Florida Housing Crisis Worse Than Great Depression?
Florida Real Estate Goes From Bad to Worse…
Securitized Trusts Face Scrutiny and Housing Crisis Now Worse Than the Great Depression Questions Roy Oppenheim.
Florida real estate is not alone. Serious questions are being raised about the validity and legality of mortgage backed securities, the negotiable instruments at the center of our country’s mortgage boom and subsequent bust.
Now, the state attorney generals of New York and Delaware, the two states whose laws govern the trusts in charge of mortgage backed securities, are investigating whether Wall Street properly bundled and documented the loans that they turned into securities.
The two attorney generals are investigating Bank of New York Mellon and Deutsche Bank, the two largest firms acting as trustees, who were supposed to be responsible for ensuring that the documentation of the securities was proper and complete.
Rules governing the securitization process are very complex, and there are specific steps to be followed to ensure the trusts comply with federal tax laws.
Serious consequences would result if the banks did not follow the proper procedures for establishing a chain of ownership of the loans through the securitization process including the rescission of beneficial tax treatment that trusts are normally given.
These Trusts actually put form over substance to the extent that form is the substance. If the Trustees really did not follow the law, the damages would likely be devastating.
Florida real estate can get worse? The housing crisis that resulted from these mortgage backed securities and Wall Street greed is now worse than the Great Depression.
Home prices have fallen more than 33% since the market began to collapse in 2006, which is more than the 31% hit the market received in the 1930s.
The dip in prices has resulted in historic highs for the measure of home affordability. Still, the brisk rate of foreclosures continues to push more homes into the market, while underwater Florida homeowners are stuck in houses worth sometimes half of what they paid for them.
As long as nearly 4.5 million American households are either three payments late on their mortgage or in foreclosure, home prices are going to continue to fall. Prices are likely to fall another 10-15% over the next two to three years.
From The Trenches,