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View Diary: Bombshell MERS Ruling:Process Illegal (144 comments)

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  •  There was a lot of feedback overnight (0+ / 0-)

    I think I understand most of the points that were made - mortgage lenders royally screwed up their business model and documentation, maybe on purpose but probably not, but in any case they need to be held responsible.  

    I absolutely agree.  If lenders have to unwind all of their MBS transactions and repay investors as if the deal never happened (which it may not have, legally) then they are in deep water.  Right where they belong.  I wouldn't know where to begin to sort all of that out over the last 10 years or so.  That's for the courts & lawyers.

    Whatever the outcome, it is the banks sole responsibility.  This crisis wasn't caused by anything out of their control - they did it entirely to themselves and they need to pay the price.  There should be absolutely no taxpayer money to shield them from the consequences.  

    I still feel that delinquent homeowners also have to be held responsible for the loans they agreed to repay.  (And obviously I don't mean this to cover fraudulent foreclosures, or cases where they payment history is in question, or cases like the military loans with the wrong interest rates.)  I'm in favor of almost anything that would help homeowners - extended unemployment benefits, renegotiated loan terms, principal write downs (without income tax liability), "cram downs" in bankruptcy proceedings, or anything else that may help.  If all of these fail, however, foreclosure still has to be the end result.  Who gets the property in lieu of mortgage payments is for the lawyers and courts to settle, as above.

    I just cannot go as far as giving free & clear title to delinquent homeowners.  At least part of my objection to this is the millions of homeowners current on their loans, who may see this as a good reason to stop paying in the future.  That would be incredibly damaging to everyone, way beyond the current mess.  Foreclosures are what, maybe 10% of all loans?  Multiply the financial impact on banks and investors by 5 if half of the rest of us stop paying – then what happens?

    The loans haven't been abandoned, and the lenders didn’t “die with no heirs” - they are still being serviced by someone.  As one suggestion, the servicer could be appointed as trustee until the ownership of the loan is determined, and all mortgage payments, sale proceeds and foreclosed property could be held in escrow.  I don't mind withholding assets from the lenders and investors until everything is straightened out - but I cannot accept giving it back to the borrower at no cost.  I’m more sympathetic to investors than to the banks and would try to protect them, but institutional investors that bought these MBS deals should also have done some due diligence.

    I know I'm in a clear minority here.  I think the original mortgage loan should be valid and enforceable, even if the subsequent securitization and sale of the loan was invalid.

    •  Maybe two wrongs don't make a right. (0+ / 0-)

      It wouldn't, and couldn't be fair, because not everyone would benefit.  But it would sure be satisfying.

      Because not only did the banks do it to themselves they came to us, the taxpayers, to make them whole AND told most homeowners to eat dirt.  Bankruptcy principal cram downs would have been the right thing to do.  Homebuyers/owners would have taken the credit hit and would come out with a mortgage/house payment in line with current values.  Banks would have had to eat the principal loss.  

      But the truth is that banks would rather push a home through foreclosure and then file insurance on the principal reduction worked out on the courthouse steps.

    •  Taxpayer Money is always Involved with Banks (0+ / 0-)

      The US government via its FDIC insures all of the deposits in the bank up to a a quarter a million an acount. If a huge like BOFA fails, US taxpayers are going to be on the hook for a huge amount of money. As little as I trust politicians and the Federal Reserve, I'm pretty sure their calculations on how much money to pump into the various banks turns in part by how much their failure will cost the US government in the end.

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