A 'Countrywide' Problem

The question becomes: which is worse - a security backed by property that is declining in value and often defaulted on, or a security backed by.. nothing?

"This is in keeping with the judge’s recap, and also underscores the notion that it was Countrywide’s practice to not convey the notes. We have been told separately that a senior industry executive also said that no one in the industry transferred the notes. If true, this has very serious implications. As we’ve indicated, it means that residential mortgage backed securities are not secured by real estate, or as Adam Levitin put it, they are “non mortgage backed securities. Bloomberg provides further comments along those lines:

“It may mean investors who think they bought mortgage- backed securities bought securities that aren’t backed by anything,” said Kurt Eggert, a professor at Chapman University School of Law in Orange, California."

http://www.nakedcapitalism.com/2010/11/more-on-bofa-employee-damaging-admissions-re-failure-to-convey-mortgage-notes.html