Tony's profilePlease view with FIREFOX...PhotosBlogListsMore  |  Tools Help |
|
Ohio Sues Rating Firms for Losses in Funds: Fraud Catching Up with SwindlersNOW AVAILABLE ON KINDLE/AMAZON
November 21, 2009
Ohio Sues Rating Firms for Losses in FundsBy DAVID SEGAL
Already facing a spate of private lawsuits, the legal troubles of the country’s largest credit rating agencies deepened on Friday when the attorney general of Ohio sued Moody’s Investors Service, Standard & Poor’s and Fitch, claiming that they had cost state retirement and pension funds some $457 million by approving high-risk Wall Street securities that went bust in the financial collapse. The case could test whether the agencies’ ratings are constitutionally protected as a form of free speech. The lawsuit asserts that Moody’s, Standard & Poor’s and Fitch were in league with the banks and other issuers, helping to create an assortment of exotic financial instruments that led to a disastrous bubble in the housing market. “We believe that the credit rating agencies, in exchange for fees, departed from their objective, neutral role as arbiters,” the attorney general, Richard Cordray, said at a news conference. “At minimum, they were aiding and abetting misconduct by issuers.” He accused the companies of selling their integrity to the highest bidder. Steven Weiss, a spokesman for McGraw-Hill, which owns S.& P., said that the lawsuit had no merit and that the company would vigorously defend itself. “A recent Securities and Exchange Commission examination of our business practices found no evidence that decisions about rating methodologies or models were based on attracting market share,” he said. Michael Adler, a spokesman for Moody’s, also disputed the claims. “It is unfortunate that the state attorney general, rather than engaging in an objective review and constructive dialogue regarding credit ratings, instead appears to be seeking new scapegoats for investment losses incurred during an unprecedented global market disruption,” he said. A spokesman for Fitch said the company would not comment because it had not seen the lawsuit. The litigation adds to a growing stack of lawsuits against the three largest credit rating agencies, which together command an 85 percent share of the market. Since the credit crisis began last year, dozens of investors have sought to recover billions of dollars from worthless or nearly worthless bonds on which the rating agencies had conferred their highest grades. One of those groups is largest pension fund in the country, the California Public Employees Retirement System, which filed a lawsuit in state court in California in July, claiming that “wildly inaccurate ratings” had led to roughly $1 billion in losses. And more litigation is likely. As part of a broader financial reform, Congress is considering provisions that make it easier for plaintiffs to sue rating agencies. And the Ohio attorney general’s action raises the possibility of similar filings from other states. California’s attorney general, Jerry Brown, said in September that his office was investigating the rating agencies, with an eye toward determining “how these agencies could get it so wrong and whether they violated California law in the process.” As a group, the attorneys general have proved formidable opponents, most notably in the landmark litigation and multibillion-dollar settlement against tobacco makers in 1998. To date, however, the rating agencies are undefeated in court, and aside from one modest settlement in a case 10 years ago, no one has forced them to hand over any money. Moody’s, S.& P. and Fitch have successfully argued that their ratings are essentially opinions about the future, and therefore subject to First Amendment protections identical to those of journalists. But that was before billions of dollars in triple-A rated bonds went bad in the financial crisis that started last year, and before Congress extracted a number of internal e-mail messages from the companies, suggesting that employees were aware they were giving their blessing to bonds that were all but doomed. In one of those messages, an S.& P. analyst said that a deal “could be structured by cows and we’d rate it.” Recent cases, like the suit filed Friday, are founded on the premise that the companies were aware that investments they said were sturdy were dangerously unsafe. And if analysts knew that they were overstating the quality of the products they rated, and did so because it was a path to profits, the ratings could forfeit First Amendment protections, legal experts say. “If they hold themselves out to the marketplace as objective when in fact they are influenced by the fees they are receiving, then they are perpetrating a falsehood on the marketplace,” said Rodney A. Smolla, dean of the Washington and Lee University School of Law. “The First Amendment doesn’t extend to the deliberate manipulation of financial markets.” The 73-page complaint, filed on behalf of Ohio Police and Fire Pension Fund, the Ohio Public Employees Retirement System and other groups, claims that in recent years the rating agencies abandoned their role as impartial referees as they began binging on fees from deals involving mortgage-backed securities. At the root of the problem, according to the complaint, is the business model of rating agencies, which are paid by the issuers of the securities they are paid to appraise. The lawsuit, and many critics of the companies, have described that arrangement as a glaring conflict of interest. “Given that the rating agencies did not receive their full fees for a deal unless the deal was completed and the requested rating was provided,” the attorney general’s suit maintains, “they had an acute financial incentive to relax their stated standards of ‘integrity’ and ‘objectivity’ to placate their clients.” To complicate problems in the system of incentives, the lawsuit states, the methodologies used by the rating agencies were outdated and flawed. By the time those flaws were obvious, nearly half a billion dollars in pension and retirement funds had evaporated in Ohio, revealing the bonds to be “high-risk securities that both issuers and rating agencies knew to be little more than a house of cards,” the complaint states. Swindler's Waltz to the Sounds of a Crash
November 20, 2009
Op-Ed Columnist
The Big SquanderBy PAUL KRUGMAN
Earlier this week, the inspector general for the Troubled Asset Relief Program, a k a, the bank bailout fund, released his report on the 2008 rescue of the American International Group, the insurer. The gist of the report is that government officials made no serious attempt to extract concessions from bankers, even though these bankers received huge benefits from the rescue. And more than money was lost. By making what was in effect a multibillion-dollar gift to Wall Street, policy makers undermined their own credibility — and put the broader economy at risk. For the A.I.G. rescue was part of a pattern: Throughout the financial crisis key officials — most notably Timothy Geithner, who was president of the New York Fed in 2008 and is now Treasury secretary — have shied away from doing anything that might rattle Wall Street. And the bitter paradox is that this play-it-safe approach has ended up undermining prospects for economic recovery. For the job of fixing the broken economy is far from done — yet finishing the job has become nearly impossible now that the public has lost faith in the government’s efforts, viewing them as little more than handouts to the people who got us into this mess. About the A.I.G. affair: During the bubble years, many financial companies created the illusion of financial soundness by buying credit-default swaps from A.I.G. — basically, insurance policies in which A.I.G. promised to make up the difference if borrowers defaulted on their debts. It was an illusion because the insurer didn’t have remotely enough money to make good on its promises if things went bad. And sure enough, things went bad. So why protect bankers from the consequences of their errors? Well, by the time A.I.G.’s hollowness became apparent, the world financial system was on the edge of collapse and officials judged — probably correctly — that letting A.I.G. go bankrupt would push the financial system over that edge. So A.I.G. was effectively nationalized; its promises became taxpayer liabilities. But was there any way to limit those liabilities? After all, banks would have suffered huge losses if A.I.G. had been allowed to fail. So it seemed only fair for them to bear part of the cost of the bailout, which they could have done by accepting a “haircut” on the amounts A.I.G. owed them. Indeed, the government asked them to do just that. But they said no — and that was the end of the story. Taxpayers not only ended up honoring foolish promises made by other people, they ended up doing so at 100 cents on the dollar. Could things have been different? Some commentators argue that government officials had no way to force the banks to accept a haircut — either they let A.I.G. go bankrupt, which they weren’t ready to do, or they had to honor its contracts as written. But this seems like a naïve view of how Wall Street works. Major financial firms are a small club, with a shared interest in sustaining the system; ever since the days of J.P. Morgan, it has been common in times of crisis to call on the big players to forgo short-term profits for the industry’s common good. Back in 1998, it was a consortium of private bankers — not the government — that put up the funds to rescue the hedge fund Long Term Capital Management. Furthermore, big financial firms have a long-term relationship, both with the government and with each other, and can pay a price if they act selfishly in times of crisis. Bear Stearns, the investment bank, earned itself a lot of ill will by refusing to participate in that 1998 rescue, and it’s widely believed that this ill will played a major factor in the demise of Bear Stearns itself, 10 years later. So officials could have called on bankers to offer a better deal, for their own sake, and simultaneously threatened to name and shame those who balked. It was their choice not to do that, just as it was their choice not to push for more control over bailed-out banks in early 2009. And, as I said, these seemingly safe choices have now placed the economy in grave danger. For the economy is still in deep trouble and needs much more government help. Unemployment is in double-digits; we desperately need more government spending on job creation. Banks are still weak, and credit is still tight; we desperately need more government aid to the financial sector. But try to talk to an ordinary voter about this, and the response you’re likely to get is: “No way. All they’ll do is hand out more money to Wall Street.” So here’s the real tragedy of the botched bailout: Government officials, perhaps influenced by spending too much time with bankers, forgot that if you want to govern effectively you have retain the trust of the people. And by treating the financial industry — which got us into this mess in the first place — with kid gloves, they have squandered that trust. Filed under: CDO, CORRUPTION, Eviction, GTC | Honor, Investor, Mortgage, bubble, currency, foreclosure, securities fraud | Tagged: AIG, bailout, disclosure, Federal reserve, foreclosure defense, foreclosure offense, illusion of financial soundness, Krugman, mortgage meltdown, Ny Times, securitizationOh What a Mess!Wells Fargo to Repurchase $1.4 Billion of Securities: WHAT THAT MEANS TO YOU
Wells Fargo to Repurchase $1.4 Billion of SecuritiesBy CYRUS SANATI
Wells Fargo & Company said on Wednesday that it had agreed to buy back $1.4 billion in auction-rate securities it sold to investors before the market for those securities dried up last year. The decision settles a lawsuit brought against the firm by California’s attorney general, which accused it of violating the state’s securities laws. Wells Fargo, which is based in San Francisco, also agreed to pay the state’s expenses related to the lawsuit. The brokerage arm of the bank marketed the securities, which resemble corporate debt and whose interest rates were regularly reset by auctions, as an alternative to cash for years, even after analysts warned that the market could freeze up. In February 2008, banks stopped participating in the auctions and effectively locked up investors’ cash. The suit, brought by the California attorney general, Jerry Brown, contended that Wells Fargo had routinely misrepresented, marketed and sold auction-rate securities as safe, liquid and cashlike investments, omitting material facts. “Wells Fargo convinced thousands of investors to purchase auction-rate securities with promises of robust returns and liquidity, but when the market collapsed, investors were left out in the cold,” Mr. Brown said in a statement. “Based on misleading advice, investors bought these risky securities. Now, retail investors and small businesses are finally getting their money back.” Under the terms of the settlement, Wells Fargo agreed to buy back at par value by April 2010 all auction-rate securities bought through its brokerage unit by investors before the market froze up. About half of the auction-rate securities sold by Wells, which is based in San Francisco, were bought by California residents. Mr. Brown and Wells reached a settlement agreement Tuesday night, people briefed on the matter said. The settlement arises in part from an investigation led by Washington State’s Department of Financial Institutions, according to a statement by the North American Securities Administrators Association. Washington State filed an administrative action against Wells before California filed its own case. That matter has also been settled. State regulators have secured settlements in which banks have agreed to repurchase more than $61 billion in auction-rate securities from investors. Among the firms that have settled these lawsuits are UBS, Bank of America, Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup and Credit Suisse. Possibly related posts: (automatically generated) Filed under: CDO, CORRUPTION, Eviction, GTC | Honor, Investor, Mortgage, bubble, currency, foreclosure, securities fraud | Tagged: auction rate securities, borrower, credit default swaps, disclosure, foreclosure defense, foreclosure offense, fraud, Investor, mortgage backed securities, securitization, Wells Fargo It's the Jobs and Food, Stupidby Steven D The "economy" isn't what its all about. Stock
prices can rise, Goldman Sachs can give out bonuses galore,
productivity can shoot through the roof, but until we start getting
people back their jobs -- good paying jobs -- we are headed to Nowheresville. And for millions of people that means they go not only without work, but WITHOUT ENOUGH FOOD (and, yes, some things do require all caps):
(cont.)
