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Is MetLife's Foreclosure Process Review By Moody's A Harbinger Of The Excrement Show To Come?
As observant readers will recall, the one proximal catalyst that brought down the financial system last time around was something as innocuous as a rating agency downgrade of AIG, which precipitated a waterfall of margin calls and liquidity deficiencies, resulting in the near collapse of capitalism. This in itself was not surprising: it is always the least expected events (i.e., Moody's performing its function honestly and ethically) that tend to have the most adverse impact in a precarious scenario. Which is why when Moody's put MetLife's Home Loan Servicer ratings on downgrade watch it resulted in a chorus of fear and incredulity: after all Wall Street had seen this scenario all too recently. One person whose phone line off the hook was Morgan Stanley's Nigel Dally who sent out a letter to clients today trying to calm everyone down that this was not the apocalyptic event many are fearing it could be. True, as Nigel pointed out, MetLife only has $1.5 billion in mortgages serviced for others per SNL (whose data we presented yesterday when discussing exposure at JPM, WFC and BofA), but the fact that this is sufficient for Moody's to look at the company vis-a-vis its foreclosure practices should set red light everywhere. After all, in all the talk of gloom and doom, has anyone actually done any work to find out just what a home loan servicer downgrade means for the system? We didn't think so. And while MetLife is just $1.5 billion, recall that the Big Three share a quarter of a trillion among them. And yes, they are also about to be downgraded. Here is Morgan Stanley's unsuccessful attempt to make uber-nervous investor feel safe. Alas, it can only get worse from here, and what's worst, with consequences that nobody can really anticipate (ref: AIG).
This morning we've received a lot of questions over MetLife mortgage servicing operations. The below table provided by SNL helps put the issue into perspective -- as of June 30, MetLife currently has $1.5 Bn mortgages that it services for others that are in foreclosure. Given the size of these operations versus other financial institutions, we do not believe it is of sufficient size relative to the total organization to impact the fundamental outlook, although it remains a topic which we will continue to closely monitor. We have also included below the text from the Moody's rating action, which highlights the concerns over the foreclosure actions for your review.
New York, October 14, 2010 -- Moody's has placed on review for possible downgrade MetLife Home Loans' Servicer Quality ("SQ") Rating of SQ2- as a primary servicer of prime residential mortgage loans. Additionally, Moody's has lowered the timeline assessment to average from above average.
The rating action is due to irregularities in MetLife Home Loans' foreclosure processes, specifically that employees signing affidavits did not have full personal knowledge of every item in the affidavit. Additionally, MetLife Home Loans temporarily postponed foreclosure sales in some states. According to MetLife Home Loans, refiling affidavits, if necessary, would be completed by November. The foreclosure process irregularities and postponing of foreclosure sales could result in delayed foreclosures and longer REO timelines. The review for possible downgrade considers that the irregularities in foreclosure processes could result in legal challenges to previously completed foreclosures and reputational risk for the servicing operation. During the review period, Moody's will primarily focus on determining the increase to foreclosure and REO timelines and the effectiveness of any new procedures, if applicable. Furthermore, we will review MetLife Home Loans' quality control processes and the oversight of the foreclosure document execution department.
MetLife Home Loans is a division of MetLife Bank N.A., a wholly owned subsidiary of MetLife, Inc. MetLife Inc. is rated A3, on negative outlook by Moody's. MetLife Home Loans' servicing operations are located in Irving, Texas.
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Well, this should be an interesting show, considering that Moody's is itself up to its neck in potential MBS liability:
http://opinionator.blogs.nytimes.com/2010/10/14/how-wall-street-hid-its-mortgage-mess/?hp
Something tells me they're gonna put their extra, extra best effort into an honest appraisal of this MET situation:
http://www.nytimes.com/2010/09/27/business/27ratings.html?_r=2&scp=2&sq=...
Fan, meet shit!
I think the only way out of RoboForger is for each state to take full control of the mess in each of their own backyards. Dissolve the union ... or the feds will nationalise all property (and that is not a good thing).
Each state can then encourage/protect small business to create employment through innovation and entrepreneurial trade. Starting again from a sound base ... rather than relying on a democratically elected (and oligarch controlled) central planning politbureau to continue with 'business as usual'.
This is not a drill.
