Life, Liberty, and Property

We’ve largely been ignoring the latest episode of Big Shitpile, mainly because, well, it doesn’t involve Bozos or Nazis.

Turns out we were wrong.

If, like us, you’re just tuning in to Dancing With The Banks, foreclosures have largely been put on hold nationwide because of red tape. And by “red tape”, we mean that nobody can prove they own the foreclosed mortgages.

This isn’t just a matter of robo-notaries rushing through the paperwork. It’s a matter of the paperwork itself missing a few papers. Like, oh, deeds:

During the height of the housing bubble, investment banks were churning out mortgage bonds in such a frenzy, sometimes the assignments never got executed and mortgage notes never got delivered… It was inevitable that the fast and loose and slightly documented culture would not stop at the mortgage originator but stretch all the way through the process.

Presumably somewhere at the bottom of a given shitpile is the slip of paper that allows a bank to kick a family out of their home. But if you’re imagining the Raiders of the Lost Ark warehouse, you’re being too tidy — between bank closures and mergers, even some of the warehouses are off the map.

Economists, including those working for the government, will tell you this is all a Bad Thing, because—

Let’s pause here a moment. How would you like that sentence to end? Something like, “because every American needs to be confident that foreclosure laws will be followed to the letter”?

Silly you.

No, this is all a Bad Thing because we can’t kick out families and flip their houses fast enough.

We understand the macroeconomic view: the sooner losses are dealt with, the sooner markets can rebuild. We learned that a few shitpiles ago, during the S&L crisis. Consider it noted.

But please note this: If you’re gonna give homeowners shit for not meeting their obligations, the least you could do is meet yours.

A Primer On The Foreclosure Crisis [CNBC, via Sully]

RICO scheme, anyone? Plaintiffs’ class action lawyers on scene in 3, 2, 1 . . .

Hey! You’re being a “bad” (read uncooperative) Lawyer. That law is only for criminals whose names end with a vowel not bankers (except the orange looking guy from CountryWide) because bankers are pillars of the community… who use fraud to fatten their bonuses, paychecks and perks while stomping on the US America dream and creating world wide economic chaos.

BTW, on that happy note… Did you know that Wall St is getting a bigger bonus pile this year?

@ManchuCandidate: That’s so they can create all the (Italian) jobs by each buying thirty-two Ferraris.

fucking hell

WASHINGTON (Reuters) – The Obama administration decided on Tuesday to appeal a judge’s rulings that prevented the U.S. government from banning same-sex marriages, a move that could undermine support among President Barack Obama’s traditional liberal base ahead of a key election.

bad day for me to get my absentee ballot

@Capt Howdy: First lifting the ban on deep water drilling, now this? We’re being shit on by professionals. Nadine, where art thou?

@Mistress Cynica:
seriously. this was such a fucking no brainer. just do nothing. thats all Barry had to do. no one important would have complained. I am so fucking pissed I cant see straight.

not particularly surprised. not anymore.

he seems to want a republican congress.

Difference between the S&L meltdown of the late 1980s and today’s mess is both qualitative and quantitative. Disregulation of state- and federally-chartered thrifts resulted in structural interest rate changes for the thrifts and, with a handful of rule changes, allowed for both concentration of executive power and an easy sleazy path toward direct investment. Last minute derring do by Ed Gray and SFHLBB general counsel Bill Black pulled back on these most provocative of deregulatory missteps and limited the losses to something over half a trillion that was resolved through the RTC, formed to distribute orphaned assets and sell off real property in dechartered institutions’ REO portfolios. It worked only in that the dead thrifts held their notes and sold them off to Fannie and Freddie, a short chain and well managed chain of trust. The monstrous bucket brigade of racketeers that were organized to securitize and hold in trust the mortgages being hurled up the pipe at ever increasing velocities will cloud title for decades to come, as fully some 2/3rds of mortgages were to become funded by Wall Street securitization before the music stopped. Any property with a note that was subsumed into that zombified chain of trust will forevermore have suspect title. The title clearance plague is upon us.

@FlyingChainSaw: I thought you couldn’t close on a house if you were taking out a mortgage without a clear title. I thought the mortgage co wouldn’t sign off on it. But then, I thought a mortgage co wouldn’t sign off on a closing unless you had insurance including fire and flood – in this part of the country. Has this changed?

@Capt Howdy: Don’t they have to do this? And isn’t GLAAD glad (publicly at least) that they are?

no idea what glaad is glad about but I would love to know why they are. are they foolish enough to believe congress will take its head out of its collective ass and do something. if so I wish them luck.

“As a policy matter, the President has made clear that he believes DOMA is discriminatory and should be repealed,” said Justice Department spokeswoman Tracy Schmaler. “The Justice Department is defending the statute, as it traditionally does when acts of Congress are challenged.”

IMO this is such fucking bullshit. this is who Barry is. it was obvious starting from the primarys. he doenst give a rats ass about gay rights.
only gay votes.