WASHINGTON — The number of U.S. households that are struggling to feed their members jumped by 4 million to 17 million last year, as recession-fueled job losses and increased poverty and unemployment fueled a surge in hunger, a government survey reported Monday. This is something the likes of Lou Dobbs and Glenn Beck and Rush Limbaugh with all their talent on loan from Satan will never understand, nor likely care about. After all, the gull enough people into listening to them babble lies and cry on cue and scream racially divisive rants into their microphones, (or make senior executives of major media outlets so sick of their bile that they throw millions of dollars at them just to go away and not to work) not to have to concern themselves with the needs of "people looking for government handouts" (to use their own words). Nor are our elite class of pundits and politicians and lobbyists likely to get it, and by "it" I mean what it's like to decide if you have enough money to pay the rent and make the peanut butter and bread last long enough until either your next unemployment check comes or your savings runs out. I've been there, back in the early 80's, the last time unemployment was this bad, and I can't tell you how gut wrenching it is to see what little money you have drain away on a one room studio apartment in the attic of a converted house, unable to afford milk to wash those thinly spread peanut butter sandwiches down while you desperately look for a job each and every day. I was single, however. I can't even imagine the anguish that many parents today (literally today, folks) must go through when they have to deny their kids a decent meal. And I'm not talking healthy food necessarily. Just any food.
In phone interviews, more than two-thirds of people with very low food security said they went hungry from time to time, and 27 percent of these adults said they didn't eat at all some days. [...] One in seven people in America who are "food insecure" (and what a euphemism that is, right up there with "collateral damage" for detaching reality from raw meaning), and of that number, sixty-six point six - six - six (ad infinitum) percent who go hungry, with nearly another third who go without eating anything period on many days. You know what I think? These are people ripe for the promises of demagogues, liars, propagandist and "rogues" who are and will be more than happy to tell them who is responsible for their misery. People who are ripe for finding scapegoats. And I know where they will find them. You do, too. This news ought to increasingly worry Democrats, especially those Blue Dog Democrats and Conservative Democrats and weak kneed Democrats, and any other Democrats (even if only in name) who are afraid to spend federal money to create jobs -- now because Republicans will run "attack ads" against them. Well I'll let all those democrats in Congress in on a little secret, (and I'm only talking to those who oppose more stimulus money for anything) The Republicans are going to run those attack ads anyway, so you better have some bullets to fire back at them. Because the longer people go without jobs, and the longer they go hungry, the more the table is set (no pun intended) for massive losses for Dems in Congress next year when these folks either blame them for the fact that they can't find jobs or feed themselves and their kids properly, or they will simply stay away from the polls and not vote. The GOP won't need to suppress voter turnout. Inaction to address this fundamental inequity in our society will do that for them. One thing we know for sure: people without jobs, people who are skipping meals so their kids can eat, or because they just don't have the money, won't be spending any hard earned dollars on campaign contributions, because they won't have any to spend. So my message to Congressional Dems that oppose more stimulus spending is this: Vote for the money and programs necessary to increase employment or lose your job. If you don't, it's your own funeral. Freedom Is Not Free (Veterans Day Edition)Take a moment to say "THANK YOU" for all those who selflessly serve so that we may live in a free country. YOU ARE NOT FORGOTTEN!!!
ONE DAY A YEAR JUST ISN'T ENOUGH!!! UCC 3-501 allows borrower to discontinue payments WITHOUT DISHONOR *
Just uploaded a great study from Kathleen Engel & Patricia McCoy
entitled: “Turning a Blind Eye: Wall Street Finance of Predatory
Lending.” It can be found in the folder “public” located up and to the left - the actual name of the folder is "PUBLIC." First click on public folder, then select the document you wish to read, then select the document image as it appears (looks like a paper icon) and you should be able to open or save the document. ** Also in the public folder amongst many other good research studies is the “Mortgage Fraud Assessment,” a 2005 report by FDLE - Florida Dept. of Law Enforcement, which mentions at the bottom of page 20 loan flipping AND insurance payouts. "The Fraud of Appraisal Regulation" by Larry Levy is a great read and so is the MERS report by University of Utah Professor Peterson. *** How can we ever expect real “change” when the Wall St wrecking crew has their tentacles so far entrenched in Washington? S&L should have taught us better than this re: taxpayer funded bailouts – these guys have done nothing more than perfected their craft! LEGISLATORS WILL AGAIN PUT UP THE “APPEARANCE” OF REGULATION TO APPEASE US TAXPAYERS AND SUBSEQUENTLY START STRIPPING AWAY AT IT AND LEAVE LOOPHOLES FOR THEIR BANKING CONSTITUENTS… JUST WHERE THEY KNOW TO FIND THEM. UCC 3-501 allows borrower to discontinue payments WITHOUT DISHONOR From: Mario Kenny's Wordpress Blogsite October 25, 2009
I am an attorney who has taken “produce the note” one step further. I am current on my mortgage, and actually what prompted me to take
the action I am taking is that I had paid off my second mortgage but my
lender refused to surrender my paid off second mortgage note. My lender
also refused to prove to me that it had my first mortgage note or that
it had the authority to make payment demands. So I decided to sue my lender. I decided that if the “produce the note” strategy was working for people who were in default, it would work for those who are not in default. If the bank doesn’t have the right to foreclose, it doesn’t have the right to demand payment either. The Uniform Commercial Code is the homeowner’s best friend. UCC 3-501 requires a lender to “exhibit the note” when the lender makes demand for payment, and the borrower demands to see the note. Technically a demand for payment occurs every month, and it also occurs when a bank begins foreclosure proceedings. UCC 3-501 also requires a servicer to show authority to make a demand for payment, if it does not own the note, but is merely servicing it. In the event a noteholder or servicer or will not exhibit the note or perform other legal requirements when requested to do so by the borrower, this UCC section allows the borrower to discontinue payments WITHOUT DISHONOR until such time as the noteholder or servicer complies with all laws or contract provisions. Also helpful is UCC 3-309. UCC 3-309 requires the lender go through certain steps to prove up a note (make it enforceable) that is lost or destroyed. This is not easy for the lender to do, if one is willing to contest everything the lender does to try to prove up the note. This proof takes witnesses, who may not be able to say what the law requires, if the witnesses are thoroughly cross-examined. (Tip: Don’t let the lender get by with self-serving affidavits; take their witnesses’ depositions). Moreover, this section requires the lender to give adequate protection in the event the lender can make the lost note enforceable. That may be difficult for a lender that is under FDIC scrutiny and whose stock is in the tank. I filed suit in March and so far my lender has vigorously put off answering my suit with what I believe was a meritless motion to dismiss, but has not yet produced either note, and has confirmed my unpaid note was sold to Fannie Mae. This is clearly a justiciable controversy as will be clear when I ask the court to allow me to put my future payments into the registry of the court until the note is proven up and authority to make demand is proven. If the bank really believed it had the evidence to compel me to pay, it would have gladly produced the note by now with proof of authority to demand payment. They have steadfastly avoided having to do this. Chances are the note is lost or destroyed. It gets even better. MERS is the sole beneficiary of my Deed of Trust (quite often the case for homeowners on Deeds of Trust since 2000). The Arkansas Supreme Court has just ruled in March of this year that MERS was not the beneficiary of a Deed of Trust (with language verbatim to mine) despite what the Deed of Trust said, because MERS has no interest in the note payments or in the corpus of the trust (homeowner’s obligation to pay). No beneficiary means the Deed of Trust is fatally flawed. More and more it is looking like I will have the lien on my home removed and I may well never have a noteholder to pay. I could even get some of my money back. An Open Letter to 18th Circuit Court_Brevard County FL An Open Letter to 18th Circuit Court_Brevard County FL To: mark.vanbever@flcourts18.org CC: howard.tipton@brevardcounty.us Subject: FW: I thought you would like to see this... Date: Fri, 30 Oct 2009 11:22:50 -0400
Mr. Vanbever, I wanted to follow up on the email I sent you on the 15th of this month. I'd like to know if the 18th Circuit Court is aware that Brevard County property owners are being stripped of their homes without due process of law? This mainly happens in uncontested foreclosure cases where plaintiffs that lack standing are steam-rolling over homeowners who have no clue as to their rights to have a full set of accounting on their transaction before walking away from their homes. Most often, uncontested foreclosure cases are being brought forward (under the guise of legitimacy), by parties who have no beneficial interest whatsoever in the loan, have not lent any money, cannot properly demonstrate the chain of custody of the note itself and have not suffered any loss relative to the note. Consider the recent Federal Racketeering charges against Countrywide/BofA for altering documentation pertaining to home loans in order to "hide" blatant errors. Complaints from more than 10,000 individuals have prompted the investigation. If you know that BofA was engaged in these dirty types of practices to hide fraudulent assignments and such, chances are other large companies were (and probably still are) engaging in this practice too. THIS IS A DIRECT RESULT OF SECURITIZATION. Nobody is able to bring a full set of accounting to the table which discloses the "true" lien-holder, proof of lien & the total amount of compensation earned via flipping notes, cross-collateralization, cross-insuring, Tarp funds, etc. It is estimated that a majority (90%) of loans were securitized from 2001 to 2008. More than likely the notes were intentionally destroyed to stop the audit trail. How do we know if these notes ended up making it through to the trust? Moreover, if the note was sold to a REMIC (tax free entity) why then are we paying the banks TARP money for unsold MBS? Where is that note, who owns it and do the parties that bring forward litigation in the 18th Circuit Court have standing to bring such actions? We may never know unless the courts demand it. I submit that loans were extinguished on one set of books yet still exists on another separate set of books. Investors (the real lender who purchased the securities) are the ones who put up the money and have the right to make a claim, not a mortgage "servicer". The investors probably have no clue that their assets are being removed from trust and sold. If they did know - you would not see so many "lost note" affidavits upon filing and then have them "magically appear" after the borrower has vacated their home. FAS & GAAP (ENRON) type accounting fraud is MASSIVE in this mess! More info can be found here; * http://tawebster.spaces.live.com Please reply when time permits. I look forward to hearing from you. Best regards, TA Webster Investors and Borrowers Unite!Investors and Borrowers Unite!
