Landmark

This is potentially a game changer.The Kansas Supremes have opined in Landmark v. Kesler that splitting the note and deed of trust, and other practices common to mortgage securitization, basically make it impossible to foreclose on a mortgage. (http://en.wikipedia.org/wiki/Landmark_National_Bank_v._Kesler)

Obviously there are winners and losers. Banks, pension funds and so on who hold the securities are obvious losers. So might the Fed be if this is upheld on its almost* inevitable appeal. As for winners, this reminds me of neighbors getting together in the '30's and bidding a dollar at their friends' foreclosure auction, then giving the property back. Unfortunately, even if the bank survived, it wasn't very likely to lend to the farmer for seed, fuel and fertilizer the next year.

In any case, my earlier opinions that the liquidation value of Mortgage Backed Securities exceeding their street price are invalid if there is no ability to liquidate. In fact, given the value would then depend on payments from mortgagees who may feel them optional makes even the street price look suspiciously rich.

*Almost inevitable appeal. The loser in the case might decide that the legal points raised in Kansas, and the sloppiness of the underwriting generally call for limiting losses. How many securitized mortgages ARE there in Kansas?