Reply #40: A Third Of Mortgage-Backed Securities May Be Missing The Underlying Note

[Robbien]

Given everything we know about sloppy underwriting standards at the mortgage mills from the middle of this decade, it wouldn't surprise us at all to learn that a lot of crucial mortgage paperwork is just flat out missing.

This issue has been bubbling under the surface for awhile, as some homeowner advocates fight foreclosures on the grounds that the actual paperwork can't be produced.

How big is the problem? Bankruptcy lawyer R. Glen Ayers recently gave a speech saying 1/3rd of all mortgage backed securities may not be connected to a physical mortgage. Sure, they're producing cash flow now. They're connected to a household. But if there were ever need for a foreclosure, it could be much harder than current holders assume. Talk about toxic assets.

http://www.businessinsider.com/a-third-of-mortgage-backed-securities-may-be-missing-the-underlying-mortgage-2009-4


Then there was this article:

The Mortgage Bankers Association did a study in 2008 that found 70 percent of foreclosures were on properties either not occupied by owners, were on borrowers who could not be found or did not respond, or on borrowers who had already had a modification and were defaulting again. Of the 30 percent not in those categories must surely be quite a few of tomorrow's re-defaulters!

http://dealbreaker.com/2009/02/let-it-fall-but-get-out-of-the.php