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Is MERS Commercial About To Break The CMBS Market?

Tyler Durden's picture





 

The irresponsible actions by MERS are rapidly becoming the stuff of folklore: from their direct and indirect involvement in every fraudclosure, to the president himself falling for what appears to be a MERS agent with a split signature personality, to MERS just-released refutation of it ever having done something wrong, the hammer on MERS seems to be preparing to fall with a resounding thud. Yet with everyone focusing on MERS' involvement in the residential mortgage space, pundits have ignored that "other" space where MERS made the possibility of outright robosigning fraud a distinct possibility - commercial real estate. For specifics one has to go back 7 years in time, to July 28, 2003, and read the following press release from the company titled: "MERS Liberates Commercial Marketplace From Assignments" in which we read that "MERS announces the release of its latest
product, MERS® Commercial, designed to eliminate the repurchase risk and
costs associated with preparing, recording and tracking assignments for
the commercial mortgage-backed securities (CMBS) marketplace." Ah yes, how convenient for MERS to come to the CMBS market with a "time saving" yet fraud facilitating product, at precisely the time when various CMBS issues would start propagating and flooding the market with hundreds of billions of commercial real estate securitizations. Which begs the question: if residential mortgage foreclosures are being halted and if the very fabric of the MBS securitization architecture is put into question, when will someone ask whether MERS
® Commercial allowed such pervasive title fraud as is now apparently ubiquitous in the residential space, to take the CMBS space by storm, and how many billions in dollars will Banc of America Securities, Bear Stearns (d/b/a JP Morgan), GE Capital Real Estate, GMAC Commercial, John Hancock and Wells Fargo be forced to buy back loans that were fraudulently certified.

Reading through the MERS press release:

Commercial originators and issuers can save hundreds of dollars in preparing and recording assignments; in cases of cross-collateralized loans, the savings can be in the thousands. Missing interim assignments are eliminated, making the lien release process more efficient for commercial servicers. MERS® Commercial also allows special servicers to foreclose more efficiently by eliminating the problem of missing interim assignments.

“MERS undertook the task of developing this product with the endorsement of the Mortgage Bankers Association of America and the Commercial Mortgage Securities Association,” said R.K. Arnold, President & CEO of MERS. “It was mainly driven by a need in the commercial marketplace for a simpler loan process, elimination of paperwork and cost-savings.”

The first MERS® Commercial loan closed on July 10, 2003 by Bank of America for approximately $300 million. It was collateralized by over 40 properties in over 20 states.

MERS® Commercial allowed us to more easily originate this complex loan for Bank of America,” said Joe Forte, senior partner at Dechert LLP. “The MERS team was exceptionally responsive to our inquiries. Within 24 hours, they answered all our questions and gave us all the information we needed to close the deal. I believe that the use of MERS® Commercial will quickly become the standard in CMBS transactions.”

We are excited about the value that MERS® Commercial brings to the commercial lending industry,” said Janice Smith, head of CMBS conduit operations for Banc of America Securities. “This product addresses the longstanding industry problem involving missing or improperly recorded assignments, while also substantially streamlining the overall loan transfer process. We believe that MERS® Commercial will play an important role in helping the CMBS market maintain its liquidity by making loan transfers simple and efficient.”

MERS® Commercial for the CMBS marketplace is designed especially for use by issuers, master servicers, custodians, originators and special servicers. It is easily accessed through the Internet, through a secure, password-protected web-based interface. It supports loan structures with multiple promissory notes and multiple properties in the collateral structure, and provides a method to identify how many security instruments and UCC documents were present at the time of loan closing.

MERS® Commercial streamlines the final certification process,” said Dan McLaughlin, Executive Vice President, Product Division, for MERS. “It reduces the risk that a lender will have to repurchase a loan.”

MERS® Commercial has been jointly funded by Banc of America Securities, Bear Stearns, GE Capital Real Estate, GMAC Commercial, John Hancock and Wells Fargo.

“It is important for the success of this effort that the industry’s critical players are involved and committed,” said Carson Mullen, Executive Vice President, MERS Customer Division. “They have given their financial support from the outset, as well as their participation in the development of the final product.”

"We are excited about the potential for MERS® Commercial," said Mary Anne Ashmore, Chair of the CMSA/MBA Task Force on Loan Document Integrity and First Vice President of ABN AMRO/LaSalle Bank,. "In addition to reducing the risks associated with collateral documents, it also significantly reduces the costs associated with assigning the collateral to the Trusts. This makes it a perfect solution for our industry."

Oopsie. Perhaps the perfect solution to the CMBS industry will also just end up being its perfect downfall. At least we now know that once MERS fraud is exposed for all to see, that Banc of America Securities, Bear Stearns (d/b/a JP Morgan), GE Capital Real Estate, GMAC Commercial, John Hancock and Wells Fargo (and likely many others), will soon be forced to "repurchase all those loans" they thought were safe in the title certifiation department.

We, for one, can't wait to see how long the CMBS market tries to stay mum about this so overdue next leg down in the commercial mortgage industry. On the other hand, with various CMBX tranches trading close to all time highs, it may be a fitting epilogue to the most contrarian story in the history of commercial real estate. Plus it is not like any one of those tenants are actually paying their rents.

