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11.20 The arts have a leading role to play in tackling climate change [We have to stop killing everything!!!]

11.20 Indonesia: dead whale had 1,000 pieces of plastic in stomach [We have to stop killing everything!!!]

11.18 How Extreme Weather Is Shrinking the Planet

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11.17 Policies of China, Russia and Canada threaten 5C climate change, study finds [Climate catastrophe is increasingly likely without worldwide organization, funding and commitment to winning THE WAR AGAINST GLOBAL WARMING.]

11.16 Scotland was first Industrialized Country to Run wholly on Wind in October

11.16 How pesticide bans can prevent tens of thousands of suicides a year [how many thousands more die early from eating pesticide-laced food?]

11.15 The Earth is in a death spiral. It will take radical action to save us [fossil fuel burning, un-recyclable plastic production/use and methane gas release must cease ASAP.]

11.15  The long read:  The plastic backlash: what's behind our sudden rage – and will it make a difference? [the world wants to throw-up...]

11.15 Claws out: crab fishermen sue 30 oil firms over climate change [workers are waking-up...]

11.15 Trump administration to cut air pollution from heavy-duty trucks

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11.19 The Biggest Threat to Free Speech No One Is Talking About

Daily: FAIR Blog
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11.21 With Statement Equal Parts 'Dangerous' and 'Imbecilic,' Trump Smears Khashoggi and Vows to Back Murderous Saudis [Keeping oil prices affordable prolongs its use, its burning and our dying]

11.21 Sen. Cindy Hyde-Smith's Demands for Runoff Debate So Ridiculous, Viral Story Crashes Local Paper's Website

11.20 'Get Our Country Off Fossil Fuels': Demanding Green New Deal, Youth Climate Leaders to Flood Congressional Offices Nationwide

11.20 New York City subway and bus services have entered 'death spiral', experts say [death spirals are the end-thing nowadays]

11.19 Last Week Tonight with John Oliver 11/18/2018 (HBO) [29:26 video]

11.19 Michael Bloomberg: Why I’m Giving $1.8 Billion for College Financial Aid

11.19 Trump’s Diminishing Power and Rising Rage

11.19 Trump Says He Was 'Fully Briefed' and Also 'Not Briefed Yet' But Either Way Saudi Crown Prince 'Absolutely' Not Involved Because Trump Knows 'Everything That Went On' Without Listening to Tape of Khashoggi Murder

11.19 'We Need New Leaders, Period': Progressive Newcomers Urge Democrats to Embrace Bold Agenda or Face Primary Challenges [Current Democrat leaders are highly compromised by corporate donations]

11.19 SNL explains Jeff Bezos and Amazon’s HQ2 strategy: trolling President Trump [2:55 SNL video]

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11.21 Acting Attorney General Matthew Whitaker got $1.2 million from non-profit that won’t disclose its donors [Mafia rule...]

11.20 'He may not rewrite immigration laws': Trump's asylum ban blocked by federal judge [Has anyone thought about putting razor-wire around the White House?]

11.20 Legal Blue Wave? New Democratic AGs Could Change the Face of Climate Fight

High Crimes?

11.21 Saudi Arabia Accused of Torturing Jailed Women’s-Rights Activists [Trump's great friends...]

11.14 The Guardian view on Yemen’s misery: the west is complicit [WAR CRIMES]

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11.21 Nationalize California’s Pacific Gas & Electric

11.19 Bankrupt Sears wants to give executives $19 million in bonuses [blatantly immoral and sick to richly reward those who led the company into the bankruptcy]

11.18 Big Pharma Bankrolled Pro-Trump Group As Trump Pushed Pharma Tax Cut [Corruption Central!]

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11.21 'Who let this happen?': students rediscover antisemitism on Auschwitz field trip

11.21 Climate activists block London bridges in 'swarming' protest – video

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11.20 Trump administration hawks putting US on course for war with Iran, report warns [“Stupid is as stupid does.” –Forrest Gump]

11.18 New Evidence Emerges of Steve Bannon and Cambridge Analytica’s Role in Brexit

11.18 France demands UK climate pledge in return for Brexit trade deal [Excellent!]

11.17 Saudi crown prince's 'fit' delays UN resolution on war in Yemen

11.17 Thousands gather to block London bridges in climate rebellion [We're losing WWIII because the enemy is invisible while we're like frogs slowly cooking. We aren't informed enough to be alarmed, but must get organized and motivated to fight back. We need a War Plan to ruthlessly pursue the fight of our lives!]

11.17 CIA finds Saudi crown prince ordered Jamal Khashoggi killing – report

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  Print view: Thinking About Closings
COMMENTARY:

Thinking About Closings

by Fred Cederholm
The mortgage processing system is broken. Many delinquent homeowners are taking advantage of the mess and living extended periods of time in the would-be foreclosed properties without paying a dime.