+1
without clear title, the last motive to buy is gone. sure, im willing to get fucked by paying an extra 50% per month to own not rent; on an underwater mortgage; be on the hook for additional expenses, ... with 75% of my monthly payment being interest, throwing precious capital out the goddamn window..
but, now your saying i dont really own it? LOL.
and who the hell is going to insure title in the future after this fiasco? how the hell am i supposed to SELL this piece of shit without clear title? escrow delays scaring off potential buyers, who are hard enough to find anyway because everyones credit sucks and they cant qualify for a loan..
strategic defaults are now not only justified, but necessary. im tired of being screwed for being moral. startin' to think i was trained to be moral so the wolves can eat.
Put another log on the fire for Bank of America as a former manager is indicted for six counts of wire fraud and one count of bank fraud:
http://7thspace.com/headlines/360304/massachusetts_bank_branch_manager_charged_in_mortgage_scam.html
"According to the charges, developer Michael David Scott arranged to purchase multi-family dwellings and then sold individual units in the buildings to straw buyers recruited by Scott, SAMUELS, and others.
The straw buyers' financing for the purchases was obtained by submitting mortgage loan applications that falsely represented key information, such as the buyers' assets, down payment and intention to reside in the condominiums. SAMUELS also caused false verifications of deposit to be created in support of loan applications submitted to lenders in the names of straw buyers, and acted as a straw buyer himself on three property transactions. In most instances the lenders were led to believe that the straw buyers had made substantial down payments and paid substantial sums at closings."
As I have posted earlier in my conjecture, the banksters may have developed a fractionalized mortgage system to boost their profits & bonuses during the bubble years. This will put into doubt clear title for all mortgaged properties. Check your title & deed(s) to your property.
MCO110122P00025000
interesting that it was the title insurance companies that rallied on what you would think be horrible knews for them, isn't it?
"Given the size of these operations versus other financial institutions, we do not believe it is of sufficient size relative to the total organization"
Blinding clients with big words, but comparing apples and oranges. Why would you compare the proportion of the business compared to other organizations and then suggest it is in the all clear merely because it is a smaller proportion than others? A totally useless analysis.
"Moody's will primarily focus on determining the increase to foreclosure and REO timelines and the effectiveness of any new procedures, if applicable. Furthermore, we will review MetLife Home Loans' quality control processes and the oversight of the foreclosure document execution department."
But we will ignore the possibility of legal liability, the potential of lost business, and whether this might be a systematic liquidity event. We will ignore all MBS trust documentation issues that stemmed from the faulty nature of the process itself. We will limit our downgrade to one notch on the narrowest of technical reviews.
+1
We assume that since everything seemed fine yesterday, that things should be fine tomorrow.
What we ignored yesterday is fine to ignore today.
After all, past performance is representative of future performance.
And, "it's just a flesh wound."
</NOT>
"it's just a flesh wound." (NOT)
You are so right. This problem has outlived the normal "headline today, forgotten tomorrow", and keeps growing as more layers of this smelling onion are peeled away.
As so many others have said......Shit, meet fan.
Yes, the layers only get deeper and more lastingly public.
The longer they pretend to be absent minded, well-intentioned, innocently incompetent raters, the more undeniably they reveal themselves as engaging in a self-serving major cover-up.
Still waiting to see the first
"If you have been foreclosed on or are in the process of being foreclosed on by one of the following banks:
J.P. Morgan Chase
Bank of America
Wells Fargo...
We can help you stay in your home or get your home back.
Contact the law offices of Ripem A. Newone at 1-800-NO FRAUD"
*
" As an average American taxpayer and homeowner you may be feeling that you have been victimized by Wall St and the Big Banks. We're here to help! Because bankers may have destroyed the title to your home making it impossible for anyone to foreclose on your property it may be prudent for you to stop paying on your mortgage. We'll help you determine if you are paying the right party, or if in fact you owe anything at all. If a home cannot be foreclosed on then it cannot be resold." contact us @ Dinkem and Howe
Yeah, you're right, this has just been dreamed up by a bunch of lawyers to defend a bunch of deadbeat borrowers. Glad you understand the issue so well. I suggest you buy a ton of Wells Fargo and B of A.
Or maybe you already are on their payroll.
Met Life is BIG. Didn't they just purchase a controlling stake in AIA from AIG? That doesn't sound like the actions of a company in deep doo-doo. And that is the Pan-Am building, is it not? Probably shouldn't have said that.
Is that Mark Zandi I see hiding under a desk?