@Benedick: You never have to appeal. They have a legal obligation to defend DOMA when it is challenged, but no obligation to continue to do so once it loses.

@mellbell: “no obligation to continue to do so once it loses.”

Kind of like how Republican governor Schwarzenegger didn’t appeal the California federal district court decision on Prop. H8 or Republican governor Crist didn’t appeal the Florida state court of appeal decision striking down the ban on ghey adoption.

@FlyingChainSaw: So now it’s the turn of all the title insurance companies to implode like AIG?

@Nojo: w/r/t to alt-text, never have I been happier that the property I own has title held in such an unusual way that our bank is required to keep the loan on its own books and not resell it or chop or dice it. Trade off is a higher interest rate, but I know who owns my mortgage.


No worries, the banks’ lobbyists will have their puppets in Congress retroactively legalize their crimes, thus saving crapitalism to die another day.

@¡Andrew!:” If you don’t like what is being said, then change the conversation.” – Don Draper.

@redmanlaw & @Capt Howdy:

I’ve been trying to think of a snappy response to Daddy O and AG Holder re: the DOMA & DADT appeals, but the only phrase that comes to mind starts with “F” and ends with “u.”

@Benedick: Exactly. You can’t. That is why banks were turning to foreclosure mills set up in malls which would just forge documentation. Banks and Wall Street were using MERS to swap notes without actually using wet ink signatures of trustees who were supposed to follow state and federal laws in transferring the control of the note. In most states, you got no wet signature, you got no title. So the banks hired the mills to forge them all. Now that’s Innovation.

@FlyingChainSaw: I thought that the RTC did a reasonably good job of dealing with the failed S&Ls. There is nobody in sight to take that role with the stealth securitized mortgages and other flaky assets we’re seeing now.

@redmanlaw: “Why I’m quitting news.” It’s the only possible solution.

@Dodgerblue: RTC’s role was a sort of czarist evolution of FSLIC’s chartered powers. They knew what to do and the guys who came out of OTS and the FHLBB to organize it were seasoned mandarins. There was also a handful of assets classes to resolve and no systemic title clouding like we have today. This is a clusterfuck of epic proportions pre- and post-securitization. In the first instance, how would a government agency even be able to prepare REO for auction, knowing what it knows about the title quality of the properties?

@mellbell: Yes, but everyone was puffing up a storm immediately afterward.

@Dodgerblue: I think it fits the meaning of the CCE quite nicely. Sadly, putting the bad guys away will not cure the derangement of a culture in which simply buying or selling a home has become a criminogenic excursion. We’ve got two generations of originators, brokers and servicers for whom criminal non-feasance and fraud are just normal business practices.

I guess the Alabama AG is too busy fighting health care reform and pursuing other teabagger interests than to join the other 49 state Attorneys General in a group inquiry into the foreclosure clusterfuck.

we’re looking to get out of our affordable but declining neighborhood, but the foreclosures look like something to be wary of. Wonder what the title binders look like? I’m sure the title insurers are imposing new policy exclusions at this very moment.

@FlyingChainSaw: @redmanlaw: If you were a title insurer, would you put your assets on the line for a foreclosed securitized mortgage now? I think not. Plus, you can’t get a new mortgage without a reputable title insurance policy. I think this one is going to last for a while.

@Dodgerblue: “Ever hear about the guy who moved in over a bank? Now his assets over $10 million dollars.” The Unknown Comic, c.-mid 1970s.

Unrelated, apart from the similar presence of (a) dickweed who doesn’t understand the rule of law:

Once again – Colorado, WTF?

From Sully’s note that led me to the piece:

“I had one small glimpse of this trying to buy a distressed property from Bank of America. The incompetence was staggering.”

So, yes: The same problem that affects foreclosures, affects subsequent purchases.

Yes. I hope this brings down the whole sector and gets underwriting quality back on the agenda. It matters. Like sterile procedure matters in an operating theater. And it’s been eroding since the 1970s. This clusterfuck is a horror unimaginable 30 years ago. I dunno how a culture gets beyond pandemic corruption like this.

@SanFranLefty: So now it’s the turn of all the title insurance companies to implode like AIG?


personally I am getting angry enough to accept president Gingrich or whoever. just get this guy the hell outta here so we can move on.
he is not up to this job.

@Capt Howdy: No–he’ll steal Christmas! And everything else!

true. you know, I dont even care about gay military service. god knows I would not do it. this is just such a fucking no brainer. its a slap. a backhanded slap to every gay person serving.

I think they, every goddamed one of them, should come out. today. en masse.
let them kick you out and fight their own damn wars.


It’s not necessarily incompetence, it’s that the workload for foreclosures and REO is physically and logistically impossible given the massive numbers. Even huge nation-wide banks probably have less than 25 people in these departments, which is why you’re reading about one person robo-processing 15,000 foreclosures a month. They’re clicking buttons and hoping that it works out.

