That’s a hole that no fleet of Fed helicopters can fill...

Arthur Cashin, director of floor operations at UBS



Foreclosure Fiasco Ferments Further – When I wrote last week about the emerging problems in foreclosures, I opined that the problem could get much bigger and more complicated. Boy, has it ever.

Wednesday morning, my good friend David Kotok, dropped by the NYSE to be interviewed, along with Rod Smyth of Riverfront Investment Group, on CNBC’s Squawk on the Street. Before they left, they dropped by to say hello. The conversation quickly turned to the foreclosure fiasco.

It was noted how quickly this had morphed from a potentially isolated processing problem at a single institution (GMAC) to an industry-wide disaster that may threaten the very concept of securitization.

That would be a major problem since at the top of the bubble, it was estimated that nearly 80% of all credit came from securitization. That’s a hole that no fleet of Fed helicopters can fill.

The problem is even being politicized to some degree. Speaker Pelosi and several associates called on the Justice Department and other regulators that the banks be “held accountable for their practices”.

There are fears that the murky comingling of mortgage packages may take months or even years to unravel. In one case, as many as four separate entities claimed title to the same piece of property.

With foreclosures virtually frozen, a surreal new world seems to be evolving. Delinquent homeowners live in the house but make no payments. The banks/mortgage holders get no payments but are still liable for things like property taxes. Could this morph into TARP II?

Before we got each other more depressed, we exchanged greetings and went our separate ways wondering if the “new normal” was morphing into the “new abnormal”.

http://www.zerohedge.com/article/ar...ath-securitization-and-fleets-fed-helicopters

 

Mortgages can be traded on an electronic exchange like stocks. That was supposed to make things better but it made things much worse, it enabled the repackaging and now it's a real mess. In some cases four or five different entities are trying to foreclose on a single property... but it could be great for other sectors of the economy if consumers catch on and demand that foreclosure stops if there is no proof of ownership of the mortgage... they can live for years payment free and spend the money on other things... it almost makes me wish I had a mortgage, I'd give them the upraised middle digit and stop making the payments....

People are clearing their credit ratings by simply demanding the same thing out of people that put the bad reports on their ratings. It's cheaper to remove the items from the credit report than to prove they properly own the debt so they remove the items from the credit report...

 

It wouldn't surprise me if the big winners out of this mess are the delinquent homeowners. Since the foreclosure process is compleatly broken no exaggeration, many will get to stay in their homes for free. Give it a few years and they get clear title by virture of adverse poession. Perfect.

 

The banks will get their usual exemption from the law of the land so they can foreclose.

Judging by the Banks cavalier attitude to the law, in a just society they would be closed down as criminal organisations.

 

what would the bank do with 80% of mortgaged homes

 

There's nothing wrong with a jubilee. Every thousand years or so, it has to happen to clear society from oppression.

 

In 13th century England the solution was to lock the moneychangers in their counting houses and then set fire to the counting houses.