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This is going to become a huge mess.

It's a messy business in the best of times; in the worst of times, a nightmare. MILLIONS of loans change hands every year and as long as the market maintains, few problems. Many of the lenders of record are not the servicers of the loans they own. They often pay somebody else to do it; a service company of sorts. The originating lender oftentimes will "sell" the loan and retain the "servicing"(collecting payments, maintaining and disbursing escrow moneys, etc). Loan servicing itself gets bought and sold all the time.

Now, throw the market into turmoil and what do you have. Service companies(who may or may not be the note holder), originating lenders(who may or may not actually own the loans, having been sold into secondary investor markets), loan amalgamators(Fannie, Freddie, eg.) who "package" the loans into mortgage backed securities which are sold to pension funds and the like; grandma's retirement. Now, throw large scale industry bankruptcies, massive turnover of responsibility and other disruptions into the market while increasing foreclosures by say, tenfold. Can you say monumental fur ball??? Shortcuts were ABSOLUTELY taken. The question is, does it really matter WHO owns the loans if they're in default? The investors will figure it out in the end or the lawsuits will fly. Keeping lawyers in high cotton but that's another story...

Fraud is possibly too strong a word to describe what may be happening in the mortgage markets. One needs to support the claim with evidence of intent to defraud as opposed to those handling and/or servicing these loans doing all they can just to keep the wheels from falling off and the gears from grinding to a halt. Will the defaulted borrowers be out anything they shouldn't be regardless of the paperwork? Is anybody asking them for more than they owe? Not likely, so I submit this is just another related mess created by our fearless leaders in DC.

That said, Fannie and Freddie at one time set the standards and were pretty much the policemen of the industry. They were reasonable guidelines, accepted by most and the bulk of loans made in this country conformed to those standards. Along came expansion of the CRA under bent willie, hiring of shysters and used car salesmen to run Fannie and Freddie and well, the rest is history. So, just where does most of the fraud lie?