Zandi last spotted puking over toilet bowl in executive suite.
More like kneeling under Timmah's desk.
Flashback:
http://www.cnbc.com/id/27321998/
Or they could rubber stamp MBS ratings on Urban Roman and Linda Green signed deals.
At least cows would be real, and actually capable of output and productivity.
.
I missed that headline. Thanks.
No big deal, just downgrade Wells Fargone and their ilk to non-investment-grade status and watch the fireworks. Insolvency hurts but hey, it's a free market after all.
You've "hit the nail on the head" Jim. Fireworks indeed.
There is absolutely no reason to believe that anything we learn about this subprime fiasco is a minor blip. Everything we learn is yet another data point confirming that Godzilla is alive and well.
The E=MC2 statement to all our problems is that the Rule of Law has left the building.
It's the undercarriage to everything that is broken. We are now ruled by Oligarchs and they are no longer slaves to law but the master of law.
WB7 - Insert your Rule of Law chalk drawing here, with a host of people holding the gun in their hand. Including the populous who have sat there doing nothing but typing while it happened in front of their face.
@ billy banzai
i thought i saw one of these being wheeled in the back door over at wells fargo (america home servicing). but according to their press release they are TOTALLY above board.
http://www.signaturemachine.com/products/demo_page.htm
note: actual signing speed will be faster than displayed on this video.
Yeah, OGW, I am aware of the irony of this whole cyber-reality that brings us together and away from ground-level reality so much as it does. Ordinary, I fear it because of what it means that not only am I doing it, but the majority of the populace is doing it as well. Sure, they're on Facebook, etc., but it's all the same wrt the loss of in vivo social experience.
Nonetheless, everyone follows their own interests online. As a community, I woud say that we at ZH are a bunch of critical moral thinkers, critical market analysts, critical this and that, but a lot of people who do a lot of very serious critical thinking. We are fortunate that it brings us all together here, as well as other places, to share the virtues and vices of our talents as critics and figure shit out.
Okay, we're just beating keys. But that's what we do. We do it unusually well, it seems to me. To thine own self be true: not all bad.
Maybe by some bizarrely fortunate happenstance, it's even the best thing that could possibly happen, all things considered.
If we get out the word at this point, it's all we can do. But if that's all we can do, we will have done something upon which everything else depends.
We can't blame the sheeple if we didn't bring it to them. They're otherwise busy. But they do have their own virtues and vices by means of which, providence willing, a better future awaits. Otherwise, perhaps we deserve what we get.
Have you sent anybody this video link, btw?
http://www.youtube.com/watch?v=9kPCYcBm-C8&feature=player_embedded
Luv u, man!!!
8>)
In with the Caturday laughs (my first playlist for ZH):
http://www.youtube.com/view_play_list?p=8584FE99F413E42F
http://i8.photobucket.com/albums/a44/SpiderGirlie/Caturday.jpg
Caturday FTW
Cool, Metlife services my mortgage. Umm does this mean I can has free house?
U can has NOTHING AND LIKE IT
I think MERS is the key here, not which bank. if your mortgage is in MERS you've hit the lottery. They must prove title.
What if you already sold the house with a mortgage in MERS? Do the people I sold it to have good title, or is there an issue?
Short answer - Yes, they have good title.
Sorry Folks, The Put-Back Apocalypse Ain't Gonna Happenhttp://www.cnbc.com/id/39686897
Which brings us back to the rule of law issue. Habitual cynical naysayers have no real authority upon which to base their proclamations except their cynicism about the application of law . . . regardless of who they are or what media platform they operate from.
Bob, I agree, this is about the rule of law and states rights versus federal rights. Are the states going to allow congress to to pass "a law called something like “The Financial Modernization and Stability Act of 2010” that will retroactively grant mortgage pools the rights in the underlying mortgages that people are worried about. All the screwed up paperwork, lost notes, unassigned security interests will be forgiven by a legislative act." Will it even be constitutional?
Nope. States win this one.
In fact the 2008 crisis WAS driven in part by legal rights -- the rights of counterparties to various derivative instruments to demand payment or additional cash collateral, under the terms of those contracts. While the dollars are not the same size (at least at first glance) now, the basic issue isn't all that different -- if the different players we've been discussing are able to exercise their right to be reimbursed, either in contract or in tort, the banks will have insufficient resources to handle it all. After that I suppose the domino effect is largely the same as before.
