Sunday, December 4, 2011

The Mortgage Lending and Banking industries are out of control and full of Hubris

It still is making me shake my head every time I hear someone berating the Occupy protestors or calling anyone who has said their bank had screwed them royally.  What I really don't understand is how people can willingly be so blind to the state of the mortgage and banking business and be stupid enough to think it is fine.  Everyone is getting screwed by the criminal behavior of the banks and lenders.  The system used to created and securitize mortgages is a criminal enterprise and the following article taken in part from the Wall Street Journal and in part from Naked Capitalism reveals just how arrogant the too big to fail banks have become and it shows how they continue to act in violation of many laws without fear of consequence. 

People are missing the point of all of the protests and all of the complaints by home owners who have been done wrong by the banks.  It is funny that people have become so righteous  and are willing to actually let banks work as an enterprise that is criminal from top to bottom.  Most people seem to think they are not affected by the bank issues if they are not missing a payment on their home.  There is so much more at stake than people realize and the right to proper ownership may be on the verge of disappearing. 

From the Wall Street Journal:
GMAC Mortgage, the mortgage lender of Ally Financial Inc., is exiting the vast majority of its lending in Massachusetts a day after the state sued it over its foreclosure practices.
The nation’s fifth-largest mortgage originator said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,” ratcheting up the high-stakes mortgage fight there….
GMAC Mortgage will stop purchasing loans from correspondent lenders and wholesale brokers, which makes up the majority of the company’s business. The lender said it was “disappointed” but that “it has an obligation to manage risks and deploy capital in an appropriate manner and in a way that protects the investment of the U.S. taxpayer.”
Get a load of the sanctimoniousness. Since when do the interests of investors trump the rule of law? In fact, the logic is backwards, since investors are not well protected in a regime where laws are not respected. Does anyone want to invest in, say, Somalia?
Reader MBS Guy notes by e-mail:
Ally will stop lending in the state. Now litigation costs are too high in Massachusetts, according to Ally Bank, which is 74% owned by the US Treasury.
This is a bit funny, since the lawsuit involves issues with loans which were originated and, generally foreclosed, in the past. Ally has said that they have fixed all of their robo-signing issues, so it shouldn’t be a problem for newly originated loans.
Given its ownership structure, is this a pissy message to Massachusetts from Ally itself, or from its majority shareholder for tanking the AG Task Force?
And get a load of this part by an industry mouthpiece:
“It also sends a signal to Massachusetts and other states that if you make it difficult for lenders to act they will take their business elsewhere,” Mr. [Guy] Cecala of Inside Mortgage Finance said of GMAC’s decision. “There is no law you have to operate in all 50 states.”

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