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Strategies & Market Trends : John Pitera's Market Laboratory

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From: Hawkmoon	9/24/2009 11:26:28 AM
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Anyone here been reading about the Kanasas Supreme Court ruling on foreclosures?? Pretty exciting stuff!! The ruling effectively nullifies bank's ability to foreclose on about 60 million homes because they are no longer party to the mortgage contract. trueslant.com globalresearch.ca rbguy.dailykos.com The way I interpret it, the CDO/CMO Special Purpose Entity (SPE) structure was not properly set up to transfer legally enforceable property rights. They certainly have no standing in court. This means the banks sold a fraudulent product and wrapped them up in CDO/CMOs with no legal standing to enforce foreclosures. Which seems to mean that the CDO/CMO entity, and/or holder, can either demand different collateral from the banks (since the mortgage notes, themselves, act as collateral against cash flow into and out of the SPE), or they can dissolve themselves. Thus, effectively speaking, it truly calls into question whether CDO/CMOs are legal entities with enforceable rights. It also makes one wonder if those CDS's bought/written on CDOs/CMO are enforceable. But more importantly, if the structure was not legal, then what obligation do the mortgage insurers like ABK/MBI.. etc have to pay out? If the structure was set up in a legally flawed manner than makes it impossible to foreclose, and didn't assign property rights to the CDO/CMO then do the insurers have to pay out? Hawk

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