What started out as a trickle of news from GMAC of a housing foreclosure suspension a few weeks ago, has become a tidal wave of incredibly bad news for the housing market. As it becomes apparent that servicers (GMAC, Chase, Bank of America, etc.) don't have clear titles to the homes they're foreclosing on, title insurers are refusing to insure and the whole mortgage system in seizing up as a result. This effectively means that with jumbled titles, mortgage debt securities marked on a bank's books at cost or higher, are worth zero. CNBC even spread a nasty rumor this evening that the federal government may try to mandate a 90 day suspension on foreclosures. 90 days won't be enough time to correct this problem which may take years to unravel.
Imho, this has obvious negative implications for banks. $JPM, $BAC, immediately come to mind. Title insurance companies don't look too good in this scenario. Use your imagination.
1 comment:
It already started. GMAC is denying mortgages in South Florida for no apparent reason (they are re-interpreting a Fannie Mae rule and taking it out of context as legal cover) to buyers that are absolutely credit-worthy. And I speak of scores of almost 800... GMAC is helping to virtually halt the housing market AGAIN! And AFTER receiving TARP money. So unless something happens and fast, the W shape crisis is confirmed. I can provide details if anyone needs. Contact merchipltd@gmail.com.
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