Except that generally speaking, a law which retroactively affects vested rights is unconstitutional, on both state and federal levels. The "solution" the article suggests would only result in another layer of litigation.
Except that generally speaking, a law which retroactively affects vested rights is unconstitutional, on both state and federal levels. The "solution" the article suggests would only result in another layer of litigation.
and of course "it only gets worse." will any payment be received once "the deal is done"? lawyers, lawyers, lawyers. at some point they will realize "i'm for runnin' for office on this one!" and the banker might say "that's my office now"!
This was one of those 'test' moves by the ratings agencies. Let's pick the smallest, non-essential servicing unit we can find, preferably one a part of a much bigger organization that doesn't rely too heavily on the servicing units revenues for ratings, and let's let the market tell us what it thinks of this. Then we'll know if we can be honest about the big players or not.
+1
Sounds about right.
I'm just bummed now I'm gonna lose dental coverage. C'est la vie.
+2
My fear here is that MetLife was deliberately selected as the high profile "model case" after being carefully vetted and scrubbed clean in order to triumphantly declare that the critics are just being "hysterical" and the problem is "easily manageable."
Good point. But it won't matter - a public relations sleight of hand isn't going to fix this, jsut delay its recognition.
Ah, but delay is necessary to buy them time to drain $144B from their companies before TSHF.
I think the larger issue at hand here is how all the derivatives that are tied to Metlife will (attempt to be) netted once said downgrade is issued. As mentioned in the post, that was the issue with AIG as well, and why GS indirectly influenced the gov to save AIG due to their counterparty obligations.
Assuming Metlife has, conservatively, $10B in gross contracts, then a rating downgrade would definitely have an adverse affect on their viability..
Agree the effect on all those derivatives is yet to be tallied. It is huge.
http://3.bp.blogspot.com/_E3aT2431XpA/SwQwWAUgznI/AAAAAAAABkA/2cb_5j5hSxU/s1600/snoopy-red-baron.jpg
Thus the deluge of POMOs coming up this month..
damn fed. "the bankruptcy protection team."
For those who may not have seen this you may want to take some time over the weekend to watch this interview with William K. Black from April, 2009. http://www.youtube.com/watch?v=Rz1b__MdtHY
Ha, ha, ha... Who could have predicted THAT!
So if Dick Bove says the banks could lose as much as $80 billion from fraudclosuregate, is the number more like $800 billion?
That is his track record. On Fox Bus they laugh their heads off at him. He still hasn't caught on that he is there for comic relief.
A thorough legal analysis of MERS
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1469749
What is the takeaway from that paper? Have you read it? I keep getting linked to it and the abstract quickly suggests to me that I should read it, but I don't.
It would be nice if somebody would just post an outline of the conclusions for lazy people. :(
I read it. It covers every aspect of MERS legal intricacies, so I would say 51 pages is a summary.
Ah. I think I'll just be a consumer of others' work on this specific issue hereforward, then. Just don't have the energy. Looks like the more refined layperson-level arguments are starting to roll out now.
I wish all of you had followed my Citi 4 Nov puts! Sold Fri. @ .21, four thousand dimes :)
Ponzi-puppet...
Great catch, Tyler.
I've been thinking about what this mess does to the last of the flippers. According to the MSM, flippers have done all the heavy lifting in recycling foreclosures in the South West. Now they will be stuck with massive inventory, and have more than a few deals come unstuck. It was a fool's errand from the beginning, but still, what a way to go down.
Looks like a lot of dominoes are leaning;)
ground zero.
Speaking to our continued collective effort to promote public awareness of the MBS issue, 6 days ago Tyler predicted that this video would be going viral:
http://www.youtube.com/watch?v=9kPCYcBm-C8&feature=player_embedded
It has been getting 10,000 views per day since. It is extremely educational and entertaining--perfect attributes for an effective video to go viral--while being only four minutes long.
We would do well, imo, to drive it up to 100,000 views per day. Time is short. Please distribute as widely as possible.
Peeling away the onion reveals the mortgage fraud is unthinkably mega-huge. But that's the problem: the fraud is TBTF. Whatever it takes, by hook or by crook, Ben and the boys will make sure it disappears. Just send us the bill and move on already, because that's what's gonna happen. And the American people literally won't know what hit them. But doesn't the new season of American Idol start soon? And we'll get some shiny new toys from Apple any day now. It's all good.
