DC Waking Up to Escalating Foreclosure Train Wreck: Grayson Calls for FSOC to Examine Foreclosure Fraud as Systemic Risk

Some more analysis of the foreclosure fraud crisis by Yves Smith at Naked Capitalism.  She cites comments from industry insiders as well.

Wow, someone in DC has connected the dots: that the banks’ failure to adhere to contractual and legal requirements in the residential mortgage backed securities market are so extensive and widespread as to constitute systemic risk. Alan Grayson, Congressman from Ground Zero of the foreclosure mess, is calling on the Financial Stability Oversight Council to investigate the escalating foreclosure fraud crisis.

Although the data points we have seen so far could be considered anecdotal, we have evidence that strongly suggests that major RMBS originators, the investment bank packagers, and the bank trustees failed to convey the notes (the borrower IOU, which is critical to having the legal standing to foreclose in 45 states) to the RMBS trusts starting in 2005, perhaps even earlier. And comments from industry insiders suggest this problem is pervasive. …

Yves gives 4 scenarios as to how this whole mess may play out.  Check out the entire article here.