If nothing else, it will at least force Bernanke to finally step in and destroy all speculations and rumors that the Fed may actually allow the commercial mortgage backed security industry to fail, even as intrinsic securities' valuations are rapidly dwindling courtesy of the second great depression.

 


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Mon, 10/11/2010 - 13:53 | Link to Comment Turd Ferguson
Turd Ferguson's picture

Estimates of QE2 are grossly too low. Try $5T on for size. Got gold?

Now, take this to its conclusion....

The Fed buys all worthless CMOs. The Fed becomes beneficial owner of the vast majority of US residential real estate.

At the demise of the Weimar, the Germans issued new currency backed with the only hard asset they had...real estate. 

Not sayin. Just sayin.

Mon, 10/11/2010 - 13:54 | Link to Comment Keri at Bankste...
Keri at Bankster Report's picture

The nation's largest title insurance company, Old Republic, is no longer offering title insurance to JPM or Ally Bank foreclosure sales:

http://moneywatch.bnet.com/saving-money/blog/home-equity/old-republic-ti...

Holy smokes.  This is huge!  The title insurance companies even know that they can't trust the banks!

Mon, 10/11/2010 - 14:25 | Link to Comment Ripped Chunk
Ripped Chunk's picture

Title insurance had to be the next shoe to drop.

Mon, 10/11/2010 - 22:55 | Link to Comment title examiner
title examiner's picture

Title Insurance should have been the first shoe to drop and it should have dropped years ago.

It isn't like they didn't know at the very beginning and it isn't like Title Examiners around the country weren't complaining--and being squelched via blacklisting.

OK.

You'd best turn your thoughts to a soviet style collapse and how to get through that.  Agriculture and distribution come to mind.

 

 

Mon, 10/11/2010 - 13:55 | Link to Comment davidsmith
davidsmith's picture

No, as I have said since July, it's $7 trillion, with $5 trillion more in the pipeline for spring.

 

And don't forget the stealth monetization!!

 

By the way, wait til you see the drop in California tax revenues.  Word to the wise!!

Mon, 10/11/2010 - 14:30 | Link to Comment Conrad Murray
Conrad Murray's picture

Regarding the $7,000,000,000,000 figure:

http://www.cnbc.com/id/39557679

Mon, 10/11/2010 - 14:51 | Link to Comment davidsmith
davidsmith's picture

"U.S. households have $70 trillion in assets," Sumerlin explained during a live interview. "And the Fed essentially needs to buy enough Treasurys and mortgages that you can get a bid on all those other assets. And when you have leakage in the international system it takes a pretty big amount to be successful. To me, it starts to get interesting at six to seven trillion dollars."

 

Sumerlin is OK, but his focus has ALWAYS been too narrow.

 

For example, Americans do NOT have $70 trillion.  Their realistically realizable assets (and remember, it's Sumerlin's premise that we are talking about the real world here) are about $12 to $14 trillion.

 

That's why I say $7 trillion now and $5 trillion in early spring 2011.  Because, once that is done, Americans will have nothing, really, more to loot.

 

And that's what this liquidationist process is all about: it's about looting the middle class.

 

When will we know that it has been successful?  When the unemployment rate for people with a Bachelor's degree or higher starts to zoom.  I'm using the BLS figure here, which said that unemployment in this class (dare I use the "class" word?), actually DECLINED from 4.6% to 4.4% last month.

 

Meaning?  Meaning that the political system is free to loot to its heart's content, because our useless, fascist overpaid clockwatchers are still trudging to their stations.

 

This class of worms is next in liquidation's crosshairs.  They will lose everything they have: house, job, assets.  It will all be taken from them.  And until the process is complete, they will be unaware of it.  Boiling frog or something like that?  Anyway, this group of ants is doomed.  Bye bye.  The garbage can of history awaits you.

Mon, 10/11/2010 - 17:00 | Link to Comment SteveNYC
SteveNYC's picture

Those numbers would surely crash all markets, currencies, and economies instantaneously. I don't see this happening at all.....

....and in the chance we do, bye bye Bernanke.

Mon, 10/11/2010 - 13:58 | Link to Comment cossack55
cossack55's picture

Does that mean I will have to repaint my house to like like a FRN denominated at ???  I do have some Zimbab 100 Trillion bills left to us as a template. High enough???

Mon, 10/11/2010 - 14:02 | Link to Comment LeBalance
LeBalance's picture

With only 5 $1T bullets in his revolver does Ben feel like a MAN?

Can he say, "Well this is a .44 magum intervention and it will devalue our currency by a clean 2%.  You've got to ask yourself one question, do you feel Trichet? Well, do ya [Vlad/Wen]?"

Of course he can't.

Now with a "until the problem is solved" number of undisclosed denominated bullets, he feels like he has the bulge that delivers.

He can sit down with his compadres and not feel light in the drawers.

Mon, 10/11/2010 - 14:22 | Link to Comment Keri at Bankste...
Keri at Bankster Report's picture

MERS, Citibank, and Ally sued in civil RICO suit:

http://crooksandliars.com/susie-madrak/citibank-ally-and-mers-sued-civil...

RICO--Racketeering-Influenced and Corrupt Organizations act.  A suitable title for all of them!

