Grayson's Letter On Foreclosures - And A Way Forward

Love him or hate him, here are two points to keep in mind when it comes to Alan Grayson:

He's an attorney.

He "gets it" when it comes to the root causes of Foreclosuregate. It took him a while (too long, in my opinion, even though I've been hammering his office since he was elected and his staff indicated a willingness to listen), but he finally connected the dots.
A letter he sent out yesterday is linked in full at the bottom of this Ticker. Here are the salient points for you to ponder, from my perspective:

So far, banks are claiming that the many forged documents uncovered by courts and attorneys represent a simple "technical problem" with foreclosure processes. This is not true. What is happening is fraud to cover up fraud.

Yep. As Grayson goes on to cite, The FBI noted an "epidemic" of mortgage fraud earlier in the decade. Nothing was done about it. These lenders were engaged not in making mortgage loans but rather in an elaborate asset-stripping scheme where the key point was to force the homeowner back into the lender's office in a couple of years so they could grab another few thousand dollars in fees.

Repayment didn't factor into their decisions and was immaterial to their thought process. FULL STORY

'This is the biggest fraud in the history of the capital markets'

Ezra Klein: What’s happening here? Why are we suddenly faced with a crisis that wasn’t apparent two weeks ago?

Janet Tavakoli: This is the biggest fraud in the history of the capital markets. And it’s not something that happened last week. It happened when these loans were originated, in some cases years ago. Loans have representations and warranties that have to be met. In the past, you had a certain period of time, 60 to 90 days, where you sort through these loans and, if they’re bad, you kick them back. If the documentation wasn’t correct, you’d kick it back. If you found the incomes of the buyers had been overstated, or the houses had been appraised at twice their worth, you’d kick it back. But that didn’t happen here. And it turned out there were loan files that were missing required documentation. Part of putting the deal together is that the securitization professional, and in this case that’s banks like Goldman Sachs and JP Morgan, has to watch for this stuff. It’s called perfecting the security interest, and it’s not optional. FULL STORY