Sunday, November 7, 2010

Prof. Christopher Peterson (and myself) Will Present a Webcast on the Mortgage Morass Tomorrow

As I previously emphasized, Professor Christopher Peterson recently posted an outstanding update to his outstanding law review article in the Cincinnati Law Review.

Tomorrow the University of Utah, Quinney College of Law, will host a webcast (available here) presentation by Professor Peterson and myself entitled “Foreclosure Fiasco? Lost Promissory Notes and the Mortgage Electronic Registration System.” The webcast will run from 12:15 to 1:30 p.m., Utah Time or 1:15 to 2:30, Chicago time.

I will comment and try to put Professor Peterson's outstanding work in perspective, as I have tried to do here, here, here and here.

We will also address the problem of lost and destroyed notes, which along with MERS casts a pall over the residential real estate market today. Indeed. most real estate experts attribute renewed weakness in the real estate market to the mortgage morass.

Professor Peterson displays uncommon scholarly courage as the messenger of bad news for the megabank sector. I urge anyone concerned about the power of the megabanks or the economy in general to tune-in as I predict the banks will soon beseech our elected representatives to relieve them from the legal and economic consequences of the recklessness of their senior managers. My argument is that some megabanks may already be insolvent and should be escorted into the Dodd-Frank Orderly Liquidation Authority Regime.

Late last Friday afternoon, for example, Bank of America disclosed that it faces $375 billion (although much less in light of this ruling which is not final) in claims that the mortgage backed-securities sold by it and its affiliates included such deep-seated flaws that BOA must repurchase the private label securities. This exposure certainly does not boost their financial solvency. The full BAC 10-Q is available here. Similarly, the Attorney General of the District of Columbia just issued an innovative, even pioneering, opinion that the use of MERS may violate the DC consumer protection statute. This too carries the potential, if followed in other jurisdictions, to severely impact the capital of the megabanks.

I cannot imagine a more timely issue.

1 comment:

  1. I often think about the other side of the equity coin. We read a lot about the banks and what they are doing to try and stabilize their books, what about the homeowners who face destitution due to a crumbling employment market. While banks are scrambling to take control of their downward spiraling non-performing notes, they have all but frozen any normally attainable lines of equity. What happens to the homeowners who needs a little while to organize their own books?

    After B.O.A announced its halt on forclosures which was very short lived, i thought that it might be a glimmer of hope for struggling home owners.

    The answer to this problem cannot be to foreclose on everyone and all will be well. There needs to be a system in place to help those that are legitimately trying to fullfill their obligations.