Mon, 10/11/2010 - 14:36 | Link to Comment Bob
Bob's picture

 

Courtesy of user Careless Whispers :

 

let's take a look at who owns MERS:

http://www.mersinc.org/about/shareholders.aspx

here's a deposition of an officer of MERS admitting zero employees for the past five years!

http://stopforeclosurefraud.com/2010/08/27/exclusive-mers-deposition-of-secretary-and-treasurer-of-merscorp-42010/

hey, all you wanna be fraudsters, for $95 per month you too can have a virtual office at the same address where MERS has their "global headquarters" with zero employees; 1818 library street, reston virginia 20190

https://www.davincivirtual.com/loc/us/virginia/reston-virtual-offices/facility-848

 

It looks like MERS is a shell corporation founded and operated by the MBS banks.

Mon, 10/11/2010 - 20:50 | Link to Comment williambanzai7
williambanzai7's picture

Very interesting. MERS is a server farm.

Tue, 10/12/2010 - 05:27 | Link to Comment gecko_x2
gecko_x2's picture

this guy found the farm:

http://ppinternational.goldtent.net/?p=235968

 

http://www.ebrinc.com/index.html

from the site:

"EBR is a research, development, and analysis company that focuses on supporting efficient and effective decision making. The company uses extensive scientific, technical, and intelligence expertise to develop relevant, insightful, and effective solutions to critical issues. Since its founding in 1987, EBR has completed hundreds of successful projects for government, private sector, and international clients, including better approaches to command and control for coalition missions ranging from warfighting to peacekeeping and disaster relief; acquisition of actionable competitive intelligence; valid and reliable measurement of organizational and institutional performance; modeling complex phenomena such as irregular warfare and future information technology architectures and systems; designing and executing experiments that link emerging ideas to practical innovation; as well as tracking and forecasting political, social, and economic trends."

 

'ranging from warfighting to peacekeeping and disaster relief '

Seems pretty handy for them to have the complete database of US homeowners..

Mon, 10/11/2010 - 14:50 | Link to Comment ZackAttack
ZackAttack's picture

At the demise of the Weimar, the Germans issued new currency backed with the only hard asset they had...real estate. 

Yep, and French assignats, backed by seized private (church) lands.

This time, Bernanke Bucks will be backed by MBS paper, and nonconvertible.

 

Mon, 10/11/2010 - 14:55 | Link to Comment davidsmith
davidsmith's picture

Very good, and very good at building up the links showing us the U.S. government's orchestration of the conspiracy

 

TO HIDE BAD BANK DEBT

 

Keep your eye on the ball.  This is what is going on and it is the ONLY thing that's going on.  The rest--HAMP, MERS, MBS--all the rest of it, is a

 

MEANINGLESS FRONT

 

to blow smoke in your face, so that you don't see that what is really going on is a conspiracy

 

TO HIDE BAD BANK DEBT.

Mon, 10/11/2010 - 15:02 | Link to Comment Bob
Bob's picture

No shit it's a conspiracy of govsters and banksters to hide and shift bad debt onto taxpayers.  I think most of us assume that.  Common sense? 

The tricky part is finding the evidence and spreading the word. 

Mon, 10/11/2010 - 15:03 | Link to Comment gmrpeabody
gmrpeabody's picture

Does all this mean that I should start a FAZ position in my portfolio?

Mon, 10/11/2010 - 15:30 | Link to Comment Bob
Bob's picture

Maybe, but my guess is they'll outlaw the inverse ETF's or close down the markets before that bet pays like it should. 

Mon, 10/11/2010 - 16:00 | Link to Comment Freebird
Freebird's picture

From the Great Transfer of Wealth and other spine tingling tales...

Mon, 10/11/2010 - 16:02 | Link to Comment Shameful
Shameful's picture

Could even still sell the ownership society.  "See we are the government and the government owns the houses, so we al own the houses!".  But then that is assuming the Fed hands over assets to the Gov after the currency collapse.  Since it's private seems t me that they will walk the good assets out the back door at fire sale prices.  If it works for hte mob...

As to 5 trillion more, yeah that's feasible.  But it won't end, the trigger for the rapid downward move will be the foreigners realizing "My God their self immolating and keep in pouring on the gas...I don't think they are going to stop..." 

Mon, 10/11/2010 - 13:47 | Link to Comment tpberg7
tpberg7's picture

One currency to rule them all and in the darkness bind them!

Mon, 10/11/2010 - 13:52 | Link to Comment breezer1
breezer1's picture

 if this is to be the final nail in the coffin then they will need to get another coffin, too many nails in the first one.

Mon, 10/11/2010 - 15:05 | Link to Comment gmrpeabody
gmrpeabody's picture

ROFLMAO..;-)

Mon, 10/11/2010 - 15:51 | Link to Comment TraderTimm
TraderTimm's picture

Yeah, sad thing when you start out with a classy walnut coffin, then it ends up being mostly bent stubby nails. The circular tops reflecting enough light to look like a leaden disco-ball.

The next coffin should be something cheaper, perhaps balsa or pine.

Mon, 10/11/2010 - 13:53 | Link to Comment davidsmith
davidsmith's picture

When will you realize that this entire fraud scheme--from commercial real estate to residential real estate, from HAMP denials to robosigning--is designed to do one thing and one thing only:

 

HIDE BAD DEBT ON BANK BOOKS.