Posted on October 28, 2009 by livinglies
Thanks to Dan Edstrom: This is a comment bringing to our attention the lawsuit of the real lenders (the investors) against the intermediaries, pretender lenders and conduits in the securitization process. It of course looks very familiar. They are saying that they were misinformed, led astray and lost money. What is not stated is that they were “qualified investors” who because of their size and sophistication are deemed to have greater access to information and a greater ability to assess risk on their own. And even they got duped. So our point is that the homeowner is the LEAST sophisticated player as a party in interest. Thus the homeowner should be the one to suffer the least amount of damage. As is usually the case with American politics, the current situation is standing on its head. The homeowner generally doesn’t have a clue as to what is really going on with his “loan product,” and even if he had some idea, wouldn’t know what to do with the information. And Yet the brunt of this crisis is falling on the people who were MOST vulnerable. My solution is for attorneys, particularly class action attorneys, to put their differences aside. One might argue that the investors, as real lenders have an interest that conflicts with the interest of borrowers of their money. Conversely one might argue that borrowers might have claims against the real lenders whose money set this whole process in motion, and counterclaims and affirmative defenses in foreclosure or mortgage litigation (whether the loan is in distress, non-performing, or otherwise). But if you peal away the apparent differences you find that there is an inherent joinder of interest investors and borrowers: both were deceived and both lost nearly everything they had by purchasing a financial product that was misrepresented — artificially inflated as to quality and value. And both were subject to the same MO — using third parties to create the appearance of propriety and conformity with the applicable laws, while the real purpose was simply to take the money and run. Only the real lenders can actually re-structure these loans. It is true, when all is said and done, that the restructuring alone will only provide them with cover on 10%-35% of their investment. But that is geometrically more than the write-downs currently being imposed by Wall Street and they lay off the risk onto the investors and the taxpayer. But the solution doesn’t end there. A joint claim for damages against the intermediaries who obviously knew they were creating loans to fail so that they could collect on credit default swaps and higher service, fees, would net both the investor and the borrower a hefty judgment. The judgment would either be paid or it would levied against assets of the the losing party(ies). Those assets would include mortgages claimed to be owned by the pretender lenders, unopposed by other borrowers. Hence the early bird here would be able to recover as much as 100% or more of the investment in mortgage backed securities and play a societal role in re-structuring loan products that were brainless and predatory in their conception and execution. So take a look at the entry below and go looking for other lawsuits from investors against the underwriters who sold mortgage backed securities. They probably have done a lot of your discovery for you. And you might end up with a deal in which the borrowers and the investors come into the same courtroom crying foul against the players in the middle. Then, and only then will they have no place to hide. xxxxxxxxxxxxxxxxxxxxxxxxxxxxx Excerpt: According to the complaint, by the summer of 2007, the amount of
uncollectible mortgage loans securing the Certificates began to be
revealed to the public. To avoid scrutiny for their own involvement in
the sale of the Certificates, the Rating Agencies began to put negative
watch labels on many Certificate classes, ultimately downgrading many.
The delinquency and foreclosure rates of the mortgage loans securing
the Certificates has grown both faster and in greater quantity than
what would be expected for mortgage loans of the types described in the
Prospectus Supplements. As an additional result, the
Certificates are no longer marketable at prices anywhere near the price
paid by plaintiffs and the Class and the holders of the Certificates
are exposed to much more risk with respect to both the timing and
absolute cash flow to be received than the Registration
Statements/Prospectus Supplements represented. [Editor's Note: Same as
the houses] http://www.csgrr.com/csgrr-cgi-bin/mil?case=jpmorgan&templ=cases/case-pr-print.html Where is the Lender? Where is the Counterparty?Where is the Lender? Where is the Counterparty?
Posted on October 22, 2009 by livinglies
Where’s the counterparty? Who wrote the default swap? In my trust, it was Bear Stearns (Now JPMChase), and the Securities administrator (seller) was Citigroup Global Markets. Trustee HSBC for the Wells Fargo Trust. Wells Fargo wore all the other hats. Now, the vintage deals WFHome Equity Asset Backed Securities 2005-1/2/3/4 were all “left on dealers shelves” like the same vintage SASCO Deals. Anyway, if CitiGroup Global got stuck holding the bag ($62Billion writedown, anyone remember?) and the securities remained unsold, how did they (the mortgage pools) end up in the 1999 Wells Fargo/Norwest Assets 1999 Trust? It’s the “extinguishment of the liability” (140-3) wherein the problem lies (reverse-repo). It’s a modern-day version of “hot-potato”. It’s hot because they used the loan to borrow more money after dispersing the investor money. They don’t have the money to pay back the loan that constituted the proceeds of YOUR loan (it was borrowed from the investor). The AB1122 is where they defraud the investors by not reporting the actual failure of the trust (receivership). And, the REMIC trust is taking in more money in foreclosure and sheriff’s sale/liquidation (not a true open market transaction as perpetrated with fraudulent representation on the part of the foreclosing entity) than in interest pass through (the key to tax-exempt flow through (conduit) status) (more than 20%?), if the defaulted loans are indicative of 20% of the total number of loans in the pool, the mathematical consequences are supposed to trigger receivership (liquidation). The WFHEABS05-2 are running at 40% delinquent/foreclosed/bankrupt/REO. These default rates are common throughout meltdown-era MBSs. My question, Mr. E, is who is the counterparty? They are the one who got stuck with loss on your note, but they have no note, and no claim to the collateral. They got paid a premium to perform on a contract, and lost. They don’t have any assigned interest in the house, only a receipt for paying the claim. The loan is extinguished on one set of books, but is continuously carried as an asset (money still a receivable) on another set of books (ABS) even though no such obligation exists. Now, back to True Sale. This is the “surrender of control” issue that violates the true sale status. The loan was to be assigned “without recourse” when the Depositor agreed to deposit it with the Trust. I don’t think any of this was done other than with a passing of dollar values over a wire. There was never any “arms-length” transaction, the pretender lender stayed on immediately to “service” the loan and make sure you defaulted, they directed the appraisal of the collateral to cover the loan. Then they end up recovering the collateral at sheriffs sale to sell at a later date directing proceeds into their own pockets (the sponsor usually holds the equity tranches and the Z tranche, which receives non-regular cash flows).
Elizabeth Warren Straight UpElizabeth Warren Straight UpSee today’s HuffPo for her full comments and exclusive video that was taken for Michael Moore’s Capitalism movie but some of which was cut: http://www.huffingtonpost.com/2009/10/21/elizabeth-warren-speaks-w_n_329425.html?igoogle=1
Warren describes how “the very people who drove the car over the cliff have been instrumental in shaping how the American taxpayer was supposed to save it. In the past,” she notes, “when you drove the car over a cliff, you lost your job.” She criticized the government for not conducting a thorough and transparent investigation into the causes of the financial crisis, which is essential because “responsibility is not just about blame. Responsibility is about making sure we fix this and it will not happen again.” “If the people who were directly affected, people whose lives have been wrecked by this, are not represented at the table, we won’t get the right solutions,” Warren says emotionally. “Yeah, we’ll patch this up – and then in ten years it crashes again and it crashes again and it crashes again… My job is to be here for the people who just don’t get a voice in this game. They’ve been shut out now for 30 years in this. It’s to say no more.” At one point Warren laments: “I teach contract law at Harvard Law School, and I can’t understand my own credit card. No, I am not kidding you.”  Read more at: http://www.huffingtonpost.com/2009/10/21/elizabeth-warren-speaks-w_n_329425.html?igoogle=1 More love for Elizabeth Warren: Elizabeth Warren for President by Matt Taibbi http://trueslant.com/matttaibbi/ Also Neil Garfield on Living Lies: http://livinglies.wordpress.com/2009/10/21/wisdom-succumbs-to-wise-guys/ Professor Warren on the Daily Show in April, explaining what was done with the TARP money: http://www.thedailyshow.com/watch/wed-april-15-2009/elizabeth-warren-pt–1 http://www.thedailyshow.com/watch/wed-april-15-2009/elizabeth-warren-pt–2 What is MERS and why is it on my title?What is MERS and why is it on my title? TA Webster "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered." -Thomas Jefferson, 1802.
As most of us already know, the economic tsunami that hit this country has reverberated around the globe. Capitalism was put down without even so much as a whimper and out national debt is hovering somewhere just shy of 13 TRILLION dollars. I do not believe the financial crisis happened on accident. So why are banks rewarded for poor loan underwriting decisions while everyone else gets to pick up the bill? Why do corporate executives receive such hefty bonuses for making such a mess of things? If I screw up on my job I get fired. When you work on Wall Street and have friends on Capitol Hill making that kind of money seems easy, but it does come with a price.
It was not until I researched my own chain of title in the Clerk of Courts office that I discovered a company called MERS was on my mortgage. This was a total surprise because I never dealt with MERS and had no clue as to who they were and what they did. Surely there must be an explanation I thought. After gathering copies of everything that was in public record I called the title company that closed our loan to get a copy of our title policy. Unfortunately they went out of business but I did manage to retrieve a copy of my policy directly from Chicago Title Insurance Company (CTIC), the underwriter. What I found was amazing!
Our loan servicer had not been too helpful up to this point. I had lost my job in the housing industry and moreover, in Florida, the industry just evaporated. I knew we were in for hard times. I kept seeing government figureheads on the cable news channels talking about programs designed to “help homeowners stay in their homes.” This was great news… so I thought.
The first thing our loan servicer told us was “you need to be at least three month behind in your payments before we can assist you”. This must have been the most absurd comment I had ever heard in my life. I am being honest and upfront, not wanting to shirk my responsibilities but looking for information on the program that then Treasury Secretary Paulson and President Bush were mentioning. After all, if the President of the United States and the Treasury Secretary say there is a program to help homeowners it must be available, right?
