[turtle777]

So, is the robo-signing bad ?

Hell, read the following article.
The American financial system is close to a complete collapse.

Thanks to the Bankenstein's MBS, the big American banks will go bankrupt, if the rule of law is upheld.

Now, it's not past Congress to completely overturn any notion of contracts and law, but IF the current law is followed, we're in for the biggest clusterf*ck the American economy has seen.

Go read: Gonzalo Lira On The Second Leg Down Of America's Death Spiral | zero hedge

-t

[The Godfather]

It's a great time to be a lawyer.

[ghporter]

That article fails to really support the premise that everything is going down the crapper. The "robo-signing" scandal is all about banks letting themselves get overextended. Too many loans without enough supervision means that foreclosures are going to go up, and someone has to prepare the documents for those. But there are procedures and processes for this, and a lot of banks' managements didn't ensure that those procedures were followed-at all. One does not simply sign off on a "take the house away" order without ensuring that the loan was properly made in the first place, that the debtor was properly informed of their arrears, that statutory requirements for notice and contact were fulfilled, and so on. But nobody can sign 400 foreclosure orders in a day and actually read ANY of them. Quantity over quality...

Those banks aren't going to go bankrupt-but a lot of them will lose a lot of "paper" value based on their holdings of loans that they can't foreclose on.

In an interestingly related note, the co-founder, CEO and CFO of Countrywide all agreed to settle with the SEC on Friday. Angelo Mozilo, the co-founder, will pay back $45M in ill-gotten profits, and pay $22.5M in fines. A lot of the mess in the banking industry can be traced to Mozilo, and a few others like him. Mozilo, the head of the then largest mortgage lender in the country, led a campaign of falsehood and exaggeration, painting Countrywide as an underwriter of "high quality loans," while all the while actively decreasing the company's lending standards. Their tactic? Write as many loans as fast as possible and hope to make up for quality with volume. It didn't work, and it pulled a lot of other institutions down when it finally crumbled.

[stumblinmike]

Greed is really underrated...that scumbag Mozilo was just an enterprising capitalist, doing what he did to make a buck...too bad people got hurt, HE was very successful...

[turtle777]

Originally Posted by ghporter 

Those banks aren't going to go bankrupt-but a lot of them will lose a lot of "paper" value based on their holdings of loans that they can't foreclose on.

None of those banks can survive taking the hit for trillions of worthless MBS.

Not w/o the government bailing them out AGAIN.

Now, we can debate whether or not those f*cking banks that f*cked the Americans should get more bailouts. You bet that the politicians will vote for that, since banks were the biggest single donors in the last years for political campaigns.

-t

[turtle777]

Originally Posted by stumblinmike 

Greed is really underrated...that scumbag Mozilo was just an enterprising capitalist, doing what he did to make a buck...too bad people got hurt, HE was very successful...

So I guess you support all those Democrats that voted FOR TARP and bailouts ?

And especially Dodd and Frank, who with their past regulation favored those banks heavily.

-t

[stumblinmike]

I said greed is underated! You know, people that live and die for the almighty dollar? The politicians are not immune, either side of the aisle...

[turtle777]

Well, FWIT, if we nuked all politicians and bankers, we might have a realistic chance for a better America.

-t

[BadKosh]

I think the best way to intercourse the banks is have the mortgages redefined and allow what you owe to fluctuate, so in suck times, you wouldn't end up "Upside down".

Example:

you buy a house in 2000 for $200K. - you pay $1400/month mtg.
in 2003 it's worth $225K (you have equity) - you pay $1400/month mtg.
in 2006 it's worth $275K (more equity)- you pay $1400/month mtg.
1n 2009 it's worth $195K (No equity-or minus $2K) you pay $1500/month mtg - adjusted to appraised value
late 2010 it's worth $178K (No equity - minus $22K) you pay $1350/month - adjusted to appraised value

This would punish the county/state appraisers and the banks, and the desire of the banks would be to estimate on the cheap...weird as that sounds.

In good times the house would acquire equity, and that would mean more $ available when buying the next house.

[BadKosh]

Originally Posted by turtle777 

Well, FWIT, if we nuked all politicians and bankers, we might have a realistic chance for a better America.

-t

We shouldn't use nukes! A Bonfire would be better. Why miss a chance to piss of the Eco-nuts?

