Lawmakers Look for Home Foreclosure "Quick Fix"

[vaskidmark]

http://bayourenaissanceman.blogspot.com/2010/10/am-i-prophet-or-what.html

Guess what happened today?


HOUSTON, Oct. 18 /PRNewswire/ --Today, the holders of over 25% of the Voting Rights in more than $47 billion of Countrywide-issued RMBS sent a Notice of Non-Performance (Notice) to Countrywide Home Loan Servicing, as Master Servicer ("Countrywide Servicing"), and to Bank of New York, as Trustee, identifying specific covenants in 115 Pooling and Servicing Agreements (PSAs) that the Holders allege Countrywide Servicing has failed to perform.

The Holders' Notice alleges that each of these failures has materially affected the rights of the Certificateholders under the relevant PSAs. Under Section 7.01 of the PSAs, if any of the cited failures "continues unremedied for a period of 60 days after the date on which written notice of such failure has been given ... to the Master Servicer and the Trustee by the Holders of Certificates evidencing not less than 25% of the Voting Rights evidenced by the Certificates," that failure constitutes an Event of Default under the PSAs.

In a previous release, the Holders emphasized their intent to invoke all contractual remedies available to them to recover their losses and to protect their rights. Kathy Patrick of Gibbs & Bruns LLP, lead counsel for the Holders, emphasized that the Holders' notice does not seek to halt loan modifications for troubled borrowers. Instead, it urges the Trustee to enforce Countrywide Servicing's obligations to service loans prudently by maintaining accurate loan records, demanding the repurchase of loans that were originated in violation of underwriting guidelines, and compelling the sellers of ineligible or predatory mortgages to bear the costs of modifying them for homeowners or repurchasing them from the Trusts' collateral pools.


There's more at the link. Bold print is my emphasis.

Folks, this is only one legal step, a preliminary to a lawsuit from a single group of investors, issued against a single bank (well, two, in the sense that Countrywide - which originally issued the securitized mortgages - is now owned by Bank of America, which inherited the former's legal liabilities as part of the purchase). This single lawsuit might involve as much as 47 billion - that's B for BILLION - dollars. There are hundreds, if not thousands, of similar groups here and around the world, all of whom are going to want to recover their investments in fraudulent and/or misrepresented securitized mortgages. Most of them can be counted on to pursue similar legal steps. Anyone care to guess just how high the total amount involved may go? If you guesstimate in the trillions, I won't disagree with you.

And the fall-out's just beginning . . .

Handbasket?  Check.  Directions to Hell?  Check.   ?  Check.  Big Comfy Chair?  Need to get.

stay safe.

[TommyGunn]

.... Imagine the CRA was never passed, and Fannie never guaranteed low-income loans.  How does that take away the banks' and brokers' incentives to sign as many loans as possible, and then sell them on wall street?

Rather than that, ask what would be the banks' motives for doling out a lot of loans to people who are bad risks if there was no CRA? 
The issue isn't necessarily the number of loans, it's the number of bad loans prompted by the CRA and other forces out to try to increase "home ownership" beyond the ability of the people to repay loans.

[Scout26]

Imagine the CRA was never passed, and Fannie never guaranteed low-income loans.  How does that take away the banks' and brokers' incentives to sign as many loans as possible, and then sell them on wall street?

Yes, and that's exactly what the banks were doing prior to the CRA/Fannie/Freddie... oh wait..

[Ben]

And here's yet another reason these "quick fixes" bother me. I have had several mortgages over my life. I have accepted the interest rate and conditions at the time of the loan. In some cases, when interest rates improved, I took it upon myself to refinance and pay the points for doing so. I paid all my mortgages off and paid them all on time. I knew I was getting into debt, that there was no guarantee of profit, and I accepted that responsibility. I would have loved to have had my mortgage payments magically cut in half without adding extra years to the loan by simply saying, "I can't afford it anymore".

