Tuesday, March 29, 2011

The Never-Ending Story

JPMorgan Loses Court Ruling Over Loan Putbacks
REUTERS - JPMorgan Chase & Co could be forced to repurchase thousands of home equity loans, after a judge ruled in favor of a bond insurer that argued it could build its case based on a sampling of loans.

The ruling against EMC Mortgage Corp, once a unit of Bear Stearns Cos, comes amid many lawsuits seeking to force banks to buy back tens of billions of dollars of mortgage and other home loans that went sour. JPMorgan bought Bear Stearns in 2008.

Syncora Guarantee Inc. now can pursue claims concerning the entire 9,871-loan pool that backed a securities issue, according to the ruling late Friday from U.S. District Judge Paul Crotty in Manhattan.

The ruling lowers the hurdle for insurers trying to prove they were deceived by banks, and increases the potential that banks could be forced to buy back more loans.
(Read the entire article here.)

At least several Trillion dollars in Mortgage-Backed Securities (aka Collateralized Debt Obligations) sold through all major Wall Street investment houses between 2008 and 2008 are backed by 'pools' of home mortgages.

The mortgages were sold by unscrupulous and greed-driven leasing companies (like Coutrywide Mortgage), who didn't care if the mortgages were based on bad information, or if the homebuyers were later screwed by resetting, adjustable rates. The idea was to produce more and more mortgages to add to the pools of new mortgages so that MBS / CDO's could be created and the mortgage companies and investments houses and banks could charge fees and get their cut.

All the MBS's and CDO's are still out there. However, no one knows what the underlying mortgages are actually worth. And, the banks holding those mortgages have avoided having to repurchase them. Cases like the one noted above may change that.

...at least, for a time. Soon, the funny little law Governor Walker in Wisconsin rammed through without any real due process will make its way to the Supreme Court. As will this case.

I predict that Little Tony Scalia, three years old, and Bobby Alito and Johnny Roberts, and Little Clarence, and Little Tony Kennedy, too (Gosh, that description is like a kind of Fascist "Our Gang" comedy film, huh?) will all vote "No!" to the right of Americans to bargain collectively. Who cares what the labor movement since 1850 was about? Corporations Are So People Too!

And in another case, they will say that "Big Banks Are People Too", and rule that they shouldn't have to pay anything at all for any thing. No, sir. And those whiny bunch of greedy people who forced poor Angelo Mozilo to give them bad home loans will just have to take their medicine and eat their pie. Every bite.

Because this is America, where Der Tea Partei says We don't like them activist judges; no, sir.

Unless...