Judge's Bombshell Ruling Exposes The Biggest Flaw In Obama's Disastrous Foreclosure Program

Interesting story here... CourtHouseNews (via Denninger): A La Jolla man can keep his home for now, after a federal judge granted his motion for a temporary restraining order blocking Washington Mutual and JP Morgan from foreclosing on his house because the banks misled him into defaulting on his mortgage.

Kaveh Khast claimed the banks instructed him to stop making his mortgage payments so he could qualify for a loan modification. A Washington Mutual representative confirmed receipt of the documents, but did not contact Khast within two months as promised.

After learning JP Morgan Chase had acquired Washington Mutual, Khast contacted JP Morgan Chase, and a representative told him he needed to submit another application.

Meanwhile, he resumed making his monthly mortgage payments. This is of course a symptom of Obama's HAMP program. In order to qualify for a mortgage mod, homeowners are told to stop paying their mortgage, and then when things don't work out they're in default. Watch this case for precedent.

Great Program. Great program.

This is like saying to a drunk,”Hey, Sparky! Wanna sober up? Here, drink this bottle of bourbon.”

That Mr. Obama and his minions thought this might work just shows how bleeping stupid these people are.

Geez.

First off, stop reading Denninger except for links, in my opinion he’s an idiot big time.

http://www.nakedcapitalism.com/

has been following this ad nauseum and

http://jsmineset.com/#

starting warning of these consequences more than two years ago.

RE :”Kaveh Khast claimed the banks instructed him to stop making his mortgage payments so he could qualify for a loan modification....This is of course a symptom of Obama’s HAMP program. In order to qualify for a mortgage mod, homeowners are told to stop paying their mortgage, and then when things don't work out they're in default”

The other interesting (or idiotic) story I heard on FNC was homeowners walking aways from their mortgages and buying their neighbors foreclosed house for pennies on the dollar, with HUD loans. But I haven't seen it written about here.

MERS is the thing that is scary. It could topple the entire economy. Imagine being able to keep your house free and clear and never pay a mortgage payment because the idiot lenders did not file the proper paperwork. Or, if they forclosed on the house finding it was illegal and that money damages may apply besides getting the house free and clear. MERS is a huge mess:

http://4closurefraud.org/

Calling MERs a “huge mess” is an insult to huge messes everywhere.

States are now suing MERs for the mandatory recording recording fees. We’re talking billions of dollars for cash strapped states here.

The failure of the multiple chains of conveyance required both for the collateralization of the notes underlying the mortgages (implying; the rights of lenders to foreclose) may well have been irretrievably compromised.

Virtually all of the securitizations that occurred have blown their REMIC qualification; a correction that by definiton cannot be repaired. That means that the favorable tax treatments enjoyed by this particular form of investment have been lost. Considering that the buyers of MBS debt entered into these boneheaded agreements for mere tens of basis points over Tsys, this is gonna leave a very serious mark in pension funds and insurance pools and funds of every description. In 2006, the head underwriter at Citibank told his superiors that 60% of loans sold into pools were defective in terms of their reps and warrantees. By 2008, the number was 80% defective.

The very idea that banks think they can “resubmit” affadavits which re-swear whatever they swore when they first sumitted these affadavits in the first place is a total undermining of our legal system.

As is MERs itself, a de facto parallel proerpty-records system.

And finally, millions of properties will not be able to be delivered or acquired with good title; in essence, this whole mess threatens to corrode the whole proprety registry system in place across the 50 states. Title insurance as an industry will become an entirely different item.

I may have left a couple of other things out.

This will be minimally a decade of litigation to sort out.

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