Sunday, September 18, 2011

Bankster-Created Housing Market Mess Leads To Improper Home Loss For Many, Pension Hit For Others While Some Get Belted On Both Ends

The New York Post reports:

  • It’s the flip side of foreclosure fraud: Not only is the city fireman in danger of losing his home, he also might wind up with smaller retirement checks because his pension invested in home-mortgage-backed bonds that were bundled and sold off by banks during the real-estate bubble.

  • Pension funds, insurance companies, university endowments, charities, community banks and other investors are believed to be out hundreds of billions of dollars because of the mess big banks made of the housing market.

  • Although lawsuits against banks are mounting, the disputes over the almost $1 trillion in mortgage securities may take years to resolve -- and most investors are likely to wind up with only cents on the dollar.

  • It comes out of our pockets,” says Peter Henning, a Wayne State University law professor and securities-law expert. “No one reached into your wallet and took out cash, but it impacts all of us. If you’re a mutual-fund holder with a bond fund, you’ve probably taken a hit. Insurance companies have losses, and that cost has to get passed on.”


  • Every layer of this onion you peel is rotten,” says Talcott Franklin, a Dallas lawyer who is representing the 129-year-old Catholic charitable organization, Knights of Columbus,(1) and other investors in lawsuits against banks. “It’s hard not to feel wronged.”

For more, see $1T in sour notes (Banks being squeezed by mortgage investors).

(1) For more on the Knights of Columbus case, see Investor Files Amended 'Securitization Screw-Up' Suit; Believes Bankster's Knowing Bungle In Mortgage File Exchange Led To Purchase Of 'Unbacked' MBS.

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