Dee, the servicers will be eviscerated by Wall Street banks and assets (I believe) will disappear into a cloud of paper confusion when that happens. (American Home Mortgage is an example....this story makes me imagine a goldfish surrounded by circling piranhas with a courtroom serving as their bowl....)
"The clamor from lenders is complicating American Home's attempt to liquidate its assets in an orderly fashion, the attorney, John T. Dorsey said at a hearing in the U.S. Bankruptcy Court in Wilmington, Del.
One of the country's largest home lenders, American Home filed for Chapter 11 bankruptcy Aug. 6, with plans to shut down its business under court protection. Those plans, Dorsey told the judge presiding over the case, did not include "running in here every day" to fend off lenders anxious to grab their collateral.
On Friday, Impac Funding Corp. and Deutsche Bank's DB Structured Products Inc. initiated actions similar to those already begun by Morgan Stanley and Credit Suisse First Boston.
On Thursday and Friday, Melville, N.Y.-based American Home clashed in court for hours with CSFB, which was trying to get permission to immediately seize $46 million worth of home loans. American Home goes up against Morgan Stanley Tuesday in a battle for control of $519 million worth of home loans owned by Morgan Stanley, but serviced by American Home.
Dutch bank ABN Amro has also filed papers staking a claim to $146 million worth of mortgages that American Home is servicing.
Dorsey, who is with the law firm of Young, Conaway, Stargatt and Taylor, asked the judge overseeing the case, Judge Christopher Sontchi, for "breathing room," as the company prepares for asset sales in bankruptcy while jousting with major lenders.
The automatic stay of bankruptcy protects distressed companies from abrupt demands by creditors. Big investors in the mortgage boom of recent years, however, structured their deals with lenders like American Home so that they could move quickly in the event of a bankruptcy and reclaim the mortgages that were made with their money."http://biz.yahoo.com/ap/070820/american_home_mortgage_bankruptcy.html?.v=1
American Home Mortgage does not appear to be on our list of "evil ones". So we must assume that this servicer did its job properly and did not rape people just because they could. Because they were surviving on the meager servicing fees, they were unable to withstand the drying up of the revenue stream. And you can see how the big banks covered themselves in these deals...they are disgusting in their greed.
So, one may think that the honest servicers will be the first ones to go. The more crooked they are, the longer it will take to "kill" them since they have pillaged for profit that they did not deserve and thus have more reserves. Shameful, indeed.
Suing hedge funds? That will happen. But shoot, let's just skip them and go right to the source of the problem, lol:
"The regulators and the entire Congress are at risk of being sued by the general population in America, but most particularly by a class of homeowners/debtors for having failed and allowed the massive fraud which has been unfolded by very powerful grassroots investigators.
One small group is looking to amass an army of lawyers to file a $50 trillion dollar suit naming the Department of Justice, thousands of negligent FBI agents, the Securities & Exchange Commission and their three thousand lawyers for the trillion dollar fraud, but not a single lawyer in the country can stand up for this without being blacklisted.
“The darkest shadows currently hanging over the US mortgage industry are about liquidity, or the lack thereof, as a result of the corrupt accounting practices at such places as Fannie Mae, Freddie Mac, Washington Mutual, and Countrywide Financial” according to one investigator who says that “all four of these once stalwart pillars of phony money politics are being severely scrutinized newly after many years of government settlements by both Fannie and Freddie, new massive fraud allegations in the trillion dollar debacle have resurfaced.”http://www.americanchronicle.com/articles/viewArticle.asp?articleID=35705
I am sure that the yellow cowardly lawyers will hide like rats where this suit is concerned so it will never happen. But it doesn't make me stop thinking that this suit is exactly what SHOULD happen.