Why Mortgages Aren’t Modified and What a Ruling Stopping Foreclosures Means

In August, the Kansas Supreme Court issued a ruling against a mortgage tracking service which may prove very costly to banks in foreclosure, leading to massive writedowns. It could be a life saver for many trapped in the foreclosure process. The case goes to the core of the functioning of massive markets in securitization and derivatives and has wide-ranging importance.

The service, MERS (Mortgage Electronic Registration System), is a privately-owned registry set up in 1997 by Fannie Mae (FNM), Freddie Mac (FRE) and several large banks including JPMorgan Chase (JPM), Citigroup (C) and Bank of America (BAC). In foreclosure, MERS is often the party which files on behalf of the lenders behind the mortgage against homeowners. The Kansas ruling effectively blocks MERS from bringing legal action on the lenders’ behalf in certain foreclosure situations, potentially putting the kibosh on MERS’ legal authority on the more than 60 million mortgages it holds and subjecting the lenders to huge losses.

This is a complicated but important case I want to break down for you below.

Securitization at fault

The crux of the case has to do with mortgage-backed securities and the process of securitization. In a bygone era, almost all mortgages were held as loans on the books of the originating banks. In this case, if a mortgage went past due, it was a matter to be worked out between an individual homeowner and an individual mortgage holder.

However, when the mortgage-backed securities (MBS) market took off, mortgages were sliced and diced into tranches and packaged into securities and sold on to investors. These same securities were then sliced and diced and packaged with other securities into collateralized debt obligations (CDOs). CDOs were often then sliced and diced further still into CDOs-squared – that is CDOs of CDOs.

Often times, the underlying mortgages in these instruments were high-risk, sub-prime mortgages. But the ratings agencies could still give them AAA ratings, which made them eligible for investment by risk-averse investors like teachers’ pension funds or municipalities. So, these securities were then sold on to investors around the world into remote places like small towns in Norway and banks in Germany. However, when the housing market fell, the value of these securities plummeted; and they fell much more than the house prices as the securities are derivatives and leveraged against the value of the underlying asset. The result was a financial crisis of epic proportions.

Making matters more complicated for the homeowner, the originating lender is often not the servicing agent of a mortgage. Payment from the homeowner and to investors who are the ultimate owners of the security is handled by a mortgage servicer who collects a fee for its work.

What this has meant is that there is considerable distance between a homeowner and a mortgage holder, such that in the event of foreclosure, it is not a matter of picking up the telephone and calling Mr. Smith at the local Bank. Often times, there is a byzantine web of originating bank, mortgage holder (if loan is sold), mortgage servicer, MBS pooling/securitizing agent, and investors. Needless to say, the average person doesn’t have a clue as to who to call in order to get relief to avoid foreclosure. The obvious port of call is the mortgage servicer, who is the one party with whom a homeowner has ongoing contact.

Mortgage Servicer

Below is a research report written by the National Consumer Law Center just this past month on why consumers in jeopardy of suffering foreclosure cannot get loans modified.

It starts:

The country is in the midst of a foreclosure crisis of unprecedented proportions. Millions of families have lost their homes and millions more are expected to lose their homes in the next few years. With home values plummeting and layoffs common, homeowners are crumbling under the weight of mortgages that were often only marginally affordable when made.

One commonsense solution to the foreclosure crisis is to modify the loan terms. Lenders routinely lament their losses in foreclosure. Foreclosures cost everyone—the homeowner, the lender, the community—money. Yet foreclosures continue to outstrip loan modifications. Why?

Once a mortgage loan is made, in most cases the original lender does not have further ongoing contact with the homeowner. Instead, the original lender, or the investment trust to which the loan is sold, hires a servicer to collect monthly payments. It is the servicer that either answers the borrower’s plea for a modification or launches a foreclosure. Servicers spend millions of dollars advertising their concern for the plight of homeowners and their willingness to make deals. Yet the experience of many homeowners and their advocates is that servicers—not the mortgage owners—are often the barrier to making a loan modification.

