Here’s the second thing that is, however, getting absolutely no press and is completely insane. So remember there are only lawyers for the lender and lawyers for the insurance company arguing to the judge. And so a bizarre version of reality emerged from all of this in which 75 percent of the time the lender lies deliberately to the insurer, lies to the people who buy the bonds. All of these people are, you know, supposedly among the most sophisticated financial players in the world. But as soon as they get to fraud in the origination, in the making of the loan, with no discussion, everybody involved assumes that it must have been the borrowers that did all the lying, not the lenders. — Transcript, Bill Black interview with Paul Jay, Senior Editor, TRNN
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Editor’s Note: FINALLY someone (other than me) said it — if the banks were lying at least 75% of the time to the regulators, pension funds, insurance companies, credit default swap counterparties — obviously the most sophisticated people in the world of finance — why do we suddenly turn the table over and play blame the victim when it comes to origination of the loan?
Nothing could be more obvious than that the loans were nearly all based upon layers of lies, each layer seemingly supporting or corroborating the other, despite the fact that none of it was true.
The lender wasn’t the lender. The loan came from a an undisclosed party in an table funded transaction — but here the table funding strictly prohibited the originator from touching or affecting any financial transaction at the loan closing. The wrong payee is named, the terms for repayment conflict with (1) the terms of repayment of the mortgage bond and (2) the terms of repayment arising out of the fact that the real transaction in which money exchanged hands, gave rise to borrower’s obligation to yet another undisclosed party, a non-creditor initiates the foreclosure, a non-creditor submits a credit bid, the credit bid is accepted and a complete stranger to the transaction who neither funded the original loan nor the purchase of the loan gets to evict a homeowner who is not even in default — but does not know that.
The appraisal was a lie, the viability of the loan was a lie, the stated income was a lie generated by the originator and mortgage broker, the “pick a payment” was a lie because once you owe 125% of the original loan amount through negative amortization, your loan resets to a higher interest rate based upon the amount you originally borrowed PLUS 25%.
From one end to the other the securitization of residential mortgages was a lie having no merit or substance at all. It was a PONZI scheme that was wholly dependent upon new investors buying more bogus mortgage bonds issued by REMIC “trusts” that had no trust documents, no trustor, no assets, no business, no money and no loans. Why isn’t this accepted at the origination level just as the media is perfectly willing to accept that in order to generate those sales of bogus mortgage bonds, the banks lied?
Do you want proof? When did the system collapse? When defaults reached their high? NOPE. It was when investors suddenly stopped buying the bogus mortgage bonds, the credit trading markets froze up and everyone was a trapped in a lie except the banks of course who through their “laddering” as Goldman Sachs like to call it, siphoned off trillions of dollars through Bermuda and Cayman into thousands of depository accounts and investments all over the world.
No legitimate business collapses when people stop buying their stock, yet in every PONZI scheme that is the sole reason why the house of cards collapses. Hence, the securitization was an illusion where the money was diverted FROM the REMIC and the title tot he loan was diverted FROM the REMIC and the terms of the note and bond were different, neither one being disclosed to lender or borrower.
The very idea that the banks lost money and that they needed money to ease of the credit markets was a lie. To ease up the credit markets, the banks would have had to start lending again. That was the deal with Paulson and Geithner. But they didn’t start lending, they stopped the lending they were already doing sending the world into a tailspin.
All this because of an undefined assumption and fear that if the big banks fail the whole world comes to an end. That is Bulls–t. Just look at Iceland and other countries who are not giving the banks the benefit of the doubt. They have positive GDP growth and they have easing credit, and their society is more stable than ours.
This is an interview worth reading and following: