Marcy’s hypothesis about Fannie and Freddie’s deal with the title insurance industry appears to be coming to fruition, but let’s look at what this means in practice. The title insurance industry wants servicers – mostly divisions of the big banks – to indemnify them if any problems arise in post-foreclosure sales. That’s basically the entire deal.

If someone wants to tell me how this protects the banks from consequences of their errors, they can tell me. As I read it, the banks would be liable for picking up the title insurers’ expenses in the event of those errors.

You can argue, as Marcy and some others do, that Fannie and Freddie was uniquely positioned to investigate the foreclosure process, or put it on hold. I don’t really see that. I see Fannie and Freddie as businesses. They have a business motive, based on their position as owners of a lot of these mortgages, to put back onto the banks sour mortgage pools that didn’t live up to underwriting or origination standards on the banks. That repurchase surge shows no sign of letting up and could ultimately by incredibly painful for the banks. But Fannie and Freddie also have a business motive to mitigate taxpayer losses in the housing market. You could change the GSE structure and make them a guarantor and a regulator of the marketplace, but that’s not really what they are right now (it’s part of why their model needs to change).

The title issue is a legal matter; the title insurers seek legal indemnity. As such, this whole thing will be ultimately decided by the courts. And guess what, the courts aren’t inclined to help the banks out on this score.

Bank of America Corp. and GMAC Mortgage may be restarting some foreclosures, but this does not mean their legal problems with bad documents are over.

According to lawyers, supplemental or amended affidavits, which the servicers have begun to file after their process reviews, do not necessarily override the original documents. There is a chance some judges will not approve the new documents or could even demand that entire cases be thrown out and refiled. The legal uncertainty extends to any other servicer following in Bank of America or GMAC Mortgage’s footsteps.

“Judges will be a little bit leery, at least initially, as to how they allow some of these suits to proceed,” said Jeffrey Taft, a partner in Mayer Brown LLP. “I would expect that judges are going to carefully scrutinize what’s been provided in the past and what’s being presented now.”

In fact, there’s evidence that judges are throwing out cases left and right.   [cont'd]

Wake up sleepyheads.  Many thanks to watertiger for the too cute video.  She and digby will be on Virtually Speaking today.  CNN is hosting a debate with the big three candidates for Senator.   Ted Rall will be here for Book Salon with his American Manifesto.  Newsmakers has a conversation with Phil Angelides, chair of the Financial Crisis Inquiry Commission.  And there are a lot of other talking heads babbling about the dial.

Washington Journal: 7:30am – Michael Gordon, New York Times, Chief Military Correspondent. 8am – Patricia Murphy, Politics Daily, Capitol Hill Bureau Chief and Vaughn Ververs, MSNBC.com, Political Editor.  8:45am – Charlie Gasparino, Author, “Bought and Paid For: The Unholy alliance Between Barack Obama and Wall Street” and Fox Business Channel, Senior Correspondent. 9:20am – Michael McDonald, George Mason University, Associate Professor.

ABC’s This Week: Democratic National Committee Chairman Tim Kaine. Roundtable: George Will, Ed Gillespie, Anita Dunn, Amy Walter.  Then, former Chairman of the Joint Chiefs of Staff, Gen. Hugh Shelton (Ret.) – new book.

CBS’ Face The Nation: Karl Rove. Chairman of the Democratic Congressional Campaign Committee Rep. Chris Van Hollen (D-Md.),

Chris Matthews: Katty Kay, Dan Rather, Andrew Sullivan, Cynthia Tucker.  Topics: Did President Obama Push His Own Agenda To His Party’s Detriment? Will Tea Party Members Go Rogue On Republicans And Form A Third Party?

CNN’s State of the Union: Crowley moderates a Florida Senate Debate with Gov. Charlie Crist (I), Rep. Kendrick Meek (D), Marco Rubio (R) live at 9am ET.

Fareed Zakaria’s – GPS: Richard Holbrooke, the US Special Representative for Afghanistan and Pakistan.  Peter Bergen on where bin Laden is.  The censoring of Fareed’s interview with Chinese Premier Wen Jiabao.  And more.

Fox News Sunday: Pat Toomey, US Senate Candidate (R-PA).  Gov. Joe Manchin, US Senate Candidate (D-WV).  Roundtable: Brit Hume, Nina Easton, Bill Kristol, Juan Williams.  Power Player of the Week: Ted Leonsis, Founder, CEO Monumental Sports & Entertainment.

NBC’s Meet The Press: Chairman of the Republican Party Michael Steele.  Roundtable: David Brooks, E.J. Dionne, Harold Ford Jr., Rachel Maddow, Rick Santelli.

Hair-Raising Hare starring Bugs Bunny.  This Warner Bros. Merrie Melodies cartoon was released on May 25, 1946.

Directed by Chuck Jones.  Produced by Edward Selzer.  Story by Tedd Pierce.  Film Editing and Sound Effects Editing by Treg Brown.  Animation by Basil Davidovich, Ken Harris, Lloyd Vaughan, and Ben Washam.  Backgrounds and Layout by Robert Gribbroek and Earl Klein.  Voices by Mel Blanc (Bugs Bunny, Peter Lorre Scientist, Gossamer, Doctor).  Original Music and Musical Direction by Carl W. Stalling.  Orchestration by Milt Franklyn.

Grab your popcorn, put your feet up on the seatback in front of ya, and aim your spitballs at the ushers please. This is Late Late Night FireDogLake, where off topic is the topic … so dive in. What’s on your mind?