Foreclosure-Gate: No More Joint Federal/State Attorney Mortgage Settlement Effort

04-08-2011 • NakedCapitalism.com/

Housing Wire has confirmed what American Banker and the New York Times had indicated was underway, namely, that the formerly joint state/federal effort to deal with foreclosure abuses (still undefined beyond robosigning and improper affidavits) are now separate initiatives. We think that’s a good thing, since the state and federal law issues were so different that it made the idea of a grand global settlement seem a tad deranged, particularly on the fast timetable the Obama crowd was pushing for. As a reader with securities law regulatory experience noted via e-mail: Whoever was leading this charge for the Feds totally miscalculated. The fundamental failure was to separate the past from the future. The CFPB is about getting the systems right in the future so that securitization can work without all the fraud and self-dealing. The foreclosure mess is a state battle about fraud on the courts in foreclosure actions and other state real estate matters such as the effect of MERs. To the extent that fiasco bankrupts some banks, then it may become a Fed (FDIC) issue at that time, but not until.