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That is a very interesting article. I dont profess to understand your property law but if what the article says comes to pass then these mortgage backed security's that have had their value questioned will have their value set at zero. Question answered. What though is the obligation under the sale of the security for the issuer to "guarantee" the value of the security. I kind of doubt the ability of the holder to sue the issuer when any investment can well go to zero and the issuer by setting the return so high was in fact sayig something about the risk of the investment. It could be that all that paper evaporates and those folks have their mortgages paid in the end.
Yeah that would have a huge impact on the investor and lawyers as usual will do real well but it would have no real impact on the security position of a "traditional" mortgage. Simply on the lenders ability to lend assuming they get to keep the cash they were paid for the security.
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