Since we paid for an appraisal (a requirement of the lender) and we had not been privy to anything regarding the appraisal process, I questioned the fitness of the appraisal and suspected there may have been bias, or appraisal fraud which amounts to usury. I spoke with a gentleman in the executive resolution group who told me they had not yet heard of any such “help for homeowners” program out there. I was stunned! I sent him an email with a link to the video… surely this guy has an internet connection right?
I was ready and willing to pay for the home, but I wanted the house re-appraised as I did not want to pay a penny more than what the home was worth. At the peak of the market the largest home in our community (about 3,000 sq. ft. under air) sold for about $300,000 or $100 per square foot. At the time of purchase the home did not have a pool. That same home recently sold for $140,000 or $46 per square foot with a new in ground concrete heated pool. How am I going to compete with that?
The servicer’s idea of a solution was to take the house and sell it for pennies on the dollar on the courthouse steps. Heck no, if anyone was getting that kind of a deal it sure as heck was going to be me!
I was told by the loan servicer that they did not have the authority to modify the principal balance (as I had heard about on the news) because the investor would not allow it. When I asked my loan servicer “who is the investor of our loan” they replied Freddie Mac (FHLMC). I called Freddie Mac and they told me to call my loan servicer. After weeks of trying to figure out who actually owned my loan and why it was so terribly difficult for me to find them I started researching the internet for clues. Lucky for me I found Neil Garfield and his Living Lies website (www.livinglies.wordpress.com).
About Neil Garfield: Neil F. Garfield, M.B.A., J.D., 61, is the winner of dozens of academic awards, a popular speaker, and author of technical treatises on law and economics. He has come out of retirement with a bang and financial institutions should take note. He knows them from the inside out, who the deciders are, and how they arrived at a catastrophic scheme to defraud, people, agencies, institutions, and governments all over the world. The former consumer advocate, trial attorney, and economist says that he “can’t watch this meltdown without lending a helping hand to those in distress.” Appearing on TV, Radio, multiple blogs, and live appearances, Garfield offers bold and sound advice for dealing with the “largest economic fraud in human history.”
Up to this point my beef was with my lender requiring me to pay for a bogus real estate appraisal. It is ironic because you sign a stack of papers a mile high when you get financing to buy a home and again at settlement but there is nary a peep about the appraisal. Why is that?
Since information regarding home sales and valuations are captured in public record (deeds, mortgages, property appraiser valuations and tax roll valuations) why are consumers required to pay for it while simultaneously propping up the companies that are reaping such huge profits from vandalizing our appraisal and title industry. Remember, we are talking about public record.
At the time I thought the greatest injustice was being required to pay for a product (an appraisal) that contained no warranties, no representations, no disclosures… no nothing. I was wrong, there was something greater. It just took time to notice it. I still believe appraisal regulation is as important as making sure our food supply does not become tainted and that lead is not put into our children’s toys. Just like the S&L crisis and FIRREA that followed, congress can put up the “façade” (appearance) of regulation while leaving loopholes for their banking constituents where nobody else will ever find them. Politicians closest to the action are privy to crafting the rules, unless they are subject to an emergency closed session of Congress whereby they are instructed to sign a complex bill without having ample time to read it OR there will be upheaval and riots and martial law.
The E-AppraiseIT/WAMU debacle is a great example. In short New York’s attorney general accused Washington Mutual of pressuring a rather large AMC (Appraisal Management Company) to deliver inflated home values in order to justify making loans, a practice that tens of thousands of appraisers have complained and petitioned about increasingly over the years. The suit was filed by Attorney General Andrew Cuomo and did not name WaMu as a defendant. Instead, Attorney General Cuomo cited First American Corp. and E-AppraiseIT (a subsidiary of First American) as having engaging in “deceptive, fraudulent and illegal business practices.” The back story is this; the non-profit appraisal institute is selling out its own members to a for profit subsidiary that they own that creates or mimics information straight out of public record. Let me repeat – Public Record. This of course is in addition to other large AMC’s that are selling out the American people from our own public record. Appraisal regulation is so flaccid that state regulators have basically all but ignored the tens of thousand of “honest” appraisers that were literally run out of the industry because of the AMC (appraisal management company) loophole. In essence (literally), the housing market just went up, up, up and away! Seasoned appraisers with many years experience were being replaced with “compliant” less seasoned appraisers (mostly rookies) who accept valuation assignments for half the fee. The AMC takes the other half. AMC’s, data portals and AVM’s (automated valuation models – or in other words artificially generated computer junk) share some of the blame in the housing crisis but they have received very little attention for their instrumental role in the current financial maelstrom. Congress has now enacted the HVCC and IVPI. Those are the Home Valuation Code of Conduct and the Independent Valuation Protection Institute. Some would argue that this just more of the same old tired legislation that gets put forth and subsequently gutted like FIRREA.
I submit there will never be any meaningful change in legislation until
we first examine the new regulations regarding real estate appraisals and
examining carefully the inner-workings of AMC’s, data portals, AVM’s and find
out whether or not any of the aforementioned have caused adverse effects on
housing prices via biased appraisals and “cascading values,” thus making it
easier for banks and lenders to shop for appraisers (comp checks) that played
ball to get whatever was needed regardless of whether or not they had to rig
the system of accomplishing this feat. If you find one of the top banking institutions like WaMu engaging in practices such as this – chances are more than a handful of others were too. Now instead of hand-picking their favorite appraisers (wink wink), lenders are supposed to stay “arms length” from the appraiser. This means no comp checks, no partial submits, no shopping for your number, no unlocking secure digitally signed appraisal docs to change numbers… no more games. The question to ask is how can we trust that our elected officials will enact meaningful legislation regarding appraisal regulation after they neutered FIRREA? Many experts in the appraisal industry suggest that if FIRREA had been left alone “as is” this crisis would not have happened. FIRREA stands for the Financial Institution Reform Recovery Enforcement Act, sounds grand doesn’t it? Often times a bona fide appraisal was not even necessary. A lender could pay a waiver fee and be done with it or rely on an AVM (computer generated algorithm – trash, not the same as a bona fide appraisal) to project the price you needed. Works great on the way up. On the way down, not so bueno. So why are consumers required to pay and upfront fee of $300 for a biased and rigged appraisal? Seems like a very self-serving interest to me. This is not even considering the fact that AVM’s and data portals are simply a compilation of public record. Property value information is stripped from local property appraiser’s office and tax collector’s office websites and inserted into a fancy data model and voila’ AVM. Combine this practice with tight zoning, land-use, lack of adequate supply of “workforce” housing, development impact fees, wetlands fees, this fee that fee & other fees and its no wonder why “affordable” used to mean $250,000. Was there not enough land left in America to supply homes for working people at working people prices? It only takes one house in the neighborhood to set the new Guinness Book world record for highest sales price and there goes the neighborhood (and city and county) comps. The Appraisal Management Companies have literally hijacked the appraisal industry and what’s worse… no mention of the 10,000+ appraisers that have signed petitions to express concern about pressure to “hit the number” or risk losing work. A lot of people were displaced in that side of the business, for being honest about property values. Many in the appraisal industry say that the cure (HVCC) is worse than the disease of the previous system.
After spending more than 12 months looking back at appraisal regulation I did however, find something even more appalling. MERS (the Mortgage Electronic Registration System) has been recorded on over 60 Million mortgages in the US. The company does not and has not ever owned, transferred or conveyed any “beneficial interest” whatsoever in the notes or mortgages that are recorded in their name. They are considered to have only the interest of a “straw man” in many states. In a nutshell, mortgages are the security instruments (where you pledge your home as collateral) and notes are the promise to repay the loan. Either one is not much good without the other. So instead of vaulting the original note like they did before the advent of MERS, notes were re-packaged and over insured (sometimes up to as much as thirty times the value of the asset/home) so that they could reap compensation well above the normal remuneration that is required to be disclosed on the settlement HUD-1 statement and Truth In Lending disclosures. MERS is listed on record as a way to hide the real parties of interest. Enormous profits were made by swapping notes dozens of times and when the asset no longer performs and the owner defaults, the credit default swap insurance kicks in and there is yet more insane profit to be retrieved from the foreclosed property. So it seems that in an effort to cash in on the once booming business of home mortgage lending, some major banks and lenders were willing to intentionally turn a blind eye towards (or commit outright fraud) in what is supposed to be an “unbiased” appraisal and allowed appraisal regulation to suffer (amongst other things) so that Wall Street could package and sell much larger pools of investments to unsuspecting chumps all over the world under the guise of AAA rated investments and avoid disclosing who the “real” lender or “holder in due course” is on the transaction. Not to mention the fact that MERS has created “toxic titles” on more than 60 Million homes in the United States. I recommend that everyone tell
their friends and family to check their local clerk of courts office and obtain
copies of their recorded mortgage and inspect the document in paragraph C or D
to see if the words MERS appears. If yes, try obtaining a copy of your title
insurance policy to see if MERS was insured as your lender. If yes, know your
rights, do your research and challenge everything. Visit www.livinglies.wordpress.com, and http://tawebster.spaces.live.com to find out what is really happening with the mortgage and bailout fiasco. In addition I have posted The MERS report by University of Utah’s Professor Peterson in my “public” folder. Thank you and may GOD Bless you, your families and the United States of America! MERS Scandal Exposed and ExplainedMERS Scandal Exposed and ExplainedDecember 9, 2008 · Kevin Lamson
So can anyone guess the name of “organization” that was formed by Countrywide’s, Angelo Mozillo and Fannie Mae’s, James Johnson ten years ago it start with an M? No not the Mafia. It’s Mortgage Electronic Registration Systems Inc. commonly referred to as MERS. Yes that’s right Countrywide and Fannie Mae were the lead organizers of MERS and are shareholders and “members” of MERS. Here are excerpts from an investigative report on MERS I have been working on for the last several months. This may help shed some much needed light on MERS and the cozy relationships many of its so-called "members” have between each other and with our congress. It may also explain why no one in congress has bothered to investigate MERS and it crazy “paperless” system that these greedy mortgage executives invented so they could line their pockets by originating and flipping phony (phantom) mortgage loans into so-called mortgage backed security trusts and then selling trillions of dollars of bonds to investors around the world. FYI - Charter Members include a who's who of top institutional lenders as well as Fannie Mae and Freddie Mac. Given the extremely close relationship that MERS & its many corporate members have with the politicians who run our state and federal governments, it's not surprising that MERS and it members were able to pull off this gigantic global financial scheme without raising the brow of a State or Federal law enforcement or regulators. Only now are a few politicians and regulators paying lip service to what they refer to as the “Mortgage Meltdown”. What no politician or regulator ever seems to mention is that an estimated 60 million of the mortgages that “melted down” have the name Mortgage Electronic Registration System Inc. on them. · The Fundamentals: In the period beginning in 1999 and ending in March of 2008, Mortgage Electronic Registration Systems Inc., a/k/a/ MERS, has been named as a “mortgagee” on over sixty million mortgages. Yet MERS has never originated a single mortgage loan nor loaned a dime to a single borrower. In 2001 the New York Supreme Court ordered the Suffolk County Clerk to accept MERS mortgages for recording as a purely ministerial duty. However the Court denied MERS request for a judgment declaring that MERS mortgages were “lawful in all respects”. The New York Court of Appeals affirmed the Supreme Court’s order directing the County Clerk to record MERS mortgages. The Court of Appeals did not reverse the Supreme Court’s denial of MERS request for a judicial declaration that MERS mortgages are “lawful in all respects”. MERS, for obvious reasons, did not want a published opinion determining that MERS mortgages are legal nullities and/or that MERS has no standing to enforce a mortgage when it is not a creditor entitled to collect a debt. The New York Court of Appeals did address and frame these two issues but left them to be decided at a future date. MERS members and mortgage industry executives invented the so-called MERS paperless system to short cut standing mortgage lending safe guards and circumvent the legal requirements for originating mortgage loans and/or selling and transferring these loans to subsequent holders. This allows MERS members like Countrywide Financial, Fieldstone Mortgage, and Option One Mortgage to make loans to anyone with a heart beat and then quickly flip these questionable loans to other MERS members such a Fannie Mae, Freddie Mac, Bear Stearns, Merrill Lynch, Lehman Brothers to name just a few. ("Secondary Mortgage Market Players") MERS and its so-called “system” was driven by the strong desire of its founding “members” to report billions in profits as can be seen, in part, from a highly critical report issued by the Office of Federal Housing Enterprise on May 23. 