This kind of thing take away all practical reasons for being responsible. There is still the moral obligation of responsibility, but it's a lot harder when you know you're being punished for being responsible.

http://www.foxnews.com/us/2010/10/20/shattered-dreams-new-class-warfare/

[cassandra and sara's daddy]

my sis graduated from yale law in 84 or 85 with a 4.0 practiced real estate law as well as teaches it.  she says that there is no way even she could read all the crap they jam past you at closing (and she really speed reads)  it requires trust and a certain level of integrity on the part of the real estate and loan professionals to make it work right   the integrity is missing all too often nowadays   hence the current debacle

[Racehorse]

Imagine the CRA was never passed, and Fannie never guaranteed low-income loans.  How does that take away the banks' and brokers' incentives to sign as many loans as possible, and then sell them on wall street?

Simple. There would be no buyers for the loans on Wall Street. The Fannie-Mae/Freddie-Mac guarantees on the loans were the only thing that made them attractive to buyers. No one is going to spend money on a bundle of risky loans without some sort of guarantee.

[makattak]

Simple. There would be no buyers for the loans on Wall Street. The Fannie-Mae/Freddie-Mac guarantees on the loans were the only thing that made them attractive to buyers. No one is going to spend money on a bundle of risky loans without some sort of guarantee.

^^^

"Full faith and credit of the US Government."

Banks took these risks because they believed the government would back them if they failed. AND they were right.

[cassandra and sara's daddy]

http://www.finalcall.com/artman/publish/article_4275.shtml

[cassandra and sara's daddy]

http://www.slate.com/id/2271647?nav=wp

[Headless Thompson Gunner]

And here's yet another reason these "quick fixes" bother me. I have had several mortgages over my life. I have accepted the interest rate and conditions at the time of the loan. In some cases, when interest rates improved, I took it upon myself to refinance and pay the points for doing so. I paid all my mortgages off and paid them all on time. I knew I was getting into debt, that there was no guarantee of profit, and I accepted that responsibility. I would have loved to have had my mortgage payments magically cut in half without adding extra years to the loan by simply saying, "I can't afford it anymore".

This kind of thing take away all practical reasons for being responsible. There is still the moral obligation of responsibility, but it's a lot harder when you know you're being punished for being responsible.

http://www.foxnews.com/us/2010/10/20/shattered-dreams-new-class-warfare/

It just goes to show that the Usual Suspects still haven't learned.

Government broke the banking industry.  Without a sound banking system, the economy tanked.  So what are they trying to do about it?  They're trying to screw up the banks even more.  Will this help the banking industry recover and restore the economy to sound footing?

And I bet the lawyers are all really salivating over this mess.

[Headless Thompson Gunner]

my sis graduated from yale law in 84 or 85 with a 4.0 practiced real estate law as well as teaches it.  she says that there is no way even she could read all the crap they jam past you at closing (and she really speed reads)  it requires trust and a certain level of integrity on the part of the real estate and loan professionals to make it work right   the integrity is missing all too often nowadays   hence the current debacle

When I bought my last house, the sellers were late getting their ducks in a row, so the closing company couldn't prepare the documents on time.  The closing was scheduled for 8:00 am, they gave me the documents at midnight the night before.

I made 'em push the closing data back 3 days, at seller's expense, so that I'd have time to read all of the documents before I signed 'em.  I wasn't going to enter into any long term commitment without knowing exactly what that commitment was. 

They all thought I was weird for wanting to read everything.  I thought they were weird for thinking I was weird.

[cassandra and sara's daddy]

http://www.dailyfinance.com/story/real-estate/bailouts-freddie-mac-fannie-mae/19683516/?icid=fbuzz|bailouts-freddie-mac-fannie-mae/19683516/

363   billion to bail out   freddie and fannie

[roo_ster]

http://www.dailyfinance.com/story/real-estate/bailouts-freddie-mac-fannie-mae/19683516/?icid=fbuzz|bailouts-freddie-mac-fannie-mae/19683516/

363   billion to bail out   freddie and fannie

If they then sold them off, I'd be happy at that price.