Banks lose important ruling on foreclosures

[SK in CV]

[quote=SD Realtor]
What I fear is… do the banks care… the ruling is good because these guys need to follow the rules. On the flip side, to me this just will clog the inventory pipe even more, slowing down the time to market, and holding homes off the market. What was going to take a long time to happen will take longer but necessarily so.[/quote]

I think the banks do care. But their inability to deal with what is potentially catastrophic losses is a function of their arrogance and rigidity. They don’t think the bad shit will happen, and even if they did, they don’t know how to fix it. They’ve never been any good at dealing with distressed assets. Not now. Not 20 years ago. Not 30 years ago. (I haven’t seen it from the inside this time around, but I sure did 20 and 30 years ago.)

And just to make it clear, the primary loser will be the note holders, the banks are only in a position of loan servers in most cases. They make more money foreclosing than they do working out a loan, either through a short sale or a loan mod. So their motives are at odds with their clients, the note holders who would be much better off with loan mods or short sales.

BofA just made a little settlement with the GSE’s on put-backs and the markets cheered. I think it’s maybe far from over.

The GSE’s and private REMICs own most of the loans. But if all those things I listed turn out badly for the note holders, it will start a stampede. We’re potentially talking about gagillions of dollars of secured debt turning into unsecured debt, essentially worthless.

The investors take the losses. They sue the promoters of the securities (mostly wall street banks) for fraud. The promoters sue the loan origninators (the banks again) for fraud. And we’re back to BofA as successor in interest to Countrywide.

Will it happen? I don’t know. The Fed wants to sweep it under the rug. The tough talking 50 AG’s seem to have lost their balls. The FDIC seems to be standing pretty tough. I have very low expectations that the DOJ will get involved other than to help it go away, despite that fact that there are so many RICO charges in this mess that no US Attorney would need viagra for years.

So we’re left with agressive plaintiff attorneys and a concientious judiciary. Maybe an AG here or there. (I assure you the banks would be taking it all much more seriously if Eliot Spitzer was still the AG in NY.)

Edited and added:

Another party that may have some interesting input is the office of the US Trustee, as they did in this case. I spent a lot of time working in the bankruptcy system in the early 90’s, and their aggressiveness varies dramatically from district to district. But there will be cases where they have standing. And it wouldn’t surprise me if they’re the ones that get the snow ball rolling. Bankruptcy judges tend to give them more respect than either debtors or creditors. And there is nothing more dangerous than a pissed off bankruptcy judge.

[Tillers]

So, in the grand scheme of things, is all of this going to prevent more foreclosures, or just delay more foreclosures?

[Tillers]

So, in the grand scheme of things, is all of this going to prevent more foreclosures, or just delay more foreclosures?

[Tillers]

So, in the grand scheme of things, is all of this going to prevent more foreclosures, or just delay more foreclosures?

[Tillers]

So, in the grand scheme of things, is all of this going to prevent more foreclosures, or just delay more foreclosures?

[Tillers]

So, in the grand scheme of things, is all of this going to prevent more foreclosures, or just delay more foreclosures?

[GH]

Perhaps a really big point is being missed somewhere along the way. Have the occupants being making their mortgage payments or not? I agree the banks may well have royally screwed up the paperwork in the bubble frenzies, but leave this to a judge to decide. In the mean time, the courts should assume control of disputed properties and kick the FB’s out given they have ample opportunity to demonstrate they have indeed made payments as agreed, or the bank does not have the right to reposes the home as it is a wrong address etc.

FB’s who cause issues should also be notified that their loan apps will be subjected to criminal investigation if it turns out they lied substantially on their application. Particularly stated income loans.

[GH]

Perhaps a really big point is being missed somewhere along the way. Have the occupants being making their mortgage payments or not? I agree the banks may well have royally screwed up the paperwork in the bubble frenzies, but leave this to a judge to decide. In the mean time, the courts should assume control of disputed properties and kick the FB’s out given they have ample opportunity to demonstrate they have indeed made payments as agreed, or the bank does not have the right to reposes the home as it is a wrong address etc.

FB’s who cause issues should also be notified that their loan apps will be subjected to criminal investigation if it turns out they lied substantially on their application. Particularly stated income loans.

[GH]

Perhaps a really big point is being missed somewhere along the way. Have the occupants being making their mortgage payments or not? I agree the banks may well have royally screwed up the paperwork in the bubble frenzies, but leave this to a judge to decide. In the mean time, the courts should assume control of disputed properties and kick the FB’s out given they have ample opportunity to demonstrate they have indeed made payments as agreed, or the bank does not have the right to reposes the home as it is a wrong address etc.

FB’s who cause issues should also be notified that their loan apps will be subjected to criminal investigation if it turns out they lied substantially on their application. Particularly stated income loans.

[GH]

Perhaps a really big point is being missed somewhere along the way. Have the occupants being making their mortgage payments or not? I agree the banks may well have royally screwed up the paperwork in the bubble frenzies, but leave this to a judge to decide. In the mean time, the courts should assume control of disputed properties and kick the FB’s out given they have ample opportunity to demonstrate they have indeed made payments as agreed, or the bank does not have the right to reposes the home as it is a wrong address etc.

FB’s who cause issues should also be notified that their loan apps will be subjected to criminal investigation if it turns out they lied substantially on their application. Particularly stated income loans.

[GH]

Perhaps a really big point is being missed somewhere along the way. Have the occupants being making their mortgage payments or not? I agree the banks may well have royally screwed up the paperwork in the bubble frenzies, but leave this to a judge to decide. In the mean time, the courts should assume control of disputed properties and kick the FB’s out given they have ample opportunity to demonstrate they have indeed made payments as agreed, or the bank does not have the right to reposes the home as it is a wrong address etc.

FB’s who cause issues should also be notified that their loan apps will be subjected to criminal investigation if it turns out they lied substantially on their application. Particularly stated income loans.

[SD Realtor]

Very nice post GH. I agree completely. Once that court sells the home the money can be held in an escrow acct to determine how much goes to the investors, which investors it goes to, and if the servicing agency should get anything.

[SD Realtor]

Very nice post GH. I agree completely. Once that court sells the home the money can be held in an escrow acct to determine how much goes to the investors, which investors it goes to, and if the servicing agency should get anything.

[SD Realtor]

Very nice post GH. I agree completely. Once that court sells the home the money can be held in an escrow acct to determine how much goes to the investors, which investors it goes to, and if the servicing agency should get anything.

[SD Realtor]

Very nice post GH. I agree completely. Once that court sells the home the money can be held in an escrow acct to determine how much goes to the investors, which investors it goes to, and if the servicing agency should get anything.

[Author]

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