Before we get into the latest bank assessment of fauxclosure, this
time from BofA's Michelle Meyer, we wanted to highlight one point from
today's JPM financial supplement which appears to have evaded pretty
much everyone (perhaps due to its appearance on the last page, and only
lawyers go that far). In today's earning call, Jamie Dimon stated that
the average length a mortgage is delinquent before it is finally
foreclosed upon is 14 months, or 448 days. However, it seems that average
and median in this metric are quite different. To wit, on page 21 of the supplement we read that the average delinquency at foreclosure for Florida is 678 days, while for New York, it is, get ready, 792 days! That's right, a house is delinquent on its payments, which usually means not paying anything, for over two years in New York before it is foreclosed upon. Which
also means that only now are those who stopped paying their mortgage
around the days when Lehman filed being foreclosed upon. And guess
what happened to the economy, and the stock market in the 6 months
immediately after... In other words, there is such a huge cliff of
accrued foreclosures that is supposed to be hitting right about...now,
that the double whammy of foreclosure gate and the accrued foreclosures
will blow right through the balance sheets of banks like JPM. And with
that out of the way, here is why BofA believes that there is a
"heightened risk of a more dismal scenario. If negative momentum in
the housing market kicks in, and feeds into the banking system and
broader economy, it will be hard to fight." Alas, Michelle, it already has.
From Bank of America:
The vulnerable housing market
The
housing market has taken another leg down as potential homebuyers
remain on the sidelines and inventory swells. This widening imbalance
should push prices lower in the near term. Clearly the market is
vulnerable, which means we should pay attention to the brewing
foreclosure problems.
Frazzled foreclosures
As we
have been arguing for some time, the main risk to the housing market
comes from the massive foreclosure overhang. The main concern has been
that if the foreclosure process speeds up, distressed properties will
flood the market, creating an even greater disequilibrium in the market.
Unfortunately, we now have another reason to worry. Attorneys general
nationwide have launched a joint investigation into the foreclosure
process on allegations that banks used “robosigners” (sign documents
without ensuring accurate information). Banks have put foreclosure
moratoriums in place to examine their foreclosure processes.
The best case scenario
This
foreclosure probe should lead lenders to review policies and cure
deficiencies, which could be a clean and simple process. Under this best
case scenario, the effect on the housing market will be negligible. In
fact, it could be positive in the short-term, since moratoriums will
temporarily reduce inventory of distressed homes, thereby supporting
home prices. But this is clearly transitory.
And the worst case
The
foreclosure probe could open the door to more litigation. Most notably,
if a foreclosure is deemed to be under false pretences, the title could
be reinstated to the prior owner, and whoever bought the home out of
foreclosure could lose title. This could have a ripple effect on title
insurers. In addition, involving the courts could result in a wholesale
re-evaluation of the foreclosure process.
This could seriously
hurt confidence. If potential buyers of foreclosures doubt the legality
of the foreclosure process, they will be hesitant to purchase. This
means it will be even more difficult to clear distressed inventory,
further depressing sales and prices. Confidence can suffer for some time simply from fear of this worst case scenario materializing.
On red alert
In
our view, the most likely outcome is somewhere between these two
extreme scenarios. The foreclosure process is likely to be dragged out
further, prolonging the weakness in the housing market, consistent with a
painful U-shaped recovery. However, we admit that there is a heightened
risk of a more dismal scenario. If negative momentum in the housing
market kicks in, and feeds into the banking system and broader economy,
it will be hard to fight.
New fronts are opening in the foreclosure mess.
A lot of people have wondered why no one has gone to jail over what by commonsense standards is fraudulent activity. The possibility that the violations were indeed criminal is finally being investigated. From the Washington Post:
Federal law enforcement officials are investigating possible criminal violations in connection with the national foreclosure crisis, examining whether financial firms broke federal laws when they filed fraudulent court documents to seize people’s homes, according to people familiar with the matter.
The Obama administration’s Financial Fraud Enforcement Task Force is in the early stages of an investigation into whether banks and other companies that submitted flawed paperwork in state foreclosure proceedings may also have misled federal housing agencies, which now own or insure a majority of home loans, according to these sources.
The task force, which includes investigators from the Justice Department, Department of Housing and Urban Development and other agencies, is also looking into whether the submission of flawed paperwork during the foreclosure process violated mail or wire fraud laws. Financial fraud cases often involve these statutes.
Yves here. On the one hand, I would not underestimate the ability of Team Obama to give the banking industry a free pass when tough action is warranted. On the other hand, there is a proud tradition of the Federal government rousing itself when measure by the states run the risk of showing it to have been complacent to the point of negligence (one well known example is when state securities law suits force the generally lapdog SEC to take swing into gear). So if state or even private lawsuits expose enough damaging material, it will be hard for this task force to sit on its hands.
On another front, the ACLU is starting to obtain information to determine whether foreclosures in Florida (the so called rocket docket) violated Constitutional “due process” requirements:
The American Civil Liberties Union and the ACLU of Florida today filed public records requests with judicial officials in Florida to determine whether homeowners are having their constitutional rights violated during foreclosure proceedings and being unlawfully removed from their homes.
