September was a bad month for foreclosures.
...the foreclosure crisis reasserted itself in September, setting a one-month record for filings in Wisconsin.
But that's hardly the end.
...Jacobsen said there will be ups and downs in foreclosure counts month by month while the housing market and economy slowly recover. One thing that might lower the count in the near term is a move by some major mortgage lenders, including JPMorgan Chase & Co., Bank of America and GMAC's mortgage unit, to delay foreclosures while they check whether their legal documents for taking back homes are in order.
(And they didn't mention M&I, which has been extending its foreclosure moratorium for 9 months or so.)
But that Chase/GMAC/BofA problem is not so simple as 'checking their paperwork.' It appears that the "paperwork problem" is far worse than that. FAR worse--terms like "fraud" are being used by some commentators. It may come to pass that the originators of those loans are forced to eat them--meaning that those Banks (and many, many, others) will need $$umpty-billions in new capital or they will go banko themselves.
Think TARP II.
UPDATE: Here's Ritholtz' take on the upcoming MERS Mess: (and there's a LOT more at the link)
...at every step along the process, the reckless rush for easy profits has systemically undermined these legal property rights — how mortgages are recorded, the bungled bundling of notes to be securitized, the electronic system that fictionalized the process of assembling transfer documents, and how all the players along the way — The investment firms, banks, law firms, even court system, utterly lost sight of what they were doing.
This will not end well.
For those following along at home, familiarize yourselves with the acronym "REMIC", as it will soon come into play in the broadcast financial media. (And you thought you had it mastered when you figured out what a credit default swap is.....
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