2006, detailing what it called “an arrogant and unethical corporate culture where Fannie Mae employees manipulated accounting and earnings to trigger bonuses for senior executives from 1998 to 2004″. . . “The image of Fannie Mae as one of the lowest-risk and ‘best in class’ institutions was a facade,” . . . “Senior management manipulated accounting; reaped maximum, undeserved bonuses; and prevented the rest of the world from knowing”. . . “Our examination found an environment where the ends justified the means”. The Ohio Attorney General recently sued another MERS founding member, Freddie Mac, alleging and its top executives for fraud with very similar allegations to the facts found by OFHEO relating to Fannie Mae. These Secondary Mortgage Market Players would claim to package millions of these loans, with or without being delivered the promissory notes, into loan pools or “mortgage backed security trusts” and then flip the loans by selling trillions of dollars of bonds to investors around the world. The bonds were touted by Secondary Mortgage Market Players as producing safe yet high returns. The investors who bought these bonds included many of the world’s largest national banks. Initially MERS members reported windfall profits year after year by quickly originating, packaging into pools and then flipping trillions of dollars of mortgages loans to investors. Other MERS members, such as title insurance companies, also took their cut from each of the fifty million loans that were made while this high speed gravy train was rolling. MERS itself would earn over a billion dollars a year by charging its members $250.00 for each mortgage that MERS would be named as “mortgagee”. The reported profits from the sale of these mortgaged backed securities would result in billions of dollars of salaries and bonuses being paid to the senior executives of many of MERS member corporations. Ultimately the bond investors who actually provided all the money would learn that their “safe” investment was anything but safe. As hundreds thousands and then millions of these loans fell into default. These bondholders would lose hundreds of billions of dollars. As of April 1, 2008, the largest banks around the world had already written off losses of one hundred and fifty billions dollars relating to bonds they had purchased. One Swiss bank, U.S.B., has recently reported 40 billion dollars in losses. These loses may only be the beginning. What many people refuse to admit is that because of the so-called MERS paperless “system” many of the so-called mortgage backed security trusts do not actually hold the promissory notes which evidence the debts that are supposed to be backing the bonds purchased by these investors. The situation is reminiscent to the Great Olive Oil Scandal in the late 1800’s when banks were duped into investing millions of dollars into Olive Oil only to later discover that the tanks which were supposed to be holding millions of gallons of olive oil backing their investments were mostly empty. A June10, 2007 article in Forbes magazine details the carelessness in the securitization process by which mortgage loans were packaged and sold off to mortgage pools. This scenario has now come full circle to bite the trustees of these mortgage backed trusts who are now seeking to foreclose millions of loans that are in default: · The financial engineering (i.e. mortgage securitization) helped oil the housing boom by making credit more available. But stalled housing prices and rising defaults have revealed a mess: In the rush to flip paper, lots of the new lenders or pools don’t have the proper paperwork to show they even hold the mortgage. It appears that after MERS mortgage loans are flipped to the mortgage backed trusts the promissory notes are not actually delivered to the trustees. Nor are assignments of mortgages executed and delivered which evidence the fact the original lender has transferred the debt which is secured by the mortgage. This leaves the trusts with absolutely no paper evidence of ownership of the secured debt it purportedly owns. One informed lawyer who represents homeowners in Florida, April Charney, had foreclosure proceedings against 300 clients dismissed or postponed in 2007 for lack of standing. She is quoted as saying that “80 percent of them involved lost-note affidavits”. . . They raise the issue of whether the trusts own the loans at all,” Charney said. “Lost-note affidavits are pattern and practice in the industry. They are not exceptions. They are the rule.” Ms. Charney started challenging MERS and it members lost note affidavits after becoming skeptical of the lender could possibly lose hundreds of promissory notes. At least two Florida judges shared Ms. Charney’s skepticism regarding the copious amounts of MERS lost note affidavits and they issued show cause orders, sua sponte, challenging MERS to show proof that it held and/or lost notes in numerous actions. After evidentiary hearings these two alert judges dismissed twenty nine (29) MERS actions to foreclose for lack of standing. One judge struck MERS pleadings as being sham. A South Carolina court dismissed a MERS action to foreclose for lack of standing even though MERS filed an affidavit wherein a person claiming to be an officer of MERS claimed that MERS was holding a promissory note. The South Carolina court vetted the MERS affidavit claim that it was the holder of the note after the Court was apprised of the fact that MERS had previously told the Nebraska Court of Appeals that it never held promissory notes. In late 2007 three Federal Court Judges in Ohio dismissed over fifty law suits brought by trustees of mortgage backed trusts where they could not produce the original promissory notes. Following these decisions the Bankruptcy Court in Los Angeles, California adopted a rule of practice which requires all foreclosing trustees or other plaintiffs to produce the original promissory note when bring an action to foreclose a debt or face sanctions for not doing so. It is disturbing to know that National Banks are the trustees of thousands of trusts that may be missing millions of promissory notes. This might explain why, to date, not a single National Bank has publicly disclosed the fact that they are not actually holding what may be millions of promissory notes which evidence ownership of debts supposedly owned by their respective trusts. An independent audit of these trusts would probably be quite revealing. This writer is also unaware of any such audits that have been performed to date. These National Banks, as trustees are accountable and therefore liable for missing trust property or the documents evidencing ownership. As more borrowers, lawyers and judges learn that neither MERS nor these trustees are actually holding the promissory notes evidencing the debts they seek to collect through foreclosure, dismissals of these foreclosure actions for lack of standing will become routine. This will also means that bondholders from around the globe will be seeking to recover their loses from the National Bank trustees. MERS founders and members went about foisting their so-called “paperless” system on the American economy and indirectly upon the global economy. MERS studiously avoided seeking any legislative changes of long standing commercial laws relating to promissory notes, mortgages and public recording of assignments in any of the 50 states that it would ultimately be operating. It is possible that this blatant abuse, of the UCC and state recording laws might have passed itself off as the new way off doing business in our computer age. But MERS member companies, under clear instructions from their leaders, guaranteed disaster by pumping up and then dumping these (phantom) loans onto investors through trust they set up for this purpose. These investor/bondholders are jut now discovering that they were duped. They just don’t know how badly they were duped. Perhaps this is what the global economy is really all about. Seeing who can dupe international banks and governments out of trillions of dollars depositor and taxpayer money and do so with complete impunity. Yet, to my knowledge, after learning that they invested trillions of dollars into these questionable loan pools n/k/a/ cesspools, not a single National Bank has ordered an audit of these cesspools or trusts to determine the actual contents and the value. As a matter of sound public policy our courts should not allow MERS or its so-called “members” to circumvent and/or violate long standing laws of commerce, simply because some greedy mortgage executives thought they could shoe-horn their so-called “paperless system” into the framework of our current system of commerce. Our system still requires such sundry instruments as promissory notes be used to evidence debts and also requires that these instruments to change hands when sold or transferred to a new owner. Our system also requires a new holder of a promissory note to record an assignment of security interest or mortgage in order to enforce a lien which secures the debt evidenced by the promissory note. No one should be able to simply ignore these long standing laws just so they can reap billions of dollars in illicit bonuses by quickly originating and then flipping loans without the attendant delivery of notes and assignments of mortgages. Our system of commerce does not operate this way. This is because we have laws of commerce including the UCC which regulates our system. The MERS paperless system simply provided an expedient way for MERS and its members to fleece the investor on a global basis, by loaning money to people and then flipping trillions of dollars of these bogus loans to third party investors. The MERS system does not comply with our current laws of commerce. While the computer age has admittedly changed how business is transacted it has not eliminated or replaced the legal requirement for such things as promissory notes, mortgages and assignments of mortgages, when a loan is made, a mortgage given and the loan is subsequently sold and/or resold. This is precisely why a competent and prudent lender who makes a loan to a qualified borrower takes back a promissory note and if the loan is to be secured the borrower executed a mortgage or security agreement naming the lender as the mortgagee or secured party. The lender must then record or file its mortgage or security agreement to prefect its lien. If the lender decides to sell the debt it is owed to a third party it must endorse and deliver the promissory note to the third party. And in order for the third party to enforce either a mortgage lien or security interest the original lender must execute an assignment of mortgage or security interest, which must then be recorded or filed by the third party to give evidence and public notice of its status as assignee of the lien securing the debt it had purchased. Only the holder of the promissory note is entitled to enforce the note and/or any lien which secured the debt. American courts should no longer tolerate or close a blind eye to the fact that the MERS has no standing to commence any legal actions relating to peoples properties because they do not hold any legal or equitable interest in the debt or in the properties. The Courts must protect the integrity of our judicial system by enforcing our laws of commerce as they exist and not allow parties to come into our courts and commence actions relating to debts under the guise of legitimacy while knowing that they do not own and/or have no proof of ownership. This writer has been investor in real estate since 1976, and has owned properties in eight states and three countries. Over the last thirty two years I have witnessed and heard of many illegal or fraudulent schemes involving real estate finance. The MERS “paperless system” is the kind of scheme that is hatched in some internet boiler room in Nigeria, not in the boardrooms of our once prestigious American financial institutions. This gigantic scheme completely ignored long standing law of commerce. The effect of the system has already had a catastrophic effects on both the American and global economy. Yet many of the investment “trusts” which supposedly hold thousands of original promissory notes are hard pressed to produce them when legally required to do so. Given these facts how will investors ever recoup their investments if the debt they were supposed to own can not be legally enforced or collected? This is our money... US Taxpayers own Fannie Mae, Freddie Mac, MERS and more!At 1:39 on the video he says they "sold them unknowingly"… I don’t get it, who didn’t know? The banks didn’t know they were blackballing honest appraisers and taking advantage of the HUGE Grand Canyon loophole that was and is the AMC LOOPHOLE? Who is in charge of valuation – the market, free market? I demand we see some accountability on the dumbing down of the appraisal industry and AMC’s pimping out the valuation assignment to the lowest bidder. They have sold out this country the likes of which I’ve never seen before. But like a bank that leaves the vault door wide open, lenders are ’surprised’ that property values were over/hyper-inflated and property conditions were misrepresented. What bank or lender loans money without knowing exactly what their collateral is worth… banks and lenders do business exactly this way! BASIC PROPERTY LAW TRUMPS ESOTERIC PRETENDER LENDER ARGUMENTSBASIC PROPERTY LAW TRUMPS ESOTERIC PRETENDER LENDER ARGUMENTS
*I am not a lawyer and I don't offer legal advice. I would not wish for anyone to misconstrue my knowledge and
experience in the real estate title and escrow industry with the offering of legal advice.
