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The fact is that the banks loaned the money and the borrower defaulted. There was a contract. The banks certainly did many things wrong, but is it right to allow the borrower to keep his house for free? This will potentially bring down the entire system if it is not fixed. No one will make another mortgage payment again, whether they can afford it or not.

This is nothing short of judicial repudiation of virtually all mortgage debt that has been securtized or sold off. While some home debtors will no doubt be happy with this outcome, it could well be the final nail in the American Economys coffin.

And do you really want the Bamster taking full control of the too big to fail banks?

The borrowers (in most all cases) won’t be able to keep their houses. Someone is still owed money.

The issue here is due process. There is a clear legal process required for foreclosure, and in judicial foreclosure states, a court hearing is required.

Making a fast foreclosure based on fraudulent affidavits might seem like it will speed up the resolution of the housing markets’ problems, but in fact it will set the stage for contests to titles for years to come. Title insurance companies will create carve-outs in the title policies, leaving homeowners, investors and possibly future mortgage lenders in danger of having a claim arise which was not quieted in this mess. There have been cases brought on a single property from two lenders, there have been foreclosures brought on a man who had *no* mortgage whatsoever. As I indicated on another thread, I had a UCC lien placed on our farm for a loan which I never approved or entered into.

What you need to know here is that the banks are corrupt. They might be owed money, but that does not exempt them from the law. The difference between a first-world nation and a third-world nation is the application of property law. In third world nations, people who get on the wrong side of the monied interests find they have no property rights.

I was slow to get up to speed on this. The banks are forging documents in court. Sometimes they have no idea who holds title to the loans and/or they are not reviewing foreclosure documents. (The dog ate their homework)So they are making stuff up. Telling the court they have served papers to the homeowners when they have not done so. Thousands of filings for lost documents by the banks.

This will make the foreclosed properties toxic. No title company will sell insurance on a foreclosed property if they are on the hook when the original owner can claim the bank didn’t do it right. Epic cluster fark that might be the straw that breaks the camels back.

by Karl Denninger
Just Counterfeit Documents... No, Really!
http://market-ticker.org/akcs-www?singlepost=2190795

The problem is the Bright Boys wanted a way to make lots of money, which they have already walked off with, while not taking the risk, much of it involving loaning money to people who should not have been getting loans. Hence the current MCF. The people borrowing the money had NO CONTROL over how those loans subsequently got packaged, sliced and diced. If the table were turned do you think the lenders would give a rats a@@ about the borrowers?

The borrower defaulted, and as you say, he should not get to keep his house for free. However, this recording mess makes it completely unclear as to just WHO should get the house, because no one knows for sure who the note-holder is. There are sometimes multiple claimants. The restrictive rules that protect rightful ownership are there for good reason.

My own view is that this will eventually be unwound, but the equivalent of a forensic title search will be necessary on each property. This might devalue the value of all of the MBS's built on multiple mortgages by several percent and take quite a while. In the meantime, the properties will get no maintenance, taxes may no be paid, etc.

So, there will be a big time and money hit to the investors/banks who should ultimately get to repossess the properties.