[ghporter]

Originally Posted by stumblinmike 

Greed is really underrated...that scumbag Mozilo was just an enterprising capitalist, doing what he did to make a buck...too bad people got hurt, HE was very successful...

Until his wheel of karma rolled over him. While he almost certainly won't go hungry, he's never going to be allowed to do anything in the financial industry again. I hope that hurts him, too.

Originally Posted by turtle777 

None of those banks can survive taking the hit for trillions of worthless MBS.

If they had to pay out on all of it tomorrow, no. But at the moment it doesn't look like anything in that part of the market is being called. Nor does it look like calling such securities will be allowed for some time, as the knots that various scumbags who assembled those securities are carefully untied. Note that the Countrywide SEC action is several years old and only now coming to a conclusion-many other similar actions are in work and will eventually, slowly, be unwound and resolved. As that happens, the persons responsible for these mega-swindles are going to pay reparations, fines and such, and they will most likely wind up liquidating their own assets at a huge loss-which will help allow the values of these MBS packages to be somewhat recouped.

The real estate bubble was just that-a huge thing with almost no substance. As the actual real value of everything gets sorted out, the real value of each institution involved will settle out. In the meantime, there are a lot of corporate investment officers who are explaining things to their boards and shareholders (and when you have to start explaining your actions at this level, it's a good idea to have a backup career all set up), and the banks are having to shuffle their other assets to maintain liquidity on a long term basis. But that doesn't mean their liquidity is in jeopardy, only that the mix of their assets is going to need a lot of attention.

And currently all of the banking regulation agencies are in the process of merging; The FDIC, The Office of the Comptroller of the Currency, and the Office of Thrift Supervision will be one agency by 2012. Each has had different strengths and weaknesses, and the way the merger is going it looks like someone is actually on the ball and is working to ensure that the strengths are preserved and used to mitigate the few weaknesses (most of which are administrative rather than regulatory). One observation noted within the financial industry about the recent debacle is that some of the problem was that "banks" often owned or controlled other institutions, including some chartered as "savings banks" (different regulations and overseen by a different agency), and that some high-level management decisions "played the system" by moving assets between institutions so as to place them where they had the least oversight and regulation. That's pretty much ending now because of the FDIC/OCC/OTS merger. All of this is quite positive for both the general soundness of our banking system and for transparency in the whole financial industry.

[turtle777]

Originally Posted by ghporter 

If they had to pay out on all of it tomorrow, no. But at the moment it doesn't look like anything in that part of the market is being called. Nor does it look like calling such securities will be allowed for some time, as the knots that various scumbags who assembled those securities are carefully untied.

This article didn't talk about it, but one thing that wasn't mentioned is hat the buyer of the MBS (hedge funds, pension funds, etc...) could call in their MBS "slice" if there was a material defect in the transfer process.

That could easily lead to a run on the bank.

Again, it really depends if the rule of law is upheld, of if the administration will abolish the contract law as we know it (just like they did in the GM case with he bankruptcy law, when forcing bond holders to take the bigger hair cut before the unions).

Also, we shouldn't be so foolish to be happy that the government saved the day by abolishing the rule of law. It would be a true pyrrhic victory.

-t

[ghporter]

Originally Posted by turtle777 

This article didn't talk about it, but one thing that wasn't mentioned is hat the buyer of the MBS (hedge funds, pension funds, etc...) could call in their MBS "slice" if there was a material defect in the transfer process.

That could easily lead to a run on the bank.

Again, it really depends if the rule of law is upheld, of if the administration will abolish the contract law as we know it (just like they did in the GM case with he bankruptcy law, when forcing bond holders to take the bigger hair cut before the unions).

Also, we shouldn't be so foolish to be happy that the government saved the day by abolishing the rule of law. It would be a true pyrrhic victory.

-t

There is a third option that you left out: that the regulators could put a hold on such calls to prevent a run on any bank. Which is what such regulators are supposed to do. It's another part of the statutory basis of the financial world. In the GM case, the administration could force what they did because the government effectively became GM's majority creditor, and in bankruptcy the largest creditor (the government in this case) gets priority in most situations. Nothing about bankruptcy law got dodged around, and this is why Treasury insisted on an ownership stake in every institution that received assistance.

[mduell]

With few exceptions, there's not much disagreement that the loans are in default. They haven't been paid in years. What's with the moral outrage that the paperwork hasn't been kept exactly perfect?

The MERS scheme certainly helped enable the bubble, but that's no reason to leave these deadbeats in houses they don't want to pay for.