DO YOU HAVE A TOXIC TITLE? Please check out (in my 'public' folder on the left) this months ROLLING STONE ARTICLE "Wall Streets Naked Swindle" as it does apply to the residential mortgage market. Page 11 talks about the "phantom" trading of mortgage backed securities (MBS) and the complications unrecorded transactions will have on title to real property. Mortgages are security instruments that are required to be recorded in public land
records as a lien against your home. Of course, dotting i's and crossing t's can be a pain, but it looks like Wall Street ended up screwing themselves (just as much as the rest of us) big time on Mortgage Backed Securities. Title Insurance claims will no doubt go through the roof in the next several years on securitized loans where the chain of title has been compromised and (in my instance) MERS was insured as mortgagee on my loan and title policy, which is bogus! They never loaned me a dime, have had no beneficial interest and have no standing in a court of law. I will need to seek quiet title in order to resolve the flaws. The crooks on Wall Street & Capitol Hill are no joke - they have designed their system for the maximum amount of destruction permissible by law. The comment below is from Neil Garfield's Living Lies website (www.LivingLies.Wordpress.com) and talks about MERS, Securitized Loans and the chain of custody of mortgage security instruments that are supposed to be recorded in Clerk of Court land records. Has your loan been securitized? Is MERS on your title? Do you know who actually owns your note (the holder in due course)? Do you know your rights and your options? Call or email me at any time with questions or comments! Tony Webster (321) 431-9668 twebster@floridahomesearch.info www.floridahomesearch.info ***************************************************************************************** *from the article "Basic Property Law Trumps Esoteric Pretender Lender Arguments at LivingLies.Wordpress.com FROM
THE COMMENT SECTION THANK YOU ANDREW: I THINK HE’S GOT IT! There is no getting away from the fact that the lender is the investor and that anyone else whose name was inserted in the documentation did so not only without authority but as an intentional misrepresentation as part of a fraudulent scheme to sell financial products at huge profits to homeowners and investors based upon false representations as to both quality and value.
Banks Ready to File Suit Against Short-SellersBanks Ready to File Suit Against Short-Sellers
Posted October 6, 2009 - http://livinglies.wordpress.com
Banks Threaten Lawsuits Against Short Sales Updated: Oct 05, 2009 Banks Threaten Lawsuits Against Short Sales There’s a new warning out for struggling homeowners who think a short sale is their way out of a foreclosure. Big name banks like Bank of America, Citibank, and Wells Fargo are threatening to come after those who sell their homes through short sales years later once their credit is restored. Realtors say banks threatening to do this are causing some fear, but homeowners have no other options but to turn to short sales over foreclosure. Remember that bail out money these banks were given? Realtors say if banks do go after people, that bail out money should be given back to the government. Realtor Tammy Truong started in the short sale market two years ago when she noticed home owners were desperate and didn’t consider foreclosure as an option. “They’re confused and don’t know what to do. They want to do the right thing and they don’t want to walk away and foreclose,” she said. But short sales are now being threatened by banks. “They are pushing out the short sale process for as long as possible and looking for new avenues to try and sue people after a short sale is completed,” said Realtor Justin Chang. Chang says at a recent realtors meeting, big name banks were on hand and made it clear they had no problem with going after homeowners who short sell years from now as they attempt to improve their credit. “In a meeting with a lot of bank officials who came out here, they came out here and said we are able to track for up to six years peoples credit, so if they do get back on track and are able to purchase again and employment comes back, that’s when they’ll try to tag them and sue them for the difference,” he said. Both Truong and Chang say banks were given millions in bailout money to help them survive and help the crippling housing market. Going after owners who complete short sales was not part of the plan. “If they go back after all these people, I feel they should give back all the bailout money,” said Truong. Realtors are turning to Nevada’s Congressional Delegations, hoping to get them involved in this and stop these banks before anyone is sued years from now. Exposing the 21st Century BankstersTime for AnswersSeptember 17, 2009It begins. The first public meeting of the Financial Crisis Inquiry Commission kicks off today and the media is finally taking notice.
Will the Commission turn out to be a lion or a lamb? Main Street needs a lion. We need this Commission to expose the excess, the fraud and the abuse at the heart of the financial system. The Pecora Commission resulted in sweeping reforms that protected consumers for decades. It can happen again, but, only if the Commission puts the public interest first. America's been ripped off. It's time for answers and reform so that this crisis doesn't happen again. Exposing the 21st Century BankstersSeptember 16, 2009After the 1929 stock market crash, President Franklin Delano Roosevelt appointed Ferdinand Pecora to investigate the cause. Pecora's investigation took on the powerful 'banksters,' the corrupt financial titans of his day, and revealed widespread fraud and abuse. His investigations ushered in sweeping regulatory changes. Today, a Financial Truth Commission led by Phil Angelides is beginning to look into the fraud and abuse that helped usher in the worst financial crisis since the Great Depression. Their first public meeting is scheduled for tomorrow. Seventy years ago,Pecora outlined Angelides' challenge:
Wall Street wants us to forget the pain the financial collapse caused because they know that outrage begets reform. They don't want to see the system reformed because they don't want to be held accountable. But, the truth is, the current system failed us. It brought job losses and financial heartache to millions of Americans. Wall Street's abuse is responsible, but, so too is the regulatory framework that is supposed to keep abuse in check. It's time to hold the masterminds of the economic collapse responsible. It's time to reform the system so that it doesn't happen again. As Ferdinand Pecora did in his day, it's up to the Financial Truth Commission to expose the rampant abuse of the corrupt and arrogant 21st century 'banksters' that continue to stand in the way of real reform. Feds Looking at Grand Jury in AIG CaseFeds Looking at Grand Jury in AIG CaseBy Tom Matzzie
Uh, oh. Looks like more bad news for AIG. Federal prosecutors are looking into seating a Grand Jury. Here is the bignews in The Wall Street Journal.
There has been only one other major criminal case to come in the
wake of the financial meltdown. A trial starts later this month for two
Bear Stearns fund managers accused of lieing to investors. Shouldn't
there be more of these? VISIT - http://livinglies.wordpress.com for more information.
