Can this monumental mortgage foreclosure train wreck be salvaged?

Wake up and good morning. We may not have high-speed rail (yet), but the stop-the-foreclosure-fiasco bullet train is leaving the station. Suddenly, everybody's decided to recognize (or should I say confess) that the foreclosure legal process in Florida and increasingly in other states has fallen off the tracks, imperiling clear title home ownership in the country and endangering our economic recovery. We reported extensively about this in a St. Petersburg Times Sunday column here and in a follow-up Venture blog posting here on Monday.

The core of the issue? A foreclosure freeze is taking hold now that more people in power realize at least several banks were not checking the documents used to prove they owned the underlying mortgages -- and therefore couldn't prove they had the right to seize the home.

This issue is morphing so fast, it 's time for yet another update. Get used to this because this issue is only going to get more explosive the more things come to light. But on to today's news:

* Authorities in at least seven states -- that's Florida, Ohio, Connecticut, Texas, North Carolina, Iowa and Illinois -- are probing whether lenders used false documents and signatures to justify hundreds of thousands of foreclosures, and the number of these inquiries will grow, state officials and legal experts tell Bloomberg News in this story. "You’re going to see a tremendous amount of activity with all the AGs in the U.S.," says Ohio Attorney General Richard Cordray. "We have a high degree of skepticism that the corners that were cut are truly legal."

The same story quotes Peter Henning, a law professor at Wayne State University in Detroit and a former federal prosecutor who worked on cases involving bank fraud, who says lenders, loan servicers and even title insurance companies are facing litigation on multiple fronts. "This is going to become a hydra. You’ve got so many potential avenues of liability. You don’t even know the parameters of this yet."

* Even Congress, a day late and a dollar short on this matter, is waking up and getting involved. According to this New York Times story, Washington lawmakers requested a federal investigation of bad conduct by mortgage lenders. House Speaker Nancy Pelosi and 30 other Democratic representatives from California told the Justice Department, the Federal Reserve and the Comptroller of the Currency (which regulates nationally chartered banks) that "it is time that banks are held accountable for their practices."

* Texas Attorney General Greg Abbott, a Republican, sent letters to 30 lenders demanding they stop foreclosures, evictions and the sale of foreclosed properties until they could provide assurances that they were proceeding legally. Here's the Dallas Morning News coverage.

* U.S. Rep. Ted Deutch, D-Fla., wants lawmakers to take a look at how the rights of homeowners may be compromised by accelerated foreclosure proceedings adopted by Florida and other states, the Fort Lauderdale Sun-Sentinel reports. In a letter to John Conyers, chairman of the House Judiciary Committee, Deutch says the "court system has failed these families, and it is the obligation of this Congress to find out why."

* Sen. Robert Menendez, D.-N.J., is demanding that more than 100 mortgage companies determine whether foreclosure documents they approved contain errors and reveal their findings. Menendez and Sen. Al Franken, D-Minn., asked Congress' investigative arm, the Government Accountability Office, to examine whether federal regulators overlooked problems at mortgage companies. They asked the GAO to recommend whether federal regulatory agencies should have more authority. (Ah, WashingtonThink: If regulators did overlook problems, let's reward their incompetence with more power?) Read more here.

* From the Jacksonville Times Union, we learn in this story that the role of an area company called Lender Processing Services Inc. in mortgage foreclosure wrongdoing is under investigation. The company, which works with law firms that sue homeowners who are behind on their mortgages. denies it did anything wrong. A company subsidiary, Alpharetta, Ga.-based Docx LLC, has been accused of falsifying documents used in foreclosure proceedings, and the U.S. Attorney's Office for the Middle District of Florida and the Florida Attorney General's Office are investigating those charges.

* Wells Fargo & Co. (which now owns Wachovia Bank) says it stands by the accuracy of foreclosure filings and won’t follow competitors in delaying seizures, after an employee testified he signed documents for proceedings without personally reviewing records. Reports Bloomberg News: The bank said it doesn’t plan to halt repossessions because its "procedures and daily auditing demonstrate that our foreclosure affidavits are accurate."

* Finally, leave it to the New York Post in this story headlined Houses of Horror to introduce the word "Zombies" into the mortgage foreclosure crisis. Says the Post: "The home foreclosure freeze implemented in recent days by several large banks will create as many as 40,000 zombie homeowners in New York state... Members of the zombie group, in various stages of fighting to keep their homes, would be thrown into a financial netherworld where they would not be making any mortgage payments, but would also not be evicted or pursued by their bank."

At some point, this piecemeal backlash will start to gel with broader recommendations on how to fix this dangerous mess. They won't be pretty. Somebody needs to crack some heads to insure we don't go down this rabbit hole again. But gee, that might require actual regulation and oversight.

Hey, all those homes in foreclsure will be bought by government funding through Fannie/Freddie, for about 10 cents on the dolar. Then they will become community property for re-issuance to the "underprivileged." Having a home is a basic right you know, like health care.And besides, the leftists elite and the RINOS need to make their families RICH!Its liberal fascism!

Community property! You gotta love it!

Say good bye to a free market economy. Welcome to big brother and the land of milk and bunny.

The Big Rock Candy Mountain, Tex Ritter

On a summer day in the month of May a burly bum came hiking Down a shady lane through the sugar cane, he was looking for his liking.

As he roamed along he sang a song of the land of milk and honey Where a bum can stay for many a day, and he won't need any money

Oh the buzzin' of the bees in the cigarette trees near the soda water fountain, At the lemonade springs where the bluebird sings on the Big Rock Candy Mountains

There's a lake of gin we can both jump in, and the handouts grow on bushes In the new-mown hay we can sleep all day, and the bars all have free lunches

Where the mail train stops and there ain't no cops, and the folks are tender-hearted Where you never change your socks and you never throw rocks, And your hair is never parted

Oh the buzzin' of the bees in the cigarette trees near the soda water fountain, At the lemonade springs where the bluebird sings on the Big Rock Candy Mountains

Oh, a farmer and his son, they were on the run, to the hay field they were bounding Said the bum to the son, "Why don't you come to the big rock candy mountains?"

So the very next day they hiked away, the mileposts they were counting But they never arrived at the lemonade tide, on the Big Rock Candy Mountains

Oh the buzzin' of the bees in the cigarette trees near the soda water fountain, At the lemonade springs where the bluebird sings on the Big Rock Candy Mountains

One evening as the sun went down and the jungle fires were burning, Down the track came a hobo hiking, and he said "Boys, I'm not turning."

"I'm heading for a land that's far away beside the crystal fountains;" "So come with me, we'll go and see the Big Rock Candy Mountains."

In the Big Rock Candy Mountains, there's a land that's fair and bright, The handouts grow on bushes and you sleep out every night

Where the boxcars all are empty and the sun shines every day On the birds and the bees and the cigarete trees, The lemonade springs where the bluebird sings In the Big Rock Candy Mountains

In the Big Rock Candy Mountains, all the cops have wooden legs And the bulldogs all have rubber teeth and the hens lay soft-boiled eggs

The farmer's trees are full of fruit and the barns are full of hay Oh I'm bound to go where there ain't no snow Where the rain don't fall, the wind don't blow In the Big Rock Candy Mountains

In the Big Rock Candy Mountains, you never change your socks And little streams of alcohol come a-trickling down the rocks

The brakemen have to tip their hats and the railroad bulls are blind There's a lake of stew and of whiskey too And you can paddle all around 'em in a big canoe In the Big Rock Candy Mountains

In the Big Rock Candy Mountains the jails are made of tin, And you can walk right out again as soon as you are in There ain't no short-handled shovels, no axes, saws or picks,

I'm a-goin' to stay where you sleep all day Where they hung the jerk that invented work In the Big Rock Candy Mountains

I'll see you all this comin' fall in the Big Rock Candy Mountains!

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.