More Charges Against Brown at DOCX

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“Shortcuts like robo-signing are just one piece of the mortgage foreclosure crisis,” said Schuette.  “Our investigation remains ongoing, and we will bring to justice every lawbreaker we find.”

—-

The message is finally getting through. Justice moves slowly. I have mentioned here that it takes a long time for law enforcement to unravel a complex financial scheme and build a case that can be proven beyond a reasonable doubt. Finally it is starting. Brown has already entered plea deals in other states. This time it is in Michigan where the allegations from Attorney General Schuette are virtually identical to the defenses raised and dismissed by thousands of Judges who believed that borrowers were simply trying to get out of a legitimate debt.

Neither the debt nor the documentation turns out to be legitimate — all based upon fraud, forgery, and now with these charges RICO. Incredibly the investigation at the Michigan AG office only began in 2011. The rest of us began our investigations in 2007 or even earlier in some cases like Katherine Ann Porter when she was a professor at the University of Iowa and the Fordham Law students who published the article “Will the real party in interest please stand up” in the Fordham Law Review (see right side of this blog to access article). Students were able to decipher the lies and cover-ups before the issue of PONZI schemes and fraud were raised in an outcry by lawyers and borrowers who were gradually worn down to the bone by Judges who just didn’t believe the “theories” (based upon fact) advanced by borrowers who wanted to get rid of the remedy of foreclosure and a way to modify their mortgages to real value.

Like other states, Michigan is passing laws to protect and provide remedies for the illegal practices used by the Banks, but they still don’t grasp the full import of the false documentation, the credit bids by non-creditors, and the fact that the balances due on the loans are far below the amount demanded by the banks because of payments from insurance, credit default swaps, federal bailouts etc.

The real question is what restitution should be provided to the millions of people who were victims of foreclosure by entities that neither funded nor purchased the loan? Besides getting their house back, how much in damages should the banks be required to pay. When will the AG’s sink their teeth all the way into the largest economic crime in human history?

MIchigan Charges DOCX Brown with Felonies

 

Zillow Raises Estimate Again: 16 Million Homes Underwater

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Editor’s Comment:

This is why I am re-starting my seminar tours. The information out there is disinformation and in this case sellers don’t realize how badly they have been screwed until they are walking toward the closing table. The “underwater” phenomenon represents a vast market inventory shadow that is not being counted by anyone — which is why my estimates of market activity and prices are so much lower than what you hear from everyone else. So far I have been right every year.

Zillow is at least making an effort. It is sharpening the definition of “underwater.” We have been saying for years that the number of homes “underwater” is both rising and vastly underestimated. The reason I knew was that just by putting pencil to paper and using all the factors that measure the amount of money one might get as proceeds from the sale of a home, the average PROCEEDS from the sale of residential property was substantially below the average VALUES that were being used. Zillow has now entered the world of reality by adding all the relevant mortgages and not just the last one allocated to that property.

Once upon a time when you sold a house you received a check for the proceeds of the sale. It was always lower than what you expected because of expenses and charges that you incurred and after you deducted the expenses that didn’t appear on the HUD 1 Settlement Statement (money that you spent preparing the house for sale).

Now the situation is different. Instead of getting a check, many if not most homeowners must bring a check if they want to sell their home. Most homeowners, in other words, must pay money out of their pocket if they want to sell their home. In some cases, the bank will allow a short-sale where they will accept a payoff less than the amount they say is owed, but even then, the hapless homeowner will still be unable to recover his down payment, all the money he put into the house in furnishings and improvements, and all the principal payments made on a house that was intentionally overvalued, using inflated appraisals that would  leave the homeowner screwed.  

When they start looking at “Seller’s Proceeds” from the standpoint of a real HUD 1 settlement sttements, the figure will be even lower than the current Zillow estimate. The disconnect between “prices”, “home values” and “proceeds” has never been greater. The question of whether or not a home is underwater is determined by proceeds of sale — without regard to price or value. Being underwater means to answer a question: “How much money will the seller need to spend in order to sell the property with free and clear title.”

Forgetting the whole issue of title corruption caused by the use of MERS which further affects prices, values and proceeds, the amount of money required from the seller in order to sell his/her home is nothing short of sticker shock and the fact remains that a majority of the people affected do not know what has happened to their wealth. They do not understand the extent to which they suffered damage by Wall Street schemes. And of course they don’t know that there is something they can do about it — like any rational businessman instead of the deadbeat bottom-feeders  portrayed by bank mythology.

Once all factors (other than MERS) are taken into consideration, the Zillow numbers will change again to more than 20 million homes and will probably reach 25 million homes that are really underwater, most of which are hopeless because values and prices will never get enough lift, even with inflation, to make up the difference between what they must pay as sellers to get out of the deal and what they can get from buyers who are willing to buy the home. Add the MERS’ factors in, now that title questions we raised 4 years ago are being considered, and it is possible that many homes cannot ever be sold at any price. Where the levels of “securitization” are limited to only 1, then perhaps it is possible to sell the property but not without spending more money to clear title. 