See the problem? This is exactly why loan modifications are not happening in large enough numbers. This goes to incentives – mortgage servicers are not incentivized to make modifications. In fact the incentives go the other way – foreclosure.

Servicers have four main sources of income, listed in descending order of importance:

The monthly servicing fee, a fixed percentage of the unpaid principal balance of the loans in the pool;

Fees charged borrowers in default, including late fees and “process management fees”;

Float income, or interest income from the time between when the servicer collects the payment from the borrower and when it turns the payment over to the mortgage owner; and

Income from investment interests in the pool of mortgage loans that the servicer is servicing.

Overall, these sources of income give servicers little incentive to offer sustainable loan modifications, and some incentive to push loans into foreclosure. The monthly fee that the servicer receives based on a percentage of the outstanding principal of the loans in the pool provides some incentive to servicers to keep loans in the pool rather than foreclosing on them, but also provides a significant disincentive to offer principal reductions or other loan modifications that are sustainable on the long term. In fact, this fee gives servicers an incentive to increase the loan principal by adding delinquent amounts and junk fees. Then the servicer receives a higher monthly fee for a while, until the loan finally fails. Fees that servicers charge borrowers in default reward servicers for getting and keeping a borrower in default. As they grow, these fees make a modification less and less feasible. The servicer may have to waive them to make a loan modification feasible but is almost always assured of collecting them if a foreclosure goes through. The other two sources of servicer income are less significant.

If servicers’ income gives no incentive to modify and some incentive to foreclose, through increased fees, what about servicers’ expenditures? Servicers’ largest expenses are the costs of financing the advances they are required to make to investors of the principal and interest payments on nonperforming loans. Once a loan is modified or the home foreclosed on and sold, the requirement to make advances stops. Servicers will only want to modify if doing so stops the clock on advances sooner than a foreclosure would.

Worse, under the rules promulgated by the credit rating agencies and bond insurers, servicers are delayed in recovering the advances when they do a modification, but not when they foreclose. Servicers lose no money from foreclosures because they recover all of their expenses when a loan is foreclosed, before any of the investors get paid. The rules for recovery of expenses in a modification are much less clear and somewhat less generous.

In addition, performing large numbers of loan modifications would cost servicers upfront money in fixed overhead costs, including staffing and physical infrastructure, plus out-of-pocket expenses such as property valuation and credit reports as well as financing costs. On the other hand, servicers lose no money from foreclosures.

This is a very important document for anyone looking to do a loan modification. I strongly suggest you read it, download it and act upon it.

By the way, the largest servicers are:

• Bank of America: $2.1 trillion, up from $530 billion a year earlier (via its acquisition of Countrywide – this is WHY Bank of America bought Countrywide)
• Wells Fargo (WFC): $1.8 trillion, up from $1.5 trillion a year earlier
• JPMorgan Chase: $1.5 trillion, up from $795 billion a year ago (thanks in large part to its acquisition of Washington Mutual)
• CitiMortgage (a division of Citigroup): $792 billion, down from $799 billion a year earlier. Citi is hurting i everywhere)
• ResCap: $391 billion, down from $449 billion in the first quarter of 2008.

As you can see, consolidation has meant the big are getting bigger. Despite a recession, servicing fees are increasing, not decreasing.

You should DEFINITELY read my post “How refinancing helps the likes of Bank of America and Wells Fargo” because this demonstrates why these banks are going to rack up monster fees in mortgage servicing.

Landmark National Bank v. Boyd A. Kessler, Kan 2009, No. 98,489

That brings us to the Kansas case. According to the Kansas City Business Journal, the case can be summarized as follows:

A Ford County man went into bankruptcy in 2006. He had taken out two mortgages on the same property, one to Landmark National Bank and one to Millennia Mortgage Corp. Landmark foreclosed on its mortgage. Millennia had sold its mortgage, which eventually landed at Sovereign Bank, though that transaction never was recorded in Ford County.

