49 State AGs Launch Foreclosure-Gate Investigation, As Concerns Grow Over Catastrophic Implications

Wednesday, October 13, 2010
By Paul Martin

Joe Weisenthal
BusinessInsider.com
Oct. 13, 2010

The National Association Attorneys General announced that 49 state AGs are joining together to launch a foreclosure-gate investigation.

We don’t have a national moratorium on foreclosures in this country, but for all intents and purposes it feels like there is one right now.

Meanwhile, Diana Olick’s piece on CNBC yesterday about the potential ramifications of foreclosure-gate — which quoted analyst Josh Rosner as saying we could see another “Lehman weekend” — continues to get a lot of talk.

Emptywheel at FireDogLake has a good explanation of why this is such a big deal and a potential catastrophe:

The problem is that the problems exposed by foreclosures in judicial states are problems that exist throughout mortgages that were securitized in the last 6-10 years. The reason the servicers are going to such lengths to make up for deficient paperwork–including robo-signing affidavits or counterfeiting notes–is presumably because for at least a significant portion of mortgages that were securitized, the paperwork is not in order. What we’re seeing through the foreclosure process is just what is getting exposed through the random sampling of foreclosure, and any other random sampling of securitized mortgages would presumably have the same level of deficient paperwork.

The Rest…HERE

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