The current morgage mess
Posted: Thu Apr 03, 2008 12:38 am
http://www.bloomberg.com/apps/news?p...aEE&refer=home
Fed Aided Bear Stearns as Firm Faced Chapter 11, Bernanke Says
April 2 (Bloomberg) -- The Federal Reserve was forced to rescue Bear Stearns Cos. last month because the securities firm faced bankruptcy and its failure could have led to a ``chaotic unwinding'' of investments throughout the U.S. economy, Fed Chairman Ben S. Bernanke said.
chapter 11 = us version of insolvency/ uk = bankruptcy
national rock = nationalised= saved from bankruptcy by govt, over 30bn, they had to save it, in order to stop collapse of stock market/banking confidence/bank runs.
credit crunch = lack of credit, credit is capital/money, lack of money is insolvency, hence bankruptcy.
there is a low level of capital/credit, banks have blown the vast majority on speculation, on cdo's (collatrised debt obligations), these cdos are packages of mortgages bundled together to make a security/investment, the banks ploughed billions into buying these, like they do shares, bonds etc.
mortgage/property collapse in usa, means mortgages default-foreclosure/bankruptcy-reposessed, thus their investments/cdos are worthless, hence the deustche bank case.
deustch bank tried to claim houses, as the mortages defaulted, but because they sold the mortgages as cdo's, they couldn't find who actually owned the cdos/mortgage, thus they did not own the title to the asset/house, its one huge mess.
this is no accident, its all by design.
http://www.telegraph.co.uk/money/mai...deutsch116.xml
Deutsche Bank in ownership court row
By James Quinn, Wall Street Correspondent
Last Updated: 12:02am GMT 18/11/2007
An American judge has prevented Deutsche Bank from repossessing 14 homes because the bank could not prove it owned the defaulting mortgages involved. The ruling by Ohio district court judge Christopher Boyko could have serious repercussions for banks and mortgage lenders, for whom the pooling of mortgage securities is a $6,500bn (£3,200bn) industry.
Pooling involves taking hundreds if not thousands of mortgages, putting them in one unit, and then selling parts of that unit to others. As a result, it can often be unclear which bank actually owns the individual mortgages.
Judge Boyko had ordered lawyers acting for Deutsche Bank National Trust Company to prove the lender was the ultimate owner of the mortgages. When it could not do so, he dismissed the cases
He said: "The institutions seem to adopt the attitude that since they have been doing this for so long, unchallenged, this practice equates with legal compliance.
"Finally put to the test, their weak legal arguments compel the court to stop them at the gate."
Deutsche can still refile the foreclosure cases in a higher court, but the precedent set in this case is now being seized on by those about to lose their homes.
Fed Aided Bear Stearns as Firm Faced Chapter 11, Bernanke Says
April 2 (Bloomberg) -- The Federal Reserve was forced to rescue Bear Stearns Cos. last month because the securities firm faced bankruptcy and its failure could have led to a ``chaotic unwinding'' of investments throughout the U.S. economy, Fed Chairman Ben S. Bernanke said.
chapter 11 = us version of insolvency/ uk = bankruptcy
national rock = nationalised= saved from bankruptcy by govt, over 30bn, they had to save it, in order to stop collapse of stock market/banking confidence/bank runs.
credit crunch = lack of credit, credit is capital/money, lack of money is insolvency, hence bankruptcy.
there is a low level of capital/credit, banks have blown the vast majority on speculation, on cdo's (collatrised debt obligations), these cdos are packages of mortgages bundled together to make a security/investment, the banks ploughed billions into buying these, like they do shares, bonds etc.
mortgage/property collapse in usa, means mortgages default-foreclosure/bankruptcy-reposessed, thus their investments/cdos are worthless, hence the deustche bank case.
deustch bank tried to claim houses, as the mortages defaulted, but because they sold the mortgages as cdo's, they couldn't find who actually owned the cdos/mortgage, thus they did not own the title to the asset/house, its one huge mess.
this is no accident, its all by design.
http://www.telegraph.co.uk/money/mai...deutsch116.xml
Deutsche Bank in ownership court row
By James Quinn, Wall Street Correspondent
Last Updated: 12:02am GMT 18/11/2007
An American judge has prevented Deutsche Bank from repossessing 14 homes because the bank could not prove it owned the defaulting mortgages involved. The ruling by Ohio district court judge Christopher Boyko could have serious repercussions for banks and mortgage lenders, for whom the pooling of mortgage securities is a $6,500bn (£3,200bn) industry.
Pooling involves taking hundreds if not thousands of mortgages, putting them in one unit, and then selling parts of that unit to others. As a result, it can often be unclear which bank actually owns the individual mortgages.
Judge Boyko had ordered lawyers acting for Deutsche Bank National Trust Company to prove the lender was the ultimate owner of the mortgages. When it could not do so, he dismissed the cases
He said: "The institutions seem to adopt the attitude that since they have been doing this for so long, unchallenged, this practice equates with legal compliance.
"Finally put to the test, their weak legal arguments compel the court to stop them at the gate."
Deutsche can still refile the foreclosure cases in a higher court, but the precedent set in this case is now being seized on by those about to lose their homes.