 

Wait til depositions bring out the fact that this was directed entirely from the top.  Like my friend said who used to work at Wells, after a certain point the bank was crawling with treasury agents.  The entire thing is a conspiracy to defraud directed right from the top.

 

Wait and see.  You mark my words.

Mon, 10/11/2010 - 14:06 | Link to Comment greyghost
greyghost's picture

well there is another good point....this is why when growing up...THE LIE...THE COVERUP... was always far worst than whatever rule you broke! the punishment was always far worst

Mon, 10/11/2010 - 15:42 | Link to Comment eatthebanksters
eatthebanksters's picture

Eat the Banksters!!!

Mon, 10/11/2010 - 13:54 | Link to Comment LeBalance
LeBalance's picture

The analogy of an infinite number of dominoes struck and falling.  Each one carrying with it enough financial momentum to topple countries, but magically never encountering the effect plane.  Magically levitated by the power of sweet nothing.

To join its brethren in purgatory awaiting the death of confidence.

And who knows when that date is?  It is planned surely as then the propagandic floodgates shall blare their Black Swan Song.

War, Bust, Famine, .....

And William Shatner shall overact and call for .... More Power....  More Power to Me or You are All Dead.

The world's dumb masses (dum asses) will respond: "Anything, Save US!"

/excuse me I need to pray to the porcelain god, on knees yet./

Mon, 10/11/2010 - 13:56 | Link to Comment chet
chet's picture

Remember when people used to go to jail for doing illegal stuff?

Mon, 10/11/2010 - 14:09 | Link to Comment Bob
Bob's picture

They still do, in record and world-leading numbers.  It's just that they're the incompetent petty criminals. 

Mon, 10/11/2010 - 15:18 | Link to Comment RockyRacoon
RockyRacoon's picture

It's not what you do but who you are.  But that hasn't changed much has it?

Mon, 10/11/2010 - 13:57 | Link to Comment firstdivision
firstdivision's picture

TD,

you forgot to highlight the best part, that made me laugh

This product addresses the longstanding industry problem involving missing or improperly recorded assignments, while also substantially streamlining the overall loan transfer process.

Mon, 10/11/2010 - 15:31 | Link to Comment Bob
Bob's picture

That was a real gem. 

Mon, 10/11/2010 - 13:58 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

I'm not paying for this.

I will not comply.

Mon, 10/11/2010 - 14:00 | Link to Comment greyghost
greyghost's picture

wow...i was asking the other day about the cre market and their paper work. looks like another bad day at blackrock[not the company for the kids out there].  was watching the lame street media earlier, they are not even scratching the  surface yet. one lady was all a flutter about the florida forclosure condo she was buying was halted...not a word about the possiblity the deed might be tainted or that a title company might not want to touch this with a ten foot pole.......clueless in florida!!!!

Mon, 10/11/2010 - 15:45 | Link to Comment eatthebanksters
eatthebanksters's picture

Most lame stream media reporters aren't smart enough to reallyunderstand what's going on...CNN is at the top of the list...there was some bimbo on last night that basically said the problem would be cleared up in the next couple of weeks...she never even said what the 'problem' was.

Mon, 10/11/2010 - 14:01 | Link to Comment NOTW777
NOTW777's picture

"Missing interim assignments are eliminated"

how?  by ignoring them?

w/o assignments there is no legal transfer and or gaps in chain of title

Mon, 10/11/2010 - 14:02 | Link to Comment Rusty_Shackleford
Rusty_Shackleford's picture

All the more reason for SRS to continue it's journey to zero and REIT's to rally.

Mon, 10/11/2010 - 14:10 | Link to Comment Bob
Bob's picture

Surreal indeed.

Mon, 10/11/2010 - 14:18 | Link to Comment scatterbrains
scatterbrains's picture

I'm confused.. could it mean the reits might stop making mortgage payments until they figure out who they owe ? That would be bullish no ?

Mon, 10/11/2010 - 14:28 | Link to Comment breezer1
breezer1's picture

yes.

Mon, 10/11/2010 - 14:51 | Link to Comment ShankyS
ShankyS's picture

Until the blaoon payment comes due.

Mon, 10/11/2010 - 14:05 | Link to Comment win
win's picture

Wonder what this will do to GDP

Mon, 10/11/2010 - 14:14 | Link to Comment Bob
Bob's picture

Just wondering if MERSCommercial is run out of the same post office box that their Residential arm is? 

Mon, 10/11/2010 - 15:47 | Link to Comment eatthebanksters
eatthebanksters's picture

Isn't their mailing address in Louisiana, right next door to the former ACORN World HQ?

Mon, 10/11/2010 - 14:15 | Link to Comment Milestones
Milestones's picture

The entire world is now straight out of looney tunes. I suggested that B9D9 do a comic book of yesterdays drawings--man talk about undershoting the mark!!

I have been banging in and around this world for some time but never in my wildest smoked up dreams could I have put something like what has happened in the last 5-7 years together. The Wizzard of Oz couldn't top this.   Milestones

Mon, 10/11/2010 - 14:18 | Link to Comment gwar5
gwar5's picture

More and more bad news. It looks like things will go south pretty quickly. Word is getting out and going mainstream and won't be long before they cause run on run on banks/dolllar

Mon, 10/11/2010 - 14:56 | Link to Comment Ripped Chunk
Ripped Chunk's picture

Crazy talk. Insider trading and tax evasion is only prosecuted if you are a celebrity or average fool.