Nearly 16M Homes Are Now Underwater

by THE KCM CREW

Zillow just reported that their data shows nearly 16 million homes in this country are now in a negative equity position where the house is worth less than the mortgages on the home. This number is dramatically higher than the approximate 11 million reported by other entities. Why the huge difference? Zillow professes to take into consideration ALL loans on the property not just the most recent loan (purchase or refinance).

The key findings in the study:

▪       Nearly one-third (31.4 percent) of U.S. homeowners with mortgages – or 15.7 million – were underwater on their mortgage.

▪       A slower pace of foreclosures after the robo-signing issues of 2010 contributed to slower progress in working down negative equity. Foreclosures cause homes to come out of negative equity when a bank or third party takes ownership.

▪       Nine in 10 homeowners continue to make their mortgage and home loan payments on time, with just 10.1 percent of underwater homeowners more than 90 days delinquent.

▪       Nearly 40 percent of underwater homeowners, or 12.4 percent of all homeowners with a mortgage, owe between 1 and 20 percent more than their home is worth.

▪       An additional 21 percent of underwater homeowners, or 6.6 percent of all homeowners with a mortgage, owe between 21 and 40 percent more than their home is worth.

▪       About 2.4 million, or 4.7 percent of all homeowners with mortgages owe more than double what their home is worth.

How can negative equity impact the housing market? In the report, Zillow Chief Economist Stan Humphries explains:

“Not only does negative equity tie many to their homes, by making homeowners unable to move when they may want to, but if economic growth slows and unemployment rises, more homeowners will be unable to make timely mortgage payments, increasing delinquency rates and eventually foreclosures.”

Case Shiller: House Prices fall to new post-bubble lows in March NSA

by CalculatedRisk

S&P/Case-Shiller released the monthly Home Price Indices for March (a 3 month average of January, February and March).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the National index.

Note: Case-Shiller reports NSA, I use the SA data.

From S&P: Pace of Decline in Home Prices Moderates as the First Quarter of 2012 Ends, According to the S&P/Case-Shiller Home Price Indices

Data through March 2012, released today by S&P Indices for its S&P/CaseShiller Home Price Indices … showed that all three headline composites ended the first quarter of 2012 at new post-crisis lows. The national composite fell by 2.0% in the first quarter of 2012 and was down 1.9% versus the first quarter of 2011. The 10- and 20-City Composites posted respective annual returns of -2.8% and -2.6% in March 2012. Month-over-month, their changes were minimal; average home prices in the 10-City Composite fell by 0.1% compared to February and the 20-City remained basically unchanged in March over February. However, with these latest data, all three composites still posted their lowest levels since the housing crisis began in mid-2006.

“While there has been improvement in some regions, housing prices have not turned,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “This month’s report saw all three composites and five cities hit new lows. However, with last month’s report nine cities hit new lows. Further, about half as many cities, seven, experienced falling prices this month compared to 16 last time.”

Case-Shiller House Prices Indices

Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000).

The Composite 10 index is off 34.1% from the peak, and up 0.2% in March (SA). The Composite 10 is at a new post bubble low Not Seasonally Adjusted.

The Composite 20 index is off 33.8% from the peak, and up 0.2% (SA) from March. The Composite 20 is also at a new post-bubble low NSA.

Case-Shiller House Prices Indices

The second graph shows the Year over year change in both indices.

The Composite 10 SA is down 2.8% compared to March 2011.

The Composite 20 SA is down 2.6% compared to March 2011. This was a smaller year-over-year decline for both indexes than in February.

The third graph shows the price declines from the peak for each city included in S&P/Case-Shiller indices.

Case-Shiller Price Declines

Prices increased (SA) in 15 of the 20 Case-Shiller cities in March seasonally adjusted (12 cities increased NSA). Prices in Las Vegas are off 61.5% from the peak, and prices in Dallas only off 6.7% from the peak.

The NSA indexes are at new post-bubble lows – and the NSA indexes will continue to decline in March (this report was for the three months ending in February). I’ll have more on prices later

Recording and Auctions: AZ Maricopa County Recorder Meets with Homeowners

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Phoenix, May 23, 2012: Last night we had the pleasure of meeting with Helen Purcell, Maricopa County Recorder, after having met with Tom Horne, AZ Attorney General and Ken Bennett, the AZ Secretary of State on issues relating to mortgages, robo-signing, notary fraud, etc.  Many thanks again to Darrell Blomberg whose persistence and gentle demeanor produced these people at a meeting downtown. See upcoming events for Darrell on the Events tab above.

The meeting was video recorded and plenty of people were taking notes. Purcell described the administrative process of challenging documents. By submitting a complaint apparently in any form, if you identify the offending document with particularity and state your grounds, again with particularity, the Recorder’s office is duty bound to review it and make a determination as to whether the document should be “corrected” by an instrument prepared by her office that is attached to the document.

If your complaint refers to deficiencies on the face of the document, the recorder’s office ought to take action. One of the problems here is that the office handles electronic recording via contracts who sign a Memorandum of Understanding with her office and become “trusted submitters.” Title companies, law offices, and banks are among the trusted sources. It appears to me that the mere submission of these documents in electronic form gives rise to the presumption that they are valid even if the notarization is plainly wrong and defective.

