Bank of America delays foreclosures in 23 states

Bank of America is delaying foreclosures in 23 states as it examines whether it rushed the foreclosure process for thousands of homeowners without reading the documents.

Hi Eric:

Question as to your opinion on the fall out of foreclosure suspension due to faulty paperwork. Will this ultimately lead to reduced mortgage amounts to borrowers and what will happen to the secured bonds issued by Wall Street in which these properties were collateral? Will this ramp up bank failures?

Question #2 is somewhat related. If widespread bank failures increase where would you feel we should keep our cash for daily living transactions such as groceries and doctor visits. I know you don’t make recommendations but could you give us some options?

Thanks,
Daniel

Daniel,

Securitization of mortgages allowed risk and reward to be sliced and diced into packages to the global investment community. This opened the door to the "breathe on a mirror" application process. That is, anyone able to breathe on a mirror was able to secure a loan. Faulty paperwork was inherent byproduct of this greed-driven process. When the musical of the credit game of musical chairs finally stopped in 2008, the faulty paper, began seeping to the surface through the legal process.

What does it mean? It means quantitative easing part 1 and 2 to infinity, possibly in the form of government sponsored or supported mortgages through the now defunct GSEs - Fannie Mae and Freddie Mac. Why? The problem is simply too large and corrupted to permit a through examination as far as the US dollar is concerned.

Any ‘official solution’ will be designed to allow an acceptable and manageable bank failure rate. A similar rate we see today.

Smart investors know that quantitative easing (part 1 and 2) to infinity means global currency devaluation. Those seeking to maintain purchasing power during periods of aggressive currency devaluation seek refuge in gold and silver. The faster confidence deteriorates, the stronger the push for a new currency. History clearly suggests that gold (and lesser degree silver) have always filled the void during transitions.

RY,Eric

Source: news.yahoo.com