 

Mon, 10/11/2010 - 14:47 | Link to Comment Conrad Murray
Mon, 10/11/2010 - 15:22 | Link to Comment RockyRacoon
RockyRacoon's picture

It's in the WSJ with 114 comments, and now on ZH.  I wouldn't say that nobody is talking about it.  It's just not on the lips of everyone at the water cooler.  Never will be.

Mon, 10/11/2010 - 15:34 | Link to Comment Bob
Bob's picture

Why am I reminded of Martha Stewart?

Mon, 10/11/2010 - 15:59 | Link to Comment eatthebanksters
eatthebanksters's picture

If people aren't offended by social workers breaking the law to assist a 'pimp and hooker' bring in foreign under age girls for prostitution, why would they care about some political aides making money off insider information?  I fear our society has become too permissive in real things that matter and that the rule of law does not apply anymore.

Wed, 10/13/2010 - 17:53 | Link to Comment snakeboat
snakeboat's picture

It's currently legal.

Mon, 10/11/2010 - 14:24 | Link to Comment Dan The Man
Dan The Man's picture

That's just graft... who in D.C. ISN'T skimming or scamming?

 

 

"My reading of history convinces me that most bad government results from too much government." - Thomas Jefferson

 

 

Mon, 10/11/2010 - 14:26 | Link to Comment dot_bust
dot_bust's picture

The truly beautiful part of Foreclosure-Gate is that all the U.S. States are starting to realize that MERS helped the big banks defraud them of filing fees for millions of residential houses.

Now that the states are broke, they're going to attack MERS and the banks like piranhas.

Mon, 10/11/2010 - 14:42 | Link to Comment Bob
Bob's picture

I'm hoping for sharks:  

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

It's time a few swam with us, rather than against us. 

Mon, 10/11/2010 - 14:28 | Link to Comment sudzee
sudzee's picture

MERS residential,

MERS commercial,

maybe:

MERS stock certificates

MERS bond

MERS treasuries

MERS congress

Come to think of it I always wondered where all those borrowed stocks came from.

Just sayin.

Mon, 10/11/2010 - 14:31 | Link to Comment metastar
metastar's picture

I suspect that the government and industry were well aware of the MERS fraud for years.

 

What I want to know is why this is coming into the news now? What is the real game being played here?

Mon, 10/11/2010 - 14:33 | Link to Comment breezer1
breezer1's picture

distraction?

Mon, 10/11/2010 - 14:34 | Link to Comment system failure
system failure's picture

Think it through and do the opposite of rational thinking though.

Mon, 10/11/2010 - 15:03 | Link to Comment Capitalist Sooner
Capitalist Sooner's picture

Not sure on the commercial side, but on the residential side, watch for a principle write down with adjusted payments and a side order of screw the taxpayer on all the mortgages now held by Freddie, Fannie, FHA, VA etc., if you agree to sign whatever documents "fix" this.  Also, they'll take any profits when the property is sold between the new principle balance and the old, to go back to the government.

This saves the banks and the deadbeats, screws the litigators and the responsible, drops real estate values down, but fixes the upside-down problem for many.  Home builders with get screwed, but they're a GOP constituency, so who cares about them.  

Political solution that combines redistribution with monetazation, all in one fell swoop.  If the administration is smart, they'll unveil this in the next week and their candidates will run on it.  It's so complicated, the public will just hear that their mortgage is about to get cut in half, for free, and not realize the broader implications, nor who has benefited and will escape with no penalty.  Don't forget the bank got paid to originate the loan, re-paid when they sold it, re-re-paid when they got bailed out for something they probably didn't own any more, and re-re-re-paid when the CDO paid off.  I think I got all that right, I'm having trouble keeping track of it.

First post, bitchez.

Mon, 10/11/2010 - 15:15 | Link to Comment gmrpeabody
gmrpeabody's picture

Not to mention that due to a national emergency, 50% of your 401K and IRA accounts will now be in safe and secure bonds to help rebuild America and the American dream.

We must do it for the children!

Mon, 10/11/2010 - 18:51 | Link to Comment SamuelMaverick
SamuelMaverick's picture

Makes me think of Tom Sizemore in the movie Heat when he was holding a little girl between him and the cops in order to escape. He got what he deserved, a head shot from Pacino.

Mon, 10/11/2010 - 15:37 | Link to Comment Bob
Bob's picture

How do home builders get screwed?  Are you assuming that in the alternative the massive housing overbuild would be bulldozed to keep them working?

Mon, 10/11/2010 - 16:06 | Link to Comment Capitalist Sooner
Capitalist Sooner's picture

Homebuilders would not see their construction loan principle lowered under the scenario I outlined.  If the principle is reduced for the general population, property values would drop significantly, possibly by the percentage amount of the principle reduction.  Home builders take out loans based on current market conditions, and would therefore need to sell at the pre-reduction market values in order to earn enough to repay their loans.  When the market collapses slowly, they can adjust for that.  If the market is dropped overnight by a significant amount, they all go belly up.  

Any homebuilder that is not doing everything they can to exit the market right now is probably screwed anyway, this just gets all of them fast, not most of them slow.  If the market has a somewhat orderly decline, many homebuilders will live to fight another day.