If the recording office refuses to review the document, a lawsuit in mandamus would apply to force the recorder to do their job. If they refer matters to the County Attorney’s office, the County Attorney should NOT be permitted to claim attorney client privilege to block the right of the person submitting the document or objection from know the basis of the denial. You have 10 years to challenge a document in terms of notary acknowledgement which means that you can go back to May 24, 2002, as of today.

One thing that readers should keep in mind is that invalidating the notarization does not, in itself, invalidate the documents. Arizona is a race-notice state though which means the first one to the courthouse wins the race. So if you successfully invalidate the notarization then that effectively removes the offending document as a recorded document to be considered in the chain of title. Any OTHER document recorded that was based upon the recording of the offending document would therefore NOT be appropriately received and recorded by the recording office.

So a Substitution of Trustee that was both robo-signed and improperly notarized could theoretically be corrected and then recorded. But between the time that the recorder’s correction is filed (indicating that the document did not meet the standards for recording) and the time of the new amended or corrected document, properly signed and notarized is recorded, there could be OTHER instruments recorded that would make things difficult for a would-be foreclosure by a pretender lender.

The interesting “ringer” here is that the person who signed the original document may no longer be able to sign it because they are unavailable, unemployed, or unwilling to again participate in robosigning. And the notary is going to be very careful about the attestation, making sure they are only attesting to the validity of the signature and not to the power of the person signing it.

It seems that there is an unwritten policy (we are trying to get the Manual through Darrell’s efforts) whereby filings from homeowners who can never file electronically, are reviewed for content. If they in any way interfere with the ability of the pretender lender to foreclose they are sent up to the the County Attorney’s office who invariably states that this is a non-consensual lien even if the word lien doesn’t appear on the document. I asked Ms. Purcell how many documents were rejected if they were filed by trusted submitters. I stated that I doubted if even one in the last month could be cited and that the same answer would apply going back years.

So the county recorder’s office is rejecting submissions by homeowners but not rejecting submissions from banks and certain large law firms and title companies (which she said reduced in number from hundreds to a handful).

What the pretenders are worried about of course, is that anything in the title chain that impairs the quality of title conveyed or to be covered by title insurance would be severely compromised by anything that appears in the title record BEFORE they took any action.

If a document upon which they were relying, through lying, is then discounted by the recording office to be NOT regarded as recorded then any correction after the document filed by the homeowner or anyone else might force them into court to get rid of the impediment. That would essentially convert the non-judicial foreclosure to a judicial foreclosure in which the pretenders would need to plead and prove facts that they neither know or have any evidence to support, most witnesses now being long since fired in downsizing.

The other major thing that Ms Purcell stated was that as to MERS, she was against it from the beginning, she thought there was no need for it, and that it would lead to breaks in the chain of title which in her opinion did happen. When asked she said she had no idea how these breaks could be corrected. She did state that she thought that many “mistakes” occurred in the MERS system, implying that such mistakes would not have occurred if the parties had used the normal public recording system for assignments etc.

And of course you know that this piece of video, while it supports the position taken on this blog for the last 5 years, avoids the subject of why the MERS system was created in the first place. We don’t need to speculate on that anymore.

We know that the MERS system was used as a cloak for multiple sales and assignments of the same loan. The party picked as a “designated hitter” was inserted by persons with access to the system through a virtually non-existence security system in which an individual appointed themselves as the authorized signor for MERS or some member of MERS. We know that these people had no authorized written  instructions from any person in MERS nor in the members organization to execute documents and that if they wanted to, they could just as easily designated any member or any person or any business entity to be the “holder” or “investor.”

The purpose of MERS was to put a grand glaze over the fact that the monetary transactions were actually off the grid of the claimed securitization. The single transaction was between the investor lenders whose money was kept in a trust-like account and then sued to fund mortgages with the homeowner borrower. At not time was that money ever in the chain of securitization.

The monetary transaction is both undocumented and unsecured. At no time was any transaction, including the original note and mortgage (or deed of trust) reciting true facts relating to the loan by the payee of the note or the secured party under the mortgage or deed of trust. And at no time was the payee or secured holder under the mortgage or deed of trust ever expecting to receive any money (other than fees for pretending to be the “bank”) nor did they ever receive any money. At no time did MERS or any of its members handle, disburse or otherwise act even as a conduit for the funding of the loan.

Hence the mortgage or deed of trust secured an obligation to the payee on the note who was not expecting to receive any money nor did they receive any money. The immediate substitution of servicer for the originator to receive money shows that in nearly every securitization case. Any checks or money accidentally sent to the originator under the borrower’s mistaken impression that the originator was the lender (because of fraudulent misrepresentations) were immediately turned over to another party.

The actual party who made the loan was a large group of institutional investors (pension funds etc.) whose money had been illegally pooled into a PONZI scheme and covered over by an entirely fake and fraudulent securitization chain. In my opinion putting the burden of proof on the borrower to defend against a case that has not been alleged, but which should be (or dismissed) is unfair and a denial of due process.

