[SK in CV]

[quote=CA renter]
What seems to be missing in all this rhetoric is the fact that most of these FBs have defaulted on their loans, in one way or another. The paperwork glitches need to be fixed, but that should not mean that idiot speculators get to have “free” houses.[/quote]

What about idiot speculators who made bad loans and didn’t take the very simple steps required to protect the security interest in those loans?

[SK in CV]

[quote=CA renter]
What seems to be missing in all this rhetoric is the fact that most of these FBs have defaulted on their loans, in one way or another. The paperwork glitches need to be fixed, but that should not mean that idiot speculators get to have “free” houses.[/quote]

What about idiot speculators who made bad loans and didn’t take the very simple steps required to protect the security interest in those loans?

[SK in CV]

[quote=CA renter]
What seems to be missing in all this rhetoric is the fact that most of these FBs have defaulted on their loans, in one way or another. The paperwork glitches need to be fixed, but that should not mean that idiot speculators get to have “free” houses.[/quote]

What about idiot speculators who made bad loans and didn’t take the very simple steps required to protect the security interest in those loans?

[SK in CV]

[quote=CA renter]
What seems to be missing in all this rhetoric is the fact that most of these FBs have defaulted on their loans, in one way or another. The paperwork glitches need to be fixed, but that should not mean that idiot speculators get to have “free” houses.[/quote]

What about idiot speculators who made bad loans and didn’t take the very simple steps required to protect the security interest in those loans?

[SK in CV]

[quote=Diego Mamani]This is bad news! What we have here, essentially, are deadbeats (“FBs”) being protected by the courts based on a technicality.

This ruling is simply more of the “deny and delay” approach that politicians on both sides of the aisle seem to prefer. The result is that prices will remain artificially inflated for a bit longer. Banks will incur higher costs which will make credit more costly. Good grief!

So now we have the Judiciary, in addition to the Executive, interfering with the free market system. Don’t they realize that postponing the inevitable will only make the pill more bitter to swallow?[/quote]

About as much of a technicality as a borrower not making payments. And there is nothing political about it. Agreements are made. Both sides are obligated to abide by those agreements. Not just one side. Not just the borrower. The lender too. The lender agrees (in fact, insists) that the contracts are to be enforced under the laws of the state. They could alternatively require some sort of mandatory arbitration. They don’t. They choose to afford themselves of the protections provided under the law. They’re really not complicated. They’ve remained essentially unchanged in most of the 21 states that require judicial foreclosure for over 100 years.

It’s not that I’m particularly sympathetic to borrowers in default. But neither do I have any sympathy for lenders, who received hundreds of billions of dollars of government bailouts, and have squandered those tax dollars by failing to follow relatively simple rules to which they contractually agreed. There’s lots of fault to spread around as to why the bubble ever existed and then burst. No one in the process is blameless. Not the borrowers, nor lenders or any of the dozens or so other parties involved. But this problem? No one is to blame other than the banks.

[SK in CV]

[quote=Diego Mamani]This is bad news! What we have here, essentially, are deadbeats (“FBs”) being protected by the courts based on a technicality.

This ruling is simply more of the “deny and delay” approach that politicians on both sides of the aisle seem to prefer. The result is that prices will remain artificially inflated for a bit longer. Banks will incur higher costs which will make credit more costly. Good grief!

So now we have the Judiciary, in addition to the Executive, interfering with the free market system. Don’t they realize that postponing the inevitable will only make the pill more bitter to swallow?[/quote]

About as much of a technicality as a borrower not making payments. And there is nothing political about it. Agreements are made. Both sides are obligated to abide by those agreements. Not just one side. Not just the borrower. The lender too. The lender agrees (in fact, insists) that the contracts are to be enforced under the laws of the state. They could alternatively require some sort of mandatory arbitration. They don’t. They choose to afford themselves of the protections provided under the law. They’re really not complicated. They’ve remained essentially unchanged in most of the 21 states that require judicial foreclosure for over 100 years.

It’s not that I’m particularly sympathetic to borrowers in default. But neither do I have any sympathy for lenders, who received hundreds of billions of dollars of government bailouts, and have squandered those tax dollars by failing to follow relatively simple rules to which they contractually agreed. There’s lots of fault to spread around as to why the bubble ever existed and then burst. No one in the process is blameless. Not the borrowers, nor lenders or any of the dozens or so other parties involved. But this problem? No one is to blame other than the banks.

[SK in CV]

[quote=Diego Mamani]This is bad news! What we have here, essentially, are deadbeats (“FBs”) being protected by the courts based on a technicality.

This ruling is simply more of the “deny and delay” approach that politicians on both sides of the aisle seem to prefer. The result is that prices will remain artificially inflated for a bit longer. Banks will incur higher costs which will make credit more costly. Good grief!