DOUBLE FUNDING, FABRICATION OF DOCUMENTS AND FORGERY OF SIGNATURES REVEALEDDOUBLE FUNDING, FABRICATION OF DOCUMENTS AND FORGERY OF SIGNATURES REVEALED
Posted on October 5, 2009 - by Gregory Montelaro
LivingLies.Wordpress.com What is now beginning to surface are the losses attributed to the massive amount of fraud that mortgage originators created and passed on to Freddie Mac with two specific types of origination fraud know as “Double-Funding”, “Double Selling” or “Double Warehousing” fraud and Assignment Fraud. “Double-Funding” involves a mortgage originator sending simultaneous funding requests for the same loan to two different warehouse lenders. Both warehouse lenders, unaware of each other, would send funding for the loan to the title companies specified by the mortgage originator. The mortgage originator then disburses the money from one lender to the borrower, while directing the title company to wire the money received from the other lender to mortgage originator’s bank account. The mortgage originators then provide fabricated mortgage documents to the warehouse lenders that falsely represented that the lender’s funds had, in fact, been used to finance borrower loans. Assignment Fraud involves modifications to the original loan where the name of the bank who actually owns the note is changed on execution of the Loan Modification Agreement. The problem with these “modifications” (actually new loans with new “lenders”) is that the old loans remain unaffected. The existing cloud on title to the property, the mortgage deed (or deed of trust), the note, the obligation, the purported assignments etc. is being compounded by attempts to allow impostors to foreclose on the mortgage, collect on the note, modify the loan, or approve a short sale. The time bomb is title where securitized loans were recorded, foreclosed, modified or sold. The parties (other than the borrower and possibly the Trustee on the Deed of Trust) had actual knowledge that the “lender” was not the Lender, the terms of the obligation were already changed at the time of closing, the appraisal was false, the underwriting was negligent or fraudulent, the Good Faith Estimate was by definition rendered neither in good faith nor even close to an accurate estimate, and the list goes on and on. In determining whether a particular loan is part of a “double-funding” or “double-selling” scheme, examiners and forensic accountants should look for as evidence that a mortgage originator is engaging in this scheme and participating in a pattern of deception, forgery and fraud. Once demonstrated, these indicators inevitably point to fraudulent affidavits and assignments of mortgages filed in the public records. As you examine your loan documents you should be looking for the following: 1. Loan originators, servicers and their lawyers forge documents with “squiggle marks” that are not the marks, initials or signatures of the actual officer that is notarized to be the signatory. 2. Signature, initials or “squiggle marks” differ for the same signatory from document to document. 3. Squiggle marks and full signatures that are diametrically opposed to the known signature of the signatory. 4. Pre-stamped assignments and notary signatures on assignments, affidavits and proof of claims. 5. Back-dating of dates on assignments and signatures of officers dating years after either a company is no longer in business or the officers are no longer with the company. Examples of this can be seen here: http://dc131.4shared.com/download/134186016/9761c46f/BadNotary.pdf Notice that the notary swears under oath that they witnesses the signature on these documents in 2001. However in the State of Texas, notaries are commissioned for 4-years. The notary stamps on these documents expires in 2006 making it impossible for this notary to have witnessed anything in 2001. Again, these are all loans originated by Memorial Park Mortgage, sold to Freddie Mac and then, as demonstrated here, other banks on forged and fraudulent assignments. 6. The forgery of forbearance agreements and modification agreements. 7. Missing assignments or multiple assignments of the same instrument filed in the public records are a direct result of multi-pledging and the use of the same collateral, the mortgage loan, to pool into securities or pledge for other financing and should be viewed as an overt act of fraud when encountered. As an example: http://dc131.4shared.com/download/134185974/325196a4/Aug28Admit.pdf Freddie Mac was finally compelled by a court to admit to purchasing this particular loan even though no assignment to Freddie Mac was ever filed in the public records. 8. The discovery of pre-dated, backdated and fraudulent assignments of mortgages or endorsements either completely filled in or left blank to be filled in before or after the fact to support the future allegations of a foreclosing party. These fraudulent assignments are typically discovered by examiners in the servicers files or MERS files when MERS acts on the servicers behalf. These documents are created for the sole purpose of assisting in concealing known frauds and abuses by originators, prior servicers and are designed specifically to conceal the true chain of ownership of a borrower’s loan. Here is an example from a loan from Memorial Park Mortgage of Houston, Texas that was first sold to Freddie Mac and then to several other banks by the originator. http://dc148.4shared.com/download/134235430/a8cc4755/BlankAsmt.pdf Notice that the bank to whom the assignment is made is left blank as are the instrument number and several other blanks. More importantly, notice that the assignment has already been signed and notarized. This document was produced in discovery by CitiMortgage even though an assignment to them already existed in the public records. 9. No escrow instructions or settlement statements should trigger the examiner to immediately attempt to locate the assignment of the mortgage. Multiple or missing assignments coupled with an inability to produce escrow and settlement statements demonstrate a deliberate concealment of the ownership of the borrower’s mortgage debt obligation and the actual lender to whom the borrower is indebted. 10. Lack of possession of the original note demonstrating the proper chain of title and legal right to foreclose should be noted as evidence of fraud. Coupled with a missing assignment or multiple assignments is further evidence of the existence of fraud. A common practice by some banks party to or victims of this kind of fraud is the fraudulent concealment from the court and the borrower that the financial institution does not have possession of the note. Of special note is the use of known false, fraudulent, and forged affidavits and assignments by those institutions unable to demonstrate their possession of the original note. The effects and implications are more far reaching than a borrower simply having their debt extinguished. Debt extinguishment or dismissal of foreclosure actions could be obtained if it can be shown the entity filing the foreclosure: 1. Does not own the note; 2. Made false representations to the court in pleadings; 3. Did not have the proper authority to foreclose; 4. Does/did not have possession of the note; 5. All indispensable parties (the actual owners) are not before the court or represented in the pending foreclosure action. This kind of fraud is not difficult to detect once you know the indicators. Foreclosure Lawyers scrutinized for ethical violationForeclosure lawyers scrutinized for ethical violationsThe state group that disciplines lawyers is debating how to deal with reports of attorneys using errors and false statements to retake property in foreclosure cases. Some of the most egregious Florida examples come from Sarasota County, where a study this summer that looked at the civil courts system found three of four foreclosure cases that went forward without the proper paperwork. In one case, an attorney for a lender used a false reason to schedule a Sarasota widow's home for a foreclosure sale. And one circuit judge in Sarasota, after an attorney assured her everything was in order, happened to glance at foreclosure paperwork and realized the two properties were in Miami, a few hundred miles outside her jurisdiction. Judges have said they can only catch a few in hopes of keeping the rest honest. A section of The Florida Bar that seeks to give everyone equal access to the courts says stories like those prompted it to push for a special committee to review any ethical violations in foreclosure cases. "If we let these things happen without consequences, then we are allowing attorneys to take people's homes," said attorney Harley Herman. "As long as the bar sits back and does nothing, its a bad situation." Herman equated the problem with an issue the bar's Board of Governors tackled a few years ago: rampant attorney advertising. The Equal Opportunity Law section will present its case Friday at the Board of Governor's meeting that letting the behavior go will hurt the image of attorneys. And the resolution will be reviewed and a committee that looks at attorney discipline. Not all attorneys agree something needs to be done. Sarasota attorney Norman Vaughan-Birch, who sits on the Florida Bar Board of Governors, said a special panel on lawyers is not necessary because there is already a disciplinary process in place. Any attorney who sees errors or fabrications can file a complaint with the Florida Bar that will be investigated, Vaughn-Birch said. Complaints against lawyers are confidential until a decision is made, so it is unknown whether that has been happening. John B. Neukamm, who heads up the section on Real Estate law, called it a "knee-jerk resolution" and said it addresses a small number of attorneys. "Identify those lawyers and have the bar investigate them," Neukamm said of the resolution. "At least the way it is phrased, it seems to sully the reputation of a lot of lawyers." The Mortgage Machine BackfiresPublished: September 26, 2009
WITH the mortgage bust approaching Year Three, it is increasingly up to the nation’s
courts to examine the dubious practices that guided the mania. A ruling
that the Kansas Supreme Court issued last month has done precisely
that, and it has significant implications for both the mortgage industry and troubled borrowers. The opinion spotlights a crucial but obscure cog in the nation’s lending machinery: a privately owned loan tracking service known as the Mortgage Electronic Registration System. This registry, created in 1997 to improve profits and efficiency among lenders, eliminates the need to record changes in property ownership in local land records. Dotting i’s and crossing t’s can be a costly bore, of course. And eliminating the need to record mortgage assignments helped keep the lending machine humming during the boom. Now, however, this clever setup is coming under fire. Legal experts say the fact that the most recent assault comes out of Kansas, a state not known for radical jurists, makes the ruling even more meaningful. Here’s some background: For centuries, when a property changed hands, the transaction was submitted to county clerks who recorded it and filed it away. These records ensured that the history of a property’s ownership was complete and that the priority of multiple liens placed on the property — a mortgage and a home equity loan, for example — was accurate. During the mortgage lending spree, however, home loans changed hands constantly. Those that ended up packaged inside of mortgage pools, for instance, were often involved in a dizzying series of transactions. To avoid the costs and complexity of tracking all these exchanges, Fannie Mae, Freddie Mac and the mortgage industry set up MERS to record loan assignments electronically. This company didn’t own the mortgages it registered, but it was listed in public records either as a nominee for the actual owner of the note or as the original mortgage holder. Cost savings to members who joined the registry were meaningful. In 2007, the organization calculated that it had saved the industry $1 billion during the previous decade. Some 60 million loans are registered in the name of MERS. As long as real estate prices rose, this system ran smoothly. When that trajectory stopped, however, foreclosures brought against delinquent borrowers began flooding the nation’s courts. MERS filed many of them. “MERS is basically an electronic phone book for mortgages,” said Kevin Byers, an expert on mortgage securities and a principal at Parkside Associates, a consulting firm in Atlanta. “To call this electronic registry a creditor in foreclosure and bankruptcy actions is legal pretzel logic, nothing more than an artifice constructed to save time, money and paperwork.” The system also led to confusion. When MERS was involved, borrowers who hoped to work out their loans couldn’t identify who they should turn to. As cases filed by MERS grew, lawyers representing troubled borrowers began questioning how an electronic registry with no ownership claims had the right to evict people. April Charney, a consumer lawyer at Jacksonville Area Legal Aid in Florida, was among the first to argue that MERS, which didn’t own the note or the mortgage, could not move against a borrower. Initially, judges rejected those arguments and allowed MERS foreclosures to proceed. Recently, however, MERS has begun losing some cases, and the Kansas ruling is a pivotal loss, experts say. While the matter before the Kansas Supreme Court didn’t involve an action that MERS took against a borrower, the registry’s legal standing is still central to the ruling. The case involved a borrower named Boyd A. Kesler, who had taken out two mortgages from two different lenders on a property in Ford County, Kan. The first mortgage, for $50,000, was underwritten in 2004 by Landmark National Bank; the second, for $93,100, was issued by the Millennia Mortgage Corporation in 2005, but registered in MERS’s name. It seems to have been transferred to Sovereign Bank, but Ford County records show no such assignment. In April 2006, Mr. Kesler filed for bankruptcy. That July, Landmark National Bank foreclosed. It did not notify either MERS or Sovereign of the proceedings, and in October, the court overseeing the matter ordered the property sold. It fetched $87,000 and Landmark received what it was owed. Mr. Kesler kept the rest; Sovereign received nothing. Days later, Sovereign asked the court to rescind the sale, arguing that it had an interest in the property and should have received some of the proceeds. It told the court that it hadn’t been alerted to the deal because its nominee, MERS, wasn’t named in the proceedings. The court was unsympathetic. In January 2007, it found that Sovereign’s failure to register its interest with the county clerk barred it from asserting rights to the mortgage after the judgment had been entered. The court also said that even though MERS was named as mortgagee on the second loan, it didn’t have an interest in the underlying property. By letting the sale stand and by rejecting Sovereign’s argument, the lower court, in essence, rejected MERS’s business model. Although the Kansas court’s ruling applies only to cases in its jurisdiction, foreclosure experts said it could encourage judges elsewhere to question MERS’s standing in their cases. “It’s as if there is this massive edifice of pretense with respect to how mortgage loans have been recorded all across the country and that edifice is creaking and groaning,” said Christopher L. Peterson, a law professor at the University of Utah. “If courts are willing to say MERS doesn’t have any ownership interest in mortgage loans, that may eventually call into question the priority of liens recorded in MERS’s name, and there are millions and millions of them.” MERS LANDMARK DECISIONMERS_Landmark Decision Promises Massive Relief For Homeowners Ellen Brown, September 19th, 2009 A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound. Eliminating the “Straw Man” Shielding Lenders and Investors from LiabilityThe development of “electronic” mortgages managed by MERS went hand in hand with the “securitization” of mortgage loans – chopping them into pieces and selling them off to investors. In the heyday of mortgage securitizations, before investors got wise to their risks, lenders would slice up loans, bundle them into “financial products” called “collateralized debt obligations” (CDOs), ostensibly insure them against default by wrapping them in derivatives called “credit default swaps,” and sell them to pension funds, municipal funds, foreign investment funds, and so forth. There were many secured parties, and the pieces kept changing hands; but MERS supposedly kept track of all these changes electronically. MERS would register and record mortgage loans in its name, and it would bring foreclosure actions in its name. MERS not only facilitated the rapid turnover of mortgages and mortgage-backed securities, but it has served as a sort of “corporate shield” that protects investors from claims by borrowers concerning predatory lending practices. California attorney Timothy McCandless describes the problem like this: “[MERS] has reduced transparency in the mortgage market
in two ways. First, consumers and their counsel can no longer turn to the
public recording systems to learn the identity of the holder of their note.
