Chase has most likely packaged many of these garbage loans into complex mortgage backed securities and sold them to domestic and foreign investors.
The whole key is that when you sell these loans to others, there is a period of time that needs to pass before the loans go into forclosure, or the seller of the loan is legally obligated to buyback the loans/loans. This system was put in place to keep mortgage firms from issues tons of subprime junk loans and quickly selling them off to others. I'm sure the past year, Chase was VERY PROACTIVELY selling off a lot of these loans praying that the legal time period would pass before they would be forced to buy back.
What really scares me is the amount of this crap that's being held by Freddie Mac and Fannie Mae.
The lead WSJ editorial discussed just this - I think they mentioned at least $1 trillion in MBSs held by Freddie and Fannie. They also mentioned that the people at Freddie and Fannie are pleased that the Dims are now in charge, as it increases the likelihood that we the taxpayers will just bail them out without too much attention being paid to their accounting shenanigans.
How could they be holding a lot? Some maybe, but a lot? Anybody know?