(Courtesy of Greg Hunter’s of USAWatchdog.com)
There are some big questions facing the real estate market after the foreclosure fraud story exploded in the last few weeks. The number one question for anyone who has a mortgage is “Who really owns your home?” This would be simple to answer before the mortgage-backed security (MBS). These MBS’s were mortgages that were bundled together and sold to investors such as pension and bond funds by big banks. They were considered as safe as U.S. Treasuries but paid a much higher interest rate. The big banks received gigantic profits from MBS’s especially in the 2005 to 2008 time frame when most of the bundling was done. It was all about the fees, and damn the paperwork. Recently, Congressman Alan Grayson said, “It appears that on a widespread and probably pervasive basis they (the banks) did not take the steps necessary to own the note . . . which means that in 45 out of the 50 states they lack the legal right to foreclose. . . . So they have simply created a system where servicers hire foreclosure mill law firms whose business is to forge documents showing or purporting to show they have a legal right to foreclose.” I wrote about this recently in a post called “Could Foreclosure Fraud Cause Another Banking Meltdown?”
Guess what? Some investors are already demanding their money back from companies like Countrywide Mortgage because it didn’t maintain “accurate loan records,” and that is “in violation of underwriting guidelines.” This week, investors asked for $47 billion back in a demand letter delivered to Countrywide! Because Bank of America bought Countrywide a couple of years ago, B of A is on the hook for the refund. (Click here for the complete story from PR Newswire.) This kind of investor outrage is just the beginning and will only intensify in the days and weeks to come. Will the Fed be forced to, once again, save the big banks by printing trillions of dollars? Who knows, but the banks cannot afford to buy back all their sins without going bust!
This will, also, further cloud the chain of custody for documents that prove who the rightful owner of a property is. Adam Levitin, a Georgetown University Law Professor, said last week on CNBC, “The problems coming out in the foreclosure process raise questions about whether, and frankly this is frightening, but whether anyone in the U.S. has clear title to their property.”