In my opinion you stand a much greater chance of attacking the mortgage rather than the obligation, whether or not it is stated on the note. Admitting the liability is not the same as admitting the note represents the deal that the borrower agreed to. Counsel should object immediately, when the pretender lender through counsel states that the note is or contains a representation of the deal reached by the borrower and the lender. Counsel should state that borrower denies the recitations in the note but admits the existence of an obligation to a lender whose identity was and remains concealed by the pretender in the foreclosure action. The matter is and should be put at issue. If the Judge rules against you, after you deny the validity of the note and the enforceability and validity of the note and mortgage, then he or she is committing reversible error even if the borrower would or probably would lose in the end as the Judge would seem to predict.

Trial is the only way to find out. If the pretenders really can prove the money is owed to them, let them prove it. If that money is theirs, let them prove it. If there is nobody else who would receive that money as the real creditor, let the pretender be subject to discovery. And they MUST prove it because the statute ONLY allows the actual creditor to submit a “credit bid” at auction in lieu of cash. Any auction in which both the identity of the creditor and the amount due was not established was and remains in my opinion subject to attack with a motion to strike the deed on foreclosure (probably on many grounds) based upon failure of consideration, and anyone who bids on the property with actual cash, should be considered the winner of the auction.

DON’T Leave Your Money on the Table

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Editor’s Comment:

The number of people passing up the administrative review process is appallingly low, considering the fact that many if not most homeowners are leaving money on the table — money that should rightfully be paid to them from wrongful foreclosure activity (from robo-signing to outright fraud by having non-creditors take title and possession).

The reason is simple: nobody understands the process including lawyers who have been notoriously deficient in their knowledge of administrative procedures, preferring to stick with the more common judicial context of the courtroom in which many lawyers have demonstrated an appalling lack of skill and preparation, resulting in huge losses to their clients.

The fact is, administrative procedures are easier than court procedures especially where you have mandates like this one. The forms of complaints and evidence are much more informal. It is much harder for the offending party to escape on a procedural technicality without the cause having been heard on the merits. 

The banks were betting on two thngs when they agreed to this review process — that people wouldn’t use it and that even if they used it they would fail to state the obvious: that the money wasn’t due or in default, that it was paid and that only a complete accounting from all parties in the securitization chain could determine whether the original debt was (a) ever secured and (b) still existence. They knew and understood that most people would assume the claim was valid because they knew that the loan was funded and that they had executed papers that called for payments that were not made by the borrower.

But what if the claim isn’t valid? What if the loan was funded entirely outside the papers they signed at closing? What if the payments were not due? What if the payments were not due to this creditor? And what if the payments actually were made on the account and the supposed creditor doesn’t exist any more? Why are you assuming that the paperwork at closing was any more real than the fraudulent paperwork they submitted during foreclosure?

People tend to think that if money exchanged hands that the new creditor would simply slip on the shoes of a secured creditor. Not so. If the secured debt is paid and not purchased then the new debt is unsecured even if the old was secured. But I repeat here that in my opinion the original debt was probably not secured which is to say there was no valid mortgage, note and could be no valid foreclosure without a valid mortgage and default.

Wrongful foreclosure activity includes by definition wrongful auctions and results. Here are some probable pointers about that part of the foreclosure process that were wrongful:

1. Use the fraudulent, forged robosigned documents as corroboration to your case, not the point of the case itself.

2. Deny that the debt was due, that there was any default, that the party iniating the foreclosure was the creditor, that the party iniating the foreclosure had no right to represent the creditor and didn’t represnet the creditor, etc.

3. State that the subsitution of trustee was an unauthorized document if you are in a nonjudicial state.

4. State that the substituted trustee, even if the substitution of trustee was deemed properly executed, named trustees that were not qualified to serve in that they were controlled or owned entities of the new stranger showing up on the scene as a purported “creditor.”

5. State that even if the state deemed that the right to intiate a foreclosure existed with obscure rights to enforce, the pretender lender failed to establish that it was either the lender or the creditor when it submitted the credit bid.

6. State that the credit bid was unsupported by consideration.

7. State that you still own the property legally.

8. State that if the only bid was a credit bid and the credit bid was invalid, accepted perhaps because the auctioneer was a controlled or paid or owned party of the pretender lender, then there was no bid and the house is still yours with full rights of possession.

9. The deed issued from the sale is a nullity known by both the auctioneer and the party submitting the “credit bid.”

10. Demand to see all proof submitted by the other side and all demands for proof by the agency, and whether the agency independently investigated the allegations you made. 

 If you lose, appeal to the lowest possible court with jurisdiction.

Many Eligible Borrowers Passing up Foreclosure Reviews

By Julie Schmit

Months after the first invitations were mailed, only a small percentage of eligible borrowers have accepted a chance to have their foreclosure cases checked for errors and maybe win restitution.

By April 30, fewer than 165,000 people had applied to have their foreclosures checked for mistakes — about 4% of the 4.1 million who received letters about the free reviews late last year, according to the Office of the Comptroller of the Currency. The reviews were agreed to by 14 major mortgage servicers and federal banking regulators in a settlement last year over alleged foreclosure abuses.

So few people have responded that another mailing to almost 4 million households will go out in early June, reminding them of the July 31 deadline to request a review, OCC spokesman Bryan Hubbard says.

If errors occurred, restitution could run from several hundred dollars to more than $100,000.

The reviews are separate from the $25 billion mortgage-servicing settlement that state and federal officials reached this year.

