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Bank of America will be recognized as insolvent very soon

June 13, 2011

Here is a quick summary the Naked Capitalism post.  Yves pulls punches a bit, but it is quite clear BoA is insolvent.

First, BoA/Countrywide did not convey the mortgages to their securitization trusts.   In plain english, they never transfered the loan paper work into the legal entity that was supposed to get the paper work.

These legal entities do not legally possess the mortgage note.  Because the legal requirements are quite high for possession, this means what we know as “Mortgage Backed Securities” are not actually “Mortgage Backed”.

Then they certified they had transfered the paper work, over and over again.  This is fraud, because they certified they had the notes.  The liability on this is gigantic for Bank of America, and for Deutsche Bank too.

Then, there is a another large problem caused by not doing the paperwork. The company cannot foreclose on the property, because it does not own the note.  The laws for holding and conveying mortgage notes are extremely clear and detailed.  If the laws were not followed, the owner of the note becomes unclear.  What is clear is that do not have legal right to foreclose.

The problem for Bank of America is that the attorneys general of both New York and Delaware are looking into the problem.  These are serious inquiries.  They will find what everyone else has found – that the the notes have not been conveyed.  They will conclude these legal entities do not own the notes, and there is no chance of remedy because the legal time limits have expired.

In other words, the problem is not fixable.

This information is making the front page of the New York Times business section.  It’s making the front page of the Huffington Post.

Large numbers of important people are looking at the mortgage notes problems and finding out the problems are insurmountably bad.  Solvency for Bank of America is now a real concern.

Categories: Main
  1. June 13, 2011 at 1:42 pm

    so if BofA is insolvent, and they hold my mortgage, then I don’t have to pay it, right? 😉

    • mark
      June 19, 2011 at 5:47 am

      One woulf think…

  1. August 23, 2011 at 3:13 pm
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