Today, county recording systems are increasingly full of one meaningless name,
MERS, repeated over and over again. But more importantly, all across the
country, MERS now brings foreclosure proceedings in its own name – even though
it is not the financial party in interest. This is problematic because MERS is
not prepared for or equipped to provide responses to consumers’ discovery
requests with respect to predatory lending claims and defenses. In effect, the
securitization conduit attempts to use a faceless and seemingly innocent proxy
with no knowledge of predatory origination or servicing behavior to do the
dirty work of seizing the consumer’s home. . . . So imposing is this opaque
corporate wall, that in a “vast” number of foreclosures, MERS actually succeeds
in foreclosing without producing the original note – the legal sine qua non of
foreclosure – much less documentation that could support predatory lending
defenses.” The real parties in interest concealed behind MERS have been made so faceless, however, that there is now no party with standing to foreclose. The Kansas Supreme Court stated that MERS’ relationship “is more akin to that of a straw man than to a party possessing all the rights given a buyer.” The court opined: “By statute, assignment of the mortgage carries with it the assignment of the debt. . . . Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of default. The person holding only the deed of trust will never experience default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the note holder did not also hold the deed of trust.” [Citations omitted; emphasis added.] MERS as straw man lacks standing to foreclose, but so does original lender, although it was a signatory to the deal. The lender lacks standing because title had to pass to the secured parties for the arrangement to legally qualify as a “security.” The lender has been paid in full and has no further legal interest in the claim. Only the securities holders have skin in the game; but they have no standing to foreclose, because they were not signatories to the original agreement. They cannot satisfy the basic requirement of contract law that a plaintiff suing on a written contract must produce a signed contract proving he is entitled to relief. The Potential Impact of 60 Million Fatally Flawed MortgagesThe banks arranging these mortgage-backed securities have
typically served as trustees for the investors. When the trustees could not
present timely written proof of ownership entitling them to foreclose, they
would in the past file “lost-note affidavits” with the court; and judges
usually let these foreclosures proceed without objection. But in October 2007,
an intrepid federal judge in Cleveland put a halt to the practice. U.S.
District Court Judge Christopher Boyko
ruled that Deutsche Bank had not filed the proper paperwork to establish its
right to foreclose on fourteen homes it was suing to repossess as trustee.
Judges in many other states then came out with similar rulings. Following the Boyko decision, in December 2007 attorney Sean Olender suggested in an article in The San Francisco Chronicle that the real reason for the bailout schemes being proposed by then-Treasury Secretary Henry Paulson was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. Olender wrote: “The sole goal of the [bailout schemes] is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth. The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process. “. . . The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC . . . . “What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back.” Needless to say, however, the banks did not buy back their
toxic waste, and no bank officials went to jail. As Olender predicted, in the
fall of 2008, massive taxpayer-funded bailouts of Fannie and Freddie were
pushed through by Henry Paulson, whose former firm Goldman Sachs was an active
player in creating CDOs when he was at its helm as CEO. Paulson also hastily engineered
the $85 billion bailout of insurer American International Group (AIG), a major counterparty
to Goldmans’ massive holdings of CDOs. The insolvency of AIG was a huge crisis
for Goldman, a principal beneficiary of the AIG
bailout. In a December 2007 New York Times article titled “The Long and Short of It at Goldman Sachs,” Ben Stein
wrote: “For decades now, . . . I have been receiving letters
[warning] me about the dangers of a secret government running the world . . . .
[T]he closest I have recently seen to such a world-running body would have to
be a certain large investment bank, whose alums are routinely Treasury
secretaries, high advisers to presidents, and occasionally a governor or United
States senator.” The pirates seem to have captured the ship, and until now there
has been no one to stop them. But 60 million mortgages with fatal defects in
title could give aggrieved homeowners and securities holders the crowbar they
need to exert some serious leverage on Congress – serious enough perhaps even to
pry the legislature loose from the powerful banking lobbies that now hold it in
thrall. How CDO & CDS's Crushed the World EconomyHow Derivatives, Collateralized Debt Obligations and Credit Default Swaps crushed the world economyJune 4, 4:51 PM LA Bipartisan Examiner Vince Flaherty “The banks run the place… they give three
times more money than the next biggest group,” says Congressman Collin
Peterson, the Chairman of the Agriculture Committee. Peterson, who says
banks are controlling Congress, has introduced a bill to bar
Derivatives trading in any clearinghouse regulated by the New York
Federal Reserve, and thereby bring Derivatives trading out of the
shadows of the private clearing houses, and onto public exchanges. You
see, it finally took someone who knows about agriculture, to get down
to the nitty-gritty of the Derivatives dilemma. The trouble is,
according to Congressman Peterson, that his bill will not pass unless
it is materially changed to the satisfaction of his colleagues in
Congress, the ones who are accepting the contributions and perks from
their bankster superiors. Derivatives, along with their
cousins the Collateralized Debt Obligations (CDO’s), and Credit Default
Swaps (CDS), are the financial instruments that have in recent times
been defined as a bottomless pit of incomprehensibly written economic
jargon, or Wall Street hocus pocus. They are being blamed by many
bankers, politicians and high government officials, to be the
underlying cause of AIG’s recent quarterly loss, over 67 billion
dollars, and the ongoing world financial crisis, among a few other
things. Specific people are not being held to blame mind
you, just Derivatives, Collateralized Debt Obligations and Credit
Default Swaps. This is almost like saying that Hitler didn’t do
anything wrong, it was National Socialism… and since I mentioned
National Socialism… well, never mind, for the time being… Here’s
what really happened. This is how bankers just caused the largest
economic collapse in the history of the world. Up until about 2007,
Wall Street and their international counterparties got away with
running what amounted to a colossal pyramid scheme. They started by
selling millions of bundled together mortgages in packages called
Structured Investment Vehicles, to the world’s banks, trusts,
institutions, and municipal, corporate or government entities. In order
to sell these investments to municipalities and other state entities,
that are regulated to keep their portfolios conservatively safe, many
of those pools of mortgages were packaged into larger, supposedly more
stable instruments called Collateralized Debt Obligations (CDO’s) that
contained several kinds of debt such as corporate or credit card debt,
in addition to mortgage loans. The main theory behind the structuring
was that diversification of different kinds of debt within the CDO’s
would diminish the overall risk of default. As the banks
endeavored to create more attractive terms and yields to entice further
end buyers, the terms of the underlying mortgage loans became ever more
egregious to American homeowners. In many instances, cash incentives
were awarded to brokers and loan officers at the banks, as a reward for
steering borrowers into more profitable sub-prime (predatory) loans,
when the borrowers were actually qualified for better terms. In other
cases, “liar’s loans” for undocumented or unqualified borrowers were
pushed through with predatory terms and rates in order to enhance the
yields of the packages, and feed the pyramiding machine. Many
of those aggressive mortgage documents were written in such a way that
the interest payment would often double or triple within a few years,
often placing the borrowers within an astoundingly unethical debt-
to-income ratio of 80% or even more. In other words, the rate of
interest, and hence the rate of return, promised on much of that paper,
was clearly unsustainable, and designed by the banks to fail sometime
in the future after they had packaged and sold the paper to unwitting
investors in the secondary market. To conceal the high
risk nature of such mortgage instruments, and the CDO’s into which they
were packaged, our largest American banks used three different rating
agencies to rate the risk for purchasers. Unfortunately, our own
government was conveniently looking the other way, as the banks, who
just happened to own the rating agencies, and apparently our government
as well, paid the agencies to rubber stamp the mortgages Triple A (AAA)
so that they could be bundled into “Triple A” Structured Investment
Vehicles and Collateralized Debt Obligations, and sold all around the
world. As a measure to manage the risk, and as a further
inducement to facilitate more trades, the banks utilized a device
called the Credit Default Swap (CDS), under which for a monthly
premium, another institution, bank, or insurance corporation such as
AIG, would agree to pay off the debt if the borrowers defaulted. The
Federal Reserve and the Office of the Comptroller of the Currency
thought it was such a great idea, that they exempted banks from having
to keep cash reserves for the Credit Default Swap protected obligations
the banks held. This allowed the banks to make more loans with their
cash reserves that previously under federal law would have been
required to remain in the banks to balance their loan to reserve
ratios. That the secretive Federal Reserve led the way in allowing the
banks to do such a thing, was no real surprise because the Chairman of
the Federal Reserve has always been appointed by the President of the
United States from a list of three people supplied by the banks. The
main problem with the scheme was that the institutions providing the
Credit Default Swap protection were not even required by government
regulators to prove that they had enough reserves to actually pay off
the debts in the event that, God forbid, defaults occurred and world’s
financial institutions, real estate trusts, worldwide municipal and
government entities that bought the Structured Investment Vehicles,
CDO’s and Derivatives, started to suffer losses and demanded that Wall
Street buy back the bogus “Triple A” rated paper. One can
imagine that if the stalwart individuals who structured this debacle
were really sharp, they would have at least thought of a way around the
annoying buy- back clauses in the contracts. But you see, they were
busy trying to figure out how the CDS, CDO’s and the Derivatives were
going to work mathematically. Not even past chairman of the Federal
Reserve Alan Greenspan, nor present chairman Ben Bernanke, nor former
Goldman Sachs CEO and Secretary of the Treasury Henry M. Paulson Jr.,
nor former head of the New York Federal Reserve and current Secretary
of the Treasury Timothy F. Geithner, or anybody else for that matter,
could accurately figure out how these Derivatives, Collateralized Debt
Obligations (CDO’s) and Credit Default Swaps (CDS), were supposed to
actually work, because the language and the formulas in the instruments
was incomprehensible, and there wasn’t nearly enough money in reserve
to insure potential losses. The sad news at the moment… is that less than half of the underlying time bomb mortgages in the United States have yet to adjust dramatically upward and fall into default. Meanwhile, due to the “credit freeze”, many borrowers who thought they would be able to convert to more reasonable loan terms, have been forced to continue to make unreasonably high interest payments compared to their income, draining all of their savings reserve and retirement accounts, while our government and their superiors at the banks, in spite of their rhetoric to the contrary, continue to make it extremely difficult for such borrowers to have their loan terms modified.
|
||||||||||||||
Please view with FIREFOX BROWSERMake it a great day! |
|||||||||||||||
Send a private message
Subscribe to RSS feed
Tell a friend
Add to My MSN
Add to your network
Sign up for alerts
|
|