Neither MERS nor Sovereign received notice when Landmark filed its foreclosure. That’s because the notice went to Millennia, still registered in Ford County, which is like telling someone that a stranger’s car is about to be towed.

Landmark won a default judgment, essentially wiping out Sovereign’s mortgage. MERS and Sovereign sued to set aside the judgment, arguing that MERS should have received notice. They lost at trial and on appeal.

Supreme Court justices had a difficult time accepting what MERS was and why it would be entitled to receive notice of a foreclosure when it was not a lender and had no stake in the property behind the mortgage. In addition, the court found, the original mortgage required notice only to the lender, not MERS.

This case was decided on 28 August 2009 in favor of the homeowner Boyd Kessler (Document and link below). The issue was predatory lending. But there was more wrong here. MERS does facilitate liquidity in the MBS market, but it does a lot of other things that could harm consumers

• MERS also acts as a “corporate shield,” protecting lenders from legal action in cases of predatory lending.
• MERS can foreclose even though it is not the financial party with interest
• Because MERS is a distant intermediary, foreclosure can proceed without even producing an original mortgage note
• With MERS in control, consumers cannot access publicly available information to adequately determine who the holders of their note are.

If MERS is blocked from filing suit in many cases, there will be large losses accumulating at the holders of these notes. Expect to hear more about this very important case.

Landmark Bank v. Kessler, Kansas Appeals Court (MERS), 2008

Sources

Landmark National Bank v. Boyd A. Kessler, Kan 2009, No. 98,489 – Kansas Courts Documents

Why Servicers Foreclose When They Should Modify and Other Puzzles of Servicer Behavior (.pdf) – National Consumer Law Center

The Mortgage Machine Backfires – Gretchen Morgenson, NY Times

The Next Financial Crisis Hits Wall Street, as Judges Start Nixing Foreclosures – Counterpunch

60 Million Fatally Flawed Mortgages – The Classic Liberal

Landmark Decision Promises Massive Relief for Homeowners and Trouble for Banks – Peace Options

Comments

[untrusting ...:]

Well written and very informative. Thanks for posting this information.

Mortgages are truly a mess, as only the financial industy can make things. Still thinks the far better approach to the whole mortgage mess, would have been what some others suggested. Something like an "equity participation modification" by the Federal government. Would have worked something like, where mortgages were underwater and the homeowner could viably still make payments on the part not underwater, then the Fed could assume/payout the underwater part and take an equity stake for the underwater part. Upon subsequent sales, then government recovers equity stake from sales proceeds. Seems to make a lot more sense than the complex mess that has happened.

Oct 23 04:53 AM

[davidbdc:]

"equity participation modification".....does that extend to Ferrari's? If so, sign me up. I can pay $500/month....government can chip in the rest and have a claim on the residual value when I (we) sell it in four years.

Think you'll like paying taxes so that I can go cruising?

Oct 23 06:37 AM

[Andrew Butter:]

Very Very good account.

I think one thing perhaps that you missed out was the fact that it is not in the interests of what you call the "little town in Norway" to have the property foreclosed either (the "sucker" who bought the RMBS or the CDO or the CDO squared), and it is much more in their interest to re-negotiate the loan, particularly in the current circumstances where house prices are if not at bottom are in sight of bottom (i.e.the only way in two to three years is up).

If they could get their act together the borrower and the owners of RMBS might be well advised to jointly put an action against servicers, the grounds might possibly be that the agreement that assigned control of the loan to a disinterested third party to both sides of the fence was illegal and is thus invalid.

I have no doubt that a good lawyer could figure an angle which would at least get some sort of stay, and a good lawyer could keep that in court for years, people have gone to the law for much less.

