Think about it. According to a recent survey by American Core Logic, one quarter of all mortgaged homes in America today are now worth less than the amount owed on the mortgage. This, thanks to the reckless behavior of the banking industry. Which means that the tens of millions of homeowners in that situation, along with the tens of millions more who have seen the value of their property plummet, could just march into their bank, demand to see their mortgage repayment note, and, if it's not produced, quietly go back home, bolt the door, and stop paying off that mortgage.
Wouldn't that provide one hell of an economic stimulus! For me, it would mean about $1400 a month in extra cash to spend every month. What a way to create boom times for the US economy! -- and at the same time get revenge on the banksters who caused the problem in the first place! (What a nightmare scenario this must be for them.)
Could that be why the stock market swooned recently, dropping 1.5% like a rock on news that a group of rather prominent investors who had bought $47 billion in mortgage-backed securities from Bank of America were demanding that the nation's biggest bank buy this junk back? Those junk securities were issued by Countrywide Financial, which went bust and was taken over by Bank of America, and the securities are basically worthless today, so buying them back at face value would be a huge blow to BofA, whose shares slumped 4.4% on news of the bondholders' demand. Here are the details:
Bank of America pressured to buy back Countrywide securities because loans were improperly serviced
Bank of America Corp. has been hounded for months by demands to repurchase billions of dollars in mortgage-backed securities. On Tuesday, the Federal Reserve Bank of New York emerged as one of the sources of this pressure.
The New York Fed is part of an investor group that owns more than 25% of the voting rights in about $47 billion of residential mortgage-backed securities issued by Countrywide Financial, the home loan giant that Bank of America acquired in 2008.
On Monday, the group wrote to Countrywide Home Loan Servicing and Bank of New York Mellon Corp., the trustee of the mortgage securities, saying they haven't been properly servicing the loans backing the securities.
The investors asked Bank of New York to demand the repurchase of loans that were originated "in violation of underwriting guidelines," according to a statement Monday by Kathy Patrick of law firm Gibbs & Bruns, which is representing the group.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
4
4
3