[turtle777]

Originally Posted by ghporter 

There is a third option that you left out: that the regulators could put a hold on such calls to prevent a run on any bank. Which is what such regulators are supposed to do.

Uhm, yeah, that's saying "we won't enforce or support the law, because it might hurt the big banks." That's EXACTLY what I mean by the rule of law being abolished.

Originally Posted by ghporter 

In the GM case, the administration could force what they did because the government effectively became GM's majority creditor, and in bankruptcy the largest creditor (the government in this case) gets priority in most situations. Nothing about bankruptcy law got dodged around, and this is why Treasury insisted on an ownership stake in every institution that received assistance.

WRONG. The Government FIRST decided to give the union's claims seniority over the bond holder (claims against the OLD GM), and THEN became the majority shareholder of the NEW GM,
It clearly broke with decades of established bankruptcy law. Don't believe the government spin doctors.

-t

[Dork.]

From what I've read (and, admittedly, I'm not as much of an expert in this as turtle is), if you read the fine print of the legal agreements that set up most of these securities, the banks guaranteed that all but .01 percent (i.e. 1 in 10,000) of the loans that were securitized had a clear title AND all associated documentation. If it turns out that threshold wasn't reached, the agent that securitized the loans can make the banks buy the loans back. At whatever price the bank was paid for the loan in the first place. Ouch.

But I thought the government already bought a bunch of these MBS's. Weren't these the "Troubled Assets" that the Troubled Asset Relief Program was supposed to "Relieve"? So, didn't we already solve this problem? Why is the current situation any different?

[ghporter]

Originally Posted by turtle777 

Uhm, yeah, that's saying "we won't enforce or support the law, because it might hurt the big banks." That's EXACTLY what I mean by the rule of law being abolished.

It doesn't mean that at all. The FDIC can limit exactly when a bank can do business, and limit exactly what business a bank may do for the express purpose of preventing "runs on banks." It is their statutory responsibility to prevent runs

Originally Posted by turtle777 

WRONG. The Government FIRST decided to give the union's claims seniority over the bond holder (claims against the OLD GM), and THEN became the majority shareholder of the NEW GM,
It clearly broke with decades of established bankruptcy law. Don't believe the government spin doctors.

-t

It is common, legal practice to plan how a corporate bankruptcy will be handled before the bankruptcy petition is requested. As the government was going to take part in the process, it was important to establish who had the greater claim on the assets of the debtor. As it turns out, the owners of a company's stock and bonds generally have a prior claim over the company's employees in almost all situations. The discussion and planning were done to establish how much the unions needed to prevent dumping tens of thousands of people into the unemployment system without health insurance and other benefits. The "New GM" didn't happen until the petition was filed and approved, so it all had to be worked out in advance.

Your posts make it seem that you assume some diabolical and blatantly illegal purpose behind all of this. Sure, we got into it through diabolical and blatantly illegal acts-by a number of people who are all now under investigation. But between the departments of Treasury and Justice, a legal, supportable process was set up to handle each situation. Not pretty, not fun, and certainly not cheap, but each of these actions was done with so much legal review that there were vast numbers of complaints that legal review was slowing things down too much. As it is, the government had to find a workable middle ground between either nationalizing banking and several major manufacturers, and allowing the financial industry to fold up completely while idling somewhere near a quarter million workers. I can't say they did a perfect job, but the banks didn't fail, and tens of thousands of manufacturing employees didn't wind up on the street without a penny.

[turtle777]

Reported by the Market Ticker: From The Forum: Two Banks, One House in [Market-Ticker]

Two Banks, One House

So the House next to Me has been foreclosed, for some months now...
Windows boarded up, crew hired to clean the inside, indoor pool drained etc, NOTICE on the front door.....
Century 21 sign recently sprouted up this week....
This morning, My morning walk outside with coffee... A Truck & Crew pulls up..
Guy gets out walks up to the front door..... Reads to NOTICE on the door...
In His hand, He has a FORECLOSURE NOTICE of His own!
Comes to the fence, asking Me "whom" boarded up the windows, put up the sign/notice, etc...
I told Him, that It was Wells Fargo people that Foreclosed, didn't He read the Notice?
He was hired from BoA, to do the Foreclosure "Duties", & "secure" the home etc, from damage/ Doing clean up, just like the last people done.....
(@ this point,,,, I couldn't help but "giggle")He got irritated @ Me, and walked away........
He Looked around, checked the locks,Boarded windows, etc, (He had keys but the locks been changed), checked the back fence lock, and just said:
"Oh well"...... Thats another one..
Overhearing, I asked what He meant by that comment...
He just looked at Me funny, pulled up the real estate sign, put into the back of the truck and Left....