So now we have the Judiciary, in addition to the Executive, interfering with the free market system. Don’t they realize that postponing the inevitable will only make the pill more bitter to swallow?[/quote]

About as much of a technicality as a borrower not making payments. And there is nothing political about it. Agreements are made. Both sides are obligated to abide by those agreements. Not just one side. Not just the borrower. The lender too. The lender agrees (in fact, insists) that the contracts are to be enforced under the laws of the state. They could alternatively require some sort of mandatory arbitration. They don’t. They choose to afford themselves of the protections provided under the law. They’re really not complicated. They’ve remained essentially unchanged in most of the 21 states that require judicial foreclosure for over 100 years.

It’s not that I’m particularly sympathetic to borrowers in default. But neither do I have any sympathy for lenders, who received hundreds of billions of dollars of government bailouts, and have squandered those tax dollars by failing to follow relatively simple rules to which they contractually agreed. There’s lots of fault to spread around as to why the bubble ever existed and then burst. No one in the process is blameless. Not the borrowers, nor lenders or any of the dozens or so other parties involved. But this problem? No one is to blame other than the banks.

[SK in CV]

[quote=Diego Mamani]This is bad news! What we have here, essentially, are deadbeats (“FBs”) being protected by the courts based on a technicality.

This ruling is simply more of the “deny and delay” approach that politicians on both sides of the aisle seem to prefer. The result is that prices will remain artificially inflated for a bit longer. Banks will incur higher costs which will make credit more costly. Good grief!

So now we have the Judiciary, in addition to the Executive, interfering with the free market system. Don’t they realize that postponing the inevitable will only make the pill more bitter to swallow?[/quote]

About as much of a technicality as a borrower not making payments. And there is nothing political about it. Agreements are made. Both sides are obligated to abide by those agreements. Not just one side. Not just the borrower. The lender too. The lender agrees (in fact, insists) that the contracts are to be enforced under the laws of the state. They could alternatively require some sort of mandatory arbitration. They don’t. They choose to afford themselves of the protections provided under the law. They’re really not complicated. They’ve remained essentially unchanged in most of the 21 states that require judicial foreclosure for over 100 years.

It’s not that I’m particularly sympathetic to borrowers in default. But neither do I have any sympathy for lenders, who received hundreds of billions of dollars of government bailouts, and have squandered those tax dollars by failing to follow relatively simple rules to which they contractually agreed. There’s lots of fault to spread around as to why the bubble ever existed and then burst. No one in the process is blameless. Not the borrowers, nor lenders or any of the dozens or so other parties involved. But this problem? No one is to blame other than the banks.

[SK in CV]

[quote=Diego Mamani]This is bad news! What we have here, essentially, are deadbeats (“FBs”) being protected by the courts based on a technicality.

This ruling is simply more of the “deny and delay” approach that politicians on both sides of the aisle seem to prefer. The result is that prices will remain artificially inflated for a bit longer. Banks will incur higher costs which will make credit more costly. Good grief!

So now we have the Judiciary, in addition to the Executive, interfering with the free market system. Don’t they realize that postponing the inevitable will only make the pill more bitter to swallow?[/quote]

About as much of a technicality as a borrower not making payments. And there is nothing political about it. Agreements are made. Both sides are obligated to abide by those agreements. Not just one side. Not just the borrower. The lender too. The lender agrees (in fact, insists) that the contracts are to be enforced under the laws of the state. They could alternatively require some sort of mandatory arbitration. They don’t. They choose to afford themselves of the protections provided under the law. They’re really not complicated. They’ve remained essentially unchanged in most of the 21 states that require judicial foreclosure for over 100 years.

It’s not that I’m particularly sympathetic to borrowers in default. But neither do I have any sympathy for lenders, who received hundreds of billions of dollars of government bailouts, and have squandered those tax dollars by failing to follow relatively simple rules to which they contractually agreed. There’s lots of fault to spread around as to why the bubble ever existed and then burst. No one in the process is blameless. Not the borrowers, nor lenders or any of the dozens or so other parties involved. But this problem? No one is to blame other than the banks.

[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.

[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.

[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.

[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.

[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.

[SK in CV]

This is one little piece in a great big mine field for the mortgage loan industry. It follows a good dozen rulings against them across the country, on more than half a dozen different fronts. Off the top of my head we have:

1. MERS standing.
2. Improper endorsements.
3. Failure to transmit original documents.
4. Attesting to the accuracy of claims made based on personal knowledge of attestee.
5. Violation of NY trust laws which apply to almost all REMICs.
6. Violations of trust specific documents, which, in conjunction with 5 above could invalidate the securitization process, putting tax treatment in jeopardy.
7. Failure to record ownership transfers as required in some jurisdictions.
8. I know there’s at least 3 more that aren’t immediately coming to mind.

This one ruling actually touches on a few of them. Many of them only apply in some states. Some of them can be cured. But it’s a mess. And will almost undoubtedly be something the lenders and loan servicers could have avoided. They deserve all bad things that come to them.

[Author]

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