A very troubling anecdote by Art Cashin today on the possible future developments in fraudclosure.
An Amazing Assertion – Last week one of the FoF regulars brought a friend to one of the plenary sessions. The gentleman, in addition to being quite personable, was a lawyer who had a lot of experience in asset backed securities. Naturally, I tried to pick his brain on the real status of the foreclosure fiasco.
In the middle of the discussion, I avowed that I had become very concerned when several large servicers suspended mortgage foreclosures. It smacked of wholesale legal protections to avoid exposure to court reversals and possible sanctions for undecipherable records of true ownership. I remarked to our guest that it was with a large sigh of relief I greeted the announcement that foreclosures would resume – not in a scrooge-like manner, but only because resumption suggested the records might be in order.
That’s when our guest blew me away. He asserted that they had only “announced” foreclosures would resume and, in fact, were still in stand-by mode. He claimed that the announcement of suspensions had prompted many mortgage payers to consider defaulting since there would be no punishment. The guest said that, sensing that suspending foreclosures could lead to a tsunami of new defaults among “current” mortgagors, they simply announced resumption as a warning. He claimed that foreclosures were not resuming because the records remain murky and would promote challenges and, perhaps, legal penalties.
We certainly hope he was wrong since things could turn very ugly. We’ve begun checking around to see if we can get some hard data on the status of the foreclosure process. Stay tuned.
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