Home > Main > BoA is DOA: CFO to see jail time thanks to Wikileaks

BoA is DOA: CFO to see jail time thanks to Wikileaks

December 24, 2010

.15 for $10 March Puts seems massively underpriced

BoA is unlikely to survive much longer.

We just need to put a few facts together and pull out Occam’s Razor to see what the problems are, and from there, the obvious fallout.

BoA is doomed:

  • Many, many people are living in their homes for hundreds of days after they stop paying.  The average is 460 days, and during the next 12 months, this time will likely expand to over 2 years.
  • Much of the paper work provided to judges in foreclosures that are taking place  appears to be completely made up
  • Some people get foreclosed on nearly immediately
  • There is anecdotal evidence that larger, more expensive homes are seeing slower foreclosures than lower price homes

We need to ask the question of why so many people are able to live in their homes for such a long time after they stop paying.  Why would BoA allow this at all?  Missing payments quickly destroys the value of any interest rate security.

The only idea that makes sense is that the paperwork for people that are not getting papers must be even worse than the people that are getting notices.

Rich people can hire lawyers, may be lawyers themselves, have friends who are lawyers, or can read legal documents more easily.  If you put some contracts and contract law in front of me, I can read, parse, and argue it very easily.  Not as good as a trained professional, but quite well.   So can my peers.

It appears that the Fed/Pimco lawsuit will start to move forward after the first of the year.  This notice asks the same question – why is BoA dragging their feet so much on foreclosing?  Why not just do what they contracted themselves to do?  Everyone involved knows there are serious solvency issues – this is not in question.   There is no need for BoA to draw out the foreclosure process to avoid recognition of losses within the securities. Everyone already knows the losses are gigantic.

There is no shortage of people on the street who are both unemployed and capable of executing this work.   They could easily add 200 qualified people to this division, at a cost of under $30M per year, and the work would go far, far faster.

This stuff isn’t rocket science.  So why the delays in even starting the process?

The only chain of reasoning that fits is:

  • The paperwork on non-foreclosed homes is worse than paperword we have already seen
  • This currently unseen paperwork will demonstrate that the notes were not conveyed properly to the trusts
  • If not conveyed to the trusts, these loans are still Countrywide and therefore BoA liabilities
  • BoA is both 1.  bankrupt due to owning the loans; and 2. liable for securities fraud because the notes were not conveyed properly.

The only situation that makes sense given the facts is that the paperwork is really messed up on some notes. Putting this paperwork in front of people with the resources, brainpower, and facility to fight would expose too much information to them and the rest of the world.

Additionally, BoA management must know the severity of the non-conveyance problem.  The extent of the problem is something one can determine 2 weeks time.  BoA says it investigated and did not find major issues.

The veracity of this statement is material information, and with the Sarb-Ox, C-levels are staring at substantial jail time for saying something false about material information.  And yet, the Fed and Pimco had to give notice about their intention to change servicers because the delays are so substantial.

If the emails from Wikileaks reveals that the CFO has a decent idea of the mess, or could have found out easily, the CFO will end up in jail, and BoA will be nationalized for a short period.

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  1. January 13, 2011 at 10:47 pm
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