Thursday, September 30, 2010

More Foreclosure Mess Updates: 20% of Florida Cases Have Problems, Including Phony Court Summons; JP Morgan ‘Fesses Up to GMAC Type Problems

 This is from Naked Capitalism.  There has already been a problem with the GMAC loans, now JP Morgan are having issues with filing and maintaining proper paperwork when the loans resold on the secondary market.
More shoes are dropping on the foreclosure improprieties front. Let’s not forget the throughline: the parties in the securitization pipeline were so keen to rip out fees and maximize profits that they allotted too little in the way of expense dollars to executing tasks required both by statue and contractual agreements. The result was that they cut corners to such a degree (explained longer form here) that the trusts (the securitization entity) appear not to have been properly conveyed the notes (the borrower IOUs) on a widespread, if not pervasive basis. In 45 states is necessary for the party foreclosing to have the note to be able to foreclose. I’ve had attorneys tell me that when they have uncovered serious document shortcoming, the trustee’s response to the judge has been, “You can’t expect us to do that. We aren’t paid enough.” Funny, they apparently didn’t raise this issue when they signed up for the job.
The banks aren't getting any slack on this issue.  I was watching a pro-business commentator saying that banks are acting and looking like paper mills.  People in the financial industry hate this because it makes the whole system look unsound and the banks knew back in 2007 that this was going to be an issue.  Not having proper deeds and conveying documents is just mind blowing.

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