Masters of the Universe
2010-10-21 - by
There ought to be a play in the theatre of the absurd about Wall Street: After making trillions in bad loans, and then getting bailed out by taxpayers, the banks and finance companies are staring into the abyss again: This time because foreclosures have ground to a standstill.
And the reason (Wall Street is – temporarily – out of the foreclosure business) is ripe with irony.
It seems to foreclose on some poor Joe’s home, mortgage lenders have to prove they own the note. But over the past few years Wall Street’s been so busy bundling mortgages and selling and reselling them (and earning a commission each time) the ‘chain of ownership’ of the notes is no longer clear.
Not being a Harvard MBA I’m not entirely sure but it sounds like what happened worked like this: Bank X (say, five years ago) made a loan. Then it lumped the mortgage with a hundred other loans and sold them in a package to a Hedge Fund.
At that point Bank X was out of the picture – except for servicing the loans.
Masters of the Universe
2010-10-21/
There ought to be a play in the theatre of the absurd about Wall Street: After making trillions in bad loans, and then getting bailed out by taxpayers, the banks and finance companies are staring into the abyss again: This time because foreclosures have ground to a standstill.
And the reason (Wall Street is – temporarily – out of the foreclosure business) is ripe with irony.
It seems to foreclose on some poor Joe’s home, mortgage lenders have to prove they own the note. But over the past few years Wall Street’s been so busy bundling mortgages and selling and reselling them (and earning a commission each time) the ‘chain of ownership’ of the notes is no longer clear.
Not being a Harvard MBA I’m not entirely sure but it sounds like what happened worked like this: Bank X (say, five years ago) made a loan. Then it lumped the mortgage with a hundred other loans and sold them in a package to a Hedge Fund.
At that point Bank X was out of the picture – except for servicing the loans.