I borrowed my title from an article series on CBS Moneywatch. I can’t improve on it. It covers eloquently and briefly the situation.

Here’s the lead paragraphs from the article –

After three years of terrible news about the housing market, you’d think it couldn’t get much worse. But over the past week, a whole new can of awful has opened up. It turns out that the banks who lent money with reckless abandon during the real estate bubble were just as incompetent on the way down as they had been on the way up. Big lenders and mortgage servicers have been forced to acknowledge that, as they rushed to foreclose on hundreds of thousands of properties, they didn’t always check to make sure that they actually held the mortgages.

In one case, a Florida man who had paid cash for house was foreclosed upon for defaulting on a loan he never took out. In other cases, mortgage documents have been forged. So-called “robo-signers” have been churning out affidavits without checking to see if they are true. In response, foreclosures are all but frozen in 23 states, House Speaker Nancy Pelosi has called for a federal investigation, and attorneys general around the country are seeking to halt foreclosures. One major title insurer has announced it won’t insure homes foreclosed upon by J.P. Morgan Chase. That may sound like a technicality, but if the trend spreads, it could send the housing market into a tailspin.

CBS provides a slide show to give you a quick overview of the crisis. I recommend it.

Do not read the comments on the CBS web site! Trust me. Life is too short for that kind of reading.

The CBS report is a seven parter. If you are interested in how this came about and what is likely to happen, it is the best thing at the moment. I’m sure as time goes by, we’re going to get some better stuff because we’ll have more information, but CBS was first and it’s a good job.

James Pilant