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The problem with the mortgage market is the amount of misinformation that permeates the industry. A perfect example is with the new Fitch report that claims “investors” are in a decent situation when buying RMBS’s. The issue is not with the purchase of mortgage bonds, the issue is with selling bonds. Fitch claims.
“The CRA states that investors will likely be exposed only to maximum statutory damages of $4,000 plus legal fees, consumer claims in defense of foreclosure may occur in judicial states as the consumer will be working with an attorney. Defensive claims in non-judicial states or affirmative claims in any state are less likely.”
That line of thinking isn’t helping companies like W.J. Bradley, who’s now out of business, for this very bottleneck. Fitch states that the statuary damages “may not” exceed “$4,000,” yet until government administrators put this in writing, mortgage liquidity will continue to set like concrete.
The industry needs to know exactly where they stand when writing loans, not where they may stand. More to come on this issue.
