this is surely gonna blow big holes in portfolios cos people at the back end who rely on the banks' claims of liquidity are gonna start needing proof that the banks hold the papers they claim.

keep to the Fen Causeway

When there's no accountability and no punishment for fraud, then fraud will happen.

But I think Jerome's argument still holds because these actions defraud the little people, not bond holders and 'investors' - who stand to benefit from them, not lose by them.

We should wake up and deal with the reality - many parts of the markets are knowingly run in an explicitly fradulent and criminal way, for the benefit of an overclass which doesn't much care how returns are generated.

This is a moral and social problem, not just a financial one.

Jerome has argued repeatedly that international markets are not going to drop the US$ as a standard because of the legal security ("who would want to have contract law disputes decided under the Russian or Iranian courts?" goes the rhetorical question)

The Big Picture: Foreclosure Fraud Reveals Structural & Legal Crisis

"In the West, this formal property system begins to process assets into capital by describing and organizing the most economically and socially useful aspects about assets, preserving this information in a recording system--as insertions in a written ledger or a blip on a computer disk--and then embodying it in a title. A set of detailed and precise legal rules governs this entire process. Formal property records and titles thus represent our shared concept of what is economically meaningful about any asset. They capture and organize all the relevant information required to conceptualize the potential value of an asset and so allow us to control it . . .

The reason capitalism has triumphed in the West and sputtered in the rest of the world is because most of the assets in Western nations have been integrated into one formal representational system . . . By transforming people with real property interests into accountable individuals, formal property created individuals from masses. People no longer needed to rely on neighborhood relationships or make local arrangements to protect their rights to assets. They were thus freed to explore how to generate surplus value from their own assets."

-Hernando de Soto, The Mystery of Capital

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The woes in the mortgage market are complex, deep and structural. This is more than just a few shortcuts taken by paralegals here and there -- there are endemic structural problems within the US real estate and mortgage markets.  (Yesterday, we touched upon the problems associated with foreclosure mills).

And we need to keep Alan Greyson over here. Even if he goes back into private practice and defends bogus foreclosures. The problem that everyone has with this title mess is that it is the laws of 50 states that are the problems, some more than others. The State of Florida seems to have gotten creative and created some kangaroo foreclosure courts where defendants attorneys are given 90 seconds to make their case. They are staffed by retired judges, often without foreclosure experience.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

Grand Rapids

Rick and Sherry Rought of Gowen paid cash for the old house, a $14,000 fixer-upper, for their daughter, Hannah, while she attended Ferris State University.
Seven months later, after the couple started repairs and moved in furniture, Deutsche Bank National Trust Co. foreclosed, hired a company to "trash out" the Roughts' belongings, and changed locks and turned off utilities, according to a lawsuit filed Monday in U.S. District Court.

Fort Lauderdale

When Jason Grodensky bought his modest Fort Lauderdale home in December, he paid cash. But seven months later, he was surprised to learn that Bank of America had foreclosed on the house, even though Grodensky did not have a mortgage.

Grodensky knew nothing about the foreclosure until July, when he learned that the title to his home had been transferred to a government-backed lender. "I feel like I'm hanging in the wind and I'm scared to death," said Grodensky. "How did some attorney put through a foreclosure illegally?"

Spring Hill, FL

Charlie and Maria Cardoso are among the millions of Americans who have experienced the misery and embarrassment that come with home foreclosure.

Just one problem: The Massachusetts couple paid for their future retirement home in Spring Hill with cash in 2005, five years before agents for Bank of America seized the house, removed belongings and changed the locks on the doors, according to a lawsuit the couple have filed in federal court.