Oct 23 06:45 AM

[Andrew Butter:]

Example from Diane E. Thompson's document (page viii)

Even where investors want to encourage and
monitor loan modifications, existing rules can
stymie their involvement—or even their ability to
get clear and accurate reporting as to the status
of the loan pool. Additional guidance by FASB
and the credit rating agencies could force
servicers to disclose more clearly to investors and
the public the nature and extent of the modifications
in their portfolio—and the results of those
modifications. Without more transparency and
uniformity in accounting practices, investors are
left in the dark. As a result, servicers are free to
game the system to promote their own financial incentives,
to the disadvantage, sometimes, of
investors, as well as homeowners and the public
interest at large.

Oct 23 06:59 AM

[Moon Kil Woong:]

Thanks for the great explaination of the arcane system of mortgage securitization. This portion of Bank of America, Wells Fargo (WFC), JPMorgan Chase, CitiMortgage (a division of Citigroup), and ResCap gets profit and benefit without skin in the game. But that is not the main intent of such a creation. Moreover it protects the parent by purposely being created in a way that it can effectively block any resolution and linkage between mortgage defaults and the origional writers and the current holders of bonds. Thereby they are convenient shields since they do not own the bonds, are not the writers, and can claim no participation in any fraud on either end of the securitization process even if there was any.

I really pity the people being forclosed on who must try to penetrate this system. Even more so I pity the ones that this system refuses to foclose on just so they can give them a few more months of penalties and fees. Once again a growing segment of the public are being shuttled to the obscure back doors of the banking sector where they can get robbed and beaten yet once again. The numbers of people trying to forclose but can't are already estimated at over 100,000 and growing by the day. The odds they get a mortgage refinancing they can afford is almost zero and drops monthly as their equity shrinks and their liability grows to the benefit of these servicers.

So far, no one has called a stop to this secondary rip off racket. With Washington so endeared to bankers I don't expect that to change. The only relief they may get is through our legal system. Borrowers have a right to full access to their lender and the one holding their mortgage. Not a hole in the wall servicer.

Oct 23 07:05 AM

[waldipup:]

One point not exemplified here was that the Landmark mortgage was a first mortgage , and the Millenia , later sold to Sovereign , a second mortgage , junior to the Landmark first mortgage.

And so regardless of notification issues or anything , what would have occurred differently?

Nothing.

Even if properly notified , what could Sovereign or MERS as their agent done to change anything regarding the Landmark first mortgage forclosure action?

Nothing.

As to where the liability involved lies for the lack of proper notification -

It lies with THE ATTORNEY for Sovereign , and / or Sovereign's Title Co. , for failing to add Sovereign to the County Clerk record as new assignee of the Millenia second mortgage.

Nonetheless , if any equity was remaining after satisfying the Landmark forclosure debt , since the Millenia second mortgage was on record at the County Clerk , any remaining proceeds would have gone towards the outstanding debt on that loan , which would have eventually found its way into the pocket of -

Sovereign , the assignee and owner of that Millenia second mortgage .

So in this case , the bottom line is -

Nothing mattered anyway.

And if I knew the numbers , I'd bet that nothing mattered anyway a second time per the second mortgage Sovereign held and the homeowner winning on predatory lending by them , because -

I'm guessing there wasn't any equity left after the Landmark forclosure anyway!

Oct 23 08:09 AM

[Chaser12:]