@redmanlaw: The biggest banks are actuarily the smartest ones and held onto their prime notes and sold off all the subprime, Alt-A, neutron notes, exploding ARMs, etc. into the secondary market knowing they were of increasing potential toxicity following the inflation of real property prices. If you’re going to a new, stable and upper-middle-class neighborhood and run the grantees indexes at the registry of deeds, you’ll overwhelmingly find plain vanilla mortgages in the binders for those properties. The big banks, in the end, learned the first rule of scam artists – make sure you scam and gamble other people’s money. But like all scam artists, they were half-bright and forgot that, at some point, if everyone is running the same scam, the market for it collapses. Unfortunately for everyone, that cratered the prime mortgage sector, as well.

The biggest problem now is that the worst abusers sidestepped the Registry. You can be the most scrupulous primary documentation beaver in the county, reading and tracking every margin note on the binder but if the correspondents were swapping note title through MERS, you won’t ever see it. And in most situations, you don’t get a registered discharge until well after the closing. Worse, given what these foreclosure mills have done, you can’t even trust a discharge unless you’ve been able to trace a note from origination through all the portfolios it may have occupied before discharge.

Foreclosure properties with untraded foreclosed notes will be at a premium in auction and the rest may well rot on their foundations as family counsel advises family investors to stay away.

Saw is so awesome when he talks dirty money.

@¡Andrew!: Hey, it is the cost of doing business. Any bank that said we can’t handle it and hired a foreclosure mill decided it was cheaper to conspire to break the law than to be a stand-up institution. The boards chose their direction. They could have been on the spot, hired gray-beard managers to train corps of foreclosure resolution beavers and done the work. They chose felonious side track strategies. Retail anything is always hard and when it sucks, it really sucks. This is worse than incompetence. These jokers chose to break the law.

I must apologize. I either need to spend more time working or surfing. not both.
its a DOMA decision they are appealing NOT DADT so it may not be as bad.

oh well. wait until tomorrow when they appeal DADT and I will just cut and paste all my outrage to THAT thread.

@¡Andrew!: it’s that the workload for foreclosures and REO is physically and logistically impossible given the massive numbers. Even huge nation-wide banks probably have less than 25 people in these departments

Chainsaw already covered it, but it’s not the workload, it’s the workforce. The massive numbers would be more manageable if more bodies were thrown at them — which is to say, if the banks took their legal obligations seriously.

One of the background stories I didn’t include here is about Florida bringing judges out of retirement to process their end of the workload. One judge can manage thirty foreclosures an hour on a good day.

@nojo: Wasn’t it in Florida where judges started denying foreclosures because of problems proving who owned the mortgage?

@SanFranLefty: Someone’s not getting his RDA of the blood of infants.

@Dodgerblue: You’re ahead of me there. The backstory includes lawsuits, the revelation of robo-notaries, “false foreclosures” on homeowners who keep up on their payments (I think that one’s out of Florida), plus the fact that some states require foreclosures to go through courts, while others handle them administratively.

It’s like the final scene in Fight Club, but instead of credit-card buildings (and their records) going down, it’s the banks.

@Capt Howdy: We can just go ahead and pre-rage over the upcoming DADT appeal, since we know those lying scumbags at the (In)Justice Department are working on it right now.

@SanFranLefty: Benedick was is always right. Well we fixed that up. But yes, I think he looks like he’s dying.

@Dodgerblue: New York. Judge in a court in Brooklyn or Queens was laughing at these jokers years ago.

@Benedick: Steve Jobs looked worse after the liver transplant.

I won’t bother to summarize — it’s complicated — but Felix Salmon digs even deeper, and it looks even shittier. Now’s a good time for lawyers to specialize in financial fraud.

@nojo: That’s a fascinating article. I had no idea that “third party due diligence” existed. Not that it’s going to help the banks say “hey, we relied on them” because, as the article points out, the third party told the banks that close to half of the loans were crap but the banks didn’t tell the suckers investors that.



“The Obama administration is expected to appeal as soon as Wednesday a federal judge’s ruling that halted the Defense Department from enforcing its policy that bars openly gay people from military service, according to senior administration officials familiar with the government’s plans.”


@Dodgerblue: And note that this is an entirely different issue than the rating agencies signing off on crap. The banks were, how you say, makin’ shit up.

@nojo: Making shit up and selling it at a profit! It’s all good!

@Dodgerblue: Innovation! It’s what America is all about!

@nojo: Steve looked worse!!!!!! I’m shocked that you could write such a thing. Shocked your most magical product ever conceived of ever since the beginning of time didn’t just freeze up as you typed it. But then, Apple products don’t discriminate. They bring joy to everyone. Steve wanted it that way.

@Capt Howdy: CNN, right on cue

The Obama administration is expected to appeal as soon as Wednesday a federal judge’s ruling that halted the Defense Department from enforcing its policy that bars openly gay people from military service, according to senior administration officials familiar with the government’s plans.

Go Enthusiasm!


Here’s a totally legal and NSFW response to Daddy O and AG Holder.

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