(10-4-10) The mortgage foreclosure fraud debacle has moved to another level.

According to news reports, Bank of America has joined Ally, formerly known as GMAC, and JPMorgan in stopping foreclosures and evictions in 23 states because the documentation wasn't properly processed. In fact it was in most cases counterfeit and bogus. So what are the implications?

Ultimately the taxpayers are on the hook for all of it because the parties involved are all bailout institutions and they still owe the government money.

This is the problem we hear about intermittently, the nub of it being that the lenders, the banks and other financial institutions in the business of lending money, via mortgages, notes, etc. didn't set up units of their own internally to process the loans and to execute the paperwork to record the individual owners and copies of the individual titles. That was never done.

Instead they outsourced everything. These firms were not necessarily existing firms but newly created companies that could under-bid existing mortgage, loan servicing and processing, and title guarantee companies.