As I said, the banks are toast.

-t

[finboy]

Originally Posted by The Godfather 

It's a great time to be a lawyer.

That's the real deal, here. If there was a significant issue, then EVERYONE's mortgage would be in question. The reason the banks have resumed foreclosures is because they have figured out that the deadbeats (and there are tons of them) still don't have a leg to stand on EVEN IF the documentation was somehow flawed. Not with mortgages.

Let's hope it doesn't go anywhere, at least.

[finboy]

Originally Posted by ghporter 

It doesn't mean that at all. The FDIC can limit exactly when a bank can do business, and limit exactly what business a bank may do for the express purpose of preventing "runs on banks." It is their statutory responsibility to prevent runs

Well said.

It is common, legal practice to plan how a corporate bankruptcy will be handled before the bankruptcy petition is requested. As the government was going to take part in the process, it was important to establish who had the greater claim on the assets of the debtor. As it turns out, the owners of a company's stock and bonds generally have a prior claim over the company's employees in almost all situations. The discussion and planning were done to establish how much the unions needed to prevent dumping tens of thousands of people into the unemployment system without health insurance and other benefits. The "New GM" didn't happen until the petition was filed and approved, so it all had to be worked out in advance.

Your posts make it seem that you assume some diabolical and blatantly illegal purpose behind all of this. Sure, we got into it through diabolical and blatantly illegal acts-by a number of people who are all now under investigation...

With GM, there WAS a diabolical and blatantly UNETHICAL purpose behind this - to transfer wealth to the union pension plans AND keep GM open so the unions don't lose all those jobs. The unintended consequence is that now the NEXT big company (maybe BofA again) will expect a "bailout" too, even if that company isn't a union. Also, all of the bondholders (many of them were in pension funds, and other legal havens of wealth) were SCREWED out of significant dollars - why would those pension funds ever buy AA bonds again, ever? Under "prudent man" how CAN they ever buy anything from GM or its remnants again?

I've worked on a lot of prepackaged bankruptcies - this was what is called a "cram up". The bondholders and old shareholders got screwed. Why anyone would buy an IPO from the "new GM" is beyond me. We'll see.

Most importantly, GM lumbers along. The business model doesn't work. It never will work. The basic problems haven't been fixed.

We can see parallels within the banking industry, to be sure, but it's a helluva lot more transparent in most cases.

[SSharon]

Originally Posted by mduell 

With few exceptions, there's not much disagreement that the loans are in default. They haven't been paid in years. What's with the moral outrage that the paperwork hasn't been kept exactly perfect?

The MERS scheme certainly helped enable the bubble, but that's no reason to leave these deadbeats in houses they don't want to pay for.

Originally Posted by finboy 

That's the real deal, here. If there was a significant issue, then EVERYONE's mortgage would be in question. The reason the banks have resumed foreclosures is because they have figured out that the deadbeats (and there are tons of them) still don't have a leg to stand on EVEN IF the documentation was somehow flawed. Not with mortgages.

Let's hope it doesn't go anywhere, at least.

I spent about 3 years working on plaintiff's foreclosures in New York and I can say that there is plenty of paperwork that is less than ideal. Defendants would frequently demanded the original mortgage and/or note be produced amongst other documents, but I was always able to find precedent that it wasn't required since they were never denying the existence of the original or claiming that it was fraudulently signed. It was nothing more than a stalling tactic. Same with raising claims that the assignment to MERS wasn't valid.

Sure, I got the impression that the banks did some amount of robo signing, but I don't think it affected the validity or accuracy of any of the claims. At the end of the day a court appointed referee determined the exact amount owed and so the bank affidavits didn't really matter except to say the case belonged to them. Some counties were very particular about that by the way.

Personally, after reviewing literally thousands of cases, I would say the foreclosure system was working properly (albeit extremely slowly). Some people got tricked into signing mortgages, but I believe in personal responsibility and some amount of common sense. The banks also bent over backwards to help out borrowers and avoid auctions. Some people got screwed, but many more just didn't pay their bills. For some reason there is no uproar when ATT turns off your cell phone after you don't pay your bill.