Mon, 10/11/2010 - 19:22 | Link to Comment merehuman
merehuman's picture

good first post CS. Until it happens its all opinion.

Garden, grub, guns.

Mon, 10/11/2010 - 14:33 | Link to Comment system failure
system failure's picture

It all makes since doesn't it. XLF (was), IYR are both positive territory today and even last Friday, a wise note to self is to invest in a irrational way. By that I mean, think it through as to what would be rational, (banks facing multi-billions in this fiasco)(Real estate fraud and getting title to go with a property fiasco), would lead one to dump such stocks. However, we must invest irrational and long these bitchez and make money. Problem solved.

Mon, 10/11/2010 - 14:42 | Link to Comment fat tony slim
fat tony slim's picture

bank employee slave PR person:

"Sir, Zero Hedge released an incredibly damaging, yet insightful expose of our operations. what shall we do?"

bank executive: that Zero Hedge is my nightmare. I wish we could find a way to make them just...go away.

As for this article, my HPOA, just use your bedroom eyes and don't confirm anything.

I dropped my pencil can you come pick it up for me. "

but Sir?

Mon, 10/11/2010 - 14:56 | Link to Comment Things that go bump
Things that go bump's picture

"Will no one rid me of this meddlesome priest?"

Mon, 10/11/2010 - 20:51 | Link to Comment williambanzai7
williambanzai7's picture

A Scam For All Seasons

Mon, 10/11/2010 - 14:42 | Link to Comment davidsmith
davidsmith's picture

Here is confirmation of what I have said from the start: from HAMP denials to robosigning, the entire conspiracy was designed

 

TO HIDE BAD DEBT ON BANK BOOKS.

 

Now, of course, it comes out that the U.S. Government knew all along what was going on.

 

Next up?  The Government condoned and indeed designed the entire criminal process of

 

HIDING BAD DEBT ON BANK BOOKS.

 

Here you go!   Cheers, jr   Government had been warned for months about troubles in mortgage servicer industry By Zachary A. GoldfarbWashington Post Staff Writer
Sunday, October 10, 2010; 12:45 AM

 

Consumer advocates and lawyers warned federal officials in recent years that the U.S. foreclosure system was designed to seize people's homes as fast as possible, often without regard to the rights of homeowners.

In recent days, amid reports that major lenders have used improper procedures and fraudulent paperwork to seize properties, some Obama administration officials have acknowledged they had been aware of flaws in how the mortgage industry pursues foreclosures.

But the officials said they could take only limited action to address the danger. In part, this was because they wanted lenders' help carrying out federal programs to modify mortgages that had fallen into default or were poised to do so.

New concerns about improper practices - such as those involving faked documents or "robo-signers" who signed tens of thousands of documents without reviewing them - have prompted the mortgage servicing arms of the country's largest banks to freeze millions of foreclosures. As momentum builds for a national moratorium, the administration has begun assessing the potential impact, examining the threat it could pose for the ailing housing market and the wider financial system.

There is no evidence so far that the specific abuses made public in the past few weeks were known to government officials. Nor is it clear whether they were aware that the process of the selling and reselling of mortgages among financial firms - which became extremely common and highly profitable during the housing boom - was raising legal questions about who actually owned the loans and had the right to foreclose if they went bad.

But government officials were told repeatedly that the mortgage servicing industry was deeply troubled, according to administration officials, consumer advocates, housing lawyers and congressional aides.

"Have we talked to them about servicer incompetence? Repeatedly. Have we talked to them how the servicer system is broken? Yes," said Ira Rheingold, executive director of the National Association of Consumer Advocates. "Have we talked to them about the costly stream of errors made by servicers? Yes." In meetings and letters to the government, consumer advocates and lawyers accused the servicer industry of violating its agreements with the government to help slow foreclosures, saying it instead was structured to accelerate the foreclosure process.

"The message was that servicing needs to be regulated, and that the existing regulators of the servicers need to be on the job and needed to look at what has happened in the servicing industry," said Julia Gordon, a lawyer with the Center for Responsible Lending. "If it had been mandatory for servicers to engage in some kind of evaluation of the loan prior to foreclosure, you'd have seen a much different outcome for many borrowers."

Loan modification plans

Many of the warnings came in the context of the administration's signature housing policy program, the Home Affordable Modification Program. The initiative seeks to rework the loans of struggling borrowers to make them more affordable.

As discussions about the program began in late 2008 and early 2009, consumer advocates and housing lawyers say they told senior officials that they had to escalate pressure on mortgage servicers to revamp their procedures if they hoped to stem the foreclosure crisis. In particular, the advocates and lawyers cautioned that servicers had incentives to foreclose and would only pay lip service to modifying mortgages.

 

 

 

Mon, 10/11/2010 - 15:34 | Link to Comment RockyRacoon
RockyRacoon's picture

Once again all the blame can be laid at the feet of Alan Greenspan.  Why?  Because the Federal Reserve had the power, explicitly, to govern the housing and mortgage markets in the 1990s.  This current debacle would have been a no-news event if Greenspan had done his job.  Period.

