The next possible shoe to drop in the housing crisis is going to be with home insurers who are paid through escrow. (taxes being paid in escrow may be another thorn in the side of the banks and homeowners).
Rumors are stirring that the banks are neglecting to pay out to insurers who are due to be paid from their escrow accounts. This may be a red flag regarding cash flow or it may be just another way for the banks to thumb their nose at contract law.
For all the propaganda you are hearing and seeing in the media, the financial reality of the banks, is that they are in the midst of a massive cover up. This should be seen as nothing new, but the fact that it now seems the government is complicit in the cover up will potentially put the American Economy into a major tailspin.
The big banks have succeeded in killing the housing industry through their use of creative financing (IE CREDIT DEFAULT SWAPS) and now are in process of denying their insolvency behind the cloud of MERS, Foreclosuregate, Fraud, and the "deadbeat homeowner."(of course this terminology-deadbeat homeowner- is latched onto easily by the self righteous, narrow minded, or those with any relationship to a too big to fail banks or formerly known as Wall Street Investment Houses.
The banks are using their own errors and acts of fraud to their benefit. They (the banks) now have a battle that has nothing to do with the question of insolvency, which of course is the reality now that billions of dollars in bank collateral has dropped well below the value of the encumbering mortgage. (What we think is an encumbering mortgage anyway) read more here.
The problems are snow balling for the banks and the home owners. The incentive for banks to pay insurance on underwater or defaulted homes is dropping. This is evidenced by the questionable disbursing of payments out of the escrow accounts.
HP 12c Financial Calculator (12C#ABA)