We The Sheeplez- The Coming Economic Collapse.."A Nation Of Sheep Ruled By Wolves" Thomas Jefferson

Monday, November 22, 2010

Countrywide’s Mortgage Document Errors May Doom Bank of America

Posted: Nov 22 2010 By: Jim Sinclair Post Edited: November 22, 2010 at 10:17 pm
Filed under: In The News

All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation.
–John Adams

Dear CIGAs,
How many times have we discussed the fact that securitized mortgages are not that at all? The collateral supposedly behind these OTC derivatives simply does not exist in the legal sense.
This problem is bigger than anything we have seen so far. The ramifications are far reaching. Think pension funds on this one.
Now people are waking up to this major financial problem which we knew about years ago. This was reported here on JSMineset in 2008 when we discussed the emergency meeting called by the New York Fed supposedly because of back office problems on securitized mortgage debt.
This is not only the Bank of America, but every manufacturer of toxic OTC derivatives called securitized debt instruments.
QE to infinity is the only politician’s tool to kick the can down the road at the cost of hyperinflation. The can will get kicked.
Gold will trade at $1650 and better.

Countrywide’s Mortgage Document Errors May Doom Bank of America By ABIGAIL FIELD
Posted 1:30 PM 11/22/10
Testimony in a New Jersey foreclosure case decided last week may spell big trouble for Bank of America (BAC). If what one bank employee said on the stand proves to be accurate, paperwork problems it acquired when it purchased the failing mortgage provider Countrywide in 2008 could leave BofA on the hook for billions of dollars.
Linda DiMartini, a supervisor and operational team leader for the Litigation Management Department of BAC Home Loans Servicing, testified in the foreclosure case of John T. Kemp that it was "customary for Countrywide to maintain possession of the original note and related documents."
If that’s true, then Bank of America may discover that it has millions of loans on its books that it thought it had transferred to trusts that issued mortgage backed securities, because 96% of Countrywide loans were ostensibly securitized. As the Congressional Oversight Panel explained, that outcome alone could cause massive damage to a bank’s balance sheet. And as bad as that would be, it isn’t the only problem that could result from Countrywide hanging on to the notes.
If the mortgage-backed securities aren’t in fact "mortgage-backed," investors who bought them could be able to force BofA to buy the securities back. A significant number of buybacks could on its own destroy BofA’s balance sheet. Nor could BofA stave off either outcome retroactively by delivering those notes today. First, the contracts that created the trusts would typically forbid transferring the loans into the trusts now. Second, even if somehow that could happen, such a transfer would destroy the special tax status the mortgage backed securities enjoy and give the investors a different reason to put back the securities or sue over them.
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Jim Sinclair’s Commentary

I am bullish on gold, but let’s hope this price objective is a tad rich.

Lear Capital: Could An Ounce Of Gold Be Worth Trillions One Day?
Posted 11/22/2010 4:13 PM by Lear Capital
In a really bizarre moment in history, a single American dollar was actually worth 4.2 trillion German marks.
It really happened. To fund its mega-expensive World War I effort, Germany severed the tie between its mark and gold — something that’s always happened, sooner or later, with government-generated currency.
Today there are no gold-backed currencies in the world.
After 1914 in Germany, the mark became just another fancy piece of worthless paper. No longer tied to gold, there were no longer any limitations on how many marks could be printed. But no worries, either — the patriotic German populace somehow believed everything would work out fine as long as Germany won the war. Because the winners of wars, everybody knew, always dictated the terms of surrender, including — and especially — the economic terms.
The trouble was:
GERMANY LOST THE WAR
By the end of the war in 1918, Germany was a real mess. The Treaty of Versailles imposed steep war reparations, and that did nothing to strengthen a German Reichmark no longer backed by gold or anything else for that matter.
Confidence in the mark continued to nosedive, especially under a deluge of post-war government spending in many new social programs (sound familiar?). But Germany couldn’t spend its way back to normal — no country can pull that off — and confidence in the post-war currency continued to plummet.
By 1922, just four years after the war, Germany’s inflation pest had turned into a gigantic hyperinflation monster.
More…

Weimar hyperinflation "When Money Dies" PDF file