If You Thought Mortgages Were Messed Up Before

Felix Salmon:

You thought the foreclosure mess was bad? You’re right about that. But it gets so much worse once you start adding in a whole bunch of parallel messes in the world of mortgage bonds. For instance, as Tracy Alloway says, mortgage-bond documentation generally says that if more than a minuscule proportion of notes in a mortgage pool weren’t properly transferred, then the trustee for the bondholders can force the investment bank who put the deal together to repurchase the mortgages. And it’s looking very much as though none of the notes were properly transferred.

But that’s not even the biggest potential problem facing the investment banks who put these deals together. It also turns out that there’s a pretty strong case that they lied to the investors in many if not most of these deals.

There's more and it is rather appalling. As Salmon states, "It’s going to be a very long time, I think, before the banking system is going to be free and clear of the nightmare it created during the boom."

I am Frank Chow and I approved this message

Update: They don't f-in care, don't take responsibility and can't wait to start foreclosing on asses:

Analyst: The foreclosure suspension, it's a matter of weeks instead of months, did I hear you say that?

JPM: No. I didn't say weeks to clean up the files. We actually have to have little in depth conversations with regulators and AGs and stuff like that. So I don't know exactly when. I'm hopeful that it all starts to move at one point. I don't know if it's going to be three weeks or five. But I think it will be a real shame if we don't get this resolved and moving again.

Analyst: In all likelihood you should be allowed to foreclose as we go into next year.

JPM: I hope so. It's not up to me.