Are All Deeds Since 2005 (Not Just Foreclosed Ones) At Risk?

I was listening to a radio program this week (The Kojo Nnamdi show on WAMU in Washington, D.C.) and the topic was–what else–the foreclosure crisis and robo-signing. OK, I thought, this might be interesting. And it was. Not from Kojo’s guests–who were OK but pretty predictable–but from one of the callers. It was a guy named Matthew (who I think is Matthew Weidner, a Florida attorney) who raised a scary point about the foreclosure mess.

Incidentally, Matthew Weidner’s blog has all sorts of fascinating information on it. Some of it’s a bit technical, and some of it’s Florida-specific (that’s where he is), but it’s worth looking at.

While robo-signing is the most recent problem to arise, a deeper problem is all the paperwork that accompanied all the purchase and sale transactions since about 2004 or 2005. Basically, the paperwork is a mess–severely flawed–since all those loans were sliced and diced over and over again to sell to investors. Heck, I even blogged about that–a book review called The Big Short by Michael Lewis. [Tip: Buy it. Read it.]

But caller Matthew’s point was that none of these properties–foreclosure or not–really can be said to have clear title. The paperwork’s bad on all of them. He called this “the elephant in the room” that no one wants to talk about. And, obviously, for good reason.

A lot of the problems with the foreclosure paperwork are coming to light because one of the parties (the owner) is highlighting the problem and using it to block further action. You don’t have the same situation in cases where you’ve got a willing seller, a willing buyer, and no bank in the middle of that transaction.

However, just because no one’s raising a fuss doesn’t mean the problem doesn’t exist. And as those rocks start getting turned over and the worms start wiggling out, someone’s going to notice that a lot of those worms are crawling out from supposedly “clean” sales.

What Are YOUR Myths About TARP (The Financial Bailout)?

Sunday’s [October 10] Washington Post (editorial section) has a piece “5 Myths about TARP.” Now, I generally like the Post’s “5 Myths . . . ” series. Except when there’s a clear ulterior motive and the mythbuster has an ax to grind. In this case, “5 Myths about TARP” is written by none other than Timothy Geithner, current Secretary of the Treasury and former president of the Federal Reserve Bank of New York. Not exactly an unbiased or critical source.

Geithner’s “5 Myths” are:

1. The TARP cost taxpayers hundreds of billions of dollars.
2. The TARP was a gift for Wall Street that did nothing for Main Street.
3. The TARP was a quick fix for the market meltdown but left our financial system weak.
4. The TARP worsened the concentration of the banking sector, leaving it more vulnerable to another crisis.
5. The TARP was the centerpiece of a strategy by President Obama to assert more government control over the economy.

I won’t even critique Geithner’s article to cite its inconsistencies. (Well, OK, just one. He notes in Point 3 that “Of the 15 largest financial institutions before the crisis four are no longer independent entities” and in Point 4 that “It is true that the financial system is more concentrated today than it was before the crisis.” Yet Myth 4, inexplicably, is “The TARP worsened the concentration of the banking sector.”)

Most of us may not have the resume of Mr. Geithner. But I suspect we have some real-world experience and some up-close-and-personal knowledge that the Secretary of the Treasury/Former Federal Reserve Bank of New York president may not have. Plus the common sense to be able to separate myth from reality.

So, let’s add to the list of myths about TARP [Troubled Asset Relief Program]. Or–more appropriately–create our own “X Myths about TARP.” What myths did the honorable Mr. Geithner somehow overlook that really should have been included in a listing of myths about TARP?