I am posting this for information only and not as an opinion:

http://money.cnn.com/2010/10/29/news...tate/index.htm

Looks like some have decided to cash in on the high AUD.

I would wait, you will soon be able to buy houses for those prices here soon, when the government gets rumbled as to how much we really owe.

"The houses come with clear titles" - that's where the catch can be.

The growing multi-trillion dollar train wreck in the States concerns just that. After the toxic debt crisis came hundreds of thousands of foreclosures - and it was then found that, partly because of the repackaging and reselling of debts and partly because of the number of debt swaps being processed so quickly that many of the titles haven't been legally transferred.

Banks that have foreclosed are finding that they never had legal title to the collateral: in many cases agents have signed documents "on behalf of clients" - ie., illegally - and the court cases are mounting by the hour.

To make it even worse, many borrowers have discovered that, because of this, if they stop paying the mortgage they can get away with it at least for the time being.

It's a humdinger of a mess and threatens to dwarf the banking crisis.

I saw an Australian couple on TV who had just bought several properties in Florida: I just hope they realise what a gamble it is there at the moment!

How can it be a catch if you have clear title? When you buy in the US you have to pay title insurance as well. I suppose the insurance company can go bust but I think anyone would have a hard job proving you didn't have title.

Do a little search and you will find there have been many fraudulent title exchanges over the last few years. The US administration is in a big dilemma: if it stops any sales and foreclosures because of the illegal and sometimes fraudulent title reregistration it risks precipitating a total collapse, but if it doesn't then there are potentially millions of cases that can be brought.

When everything was - on the surface - booming, and money was being chucked at buyers there wasn't a problem. But when the loans started to go bad, and the "clever" people began dreaming up CDOs and repackaging debts, millions of mortgage instruments and their titles got broken up into packages. Apparently the pace grew so fast that many titles were signed over by agents, who had no legal right to do so. In many other cases everything was electronic, which is a violation of laws. Overall the system has lost definitive track in a legal sense of who actually owns what - and we are talking trillions, not mere billions.

People buying foreclosed properties in the State at the moment can't rely on the foreclosures being legal: the bank might not actually own the title.

And another consequence is that the title insurance companies are baulking at writing further cover: the potential liabilities are far too large.

Watch that space!

This may turn out very interesting. No buyer in their right mind would buy a foreclosure without title insurance. If the insurers refuse to write cover the banks will be completely stuffed as they won't be able to sell their foreclosed property. Maybe the price drops have a way to go yet!

That was one of the things that caused all this. Almost all American borrowers can just stop paying the mortgage, hand back the keys and walk away, with no further liabilities, ever.

Hmmm wonder how many people around the world will lose jobs over this. That 500,000 job cut in the UK may only be the beginning. Weird how everyone else has to pay the costs. Just imagine those poor American high flying bankers wont get their bonus payments next year either.



I doubt if Aus will escape unscathed from this now.