Moral or ethical questions rarely rise in business. It is all about making money. Remember folks this is the land of CAPITALISM. Now I am not without sympathy for those losing there homes but lets not forget many of these people bought way above what they could afford and a large part of that decision was greed, to make money on there home when they sold it and then buy another larger home. Buyer beware did not seem to be part of the publics way of thinking and as a Real Esate Appraiser just retired this year after almost 20 years I can tell you the home owners I dealt with typically had no interest in keeping any equity and just refinaced as often as they could to buy more crap. So blame the Banks all you want but they are a business that is out to make money. People lost sight of what a home is in America. It is not an ATM, It is not a short turn investment to be flipped, it is a place to live and one that should be paid off ASAP rather then milk every penny out it and then wonder why your under water when you could actually use the equity you were supposed to be building for when times got bad. I saw the writing on the wall and I'm no rocket scientist. Greed is the real factor in the vast majority of home losses on both the lenders and the buyers as well as all the middle men involved but that is CAPITALISM. Love it or hate it but work within it or lose. So what to do now? Trade BAC and make some money off of them for a change. I am one of the few that is very happy with AIG. Simply cause I made a lot of scratch off them this year. Get mad at oil prices? why bother..trade XOM, CVX, BP etc when they are undervalued and you will actually smile when gas prices go up at the pump cause you are making money. That dirt nap is coming for all of us one day and it's a long time. Play the blame game and your time is wasted when you could be happier making a profit. There is no easy money just smart money. Happy trading all...

Oct 23 08:56 AM

[Graham and ...:]

The problem is that when mortgages are sliced and diced and sold off in little pieces, "no one" (lender, tracker, servicer, investor) is fully responsible for them, meaning NOBODY is.

And "Kansas" is following Mary Ellen Lease's injunction to "raise less corn and more hell."

Dorothy Gale, slayer of the witches of the East and West (big New York and San Francisco banks), strikes again. Kansas tornadoes anyone?

Oct 23 09:49 AM

[Edward Harr...:]

The question this now brings up is what is MERS' legal right to act on behalf of mortgage holders to enforce foreclosure. If MERS is limited, as this verdict suggests it is, then any homeowner could contest a filing. This gives them the right to continue in the foreclosed property until other means to force foreclosure are found by some interested party.

Ultimately that is good for the homeowner and bad for the investors/banks holding the securities linked to these assets.

I would expect this case to be contested.

Oct 23 09:54 AM

[Edward Harr...:]

One thing I should note is that the Appeals court decision specifically said this is NOT a ruling on whether MERS can represent the mortgagee:

"We do not attempt to comprehensively determine all of the rights or duties of MERS as a nominee mortgagee."

That means the decision had a more narrow focus as to whether MERS was a 'necessary party' in this particular case. The finding is that it was not. The Kanas Supreme court agreed that MERS was not 'contingently necessary.' They went further in concluding that the fact that MERS neither possessed the promissory note or had authority to assign it means it cannot file suit.

"indirect monetary benefits do not establish protection under the Fourteenth Amendment"

However, because this is NOT a comprehensive judgment as to MERS' role as nominee, clarification is needed. That's why I think this is going to the Supreme Court.

Oct 23 10:08 AM

[Dialectical...:]

Your example is a stretch. And I agree with davidbdc to a point. The government (actually the taxpayers) already spent billions of dollars trying to keep the banks whole. If those billions had been invested to backstop individuals then the banks would have benefited from the stability of the underlying security, but the individuals would have also been spared some hardship. This in turn would have helped stabilize communities and keep tax bases in tact. It's maybe not the best idea to get the taxpayer involved in the first place, but way better than what was done. And no your Ferrari won't be subsidized, but your GM car sure will be. Taxes are going up no matter what. We might as well make it money well spent (which is to say money backstopping consumers and communities) rather than simply lining the pockets of Goldman Sachs and Citigroup.

It's too late for all this. The bailout boat has sailed. It's just a shame (and a sham) that we allowed ourselves to be panicked into giving out billions to huge corporations rather than think of a useful way we could leverage those billions by backstopping individuals.


On Oct 23 06:37 AM davidbdc wrote:

> "equity participation modification".....does that extend to Ferrari's?
> If so, sign me up. I can pay $500/month....government can chip in
> the rest and have a claim on the residual value when I (we) sell
> it in four years.
>
> Think you'll like paying taxes so that I can go cruising?

