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Agree that the above doesn't sound good and should be investigated. But to be fair, this is something that happened in the aftermath of the crisis, and had noth

by EugeneG 16y ago

Agree that the above doesn't sound good and should be investigated. But to be fair, this is something that happened in the aftermath of the crisis, and had nothing to do with the greater causes. Edit: A bit surprised at the thoughtless downvoting for not agreeing with the common narrative

mechanical_fish 16y ago
this is something that happened in the aftermath of the crisis Not quite. The fraud that is happening today is part of the attempt to cover up the fraud that happened during the crisis. (That's the thing about crime, as all the good dime novels say: Once you do the first one it just leads to another.) I'm no lawyer, let alone a real estate lawyer, so I can't refute this to the extent that it probably deserves. But some things even I understand: If Bank A lent money to a customer, and then Bank A sold the mortgage to Bank B without properly transferring the paperwork (according to the very well established law concerning such things), and then Bank B sold that mortgage upstream to Bank C, and then Bank C sold Investor D a security that is "backed by actual mortgages"... someone committed fraud. Either Bank B lied to Bank C by selling something that they did not own, or Bank C happily paid Bank B for a thing that was not, legally speaking, a properly transferred mortgage ("Bank B hereby sells this IOU, written on a Post-It note, to Bank C") but then claimed to its investors that it actually owned mortgages. Post-It notes are not mortgages. What is happening today is that the Bank Cs of the world, who are on the hook to their investors to pay off those supposedly "mortgage-backed" securities, are foreclosing on houses to try and recoup some money. But Bank C doesn't actually own the houses because someone messed up the paperwork. So they wave the Post-It notes around with great energy, committing more fraud and perjury (and stupid mistakes) in the process, and hope that nobody gets prosecuted. EDIT: Note: these are not just alleged crimes, they seem like seriously embarrassing alleged crimes. They lost the papers! What a rookie mistake! If only they'd been a little less sloppy this wouldn't have happened! But, once again: Where there is one crime there may well be others. It's quite possible that this level of sloppiness and fraud was not allowed to go on just by accident. It may well have served to disguise other frauds, like (e.g.) effectively selling a mortgage more than once as part of different securities.
sethg 16y ago
“It’s not the crime; it’s the coverup.” If the people who may have been complicit in the last meltdown are conspicuously not being punished for covering their tracks, then the people who have the power to trigger the next meltdown will not fear prosecution for “the greater causes”, either.
ZachPruckowski 16y ago
>had nothing to do with the greater causes. It has everything to do with the greater causes. The reason it's happening is to try to cover up the fact that in many cases, mortgages were improperly transferred along the chain from the lender to the REMIC trusts. This means that (a) the banks selling MBS to investors lied when they said they had properly transferred the notes, and (b) in some states, the screw-ups jeopardize the securitization of the debt. Had there not been such a mortgage bubble, this probably wouldn't have happened.

by EugeneG 16y ago

mechanical_fish 16y ago

this is something that happened in the aftermath of the crisis Not quite. The fraud that is happening today is part of the attempt to cover up the fraud that happened during the crisis. (That's the thing about crime, as all the good dime novels say: Once you do the first one it just leads to another.) I'm no lawyer, let alone a real estate lawyer, so I can't refute this to the extent that it probably deserves. But some things even I understand: If Bank A lent money to a customer, and then Bank A sold the mortgage to Bank B without properly transferring the paperwork (according to the very well established law concerning such things), and then Bank B sold that mortgage upstream to Bank C, and then Bank C sold Investor D a security that is "backed by actual mortgages"... someone committed fraud. Either Bank B lied to Bank C by selling something that they did not own, or Bank C happily paid Bank B for a thing that was not, legally speaking, a properly transferred mortgage ("Bank B hereby sells this IOU, written on a Post-It note, to Bank C") but then claimed to its investors that it actually owned mortgages. Post-It notes are not mortgages. What is happening today is that the Bank Cs of the world, who are on the hook to their investors to pay off those supposedly "mortgage-backed" securities, are foreclosing on houses to try and recoup some money. But Bank C doesn't actually own the houses because someone messed up the paperwork. So they wave the Post-It notes around with great energy, committing more fraud and perjury (and stupid mistakes) in the process, and hope that nobody gets prosecuted. EDIT: Note: these are not just alleged crimes, they seem like seriously embarrassing alleged crimes. They lost the papers! What a rookie mistake! If only they'd been a little less sloppy this wouldn't have happened! But, once again: Where there is one crime there may well be others. It's quite possible that this level of sloppiness and fraud was not allowed to go on just by accident. It may well have served to disguise other frauds, like (e.g.) effectively selling a mortgage more than once as part of different securities.

sethg 16y ago

“It’s not the crime; it’s the coverup.” If the people who may have been complicit in the last meltdown are conspicuously not being punished for covering their tracks, then the people who have the power to trigger the next meltdown will not fear prosecution for “the greater causes”, either.

ZachPruckowski 16y ago

>had nothing to do with the greater causes. It has everything to do with the greater causes. The reason it's happening is to try to cover up the fact that in many cases, mortgages were improperly transferred along the chain from the lender to the REMIC trusts. This means that (a) the banks selling MBS to investors lied when they said they had properly transferred the notes, and (b) in some states, the screw-ups jeopardize the securitization of the debt. Had there not been such a mortgage bubble, this probably wouldn't have happened.