In Florida, where almost half a million foreclosure cases are pending, the state legislature recently spent over $9 million to create special foreclosure courts, staffed by retired judges, with the intent of speeding through the state’s backlog of such cases. But recent media reports in Florida and around the country, which reveal rampant error and fraud in the foreclosure process, have shown that courts should take particular care with foreclosure cases. Instead, in the rush to push foreclosure cases through the courts, Florida may be taking shortcuts and, in the process, forsaking constitutionally-required due process protections….
Filed with the Office of the State Court Administrator and the chief judges of all 20 of Florida’s circuit courts, the requests seek access to, among other things, all documents related to special court systems created to dispose of foreclosure cases and the rules and procedures in place that govern those systems…
Copies of the ACLU’s public records requests are available online at: www.aclu.org/racial-justice/aclu-seeks-information-about-constitutionality-florida-foreclosure-courts
Yves here. These initiatives are only in the early stages, but both show that the foreclosure crisis is moving from narrow legal issues to much bigger ones.
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Google and news organizations have had a rocky time of it. To overdramatize the situation only slightly: Google insists that it cares about journalism as a.
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bench craft company complaints
ABC <b>News</b> airs big exposé on BMW N54 engine problems, lawsuits [w <b>...</b>
ABC News investigates BMW fuel pump problems – Click above to watch video after the jump ABC News has cottoned on to the story that BMW.
Tree crushes miner to death at Mahdia - Stabroek <b>News</b> - Guyana
The life of a 49-year old miner was yesterday afternoon snuffed out after a tree fell on him while he was working at a mining area at Mahdia in Region 8.
Google donates $5 million for <b>news</b> innovation to Knight Foundation <b>...</b>
Google and news organizations have had a rocky time of it. To overdramatize the situation only slightly: Google insists that it cares about journalism as a.
bench craft company complaints bench craft company complaints
Before we get into the latest bank assessment of fauxclosure, this
time from BofA's Michelle Meyer, we wanted to highlight one point from
today's JPM financial supplement which appears to have evaded pretty
much everyone (perhaps due to its appearance on the last page, and only
lawyers go that far). In today's earning call, Jamie Dimon stated that
the average length a mortgage is delinquent before it is finally
foreclosed upon is 14 months, or 448 days. However, it seems that average
and median in this metric are quite different. To wit, on page 21 of the supplement we read that the average delinquency at foreclosure for Florida is 678 days, while for New York, it is, get ready, 792 days! That's right, a house is delinquent on its payments, which usually means not paying anything, for over two years in New York before it is foreclosed upon. Which
also means that only now are those who stopped paying their mortgage
around the days when Lehman filed being foreclosed upon. And guess
what happened to the economy, and the stock market in the 6 months
immediately after... In other words, there is such a huge cliff of
accrued foreclosures that is supposed to be hitting right about...now,
that the double whammy of foreclosure gate and the accrued foreclosures
will blow right through the balance sheets of banks like JPM. And with
that out of the way, here is why BofA believes that there is a
"heightened risk of a more dismal scenario. If negative momentum in
the housing market kicks in, and feeds into the banking system and
broader economy, it will be hard to fight." Alas, Michelle, it already has.
From Bank of America:
The vulnerable housing market
The
housing market has taken another leg down as potential homebuyers
remain on the sidelines and inventory swells. This widening imbalance
should push prices lower in the near term. Clearly the market is
vulnerable, which means we should pay attention to the brewing
foreclosure problems.
Frazzled foreclosures
As we
have been arguing for some time, the main risk to the housing market
comes from the massive foreclosure overhang. The main concern has been
that if the foreclosure process speeds up, distressed properties will
flood the market, creating an even greater disequilibrium in the market.
Unfortunately, we now have another reason to worry. Attorneys general
nationwide have launched a joint investigation into the foreclosure
process on allegations that banks used “robosigners” (sign documents
without ensuring accurate information). Banks have put foreclosure
moratoriums in place to examine their foreclosure processes.
The best case scenario
This
foreclosure probe should lead lenders to review policies and cure
deficiencies, which could be a clean and simple process. Under this best
case scenario, the effect on the housing market will be negligible. In
fact, it could be positive in the short-term, since moratoriums will
temporarily reduce inventory of distressed homes, thereby supporting
home prices. But this is clearly transitory.
And the worst case
The
foreclosure probe could open the door to more litigation. Most notably,
if a foreclosure is deemed to be under false pretences, the title could
be reinstated to the prior owner, and whoever bought the home out of
foreclosure could lose title. This could have a ripple effect on title
insurers. In addition, involving the courts could result in a wholesale
re-evaluation of the foreclosure process.
This could seriously
hurt confidence. If potential buyers of foreclosures doubt the legality
of the foreclosure process, they will be hesitant to purchase. This
means it will be even more difficult to clear distressed inventory,
further depressing sales and prices. Confidence can suffer for some time simply from fear of this worst case scenario materializing.