Anyone who requests a review will get one if they meet certain criteria. Mortgages had to be in the foreclosure process in 2009 or 2010, on a primary residence, and serviced by one of the 14 servicers or their affiliates, including Bank of America, JPMorgan Chase, Citibank and Wells Fargo.

More information is at independentforeclosurereview.com.

Even though letters went to more than 4 million households, consumer advocates say follow-up advertising has been ineffective, leading to the low response rate.

Many consumers have also grown wary of foreclosure scams and government foreclosure programs, says Deborah Goldberg of the National Fair Housing Alliance.

“The effort is being made” to reach people, says Paul Leonard, the mortgage servicers’ representative at the Financial Services Roundtable, a trade group. “It’s hard to say why people aren’t responding.”

With this settlement, foreclosure cases will be reviewed one by one by consultants hired by the servicers but monitored by regulators.

With the $25 billion mortgage settlement, borrowers who lost homes to foreclosure will be eligible for payouts from a $1.5 billion fund.

That could mean 750,000 borrowers getting about $2,000 each, federal officials have said.

For more information on that, go to nationalmortgagesettlement.com.

People Have Answers, Will Anyone Listen?

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Editor’s Comment: 

Thanks to Home Preservation Network for alerting us to John Griffith’s Statement before the Congressional Progressive Caucus U.S. House of Representatives.  See his statement below.  

People who know the systemic flaws caused by Wall Street are getting closer to the microphone. The Banks are hoping it is too late — but I don’t think we are even close to the point where the blame shifts solidly to their illegal activities. The testimony is clear, well-balanced, and based on facts. 

On the high costs of foreclosure John Griffith proves the point that there is an “invisible hand” pushing homes into foreclosure when they should be settled modified under HAMP. There can be no doubt nor any need for interpretation — even the smiliest analysis shows that investors would be better off accepting modification proposals to a huge degree. Yet most people, especially those that fail to add tacit procuration language in their proposal and who fail to include an economic analysis, submit proposals that provide proceeds to investors that are at least 50% higher than the projected return from foreclosure. And that is the most liberal estimate. Think about all those tens of thousands of homes being bull-dozed. What return did the investor get on those?

That is why we now include a HAMP analysis in support of proposals as part of our forensic analysis. We were given the idea by Martin Andelman (Mandelman Matters). When we performed the analysis the results were startling and clearly showed, as some judges around the country have pointed out, that the HAMP loan modification proposals were NOT considered. In those cases where the burden if proof was placed on the pretender lender, it was clear that they never had any intention other than foreclosure. Upon findings like that, the cases settled just like every case where the pretender loses the battle on discovery.

Despite clear predictions of increased strategic defaults based upon data that shows that strategic defaults are increasing at an exponential level, the Bank narrative is that if they let homeowners modify mortgages, it will hurt the Market and encourage more deadbeats to do the same. The risk of strategic defaults comes not from people delinquent in their payments but from businesspeople who look at the principal due, see no hope that the value of the home will rise substantially for decades, and see that the home is worth less than half the mortgage claimed. No reasonable business person would maintain the status quo. 

The case for principal reductions (corrections) is made clear by the one simple fact that the homes are not worth and never were worth the value of the used in true loans. The failure of the financial industry to perform simple, long-standing underwriting duties — like verifying the value of the collateral created a risk for the “lenders” (whoever they are) that did not exist and was present without any input from the borrower who was relying on the same appraisals that the Banks intentionally cooked up so they could move the money and earn their fees.

Many people are suggesting paths forward. Those that are serious and not just positioning in an election year, recognize that the station becomes more muddled each day, the false foreclosures on fatally defective documents must stop, but that the buying and selling and refinancing of properties presents still more problems and risks. In the end the solution must hold the perpetrators to account and deliver relief to homeowners who have an opportunity to maintain possession and ownership of their homes and who may have the right to recapture fraudulently foreclosed homes with illegal evictions. The homes have been stolen. It is time to catch the thief, return the purse and seize the property of the thief to recapture ill-gotten gains.

Statement of John Griffith Policy Analyst Center for American Progress Action Fund

Before

The Congressional Progressive Caucus U.S. House of Representatives

Hearing On

Turning the Tide: Preventing More Foreclosures and Holding Wrong-Doers Accountable

Good afternoon Co-Chairman Grijalva, Co-Chairman Ellison, and members of the caucus. I am John Griffith, an Economic Policy Analyst at the Center for American Progress Action Fund, where my work focuses on housing policy.

It is an honor to be here today to discuss ways to soften the blow of the ongoing foreclosure crisis. It’s clear that lenders, investors, and policymakers—particularly the government-controlled mortgage giants Fannie Mae and Freddie Mac—must do all they can to avoid another wave of costly and economy-crushing foreclosures. Today I will discuss why principal reduction—lowering the amount the borrower actually owes on a loan in exchange for a higher likelihood of repayment—is a critical tool in that effort.

Specifically, I will discuss the following:

1      First, the high cost of foreclosure. Foreclosure is typically the worst outcome for every party involved, since it results in extraordinarily high costs to borrowers, lenders, and investors, not to mention the carry-on effects for the surrounding community.