Oct 23 11:08 AM

[Jeff Nielson:]

Excellent commentary.

While this issue has been "out there" in the market for over a year, this is the most comprehensive analysis of this issue I've seen.

I was also unaware that the Kansas case had already been upheld on appeal (a VERY important point with respect to its value as a future precedent).

The author notes the "narrow focus" of the ruling - which is to be expected. Any time where courts are forced to adjudicate on a new issue (in this case, PROOF of "standing" and/or proof of "ownership" of a mortgage), they always move in baby-steps.

Now that this has been upheld on appeal, this sets the stage for BROADENING the ruling. It very likely also sets the stages for WAVES of class-action law-suits from people who have ALREADY been foreclosed upon.

Rules of "discovery" regarding initiating a new legal action allow RETROACTIVE law-suits where a party comes into possession of NEW information. In this case, the "new information" is that the financial institution which foreclosed their property(s) may not have had legal TITLE and thus legal AUTHORITY to do so.

Not only does this set the stage for crippling legal actions against the Wall Street fraud-factories who securitized TRILLIONS of dollars worth of such mortgage, it also potentially casts doubt on who has legal title TODAY for millions of foreclosed properties.

If a bank who foreclosed on a property - and then SOLD it to a 3rd party - is found to have NEVER had the legal authority to take possession of the property, this casts extreme doubt on the sale of the property to that 3rd party.

This adds an ADDITIONAL risk to anyone thinking of buying a "foreclosed" property - the risk that you may not LEGALLY possess clear title to that property.

Oct 23 01:30 PM

[BerkeleyBob:]

Really excellent article and analysis. Encouraging home ownership and establishing a secondary market for home loans are not per se mistaken policy, although the surviving Wall Street players and their apologists griped about unfair competition from Fannie and Freddie. "We" are on the hook because a)Greenspan warmly endorsed the ARM as a boon to the consumer and b) Greenspan held interest rates too low for too long. I don't see any movement towards a structural change in mortgage servicing or "federalizing" the home loan process, clearly no longer a purely local matter with local bank holding the paper and engaging in realistic appraisal and underwriting practices.

Oct 23 02:04 PM

[MutantCapit...:]

This subject matter really warrants much more reportage and discussion. Mortgage servicers are and have been for a long time incentivized to fabricate defaults but not only for their own self enrichment in phony fees and lucrative default servicing income. Mortgage servicing fraud is the engine that drives Wall Street's credit derivative casino, feeding it a steady stream of bogus defaults along with attending insider servicing data in order for proprietary traders to place highly levered rigged CDS bets. Are we forgetting that the majority of these servicers are subsidiaries of investment banks making these bets? Let's not forget, it was investment bank traders who created the ABX Index. Every single mortgage servicer to ABX reference entities has been in recent years charged with mortgage servicing fraud, not only in state and federal courts but in FTC and OTS investigations resulting in "cost of doing business" settlements and supervisory agreements.
Bloomberg recently ran a good piece on yet another angle on how profitable insider knowledge of mortgage servicing fraud can be when utilized to hedge mortgage servicing rights. No, they didn't specify "insider knowledge of mortgage servcing fraud" in the article but that 900 lb gorilla IS IN THE ROOM.
www.bloomberg.com/apps...
To date TARP has committed $27,252,750,000 incentive payments for mortgage modifications as part of the administration's HAMP program.
bailout.propublica.org...
It is a repulsive travesty that too many recipients of these "incentive funds" are the most egregious long time perpetrators of servicing fraud as investigated by FTC and OTS along with countless class action lawsuits.
EMC Mortgage Corp. - www.ftc.gov/opa/2008/0...
Select Portfolio Servicing - www.ftc.gov/fairbanks
Ocwen Federal Bank - files.ots.treas.gov/93...
Bottom line is that in order to begin to correct the problem, we need to understand first and foremost that mortgage defaults and foreclosures are more profitable than most of us can ever imagine and certainly far more profitable than the 27 billion treasury is offering them to 'do the right thing'.