On red alert
In
our view, the most likely outcome is somewhere between these two
extreme scenarios. The foreclosure process is likely to be dragged out
further, prolonging the weakness in the housing market, consistent with a
painful U-shaped recovery. However, we admit that there is a heightened
risk of a more dismal scenario. If negative momentum in the housing
market kicks in, and feeds into the banking system and broader economy,
it will be hard to fight.
New fronts are opening in the foreclosure mess.
A lot of people have wondered why no one has gone to jail over what by commonsense standards is fraudulent activity. The possibility that the violations were indeed criminal is finally being investigated. From the Washington Post:
Federal law enforcement officials are investigating possible criminal violations in connection with the national foreclosure crisis, examining whether financial firms broke federal laws when they filed fraudulent court documents to seize people’s homes, according to people familiar with the matter.
The Obama administration’s Financial Fraud Enforcement Task Force is in the early stages of an investigation into whether banks and other companies that submitted flawed paperwork in state foreclosure proceedings may also have misled federal housing agencies, which now own or insure a majority of home loans, according to these sources.
The task force, which includes investigators from the Justice Department, Department of Housing and Urban Development and other agencies, is also looking into whether the submission of flawed paperwork during the foreclosure process violated mail or wire fraud laws. Financial fraud cases often involve these statutes.
Yves here. On the one hand, I would not underestimate the ability of Team Obama to give the banking industry a free pass when tough action is warranted. On the other hand, there is a proud tradition of the Federal government rousing itself when measure by the states run the risk of showing it to have been complacent to the point of negligence (one well known example is when state securities law suits force the generally lapdog SEC to take swing into gear). So if state or even private lawsuits expose enough damaging material, it will be hard for this task force to sit on its hands.
On another front, the ACLU is starting to obtain information to determine whether foreclosures in Florida (the so called rocket docket) violated Constitutional “due process” requirements:
The American Civil Liberties Union and the ACLU of Florida today filed public records requests with judicial officials in Florida to determine whether homeowners are having their constitutional rights violated during foreclosure proceedings and being unlawfully removed from their homes.
In Florida, where almost half a million foreclosure cases are pending, the state legislature recently spent over $9 million to create special foreclosure courts, staffed by retired judges, with the intent of speeding through the state’s backlog of such cases. But recent media reports in Florida and around the country, which reveal rampant error and fraud in the foreclosure process, have shown that courts should take particular care with foreclosure cases. Instead, in the rush to push foreclosure cases through the courts, Florida may be taking shortcuts and, in the process, forsaking constitutionally-required due process protections….
Filed with the Office of the State Court Administrator and the chief judges of all 20 of Florida’s circuit courts, the requests seek access to, among other things, all documents related to special court systems created to dispose of foreclosure cases and the rules and procedures in place that govern those systems…
Copies of the ACLU’s public records requests are available online at: www.aclu.org/racial-justice/aclu-seeks-information-about-constitutionality-florida-foreclosure-courts
Yves here. These initiatives are only in the early stages, but both show that the foreclosure crisis is moving from narrow legal issues to much bigger ones.
bench craft company complaints
ABC <b>News</b> airs big exposé on BMW N54 engine problems, lawsuits [w <b>...</b>
ABC News investigates BMW fuel pump problems – Click above to watch video after the jump ABC News has cottoned on to the story that BMW.
Tree crushes miner to death at Mahdia - Stabroek <b>News</b> - Guyana
The life of a 49-year old miner was yesterday afternoon snuffed out after a tree fell on him while he was working at a mining area at Mahdia in Region 8.
Google donates $5 million for <b>news</b> innovation to Knight Foundation <b>...</b>
Google and news organizations have had a rocky time of it. To overdramatize the situation only slightly: Google insists that it cares about journalism as a.
bench craft company complaints bench craft company complaints
ABC <b>News</b> airs big exposé on BMW N54 engine problems, lawsuits [w <b>...</b>
ABC News investigates BMW fuel pump problems – Click above to watch video after the jump ABC News has cottoned on to the story that BMW.
Tree crushes miner to death at Mahdia - Stabroek <b>News</b> - Guyana
The life of a 49-year old miner was yesterday afternoon snuffed out after a tree fell on him while he was working at a mining area at Mahdia in Region 8.
Google donates $5 million for <b>news</b> innovation to Knight Foundation <b>...</b>
Google and news organizations have had a rocky time of it. To overdramatize the situation only slightly: Google insists that it cares about journalism as a.
bench craft company complaints bench craft company complaints
ABC <b>News</b> airs big exposé on BMW N54 engine problems, lawsuits [w <b>...</b>
ABC News investigates BMW fuel pump problems – Click above to watch video after the jump ABC News has cottoned on to the story that BMW.
Tree crushes miner to death at Mahdia - Stabroek <b>News</b> - Guyana
The life of a 49-year old miner was yesterday afternoon snuffed out after a tree fell on him while he was working at a mining area at Mahdia in Region 8.
Google donates $5 million for <b>news</b> innovation to Knight Foundation <b>...</b>
Google and news organizations have had a rocky time of it. To overdramatize the situation only slightly: Google insists that it cares about journalism as a.
bench craft company complaints bench craft company complaints
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