If the subsequent economic meltdown happens, the American people--as well as their beloved overweight pets--will understand what happened.
It's easy to fall back into one's own chair, however superior it may be to that occupied by the American sheeple--but it is in no way constructive. In fact, when those who would claim to be thinkers start promoting the arguments of their masters and proffer their defeat as inevitable, a done deal, it becomes even less than unconstructive. It becomes a self-fulfilling prophecy. The criminals surely dream of a society where people no longer even consider calling the police.
What I see in the naysayers is not only cynicism per se, but a swaggering exhibition of cynicism that pretends to be mature realism. To me, however, it is nothing more than an incestuous embrace of the corruption they would claim to oppose.
Sure, congress has granted wholesale retroactive corporate immunity before, most notably for telecoms with FISA, but what was at issue there was whether Americans' emails had been unlawfully read. Criminal, obviously, but hard to prove damages there.
MBSgate, on the other hand, not so much. The damages--real monetary damages--are staggering and spread across tens of millions of victims. The entire scheme was intentional and the banksters parlayed it into a multi-trillion dollar bailout.
Now they pretend to not know how deep the problems go while they race to disburse $144B in bonuses that, under the circumstances, are clearly looting their companies before the shit hits the fan, i.e., ensuring that victims of their frauds are unable to collect on their legitimate claims because the cupboards have been emptied.
Then, of course, they will again hold a gun to the world's head demanding bigger bailouts.
IMO, this business is a watershed moment in modern history. It will truly mark the point where we either surrender to tyrany by elite criminals operating on a scale never before imagined (outside of Lex Luthor et al) or we affirm our own freedom from baldly lawless actors (regardless of power or repute) under the Rule of civilized law.
not only that, the investors are not atomized like the mortgagors (class action is the harder route). many big pension funds, etc. would love to claim "fraud victim" rather than the perhaps more accurate "poor investor". they will sue for big bucks with excellent representation.
As I have said on ZH before, Bob, defeat is not inevitable. Indeed, "unintended consequences" generally bring central planners down without any outside interference ... the "oops" moment! This (FraudClosure / RoboForgery) could well be one of those moments -- IF enough people pressure their state representatives to man up to their constitutional responsibilities. The federal government is Too Big To Fall without a big push from a majority of states.
We can also do our bit here by being as outspoken and direct with language as possible: Taxation = theft; QE = valueless money printing = counterfeiting; paperwork glitches = forgery & perjury = fraud; etc.
I also think that the word "sheeple" implies derision of a lesser person, whereas "slaves" implies that we are fellow tax slaves. Just sayin'.
first off "the criminal's dream is of no police." Second "should they arrest the Fed first"? It was "50 billion" for the credit union bailout. Let's see here...that would be...cops, firemen, teachers, prison guards...the military?
lol
This is the same as "the subprime problem is contained" sort of pronouncement. This issue has much bigger potential than anything since fall of 2oo8. Let's face it - the problem was locked in the attic like a murderous, deformed cousin hoping things would work out.
Well, the cousin broke loose and he's somewhere in the house.
Wachovia subs Evergreen stuffed the Presbyterian Church USA's investment fund to the gills with MBS toxic waste. The bond fund (for a major church denomination!) was barely half AAA rated, most of that was more MBS and only 1% was Treasury.
Now what was that securitization fraud Master Plan again? Have you checked your extended family's pension funds, your church's, your school district's?
Ground zero is wherever you happen to be. A major chunk of the bond market is gone, but for fraudulant accounting, blessed in bipartisan fashion.
+1
GOLD updated chart showing parabolic move.
http://stockmarket618.wordpress.com
Dylan Ratigan does FraudClosure on MSNBS. Doesn't stuff around, either ... talking $45 Trillion and transfers going back to the early 1980s!
http://www.youtube.com/watch?v=9yhZBgi5NOg&feature=player_embedded#!
It's gonna be interesting to see how Ratigan regroups and continues his story on Monday, now that the Earl's have been arrested and, presumably, evicted.
Home foreclosure is a heart-wrenching process. If you are a real estate investor, you’ve got to think of this as a business transaction. It’s easy to get emotionally involved, although you are often in a position to help the person going through the home foreclosure process by helping them get out with a little cash and no black marks on their credit.
http://www.financemetrics.com/foreclosures-on-homes/
Really this is a great post from an expert and thank you very much for sharing this valuable information with us.
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