Congressional Oversight Panel

NOVEMBEROVERSIGHT REPORT

November 16,2010

Submitted under Section 125(b)(1) of Title 1 of the Emergency EconomicStabilization Act of 2008, Pub. L. No. 110‐343

Examining the Consequences of MortgageIrregularities for Financial Stability and ForeclosureMitigation

Tabl

of Cont

Executive Summary .............................................................................................................4Section One:A. Overview ..................................................................................................................7B. Background ..............................................................................................................9C. Timeline .................................................................................................................10D. Legal Consequences of Document Irregularities ...................................................141. Potential Flaws in the Recording and Transfer of Mortgages andViolations of Pooling and Servicing Agreements ............................................162. Possible Legal Consequences of the Document Irregularities toVarious Parties .................................................................................................243. Additional Considerations ................................................................................33E. Court Cases and Litigation.....................................................................................341. Fraud Claims .....................................................................................................352. Existing and Pending Claims under Various Fraud Theories ...........................403. Other Potential Claims ......................................................................................424. Other State Legal Steps .....................................................................................445. Other Possible Implications

: Potential “Fron

t-e

nd” Fraud and

Documentation Irregularities ...........................................................................46F. Assessing the Potential Impact on Bank Balance Sheets.......................................511. Introduction .......................................................................................................512. Foreclosure Irregularities: Estimating the Cost to Banks .................................593. Securitization Issues and Mortgage Put-backs .................................................63

3G. Effect of Irregularities and Foreclosure Freezes on Housing Market ....................731. Foreclosure Freezes and their Effect on Housing .............................................732. Foreclosure Irregularities and the Crisis of Confidence ...................................78H. Impact on HAMP ...................................................................................................79I. Conclusion .............................................................................................................82Section Two: Correspondence with Treasury ....................................................................85Section Three: TARP Updates Since Last Report .............................................................86Section Four: Oversight Activities...................................................................................122Section Five: About the Congressional Oversight Panel .................................................124Appendices:APPENDIX I: LETTER FROM CHAIRMAN TED KAUFMAN TOSPECIAL MASTER PATRICIA GEOGHEGAN, RE: FOLLOW UP TOEXECUTIVE COMPENSATION HEARING, DATED NOVEMBER 1, 2010 ......125