If you want to jail people for fraud, or negligence in this case, then start at the source/top with Mr. Greenspan.  A CEO sets the moral tone at his company, and a lack of integrity at all levels seeps down from the top.  This failure to "do his job" on the part of Mr. Greenspan leaked into all the echelons of the housing industry.  All of them.  When a cop makes the point of looking the other way, in a public manner, crooks start stealing things, and otherwise honest people are given the opportunity to seek personal gain in what appears to be sanctioned looting.

Mon, 10/11/2010 - 15:49 | Link to Comment Problem Is
Problem Is's picture

Rocky's Assessment Means:

Alan "Crazy Chester" Greenspan:

2010 Nobel Prize in Economics... bitchez...

Mon, 10/11/2010 - 15:51 | Link to Comment Jim in MN
Jim in MN's picture

All's ya gots to do is get a warrant, read all his emails from the time period in question, and maybe find some meeting notes.  It would be done in less than an hour on Law and Order.  Complete with pithy quips.

Tue, 10/12/2010 - 01:05 | Link to Comment RockyRacoon
RockyRacoon's picture

You're missing one element:  a willing constabulary.

Mon, 10/11/2010 - 16:04 | Link to Comment eatthebanksters
eatthebanksters's picture

Barney just has to go...I think he's all out of excuses.

Mon, 10/11/2010 - 22:33 | Link to Comment TuesdayBen
TuesdayBen's picture

But where's he going to go, who will have him, upon his departing that Last Refuge of the Scoundrels, the US Congress?

Mon, 10/11/2010 - 14:45 | Link to Comment davidsmith
davidsmith's picture

"In particular, the advocates and lawyers cautioned that servicers had incentives to foreclose and would only pay lip service to modifying mortgages."

 

Yes, and guess what was the biggest incentive of all (remember all the while, of course, government ownership stake in all this): government orders to

 

HIDE BAD DEBT ON BANK BOOKS.

 

Mon, 10/11/2010 - 15:56 | Link to Comment Jim in MN
Jim in MN's picture

 

Through Bad Bank Debt Fraudy Notes Flew

While These Notes Flew, Sleazy Breeze Blew

Sleazy Breeze Made These Bad Debts Freeze

Freezy Sleaze Slowed Fraudy Notes' Grease

That's What Made These Sleazy Banks SNEEZE

Mon, 10/11/2010 - 14:45 | Link to Comment papaswamp
papaswamp's picture

They will all just go greek and "restructure" (the PC word for default).

Mon, 10/11/2010 - 14:46 | Link to Comment contrabandista13
contrabandista13's picture

Completely off topic, I highly recommend reading this from Sudden Debt, Hellacious...The

 

Peoples' Slice Of The Pie


"..... I won't go into the various economic theories on how wages, unemployment and inflation all come together to shape (or "clear"), the labor market.  I have a more fundamental question, instead:  How important are wages in today's economy, overall?  Or, to put it more precisely, how come we have allowed gainful employment and earned income to become so unimportant?....."

Mon, 10/11/2010 - 15:39 | Link to Comment Bob
Bob's picture

Now you're talking, David!

Obama administration officials have acknowledged they had been aware of flaws in how the mortgage industry pursues foreclosures.

But the officials said they could take only limited action to address the danger. In part, this was because they wanted lenders' help carrying out federal programs to modify mortgages that had fallen into default or were poised to do so.

Looks like there will have to be some sacrificial heads rolling in addition to very high profile changes in direction by Barry O. 

Mon, 10/11/2010 - 16:07 | Link to Comment eatthebanksters
eatthebanksters's picture

Timmy 'the tax cheat' Geithner, gone!  Hooorayyy!

Mon, 10/11/2010 - 14:53 | Link to Comment George Costanza
George Costanza's picture

they will just change the rules and laws, the banks and financial system are the highest priority.   If there were no prosecutions after the Subprime Frauds, there won't be for the mortgage title fraud.  QE is plugging the hole of all the bad debt, really it's very simple.

Mon, 10/11/2010 - 20:31 | Link to Comment JLee2027
JLee2027's picture

In all 50 states?  This is not a Federal issue. Too big to fix George. Mortgage cash flow stops to the banks and then to the bond holders and then to the pension funds and boom.

Mon, 10/11/2010 - 14:59 | Link to Comment eatthebanksters
eatthebanksters's picture

It is becoming apparent to me that all of these short cuts were meant to help manage the transfers of securities but they did not take into account the recording and transfer laws of individual states.  No senior exec is that stupid.  On with RICO, jail for the criminals that perpetrated this mess.

Mon, 10/11/2010 - 15:01 | Link to Comment papaswamp
papaswamp's picture

From the BI humor section on foreclosuregate...

http://www.youtube.com/watch?v=9kPCYcBm-C8&feature=player_embedded#!

Mon, 10/11/2010 - 17:47 | Link to Comment Miles Kendig
Miles Kendig's picture

A great read last night yesterday.. 

Thanks Tylers

Mon, 10/11/2010 - 15:04 | Link to Comment hambone
hambone's picture

Oh, by the way, the stock market has stopped trading!?!  Volume looks like Christmas eve...lowest I've seen at this point in the day this year.  Market is in a coma where no one dare go long for crazy valuations and no one dare sell due to fed backstop? 

This doesn't exactly seem healthy?

