my own, but the fault of those coming to vacate you from your home, I'd take $200, rent a bulldozer for the afternoon and completely tear down the house and leave the keys dangling on a stick in the ground out front!

Fri, 10/01/2010 - 15:44 | 619079 Conrad Murray
Conrad Murray's picture

I actually spit water on my keyboard from that, thanks haha.

Fri, 10/01/2010 - 19:45 | 619804 Cathartes Aura
Cathartes Aura's picture

it's already been done, at least once:

$350,000 home------> rubble.

Fri, 10/01/2010 - 15:15 | 618996 tahoebumsmith
tahoebumsmith's picture

Existing home sales for October down 65%...That's right! seeing how 65% of existing sales have been either REO properties or short sales. This will stabalize home prices as PLANNED and the glut of supply will be taken off the market along with all the shadow inventory. The pipeline was too glogged and the tsunami of foreclosures would have put the banks over the edge. Now we have a nice way to trickle it out another 3 years without notice! How convienient for the banks that know the toxic wave could have proved their insolvency! In other words, It's better to let them squat and spend their mortgage money at Walmart then it is to have them force us to show our true losses. 

Fri, 10/01/2010 - 17:15 | 619387 Calculated_Risk
Calculated_Risk's picture

I doesn't fix anything for the banks, they still have the revenue problem, and

for the homes on their books they have to pay taxes on. If they don't they may lose it to the county. I have a house in the hood that isn't being claimed by the bank, or the previous owner, because the taxes are due...

Fri, 10/01/2010 - 18:38 | 619622 tahoebumsmith
tahoebumsmith's picture

I doesn't fix anything for the banks, they still have the revenue problem??? Revenue problem? Are you kidding me? How about another backdoor bailout for the poor banks that broke the fricken law! My guess is they might even bring back Hank Paulson from hiding and put the gun to their head once again?

Fri, 10/01/2010 - 15:21 | 619011 Everyman
Everyman's picture

How does this effect RIETS both commercial and residential?

Fri, 10/01/2010 - 15:49 | 619095 Panafrican Funk...
Panafrican Funktron Robot's picture

Probably a rhetorical question, but I'll answer it for fun:

Bunch of non-performing assets.

Bills to pay.

No way to unload said assets.


Counterparties have no way to liquidate.

Counterparties -> 0.

Hard to fluff a zombie's cock when breaks off.

Fri, 10/01/2010 - 15:21 | 619012 PicassoInActions
PicassoInActions's picture

Quote stuffing in HFT, Layers stuffing in foreclosure, we will have a flash crash in housing soon enough.

Fri, 10/01/2010 - 15:27 | 619024 dead hobo
dead hobo's picture

You miss the bigger point. It is a true 'black swan,' to use a cliche.

Without title insurance, there is no mortgage loan. Period. No loan = no sale.

At this time, no responsible title insurer would or should consider issuing a title policy on foreclosed property without a government guananty.

The foreclosure market has been ended until this problem is resolved. Now, analyze the ramifications of that a few levels down.


Fri, 10/01/2010 - 18:05 | 619526 Geoff-UK
Geoff-UK's picture

Think there's any chance the housing market will return to cash-n-carry after this?

Fri, 10/01/2010 - 19:35 | 619766 Sisyphus
Sisyphus's picture

Good to see you back, dead hobo!

Sat, 10/02/2010 - 03:28 | 620501 merehuman
merehuman's picture

aha, let me guess. no loans taken out ergo less money created= further deflation?

Oh crap , derivatives come into play.. oh boy!

Fri, 10/01/2010 - 15:28 | 619028 MikeyKid
MikeyKid's picture

Strategic Defaults rising as Foreclosures meet this mess - the prefect storm to confuse anyone in the RE market:


Fri, 10/01/2010 - 15:36 | 619052 Ieetseelmeet
Ieetseelmeet's picture

This mess started because there was a great sucking sound coming from the derivative creating machine. 

To stuff tranches, they flung mortgage notes into the machine.

To keep things legal, each tranche would have a unique set of mortgage notes for its records.

If the documentation is messed at this end, would it also be messed at the other end?

May a unique mortgage have been offered in more then one CDO?

How would this play out?

Fri, 10/01/2010 - 19:54 | 619832 Dirt Rat
Dirt Rat's picture

When the housing bubble was going on, there were borrowers coming into the County Recorder's office with a problem. In the last six months they had made three separate refis on their first mortgage because the rates kept going down. They wanted to refi again, but those first two refis had never been released. They'd been paid off, but never released because the mortgage brokers didn't have a lick of sense about what they were doing. Maybe those two unreleased mortgages were showing up as perfectly good liens in somebody's tranche somewhere. Who knows?

Sat, 10/02/2010 - 09:53 | 620703 Bob
Bob's picture

Who knows?

I am not one of them, but I'm sure that many people know.  Unfortunately, they're the ones who created and/or profited from them, so they're not gonna be talking.  It will take a while for depositions to dig up the whole story. 

I would bet almost everything I have that there are a shitload of mortgages that were double or triple bundled and sold.  I mean, think about it.  First, there's this now emerging recognition that fundamental accounting controls were pervasively missing.  How many people saw opportunity there . . . and knew damn well that nobody was looking (for that matter, there were apparently no systems by which to actually monitor it for those who may have wanted to.)  And there was a lot of money to be made. 

Opportunity + motivation+ virtually no chance of getting caught = guaranteed crime, er, "mistakes" on a vast scale in the world I know.  Especially when people see others doing it with impugnity and making extreme bank.

Human nature alone ensures it.  When you kick that proposition up to accomodate the inhuman greed and sociopathy of financial industry players, the likely reality staggers the imagination.  Even more than they've staggered us to date. 


Fri, 10/01/2010 - 15:43 | 619070 Nonconformist
Nonconformist's picture

Somehow, I have the feeling that the banks will come out alright from this.  It's nothing that a few law/regulation changes can't solve.  As incompetent as the regulators seem to be, they have had to have known about this for quite awhile yet chose to do nothing about it.  As we have already seen, a lot of unthinkable things can be done in the name of financial stability and, by extension, national security.

Fri, 10/01/2010 - 15:44 | 619074 Sausagemaker
Sausagemaker's picture

Soooo- Any thoughts on SKF or SRS at 52-week lows?

Fri, 10/01/2010 - 15:48 | 619093 Precious
Precious's picture

Don't be fooled.  This is old news.  The banks, mortgage packagers, and title companies have been just covering it up and praying.  For over 2 years the handwriting has been on the wall.  It was obvious to anyone who ever observed loan origination and then the securitization process that the procedures being used were a fucking joke.  It's a miracle that the Title companies have not been crushed already.  It's only because of a crooked Federal mortgage lending system that this got so out of hand in the first place.  We will yet see if the state courts have the balls anymore to do the legal thing, and tell these fucking crooks in the mortgage industry to either produce the correct chain of title or take a fucking hike.

Fri, 10/01/2010 - 15:53 | 619113 Panafrican Funk...
Panafrican Funktron Robot's picture

I think enough judges are going to figure it out.  There's a lot of people who, once awake, tend to do the right thing.

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