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THIS IS HUGE!
Carl F. Worden
October 17, 2010
It seems like at least a full year ago or more I wrote about
the mortgage mess and how virtually impossible it will be to
unravel those "bundled" mortgages that were sold to
mostly foreign investors. I further wrote that because it will
be almost impossible to establish who actually owns a given mortgage,
it will be just as impossible for a lender claiming to have ownership
to prove that ownership and thereby establish legal authority
to proceed with foreclosure.
Really smart people will demand proof of authority in court foreclosure
proceedings, and when this proof cannot be presented, they can
live in their homes without paying another dime in payments,
perhaps forever!
I'll give you an example. Let's take a worldwide trip, and at
every destination on every continent, you save one cup full of
sand. You come back to the U.S. with 50 cups of sand, one from
each place you visited, and dump all of it together in a running
cement mixer for about two hours. How can you prove where each
grain of sand came from? Okay, so you can separate each grain
and analyze it. Through careful scientific examination, you
might be able to prove where one grain of sand came from, then
another, then another. The problem is that you can't prove which
country contributed the most sand until every grain is slowly
and exhaustively examined and categorized.
Sounds like a near impossible undertaking, don't it?? That is
exactly the undertaking these banks must go through to establish
the authority of ownership of all those broken-up and bundled
mortgages. Investors bought blocks of broken-up, bundled mortgages,
so parts of one mortgage might have been purchased by perhaps
20 or more foreign investors along with parts of other mortgages.
With all these fractions of mortgages out there on the beach,
how does anyone think they might be able to prove they have enough
ownership authority to foreclose on just one home they invested
in, let alone a bundle of them?
That is the near-impossible task the banks face right now, and
they tried to get away with a fast one by bluffing their way
through prior foreclosure proceedings, but now that the whole
truth of the mess is all over Fox, CNN and every other media
network out there, the banks have halted further foreclosure
proceedings until they can prove they have authority to foreclose
-- and in many, if not most cases, they won't be able to.
Why is this huge? Well, if the banks, who broke-up, bundled
and sold those mortgage investments, can't prove authority to
foreclose on any one home, they will be forced to buy all those
bundled mortgage investments back, because part of the allure
in first mortgage investing is the safety valve of foreclosure
spelled out in the agreements the investors accepted, and if
there is no legal authority for the banks to foreclose on the
properties, they have breached their contractual agreements with
the investors and must make the investors whole -- by buying
the investments back with money the banks don't have -- and that,
my friends, will be the final straw that broke America's financial
back. The feds have already given those banks all the money
they are going to in previous bailouts, and printing even more
money will send the U.S. into uncontrollable hyper-inflation,
cessation of all entitlement program payments and a subsequent
complete breakdown of social order.
Nothing else, short of a massive, unanswered nuclear attack on
every corner of the United States, would be more disastrous.
Carl F. Worden
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