December 29, 2009
December 28, 2009
December 27, 2009
December 25, 2009
December 23, 2009
A mortgage holder usually walks away from a property when it decides the house has such little value that it’s not worth the money and effort required to keep it in good shape or even to foreclose on it—a common occurrence in neighborhoods already scarred by foreclosures. The borrower is gone, however, often unaware the house hasn’t been taken, Lind said. A property might sit vacant for months or even years, an easy target for vandals who strip it of plumbing fixtures, wiring, copper, or anything else of value.
Walkaways wind up with “toxic titles,’’ Lind says. The mortgage company retains a lien, or a charge, on the house, but the borrower still is considered the owner. The property sits in limbo, with the mortgage usually exceeding what it would sell for, because of its decline. If the city has to tear it down, it adds its own $8,000 to $10,000 demolition lien. Not surprisingly, potential buyers aren’t exactly lining up. Non-profit neighborhood groups that could fix up the property face long and expensive legal battles to claim it.
December 18, 2009
The observations above are troubling: Goldman’s trading is by no stretch of the imagination better than average. In fact, in 2008, the firm’s prop trading was on par with some of the worst performers on Wall Street. Which begs the question: just how has Goldman managed to transform itself into a behemoth that over the past 6 months has had only three trading days of losses? The answer is simple: with no Lehman and no Bear to curb its tentacular dominance of all aspects of the Fixed Income market, Goldman can now rely almost exclusively on its monopolist agency position vis-a-vis mutual, pension, and hedge funds who are desperate to maintain a good relationship and an open dialog with the firm which rewards its best clients with market moving information ahead of all others peasants.
Specifically, I’ve heard more than once from traders who tell me that Goldman makes all its money gouging its clients, who either don’t know any better or are reluctant to get on the wrong side of the bank, for obvious reasons. Also, the fact that not only Goldman but all the banks have made mountains of money this year by borrowing cheap from the government and lending dear to the rest of the world is also manifestly obvious (credit card interest rates went up more than 20 percent in the first six months of the year, despite vastly reduced borrowing costs for the banks issuing that credit).
December 17, 2009
The relationship that MERS has to Sovereign [Bank] is more akin to that of a straw man than to a party possessing all the rights given a buyer… What meaning is this court to attach to MERS’s designation as nominee for Millennia [Mortgage Corp.]? The parties appear to have defined the word in much the same way that the blind men of Indian legend described an elephant — their description depended on which part they were touching at any given time. Counsel for Sovereign stated to the trial court that MERS holds the mortgage ‘in street name, if you will, and our client the bank and other banks transfer these mortgages and rely on MERS to provide them with notice of foreclosures and what not.’ (Landmark National Bank v. Boyd A. Kesler)
By letting the sale stand and by rejecting Sovereign’s argument, the lower court, in essence, rejected MERS’s business model.
Although the Kansas court’s ruling applies only to cases in its jurisdiction, foreclosure experts said it could encourage judges elsewhere to question MERS’s standing in their cases.
“It’s as if there is this massive edifice of pretense with respect to how mortgage loans have been recorded all across the country and that edifice is creaking and groaning,” said Christopher L. Peterson, a law professor at the University of Utah. “If courts are willing to say MERS doesn’t have any ownership interest in mortgage loans, that may eventually call into question the priority of liens recorded in MERS’s name, and there are millions and millions of them.”
But it isn’t surprising that judges are plenty unsympathetic, and in cases, outraged. The law is all about sanctity of process, both the underlying law and court proceedings. Cases typically revolve around disputes of fact or grey areas of the law. This isn’t grey (whether a party has standing to file a suit is fundamental) and the law in this area is well established. Basically, the securitization industry tried creating rules outside any established legal framework and judges are having none of it….
And we have an even more interesting set of possibilities. Say servicers and MERS fail to clean up their act, and more judges start throwing out foreclosures. Kansas Supreme Court Judge Rosen didn’t just say he didn’t see an acceptable paper trail; elements of his ruling were a much more fundamental attack on MERS. If more judges start challenging MERS’s legitimacy, that could strike at the heart of foreclosures in securitizations. In other words, a few more of these rulings may accomplish what the folks in DC have been unwilling and unable to do: force banks to negotiate. The problem, of course, is the impact will be very inconsistent. Some jurisdictions and judges will no doubt be more sympathetic to this line of argument than others.
Stay tuned, this looks certain to get even more interesting.
[T]he problem the [lenders] face (the present title defect) is entirely of their own making as a result of their failure to comply with the statute and the directives in their own securitization documents… What the plaintiffs truly seek is a change in the foreclosure sale statute (G.L. c. 244, § 14), which can only come from the legislature.
December 15, 2009
There has been much conjecture on whether using CDS is an effective way to hedge against US default risk. Many theoreticians, especially those of the post-March lows variety, have sprung up and are speculating that buying Credit Default Swaps on the US is ultimately a futile and pointless endeavor. The main argument: a US default would likely mean that interconnected dealers won’t recognize contracts on a US default event, as they themselves will be out of business. Even if they continued to exist, like cockroaches in a postapocalyptic world, the collateral which backs derivatives is mostly US Treasurys: the same obligations that would end up being massively impaired.
Firstly, an obvious point – major dealers are riskier credits than the U.S. government. The fact that they may put up collateral against their derivative obligations offers little relief because U.S. Treasuries (the very instruments on which the credit event would occur) represent a large portion of such collateral between counterparties.Secondly, given the interconnectedness among the major global dealers, the confidence-sensitive nature of their funding, and the very large exposures they all have to the U.S. market, we think that the “wrong-way” risk of buying protection on the U.S. from any major dealer is very high. In fact, the CDS market sends a similar signal as the correlation of CDS spreads – among the dealers and to the U.S. – is indeed quite high.
Still, we think that this is one of the cases where financial engineering is likely to be no match for practical reality.
December 14, 2009
For the first time in 47 years of polling, the number of Americans who said that they have had a religious or mystical experience, which the question defined as a “moment of sudden religious insight or awakening,” was greater than those who said that they had not…….
Twenty percent of Protestants and 28 percent of Catholics said they believe in reincarnation, which flies in the face of Christianity’s rapture scenario. Furthermore, about the same percentages said they believe in astrology, yoga as a spiritual practice and the idea that there is “spiritual energy” pulsing from things like “mountains, trees or crystals.” Uh-oh. Someone’s God is going to be jealous……
For those keeping political score, Democrats were almost twice as likely to believe in ghosts and to consult fortune-tellers than were Republicans, and the Democrats were 71 percent more likely to believe that they were in touch with the dead. Please hold the Barack-Obama-as-the-ghost-of-Jimmy-Carter jokes. Heard them all.
The report is further evidence that Americans continue to cobble together Mr. Potato Head-like spiritual identities from a hodgepodge of beliefs — bending dogmas to suit them instead of bending themselves to fit a dogma. And this appears to be leading to more spirituality, not less. Cue the harps, and the sitars, and the tablas, and the whale music.
We must kill them. We must incinerate them. Pig after pig. Cow after cow. Village after village. Army after army, and they call me an assassin! Well, what do you call it when the assassins accuse the assassin?~
December 11, 2009
Imagine the production of a new dress, in three steps:
¶A fabric store sells a tailor enough silk to make one dress, at a total price of $10 before taxes;
¶The tailor sews a dress and sells it to Macy’s for $30 before taxes;
¶Macy’s then sells the dress to a shopper for $50, before taxes.