2      Second, the economic case for principal reduction. Research shows that equity is an important predictor of default. Since principal reduction is the only way to permanently improve a struggling borrower’s equity position, it is often the most effective way to help a deeply underwater borrower avoid foreclosure.

3      Third, the business case for Fannie and Freddie to embrace principal reduction. By refusing to offer write-downs on the loans they own or guarantee, Fannie, Freddie, and their regulator, the Federal Housing Finance Agency, or FHFA, are significantly lagging behind the private sector. And FHFA’s own analysis shows that it can be a money-saver: Principal reductions would save the enterprises about $10 billion compared to doing nothing, and $1.7 billion compared to alternative foreclosure mitigation tools, according to data released earlier this month.

4      Fourth, a possible path forward. In a recent report my former colleague Jordan Eizenga and I propose a principal-reduction pilot at Fannie and Freddie that focuses on deeply underwater borrowers facing long-term economic hardships. The pilot would include special rules to maximize returns to Fannie, Freddie, and the taxpayers supporting them without creating skewed incentives for borrowers.

Fifth, a bit of perspective. To adequately meet the challenge before us, any principal-reduction initiative must be part of a multipronged

To read John Griffith’s entire testimony go to: http://www.americanprogressaction.org/issues/2012/04/pdf/griffith_testimony.pdf


California Leads as Nation Braces for Another Foreclosure Push

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Editor’s Comment: 

Despite successful legislation in Nevada, Hawaii and other places that have required proof of transactions (actual exchange of money) and proof of authentic documentation, the number of foreclosures is heading up with California leading the way.

Legislators should ask themselves why foreclosures dropped so precipitously in states requiring proof rather than proffer from the lips of lying lawyers. If the foreclosures were legitimate, then nothing shoud have changed. Instead, the foreclosures just went away. Why would a bank walk away from its collateral? Maybe because there was no collateral. I have already strongly advised that the mortgage liens have never been perfected.

Perhaps the retreat of the banks reveals what we have been saying all along — there is no debt secured by any mortgage lien. Thus there can be no foreclosure.

Foreclosure filings up in most markets

RealtyTrac: distressed homes ‘coming out of hibernation’

BY INMAN NEWS

The number of homes hit with foreclosure-related filings picked up during the first three months of the year in more than half of markets tracked by public records aggregator RealtyTrac, “an early sign that long-dormant foreclosures are coming out of hibernation in many local markets,” the company said.

The number of homes subjected to some type of foreclosure filing increased in 114 of 212 markets with populations of 200,000 or more, compared to the fourth quarter of 2011.

Foreclosure-related filings were up from quarter-to-quarter in 26 out of 50 of the nation’s largest metropolitan areas, including Pittsburgh (up 49 percent), Indianapolis (up 37 percent), Philadelphia (up 30 percent), New York (up 24 percent), Raleigh, N.C. (up 23 percent), and Virginia Beach, Va. (up 22 percent).

Many industry analysts expect loan servicers to step up the pace of foreclosures in some markets as they put the “robo-signing” controversy behind them.

But foreclosure filings have dropped off dramatically in other markets. The total number of homes subjected to foreclosure-related filings nationwide fell 2.25 percent from the fourth quarter of 2011 to the first quarter of 2012, and 15.9 percent from the same time a year ago.

During the first quarter, a total of 572,928 housing units — 1 in every 230 — were subjected to a foreclosure-related filing, either a default notice, scheduled auction or bank repossession. That was the lowest total since the fourth quarter of 2007,  RealtyTrac said in a report earlier this month. The biggest quarterly decreases in foreclosure activity among the 50 largest metro areas were in Portland, Ore. (down 28 percent), Las Vegas (down 26 percent), Providence, R.I. (down 24 percent), Salt Lake City (down 22 percent), Boston (down 21 percent), and San Jose, Calif. (down 21 percent).

Eight of the top 10 metros with the highest foreclosure rates during the first quarter were in California. Stockton and Modesto topped the list with foreclosure filing rates of 1 in 60 housing units each.

Stockton topped the list despite a 13.3 percent decline in the foreclosure rate from the previous quarter, and an 18.9 percent drop from a year ago. Modesto saw similar improvement, with an 8.14 percent drop in foreclosure activity for the quarter and a 21.48 percent plunge for the year.

Top 10 U.S. metros with highest foreclosure rates, first quarter 2012

Area Foreclosure rate (First Quarter 2012)
U.S. 1 in 230 housing units
Stockton, Calif. 1 in 60
Modesto, Calif. 1 in 60
Riverside-San Bernardino-Ontario, Calif. 1 in 62
Vallejo-Fairfield, Calif. 1 in 63
Merced, Calif. 1 in 72
Sacramento-Arden Arcade-Roseville, Calif. 1 in 77
Bakersfield, Calif. 1 in 81
Las Vegas-Paradise, Nev. 1 in 82
Phoenix-Mesa-Scottsdale, Ariz. 1 in 87
Visalia-Porterville, Calif. 1 in 89

Source: RealtyTrac

Riverside-San Bernardino, Calif., topped RealtyTrac’s list of foreclosure activity in the nation’s 50 largest metros, with 1 in 62 of its housing units in some stage of foreclosure during the first quarter of 2012.

