Morning All.

Has anyone been following the foreclosure debacle of late? I read this story yesterday:

Mortgage Damage Spreads
Big Bank Stocks Hit Again as Modern Finance Collides With the Legal System
online.wsj.com

The banks are saying it’s only going to take a few months to get the situation under control, it’s all fine just a matter of not taking their time with the paperwork. Sounds good until you read these:

Foreclosure Fraud: It’s Worse Than You Think
cnbc.com

Josh Rosner: “Could Violations of PSA’s Dwarf Lehman Weekend?”
nakedcapitalism.com

Don’t Listen To Me, Listen to Legal Experts
market-ticker.org

It appears that in many instances during the mortgage securitization process over the past few years, the paperwork was not properly transferred. If the paperwork was not transferred in the legally required manner, it raises questions not only about who owns the mortgages in question but also about the validity and tax exempt status of the trusts in which the mortgages reside.
…….
In his best case scenario, these issues are deemed merely technical in nature and are successfully resolved but it takes at least year to do so and all foreclosures are delayed by at least a year. Levitin disputed the claim by banks that these issues can be resolved in a month or so and attributed the banks’ claims to “legal posturing.” In the medium case scenario, litigation ensues and it takes years to sort out these matters. In the worst case scenario, the aforementioned issues become a “systemic problem” which causes the mortgage market to grind to a halt as title insurers refuse to insure mortgages involving existing homes.

It looks to me like the mortgage industry is based on piles of what could turn out to be worthless paper with no one being able to prove who actually owns the home or who is actually entitled to collect on the mortgages. This could turn out to be incredibly ugly.