I’ve been thinking about closings. Actually I’ve been thinking about the housing mess, due diligence, the paperwork, “perfection,” mortgages, passing the BUCK(s), and the lengthening foreclosure timeframes. The US housing crisis is still with us. Homes are not selling. Many are NOT even being placed on the market. The inventories of unsold housing stock are growing by far much more than we TH*NK because we have NOT been told the whole story. I am NOT certain the story can be fully told to us at this point in time because the policy makers don’t even understand the breadth and depth of the problem. The normal rules of supply and demand in determining the price of homes no longer apply... well, in essence they do, but not for the reasons one might usually expect.

You see we are now getting deeper into “a blanket moratorium” on the flow of yet more available properties being offered for sale in the market. There is pretty much a nationwide freeze on foreclosures. A big number of homes are underwater... meaning more is owed on the mortgages than what the property is presently worth. Estimates are as high as 40% on homes with mortgages! Officially unemployment stands at 9.6%, but we know the real number is well more than double that. Despite the literal TRILLIONS of newly printed “bailout dollars,” new credit extensions to the general public have not increased – they have declined. For whatever the reason, money’s NOT available to make mortgage payments. Under normal circumstance when arrears go so far, the lender takes back (as in forecloses) on the property and re-offers it for sale. Problem now is who owns the mortgage?

When a property sale is made, the buyer and seller meet with their representatives at “a closing.”

Before this critical event, due diligence (or rather a verification of status) on the property is performed. Is the seller the rightful owner? Have the RE taxes been paid? Is any prior mortgage paid off (or will be paid off with checks at the closing? What, if any, outstanding liens remain in effect? Is there a title (insurance) policy in effect? Are there documents ready to replace any prior liens with updated ones for the appropriate authorities to reflect any change of ownership? This process is known as “perfection.” Remember also that when a mortgage is involved the purchaser is effectively “renting” the property from the lender for the term of the mortgage. The rent is the interest to be paid over the time of the mortgage. All this sounds simple enough... that is IF all the I’s are dotted and all the T’s crossed.

Over time it has become “the tradition” in RE transactions for the mortgages to be sold, re-sold, re-re-sold, and maybe even re-re-re-sold. Mortgages, in theory have value, and can be marketed to investors in the CDO’s (collateralized debt obligations) or MBS’s (mortgage backed securities). These are paper transactions, but each such sale/ flip/ syndication requires the seller of the “paper” to undergo a closing with the new “paper” buyer --- like the closing at the original closing when the real property changes hands. All requirements of the initial closing apply. Check. Check. Check. Check. And Check.

This should be straight forward IF all I’s are dotted and all T’s are crossed. But, if A sells to B, who sells to C, who sells to D, who may then sell to E; if there is an oversight (make that a mistake) made anywhere in this stream of transactions, a valid transfer of ownership has NOT taken place, and a provable claim against the property (make that a foreclosure) cannot be made. There has been no “perfection.” We are now learning that the appropriate due diligence on tens of thousands (maybe even hundreds of thousands) of delinquent mortgages was not done. Legal actions to foreclose are being thrown out of court because of the deficiencies. The bankers or the present “holders” of the so-called financing paper are out of luck in the foreclosure proceedings until they get all their ducks lined up and these ducks are quacking in full harmony. This is going to take time. This will take a lot of time.

Now we are beginning to see bunches of finger pointing and still more “passing of the BUCKs!” Was it fraud, incompetence, or greed that triggered the flood of systematic errors? I suspect some of each is at work here. The system is broken. Many delinquent homeowners are taking advantage of the mess and living extended periods of time in the would-be foreclosed properties without paying a dime. They don’t care about the broken system as long as they have a (temporarily free) roof over their head(s). Then too, they are seeking help and redress from the government. But... is THAT fair to those who are meeting their obligations, and never got overextended in the first place?

The expected foreclosure time frame has expanded from roughly a half year to well over a year-and-a-half (or longer). These homes are NOT presently considered in the market mix and will not be for quite some time. When they hit, they will further depress an already saturated housing market across the country, and selling prices will further decline. The real estate debacle is a central component of our current economic drama. Closing will not occur until we know of the full inventory of properties available in the market. These foreclosures, together with the new construction, the OREO’s (foreclosed real estate already held in inventory by landing institutions), and the normal body of properties offered for sale all hit the market at one time. Only then will we see a true valuation of the real estate, and the closure process for this huge segment of our ongoing malaise can begin in earnest.

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.


Copyright 2010 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.



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This story was published on October 18, 2010.

 

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