Seven other metros among the nation’s 50 largest had foreclosure rates more than twice the national average: Sacramento, Calif. (one in 77 housing units), Las Vegas (one in 82 housing units), Phoenix (one in 87 housing units), Atlanta (one in 90 housing units), Miami (one in 95 housing units), Orlando (one in 101 housing units), and Chicago (one in 107 housing units).

National Notary Association Takes Up Robosigning

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Editor’s Comment: 

National Notary Association to take Up Issue of  Forgery, Robosigning and attesting to authority in corporate capacity.  Arizona’s Ken Bennett, Secretary of State, is among the officials leading the charge on this issue.

Notary Trade Group: Foreclosure Fraud Crisis Highlights Need For Legal, Trusted, Ethical Notarizations

Posted: 21 Apr 2012 09:07 PM PDT

The National Notary Association recently announced:

§ With the foreclosure ‘robo-signing’ crisis and the National Mortgage Settlement sending shockwaves through America’s mortgage industry, three nationally prominent Secretaries of State will convene a special Keynote Panel at the National Notary Association’s 34th Annual Conference this June to discuss the growing demand for trusted, legal notarizations, and what Notaries need to do to increase public protections and reduce liability risks.

§ Secretaries of State Elaine Marshall of North Carolina, Beth Chapman of Alabama, and Ken Bennett of Arizona are at the forefront of developments transforming the role of Notaries Public. Their insights will be a highlight of Conference 2012 — especially in light of mounting nationwide concerns over notarial compliance and risk management.

§ We are pleased that these three influential Secretaries — all of whom are among the top minds in notarial issues — will join us to address the nation’s Notaries and their employers during this critical time,” said NNA President and Chief Executive Officer Thomas A. Heymann.

§ The foreclosure crisis put the spotlight squarely on the high value of legal and ethical notarizations. These Secretaries will provide their perspectives on what needs to be done to strengthen the notarial process and avoid these types of financial crises.”

For more, see Secretaries of State to Address Notary Compliance, Liability, Consumer Protection Following National Mortgage Settlement(Distinguished State Leaders Will Convene Keynote Panel at the National Notary Association’s 2012 Conference in San Diego).

Current Bank Plan Is Same as $10 million Interest Free Loan for Every American

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“I wonder how many audience members know that Bair’s plan is more or less exactly the revenue model for all of America’s biggest banks. You go to the Fed, get a buttload of free money, lend it out at interest (perversely enough, including loans right back to the U.S. government), then pocket the profit.” Matt Taibbi

From Rolling Stone’s Matt Taibbi on Sheila Bair’s Sarcastic Piece

I hope everyone saw ex-Federal Deposit Insurance Corporation chief Sheila Bair’s editorial in the Washington Post, entitled, “Fix Income Inequality with $10 million Loans for Everyone!” The piece might have set a world record for public bitter sarcasm by a former top regulatory official.

In it, Bair points out that since we’ve been giving zero-interest loans to all of the big banks, why don’t we do the same thing for actual people, to solve the income inequality program? If the Fed handed out $10 million to every person, and then got each of those people to invest, say, in foreign debt, we could all be back on our feet in no time:

Under my plan, each American household could borrow $10 million from the Fed at zero interest. The more conservative among us can take that money and buy 10-year Treasury bonds. At the current 2 percent annual interest rate, we can pocket a nice $200,000 a year to live on. The more adventuresome can buy 10-year Greek debt at 21 percent, for an annual income of $2.1 million. Or if Greece is a little too risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a year. (No sense in getting greedy.)

Every time I watch a Republican debate, and hear these supposedly anti-welfare crowds booing the idea of stiffer regulation of Wall Street, I wonder how many audience members know that Bair’s plan is more or less exactly the revenue model for all of America’s biggest banks. You go to the Fed, get a buttload of free money, lend it out at interest (perversely enough, including loans right back to the U.S. government), then pocket the profit.

Considering that we now know that the Fed gave out something like $16 trillion in secret emergency loans to big banks on top of the bailouts we actually knew about, you might ask yourself: How are these guys in financial trouble? How can they not be making mountains of money, risk-free? But they are in financial trouble:

• We’re about to see yet another big blow to all of the usual suspects – Goldman, Citi, Bank of America, and especially Morgan Stanley, all of whom face potential downgrades by Moody’s in the near future.

We’ve known this was coming for some time, but the news this week is that the giant money-managing firm BlackRock is talking about moving its business elsewhere. Laurence Fink, BlackRock’s CEO, told the New York Times: “If Moody’s does indeed downgrade these institutions, we may have a need to move some business around to higher-rated institutions.”

It’s one thing when Zero Hedge, William Black, myself, or some rogue Fed officers in Dallas decide to point fingers at the big banks. But when big money players stop trading with those firms, that’s when the death spirals begin.

Morgan Stanley in particular should be sweating. They’re apparently going to be downgraded three notches, where they’ll be joining Citi and Bank of America at a level just above junk. But no worries: Bank CFO Ruth Porat announced that a three-level downgrade was “manageable” and that only losers rely totally on agencies like Moody’s to judge creditworthiness. “A lot of clients are doing their own credit work,” she said.

