An optimist might argue that the whole mortgage-putback crisis is way overblown based on the idea that mortgage-putbacks are nothing new, and that historically they’ve been fairly small and manageable.But historical patterns are no guarantee of future results, and in this case that’s especially true.
Yesterday Kate Kelly at CNBC reported that a group of investors, including hedge funds and insurance companies met in NYC to discuss the situation, and plan their next line of attack on the banks.
Quite simply: investors have been galvanised into action like never before. This issue of motivation is important. A key thing to know is that for investors in a mortgage pool to take action they need to gather 25% of the voting rights. That’s not been trivial in the past, but it’s obviously getting easier.
As John Carney at CNBC explains, the foreclosure-gate situation, and new questions about the proper paper trail, has obviously helped. Other reports, such as this one from Felix Salmon about possible fraud in selecting pools of mortgages, have also helped galvanize investors.
So the bottom line is that the old pattern and rhythm of mortgage putback demands has clearly been broken. Anything goes now.