Monday, October 4, 2010

Suspension of Foreclosure to Add Uncertainty to Banks, Shaky Housing Market?

More paper mill and robo-signing analysis.  This article looks more of the legal ramifications.

Litigation exposure to the banks seems an obvious place to begin. So far, there has been little early coverage of the potential legal ramifications banks may face in light of these revelations — or the attendant financial risks that bank shareholders may bear as a consequence

I guessed at class action lawsuits in my previous posts.

In short, we may be looking at the next big wave of class action law suits against major financial institutions.
And if there are allegations of redlining or other types of discrimination, the ugliness will only increase. It has already been speculated by analysts that minority home owners were disproportionately targeted by banks with predatory lending practices.
If, for example, it comes to light that banks disproportionately foreclosed on economically disadvantage home owners, because those homeowners would have been less likely to have the resources necessary to prolong the foreclosure process, a new and unpleasant dimension is added to the mix.
And some housing market questions.
Fundamentally, we are left with this question: If the volume of foreclosures remains too high to be processed by banks through their ordinary procedures, and the expedited procedures remain unworkable, where does that leave banks’ ability to exit bad loans? And what effect will those changes have to the overall structure of the housing and lending markets?

Read it all

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