Posted on 11/03/2009 9:43:40 AM PST by blam
States Growing Hair On Their Pair
The Market Ticker
Tuesday, November 3. 2009
States Growing Hair On Their Pair
It's about damn time:
Frustrated by the banks’ inability or unwillingness to stop an avalanche of foreclosures, the states are considering lawsuits over the creation and marketing of millions of bad loans as well as the dismal pace of mortgage modifications.
Good.
As I have repeatedly opined, there is more than enough fertile ground here for lots of lawsuits to spring up and take root. Indeed, let's go down the list of what I believe are the grounds for such suits:
* Most of the "exotic" loans being made during the housing boom were never intended to, on balance, be "paid as agreed" leading to a clean "fee simple" title on the property. An "Option ARM" or "Subprime" loan that qualified the buyer at the teaser rate (or anything similar), where the forward view three or five years later would result in a payment of two or three times the original amount implied a per-year compound annualized growth in income of 15-20% for the buyer. This was not disclosed, of course, yet it is what was being "discounted" in those notes, and without that capacity these notes were entirely reliant on "return business" to avoid default.
[snip]
I started that years ago. What took the states so long?
Yeah, lawsuits’ll fix it all.
I like my Option ARM.
I am not sure I get one word of this explanation of our mortgage debacle.
Paging Bawny Fwank!....Paging Bawny Fwank!
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