There's no legal tangle.  Foreclosures are a matter of state law, not federal.  Uncle Sam can't wave the magic wand and unshit the bed.

And that isn't even the real issue.  The real issue is that, as I understand it, if you can't produce the note, then the MBSes don't legally exist.

So the assets don't exist.  So the creditworthiness isn't there anymore.  And presumably there's leveraging involved here.  And credit moves trigger options in other deals.

And those are just the cases where they thought they were putting out legitimate MBSes.  Which it now seems they were not (seriously, read that).

So, yeah, I'm thinking this is pretty much Armageddon.

Be nice to America. Or we'll bring democracy to your country.