Oct 24 02:54 PM

[Tack:]

To any out there who are chortling with glee at the prospect that the Big Bad Banks can't foreclose on the Poor Victim Homeowners, you might consider what the real implications of this result are, if upheld and expanded.

What it really will mean is that more lenders won't make mortgage loans, if they can't be sure that their collateral is secure and accessible, so fewer loans will be available, and those that are available will all go out at much higher interest-rate spreads, both to compensate for risk and because more borrowers will be chasing fewer sources of loans.

Also, for the average homeowner/borrower, who bought, borrowed and pays responsibly, is it any reason to get excited and gleeful that some irresponsible person, who either bought a home they couldn't afford and/or milked all the equity out of it to speculate or buy trinkets, and now lives there scot free, neither paying a mortgage or getting foreclosed?

Who turns out to be the sap in that deal. You, I and all responsible citizens do, that's who.

Oct 25 12:28 PM

[Doc 224899:]

Blah, blah, blah. Yadda, yadda, yadda.

A bunch of legalistic hogwash, twisting words around, and the outcome is that Americans' lives are ruined.

Let's stop wasting our money on this legal system, and make lawyers and courts accountable for their blunders.

Can somebody tell me how many dollars in legal fees and taxes were flushed down the hopper paying for the lawyers and judges and magistrates and law clerks who engineered this disaster?

Oct 25 06:47 PM

[dencerspay:]

Clearly the entire mortgage lender-to-CDO house of cards - that the financial industry built - was a poor structure indeed. I'd bet that a melding of engineering, law, and finance would improve our future and reduce the likelihood of this idiocy happening in the future. By the way, when is anyone going to outlaw CDO-squared and Credit Default Swap (CDS) instruments, especially where the investor has "no skin in the game"? To me, this looks like a clear opportunity for improved regulatory structuring.

Oct 25 07:20 PM

[dencerspay:]

No one said that financial institutions should not make money - that goes without saying. The problem is that they created and then began playing in a huge shell game that was rigged as a "heads we win, tails you lose" proposition that consumers had no incentive to avoid - they were being sold a bill of goods by the lenders. You should read up on the truth behind the lie you were part of: "The commission and referral system at Wells Fargo was set up in a way that made it more profitable for a loan officer to refer a prime customer for a subprime loan than make the prime loan directly to the customer. I knew that many of the referrals I received could qualify for a prime loan. It was in my financial interest to figure out how to qualify referrals for subprime loans. Moreover, in order to keep my job, I had to make a set number of subprime loans per month." - from harpers.org/archiv... (from a legal affadavit by Elizabeth Jacobson, a former loan officer at a Maryland branch of Wells Fargo, submitted in support of a federal lawsuit brought by the city of Baltimore against the bank.


On Oct 23 08:56 AM Chaser12 wrote:

> Moral or ethical questions rarely rise in business. It is all about
> making money. Remember folks this is the land of CAPITALISM.

Oct 25 07:32 PM

[MarkitWacha:]

Wow.

I wonder how the title companies will react if a case actually happens and a foreclosee uses this case to get a house back. Then, the system will go wild, because the title insurance companies will have to change their actuarial tables, and actually pay out. Logically, they'd raise their premiums, and those premiums are required by the lenders. So, this is a catastrophic financial risk that just got added to the title companies, with the result that the payments for a house could conceivably double in the worst case scenario.

Somebody needs to hit the reset button, and standardize the system quick. I write software for title insurance companies currently, and the way titles are registered is byzantine. It's time for a federal standard on title filing.

With computing power as cheap as it is, there's no reason not to create a centralized filing authority to track who owns the note for legal purposes.

Oct 25 08:13 PM

[sara10101:]

Well Said..
Tia
foreclosure auctions

Oct 30 05:45 AM