Monday, November 02, 2009

Foreclosures, the Caymans, and You

I still haven't really figured out exactly how the subprime meltdown really happened, even though I knew it had something do do with the Cayman Islands, which are not subject to U.S. tax law or regulation. What I didn't know, was that many of the mortgage backed securities ended up being owned by financially struggling governments in Romania, Bulgaria, Slovakia and Slovenia. Anyway, you might want to read the article (more here) how Goldman Sachs dumped its really bad mortages into the market after arranging for them to be highly rated.

One thing I have learned in the past few days: if a house is about to go into foreclosure, it might be best for the homeowner to hang on tight and not give up too quickly. With so much trading of mortgages, apparently there are numerous instances where mortgage holders simply can't find the proper documents to establish a legal claim to property. While I would imagine those papers will show up eventually, it might provide homeowners enough breathing room to sort things out. Of course, if the homeowners give up too quickly, the banks may win even though their houses are not in order. What a mess we have on our hands!


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