Show Me the Mortgage

Some really great stuff coming out on the emerging scandal of foreclosure industry fraud.

Rortybomb has a great two parter explaining what has broken down and why it matters. A winning segment:

In the event, with respect to any Mortgage Loan, that such original or copy of any document submitted for recordation to the appropriate public recording office is not so delivered to the Trustee within 180 days of the applicable Original Purchase Date as specified in the Purchase Agreement, the Trustee shall notify the Depositor and the Depositor shall take or cause to be taken such remedial actions under the Purchase Agreement as may be permitted to be taken thereunder, including without limitation, if applicable, the repurchase by the Responsible Party of such Mortgage Loan.

Read that again through to the end and use the chart to follow the chain. If more than 0.01% (!) of mortgage notes weren’t properly transferred, the trust can force the sponsor (in this case, Goldman Sachs) to repurchase the bad mortgages. And this is just one contract for one part of the ~$2.6 trillion dollar mortgage backed securities market. How’s that for systemic risk? Especially if this is found to be widespread….

Ow. (H/t to Ritholtz)

CJR's Dean Starkman brings a foreclosure linkfest our way.

...as [HuffPo's] Mike Hudson...reminds us, the fraud factories on the back end of the mortgage process are only an extension of the mortgage boiler rooms on the front end that generated millions of what turn out to be the financial equivalent of Ford Pintos and Chevy Chevettes.