Countrywide's Mortgage Document Errors May Doom Bank of America - DailyFinance

Countrywide's Mortgage Document Errors May Doom Bank of America - DailyFinance: "Bank of America made at least three attempts to fix its note problem in the context of the Kemp bankruptcy case. To prove it had the right to foreclose on Kemp's house, BofA needed to show that Bank of New York, the trustee for the 2006 securitization, had the right to foreclose. If BoNY had the right to foreclose, BofA could foreclose on its behalf. But for BoNY to have that right, the trust had to have the note and mortgage, which is why Countrywide's hanging on to the notes was a problem."

 Comment by me. Here is another story on the troubles at Bank of America. The only concern I would have for the country is the implied guarantee by Hank Paulson. Ken Lewis stated on more than one occasion that the then Federal Reserve chairman Henry Paulson told Ken Lewis that is was necessary for BofA to complete the transactions and that the fed would back the losses if they were extreme. We are now talking in the extreme.

The testimony in the Countrywide vs. Kemp case has statements under oath referring to CountryWide's common practice to hold the notes themselves rather than transfer them to the trust. If the investigations into the banks are done properly every single loan done by countrywide will have to be reviewed for proper documentation. According to the PSA's, Pooling Service Agreements, that are the documents used to create the trusts, improper transfer, or failure to transfer notes into trusts will nullify the contract. The means that BofA will be required to take back all loans that have not followed or met the standards of the PSA.
Read more on Pooling Service Agreements here.
 We know roughly 30 percent of mortgages in the country are underwater. If we speculate that countrywide's loans would fall in about the same range (which a case could easily be made that their loans may have a higher percentage of negative equity) the minimum loss on thousands of loans will be 30%. This would put Bank of America itself deep underwater.

We can only guess who will be expected to come to rescue. However, who else other then the us taxpayer would be senseless enough to jump into this black hole?