More On Foreclosures

On Naked Capitalism: Bank Disinformation III: Obama Throws Weight Behind Banks, Housing “Market” Over Borrowers

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I should have expected this, Team Obama is so predictably bank friendly that it was inconceivable that the Administration would ever decide against them on anything other than the occasional sop to maintain plausible deniability. But this morning’s news stories reveal the officialdom isn’t even bothering to keep up appearances.

First, from Politico writer Ben Smith, via a newsletter targeted to policy types:

• WALL STREET WARNS WASHINGTON ON MORTGAGES – The financial services industry is growing increasingly concerned as more politicians get behind the idea of a broad moratorium on home foreclosures, which banks and many outside analysts say could be good short-term politics but terrible long-term policy.
  One senior Wall Street executive told Morning Money over the weekend: ‘President Obama should be very cautious about aligning himself with Congressional leaders who are playing politics with the foreclosure issue. With foreclosed properties comprising one in every four homes sold in the United States, the spreading moratorium could disrupt real estate deals in progress, slow down the process of clearing the backlog of troubled home loans and [endanger] the economic recovery.’

So we are back to Wall Street calling the shots, the very same Wall Street that invokes the “give us what we demand or we’ll shoot the economy” demand whenever its pet interests are threatened. Here the securitization industry was colossally irresponsible in its conduct, and has created a mess that will be monstrously difficult to remedy….and we’re supposed to plow onward in business as usual mode?

And notice the false dichotomy: the banks who screwed up yet again (and will need to be recapitalized again, trust me, foreclosure moratorium or not, there is a tsunami of litigation on the horizon that will bury servicers and the major trustees on securitizations) versus “Congressional leaders who are playing politics.” Huh? And it FURTHER, and falsely implies that those evil Congressmen are the reason banks have imposed moratoriums. Erm, it has to do with the fact that filing an improper affidavit is a very serious matter, and the banks have to straighten that out (at a bare minimum, as we stress here repeatedly, the affidavits are merely the presenting problem, not the fundamental failing).

And we further get another lie, that it’s the foreclosure freezes imposed by banks, and the prospect of more at the state level, that might affect REO sales. That’s another Big Lie; the most pressing impediment, and it’s not getting better any time soon, is title insurers withdrawing from foreclosure sales from banks that have admitted to having affidavit problems. Other title insurers are reported to be writing qualified policies on foreclosure sales.

The other disturbing but revealing report of the morning is the new Obama administration straw man: that it’s not backing a national foreclosure freeze. First, as bank expert Chris Whalen points out, this is eventually going to happen, but on a state-by-state basis. not nationally. But second, look at the deplorable logic. Per the Washington Post, boldface ours:

• The Obama administration does not support a nationwide moratorium on foreclosures at this time, Federal Housing Administration Commissioner David Stevens said Sunday in an e-mail response to questions.
  “We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile housing market,” he said.

The statement couldn’t be more clear. “Markets” as in bank/corporate interests uber alles, no concern with the rule of law.

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Mish: Unclear Titles Will Sideline Buyers of Foreclosed Properties for Many Months