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Published by 83jjmack
OMG---is this a joke?? lest we spook the banks??
OMG---is this a joke?? lest we spook the banks??

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Categories:Business/Law, Finance
Published by: 83jjmack on Oct 18, 2010
Copyright:Attribution Non-commercial


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White House Urges Calm on Lenders
By DAVID SEGALPublished: October 17, 2010
Amid a rising uproar over slipshod bank foreclosure practices, members of the Obamaadministration on Sunday expressed anger about the revelations, but urged caution as multipleinvestigations into the crisis unfold.In a piece posted on the Huffington PostWeb site,Shaun Donovan, the secretary of the Department of Housing and Urban Development,wrote: “The notion that many of the very sameinstitutions that helped cause this housing crisis may well be making it worse is not onlyfrustrating — it’s shameful.”But, he added, “a national, blanket moratorium on all foreclosure sales would do far more harmthan good, hurting homeowners and home buyers alike at a time when foreclosed homes make up25 percent of home sales.”It was the second effort in two weeks by the administration to deflect pressure for a nationalmoratorium on foreclosures. In televised comments last Sunday,David Axelrod, a senior WhiteHouse adviser, urged moderation, saying there were foreclosures with valid documents “that probably should go forward.”Given the outrage over the foreclosure revelations in the last two weeks, the administration’scomments Sunday sounded like an appeal for calm and restraint. They may also signal an attemptto defuse the potential for a party rift on the issue. Some Democratic leaders, includingHarry Reid,the Senate majority leader from Nevada, have supported a nationwide moratorium.On Wednesday, all 50 state attorneys general promised to conduct their own inquiries intoforeclosure abuses, which center on accusations that banks cut corners in a rush to get signatureson thousands of documents required for the proceedings.That move came after a number of the country’s largest banks announced partial or total halts toforeclosures.Bank of America last week announced a moratorium on foreclosures in all 50 states, whileJP Morgan Chase halted action in 41 states.
With no clear idea of the financial implications of this legal morass, bank stocks have swooned.Shares in Bank of America, for example, were off by 9.1 percent last week. Some analysts havesuggested that Bank of America failed to set aside enough money to cover any number of potentialliabilities — including buying back loans that were not appropriately processed — raising the prospect that it and other banks could face bigger losses related to foreclosure transactions.As the foreclosure abuses have come to light, the Obama administration has resisted calls for amore forceful response, worried that added pressure might spook the banks and hobble the broader economy. But members of the administration who weighed in on the subject on Sunday signaledthat there were no plans to alter their tone or tactics.In an interview on C-Span, the chairwoman of theFederal Deposit Insurance Corporation, Sheila C. Bair , suggested the fallout from this issue might not be as severe as many now predict.“If it turns out this is just a process issue, then I don’t anticipate the exposures to be significant,”she said on “Newsmakers.”“If it turns out to be something more fundamental, then we’ll have to deal with that,” she said.“But I think we need to get all the information before we jump to any conclusions.”The full extent of the foreclosure mess is still coming into focus. Congress has called for a hearingon the subject, and the housing market in certain parts of the country has come to a near standstill.The officials on Sunday stopped short of announcing a criminal investigation, and did not suggestthat one was imminent. Instead, Mr. Donovan wrote that the Financial Fraud Enforcement Task Force — a coalition of federal agencies and United States attorney’s offices — has made theforeclosure issue “priority No. 1,” adding that Attorney General Eric Holder has said that if  wrongdoing was discovered by the task force, it “will take the appropriate action.”“Banks must follow the law,” Mr. Donovan wrote on TheHuffington Post, “and those that haven’tshould immediately fix what is wrong.”If the goal of running the article in the Huffington Post was to win over converts among its liberalreadership, it did not seem to work. “We don’t need a diagnosis, Einstein. We would like your department to do something about it,” wrote one reader in the site’s comments section.
Another said that the moment for stern talk had long since passed, writing, “The time to get toughwas when it first became evident that the crash was caused by unconscionable greed and criminalfraud, misfeasance, malfeasance, and hubris on the part of Wall Street.”
Posted on October 18, 2010 by Neil Garfield, Attorney –his commentary –not legal advice
OK, let’s assume that the “paperwork mess” can be seen as isolated in a vacuum — that it wasn’t caused by the absence of assets conforming to therequirements of the securitization documents. Let’s further assume that wewaive a magic wand and allow the assignments and endorsements to be donenow. The empty pools fill with all the notes and mortgages that were everrepresented or claimed to be there (or are we just picking the ones that areperforming?). Let’s even assume that the magic of the wand extends back for 5 years. Does that fix the problem?
Unfortunately not. Here are the problems that would still remain:
What do we say to investors who purchased mortgage bonds that NOW the emptypools are filled and the “assets” from which their mortgage bonds allegedly derivedtheir value are filled with receivables from mortgages, many of which have no valueor are in default and have far less value than what was offered in the prospectus?
What do we do with property laws that require recording transfers in the publicrecords of the county in which the property is located?
What will be the effective date of this magical fix? What happens to transactionsbefore and after that?
What happens to the taxes, fees, interest and penalties that are now due from theREMICS, securitization players and investors which remain uncollected and if collected would substantially reduce or eliminate most federal and state deficits?
How will anyone identify the creditor on the obligations to investors?
How will anyone identify the creditor on the obligations from borrowers?
What do we do with people who already have had foreclosures dismissed and judgments entered in their favor?
What happens to all the cases that were based upon documents previously submittedunder the old regime, whether they are concluded or not?

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