My fear is people intentionally putting themselves in foreclosure. If the banks get bailed out and courts stop accepting robo-signed papers then people can just live rent free for years with little to worry about. If people start to think this way - that the homeowners will be rescued or fines/late fees waived - there is no incentive to pay on time.

[The Final Dakar]

Originally Posted by SSharon 

For some reason there is no uproar when ATT turns off your cell phone after you don't pay your bill.

Probably because no one lives in a cell phone signal.

(Srsly, though, terrible analogy)

[finboy]

Originally Posted by SSharon 

If people start to think this way - that the homeowners will be rescued or fines/late fees waived - there is no incentive to pay on time.

Yeah, it's this moral hazard problem that I worry about. Why WOULD anyone pay their mortgage if it meant nothing. That's a real decision for more and more folks these days.

It's really funny, but Freddie & Fannie are both discouraging "strategic defaults" in their consumer correspondence these days -- when they are in the middle of their own "strategic default." Hilarious.

[SSharon]

Originally Posted by The Final Dakar 

Probably because no one lives in a cell phone signal.

(Srsly, though, terrible analogy)

I can't even count the number of foreclosures I dealt with that were not owner occupied. One guy owned 8 homes all in foreclosure. Another home was a summer home in upstate New York, plenty of others were also investment properties. Some people were simply in denial that they were facing foreclosure and based on their credit card bills and car leases they were spending money on other things.

Nobody is entitled to home ownership. If you can afford it great, if not there are alternatives. If you don't pay the bills the service gets cut off.

Would you be happier if I used a car as an analogy since it actually gets repossessed? How about we compromise and call it a mobile home?

[ghporter]

I think "owner occupied" is beside the point here. In almost all cases currently, someone lives in a home that is being foreclosed. The operative issue is "people put out on the street," not "owners put out on the street." This isn't a trivial matter for anyone, and if banks treat it as a "just push the paperwork through" issue, then even if they do own the note and can legitimately foreclose, they are in the wrong.

[turtle777]

Originally Posted by SSharon 

Nobody is entitled to home ownership.

Why do you say that ?

Clearly, the government policies in the last 10 years clearly state the opposite.
The massive amount of money flowing into the GSE also confirm that.

-t

[Dork.]

Just to play Devil's Advocate for a moment, if a bank gave someone a loan to buy a house, and the buyer put up the house as collateral, doesn't that mean that if the buyer stops paying, the loan terms stipulate that the bank gets the house, and the buyer gives up all payments they had made up until then?

I see a lot of angst here over moral hazard on the part of people who bought houses they couldn't afford, and now want to walk away. Contractually, they have the possibility to walk away -- it's all right there in the loan terms. They understand that their credit will take a hit if they do this, and that they will have problems getting another loan for years. But given the current financial climate, it might be in their best interest to do that now. Businesses cut their losses all the time on bad investments, and enter strategic bankrupcies all the time to shed unwanted debt, why can't homeowners?

Banks are supposed to keep their paperwork in order, so that foreclosures can proceed in an orderly manner within the law. If they had done their job correctly, foreclosures wouldn't take so long. Why is it morally questionable for folks to "strategically default" on their mortgage and live in a place payment-free for 18 or 24 months when it is the banks' ineptitude that is directly leading to these lengthy foreclosure processes?

[The Final Dakar]

Originally Posted by SSharon 

I can't even count the number of foreclosures I dealt with that were not owner occupied. One guy owned 8 homes all in foreclosure. Another home was a summer home in upstate New York, plenty of others were also investment properties. Some people were simply in denial that they were facing foreclosure and based on their credit card bills and car leases they were spending money on other things.

Nobody is entitled to home ownership. If you can afford it great, if not there are alternatives. If you don't pay the bills the service gets cut off.

Would you be happier if I used a car as an analogy since it actually gets repossessed? How about we compromise and call it a mobile home?

I think you're reading into my comment about a terrible analogy.

[finboy]

Originally Posted by Dork. 

I see a lot of angst here over moral hazard on the part of people who bought houses they couldn't afford, and now want to walk away. Contractually, they have the possibility to walk away -- it's all right there in the loan terms. They understand that their credit will take a hit if they do this, and that they will have problems getting another loan for years. But given the current financial climate, it might be in their best interest to do that now. Businesses cut their losses all the time on bad investments, and enter strategic bankrupcies all the time to shed unwanted debt, why can't homeowners?