Mon, 10/11/2010 - 15:11 | Link to Comment Oligarchs Gone Wild
Oligarchs Gone Wild's picture

WB7:

Good graphic for your handywork overlays to help people understand.

http://stopforeclosurefraud.com/wp-content/uploads/2010/05/MERS-BUBBLE2.jpg

Mon, 10/11/2010 - 20:56 | Link to Comment williambanzai7
williambanzai7's picture

Thanks, that is a good graphic!

Mon, 10/11/2010 - 15:44 | Link to Comment Problem Is
Problem Is's picture

Nice dot connection Tyler...

Like Sugar Ray Leonard used to say:
"Double up on that left hook... one to the body and then to the heeeaaaad."

Residential Hook; Commercial Hook.

"Down goes Dimon! Down goes Dimon!"

(I think CD used the "Down goes Frazier!" bit in a previous post... I just can't leave good nostalgia alone...)

Mon, 10/11/2010 - 15:55 | Link to Comment HarryWanger
HarryWanger's picture

Plain and simple, somebody is going to be hit with paying for some bad shit. It ain't gonna be the banks. Period. So who does that leave? 

If it gets too big and there is a large sum of money involved, which no one is quite sure of yet, then the government steps in with some bull shit line about how these "technical" errors have to be paid and we are all on the hook again for Tarp2. 

Remember, they pushed the whole, "Tarp worked, we made money" line in all MSM. That gives plenty of justification for doing it again.

Mon, 10/11/2010 - 15:58 | Link to Comment Jim in MN
Jim in MN's picture

Wheeeeee!  We're rich!   We're--HEY

Mon, 10/11/2010 - 17:31 | Link to Comment Rainman
Rainman's picture

TARP 2 will be a much more dangerous undertaking. The TARP 1 advantage was timing.......a confused sheeple knew things were all fucked up but hadn't had time to digest how badly they were about to be hosed or by whom. And their home values and 401ks were yet to be fully spanked.

TARP 2 would have no such advantage. A backdoor sneak package will be a preferred option.....lots of laundering possibilities. The need to go another TARP would blow up the ad nauseum bullshit about the bank's being saved from the brink. They'll be sneakier this time. 

Mon, 10/11/2010 - 19:00 | Link to Comment bingaling
bingaling's picture

Not true, people were against TARP 5 to 1 (if memory serves) and it went through anyway. Shoved down taxpayers throats while they screamed murder. Everybody I talk to say that things never recovered except for the bankers I know .

Mon, 10/11/2010 - 21:01 | Link to Comment williambanzai7
williambanzai7's picture

If they do another rescue, it will have to be with the framework of that statutory monstrosity they just created. It will also have to be a purge of the banks.

They won't  allow the banking system to sink.

The problem is they don't have the ability to raise external financing for this. They will have to get the Martian bailout.

Mon, 10/11/2010 - 16:01 | Link to Comment apberusdisvet
apberusdisvet's picture

Once upon a time, in a landfar away, there was something called "watergate" in which two intrepid journalists exposed the then lie of the century.  Today, unfortunately, all of the MSM, not only suck, but also swallow from, all the Administration dicks.

Mon, 10/11/2010 - 16:15 | Link to Comment Miles Kendig
Miles Kendig's picture

The Bag Man cometh and his bosses are none to pleased as the migration from RRE to CRE is creating and enhancing a variety of national security concerns.  I don't think Ben, Timmay, Lloyd, Jamie and the rest of the gang have a year to wait as the micro imperatives assert themselves.

Mon, 10/11/2010 - 20:17 | Link to Comment DavidC
DavidC's picture

"Oopsie. Perhaps the perfect solution to the CMBS industry will also just end up being its perfect downfall."

Tyler, you phrased it so well - personally I'd have said it's a load of bollox....

DavidC

Mon, 10/11/2010 - 21:04 | Link to Comment williambanzai7
williambanzai7's picture

I am starting to see how this MERS sham works. Blankfein is lucky, MERS is turning into the new evil Wall Street demon doing God's work.

Mon, 10/11/2010 - 22:30 | Link to Comment Zombies On Toast
Zombies On Toast's picture

 

Karl Denninger has posted this tonight. Holy Shit.

http://market-ticker.org/akcs-www?post=168845

Mon, 10/11/2010 - 23:06 | Link to Comment Sausagemaker
Sausagemaker's picture


Pisani: Is Commercial Real Estate Back?

http://www.cnbc.com/id/36197736

Tue, 10/12/2010 - 00:30 | Link to Comment Grand Supercycle
Grand Supercycle's picture

S&P500 Financials index has not been bullish for some time. This is a warning.

http://stockmarket618.wordpress.com/2010/09/27/mon-sept-27

Tue, 10/12/2010 - 07:17 | Link to Comment sudzee
sudzee's picture

Dylan Ratigan video. Worthwhile few minute listen.

http://www.msnbc.msn.com/id/21134540/vp/39582228#39582228

Tue, 10/12/2010 - 09:13 | Link to Comment BoyChristmas
BoyChristmas's picture

Here is the next step in this story:

http://foreclosureblues.wordpress.com/2010/09/15/cmbs-ruling-allows-sale-without-foreclosure/

How do you get around the massive value decline to save bondholders? Easy, just ignore real property laws, all documentation recording requirements, and anything else that poses as troublesome. 

Thu, 11/04/2010 - 20:43 | Link to Comment rocky89
rocky89's picture

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