Skip to comments.Mortgage-Backed Securities Without Mortgages?
Posted on 11/17/2010 11:28:01 AM PST by Kartographer
Remember, the allegations made by various legal folks in the practice (and apparently validated by the case law thus far) is that not one note has been able to be produced that contains all of the required conveyances and endorsements.
What's going to happen when (or if) these folks gain access to the files and find that they're missing - that is, that the custodian doesn't have them?
Well now that would be interesting, no? "Mortgage-backed securities" that in fact have no mortgages in them? Why that would be a wee problem, no?
(Excerpt) Read more at market-ticker.org ...
Can you say “sh** storm”? I thought so.
Wait until the MERS hits the fans.
WaMu must return foreclosed home
Does anyone know how that vote on HR-3808 Veto Override Attempt went today?
Just another ‘Dead Beat’ that needs to be ‘Tarred and Feathered’! (sarc)
If the prospectus states mortgage backed securities and the paperwork is actually screwed up and legally no mortgage note exists, then the issuer of the prospectus is vulnerable to the charge of fraud. Legally the buyer of the mortgage backed securities can return the investment to the issuing bank and demand their money back. This is known as a putback which can cost the banks billions if the investors choose to do this. This is on top of the state investigations that can conclude the prospectus for these securities were inaccurate and if the issuer knew this they can be charged with fraud. You are talking about hefty fines and prison terms for the ones involved. Bankers are already threatening the US gov that any prosecutions would result in no new mortgages. They even threaten the US gov that if the investors successfully sue them, the US gov must bail them out or they will crash the US economy. If Obama or the new GOP House of Rep really want to score PR points, put the criminal bankers on trial and jail them. After melting down the economy with liar loans and bailouts, the bankers are not contrite but have become more strident in their private demands to the US Treasury and Congress.
It will be a voice vote. They'll probably have paper bags over their heads as they vote for their masters.
Did you see the outbreak yesterday?
>>Legally the buyer of the mortgage backed securities can return the investment to the issuing bank and demand their money back.<<
Why on earth would someone want to do this with the rate of inflation we currently have?
OK I figured it out.
You got that right.
Confirmed with Adelholts [R-AL] office that vote is taking place tonight sometime in the next two hours. This morning was a discussion and agreement to limit discussion to 10 mins.
ANTICIPATED FLOOR SCHEDULE
On Wednesday, November 17th, the House will meet at 10:00 a.m. for legislative business. Following One Minutes, the House will recess in order to accommodate the Democratic and Republican Organizing Meetings.
At approximately 4:00 p.m., the House will reconvene and resume legislative business. Last votes expected: 6:00 p.m.
One Minutes(15 per side)
Disposing of the Presidents Veto of H.R. 3808- Interstate Recognition of Notarizations Act of 2010
(Sponsored by Rep. Aderholt / Judiciary Committee)
If the portfolio performs, the investor will keep it, but on the other hand if the portfolio does not perform (ala too many properties are defaulting) the investors may execute this option. The other problem is if the investor needs cash and wants to sell their performing MBS to another buyer, these buyers may balk due to the bad PR, thus the investors may decide to exercise the put back option on the banks if such sales fail. The other issue for investors is the price they paid for the MBS was based on a AAA rating. They could have paid less for the risks they are taking, that is why many are using put back to get their money back so they can invest in other financial products with proper price to risk. Ironically Freddie Mac and Fannie Mae under pressure from Congress to keep their liabilities low are one of the biggest put back exercisers of MBS.
This is one of the reasons why the banks are very scare. The homeowner is the least of their problems because the banks must pay for an investigator to back track and locate the last known location of the title/note. Firms that had it last and lost it can have a lawyer fill out a state form and affidavit to document the lost documents. This option always exist for banks and service companies in case lost documents happen (usually due to natural disasters, fire, etc). The mess up in the MERS just gave more time for the homeowner to stay in their house, but eventually the documents will be located or accounted for and the foreclosure process will restart. However the MBS is another story because these investments were sold with a prospectus that must be accurate and meet SEC/banking regs. Claiming that the MBS are backed with mortgage notes/docs and rated AAA when they are not opens the banks to hot legal problems. Whoever prepared and signed off on the prospectus is already in legal trouble. Question now is will the state governments prosecute and disrupt the banking system with trials. Sec of Treasury and Fed Reserve may be lobbying via federal government for the states to hold off or risk causing more public panic and triggering another financial meltdown of 2008.
Thanks for expanding on this.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.