http://www.businessinsider.com/foreclosure-fraud-worse-than-you-thi...

A great report from Diana Olick at CNBC titled: Foreclosure Fraud: It's Worse Than You Think.

The gist: industry folks are getting really nervous that all this robo-signing and document fraud could infect the entire housing finance ecosystem.

She cites Georgetown Law Prof Adam Levitin who recently went on a Citigroup call to discuss the issue with investors.

Here's what he tells Olick about a possible nightmare scenario as it pertains to regular mortgage situations -- not just foreclosures:

The mortgage is still owed, but there's going to be a problem figuring out who actually holds the mortgage, and they would be the ones bringing the foreclosure. You have a trust that has been getting payments from borrowers for years that it has no right to receive. So you might see borrowers suing the trusts saying give me my money back, you're stealing my money. You're going to then have trusts that don't have any assets that have been issuing securities that say they're backed by a whole bunch of assets, and you're going to have investors suing the trustees for failing to inspect the collateral files, which the trustees say they're going to do, and you're going to have trustees suing the securitization sponsors for violating their representations and warrantees about what they were transferring.

If this were to come to pass -- and plaintiffs lawyers will certainly be eager to show that their clients were paying the wrong mortgage holders -- the value of all instruments (including the performing ones) could plummet.