Why is it morally questionable for folks to "strategically default" on their mortgage and live in a place payment-free for 18 or 24 months when it is the banks' ineptitude that is directly leading to these lengthy foreclosure processes?

Be careful with morality vs. moral hazard. Let me explain.

Moral hazard is what happens when people expect to get bailed out or let off the hook. What we're worried about with moral hazard is that thousands of folks could walk away if 1) we bail folks out at the national level (I mean MORE FOLKS.) or 2) we force the banks to renegotiate loans terms for everyone, etc. [In the second case, I'll be the next one in line EVEN THOUGH I can pay my mortgage.] That's moral hazard - creating a reliance on a bailout at some point.

Examples of moral hazard events: TARP, General Motors, etc. Sometimes there are moral implications of these things.

The morality issue is whether or not it's "just" or "right" to up and walk away from the loan. As someone who thinks & writes about this stuff for a living, I'm starting to come around to the view that the bank should understand the risk that it has taken. I'm not sure we should punish people for walking out on a home that has fallen in value, or punish them because they lost their job and can't pay and have to downsize. MAYBE they should have known better, but in many cases there was NO WAY to live otherwise.

Folks who got a loan they couldn't pay (and there is a big, recognizable difference we could drive a truck through) and SHOULD have known better bear some responsibility, but so does Congress and FHLMC and FNMA and the banking system. In particular, the systematic redistribution of wealth away from legitimate homeowners and toward subprime or "disadvantaged" borrowers is structural in Washington, and it needs to be fixed.

The fact that taxpayers have to fix the problem is a moral hazard AND a morality issue, in other words. It's immoral to transfer my wealth to someone else (regardless of WHY they need it - it's my wealth) and it creates a moral hazard when Congress does that.

[turtle777]

For real, the banks can not expect any morality from people.

They themselves are about the least moral organizations in America, right after politicians.

-t

[turtle777]

Here's another nice example:

In the instant action, Ms. Johnson-Seck claims to be:
a Vice President of MERS in the March 16, 2009 MERS to INDYMAC assignment;
a Vice President of INDYMAC in the May 14, 2009 INDYMAC to ONEWEST assignment; and,
a Vice President of ONEWEST in her June 30, 2009-affidavit of merit.

Ms. Johnson-Seck must explain to the Court, in her affidavit: her employment history for the past three years; and, why a conflict of interest does not exist in the instant action with her acting as a Vice President of assignor MERS, a Vice President of assignee/assignor INDYMAC, and a Vice President of assignee/plaintiff ONEWEST.

Further, Ms. Johnson-Seck must explain:
why she was a Vice President of both assignor MERS and assignee DEUTSCHE BANK in a second case before me, Deutsche Bank v Maraj, 18 Misc 3d 1123 (A) (Sup Ct, Kings County 2008);
why she was a Vice President of both assignor MERS and assignee INDYMAC in a third case before me, Indymac Bank, FSB, v Bethley, 22 Misc 3d 1119 (A) (Sup Ct, Kings County 2009); and,
why she executed an affidavit of merit as a Vice President of DEUTSCHE BANK in a fourth case before me, Deutsche Bank v Harris (Sup Ct, Kings County, Feb. 5, 2008, Index No. 35549/07).

Robosigned? No Paper? Uh, Not So Fast Jackass... in [Market-Ticker]

I mean, WTF ? Please don't tell me that courts will just explain that away.

-t

[finboy]

Originally Posted by turtle777 

Here's another nice example:


-t

Well DAMN! I hadn't seen that. I imagine it will have to do with the FDIC takeover (she was probably career bureaucrat-type being passed around). But still!

[turtle777]

OMG

Linda DeMartini, a supervisor and operational team leader in B of A's litigation management department, testified that "the original note never left the possession of Countrywide"... DeMartini "testified further that it was customary for Countrywide to maintain possession of the original note and related loan documents"...

Countrywide NEVER Transferred Notes [Market-Ticker]

Yeah, they're f*cked.

The consequence is, as Karl Denninger summarizes:

Most if not all of the MBS trusts are organized under NY Trust Law. NY Trust Law requires that delivery be made "in as perfect a form as possible." Intentionally not delivering anything is so far removed from this requirement that it is a near-certainty that the Trusts are in fact legally void.

In other words: Bank of America is bankrupt the minute the MBS's unravel.

-t