• Meanwhile, Bank of America reported its first-quarter results yesterday. Despite that massive ongoing support from the Fed, it earned just $653 million in the first quarter, but astonishingly the results were hailed by most of the financial media as good news. Its home-turf paper, the San Francisco Chronicle, crowed that BOA “Posts Higher Profits As Trading Results Rebound.” Bloomberg, meanwhile, summed up results this way: “Bank of America Beats Analyst Estimates As Trading Jumps.”

But the New York Times noted that BOA’s first-quarter profit of $653 million was down from $2 billion a year ago, and paled compared to results of more successful banks like Chase and Wells Fargo.

Zero Hedge, meanwhile, posted an amusing commentary on BOA’s results, pointing out that the bank quietly reclassified nearly two billion dollars’ worth of real estate loans. This is from BOA’s report:

During 1Q12, the bank regulatory agencies jointly issued interagency supervisory guidance on nonaccrual policies for junior-lien consumer real estate loans. In accordance with this new guidance, beginning in 1Q12, we classify junior-lien home equity loans as nonperforming when the first-lien loan becomes 90 days past due even if the junior-lien loan is performing. As a result of this change, we reclassified $1.85B of performing home equity loans to nonperforming.

In other words, Bank of America described nearly two billion dollars of crap on their books as performing loans, until the government this year forced them to admit it was crap.

ZH and others also noted that BOA wildly underestimated its exposure to litigation, but that’s nothing new. Anyway, despite the inconsistencies in its report, and despite the fact that it’s about to be downgraded – again – Bank of America’s shares are up again, pushing $9 today.

Bringing in the Clowns Through Breach of Fiduciary Duties

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Editor’s Comment: In my many conversations with both attorneys and pro se litigants they frequently express intense frustration about those invisible relationships and entities that permeate the entire mortgage model starting in the 1990’s and continuing to the present day, every day court is in session.

I think they are right. This article takes it as given, whether the courts wish to recognize it or not, that the parties at the closing table with the homeowner were all fiduciaries and included all those who were getting fees paid out of the closing proceeds — in other words paid out either the homeowner’s hapless down payment (worthless the moment it was tendered) or the proceeds of a loan (undocumented as to the source of the loan and documented falsely as to the creditor and the terms of repayment.

This article also takes it as a given, whether the courts are ready to recognize it or not, that the parties at the closing table with the investors who were the source of funds pooled or not were all fiduciaries and included all those who were getting fees paid out of the closing proceeds — in other words paid out either the hopeless plunge into an abyss with no loans purchased or funded until long after the money was in “escrow” with the investment banker in exchange for a completely worthless mortgage backed security without any mortgages backing the security.

But the interesting fact is that while some of the parties were known to the investor, and some of the parties were known to the homeowners, the investor did not know the parties at the closing table with the homeowner; and the borrower did not know the parties at the closing table with the investor.

In point of fact, the borrower did not even know there was a table or an investor or a table funded loan until long after closing, if ever. Remember that for years MERS, the  servicers and others brought foreclosures that are still final (but subject to challenge) while they vigorously denied the very existence of a pool or any investors.

While this is interesting from the perspective of Reg Z that states that a pattern of table-funded loans is to be regarded as “predatory” per se, which the courts have refused to enforce or even recognize, I have a larger target — all the participants in the securitization chain, each of whom actually claims to have been some sort of escrow agent giving rise to a fiduciary relationship per se — meaning that the cause of action is simple and cannot be barred by the economic loss rule because they had no contract with the homeowners and probably had no contracts with the investors.

Again, I warn about the magic bullet. there isn’t one. But this one comes close because by including these fiduciaries by name from your combo title and securitization report and by description where the fake securitization was dubbed “private label” they are all brought into the courtroom and they are all subject to a simple action for accounting which can be amended later to allege damages, or if you think you have enough information already, state your damages.

Based upon my research of the fiduciary relationship there are no limits anywhere if the action is not based upon a direct contract, and some states and culled that down to a “no limit’ doctrine (see Florida cases) except in product liability or similar cases.

The allegation is simply that the homeowner bought a loan product that was known to be defective, poorly documented, if at all, and subject to a shell game (MERS) in which the homeowner would never know the identity of the chosen creditor until the homeowner was maneuvered into foreclosure. There are several potential channels of damages that can be alleged.

Lawyers are encouraged to do about 30 minutes of research into fiduciary liability in your state and match up the elements of the cause of action for breach of fiduciary duty with the securitization documents that either has already been admitted or that has been discovered.

Go through the PSA and look at it from the point of view of assumed agency and escrowing or holding documents, receivables, notes, money and mortgages. Each one of those is low hanging fruit for a breach of fiduciary duty lawsuit.

And of course any party specifically named as a “trustee” whether a trust exists or not raises the issue of trust duties which are fiduciary as well, whether it is the trustee of a “pool” or the trustee on the deed of trust (or more likely the alleged substitution trustee on the DOT).



FireDogLake: How the Corruption of the Land Title System is NOT Being Fixed

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“You’re talking about massive, massive fraud. And this is what the state Attorneys General and the federal regulators gave up, in exchange for their non-investigatory investigation.”

The Real Foreclosure Fraud Story: Corruption of the Land Title System

By: David Dayen

George Zornick carries a rebuttal from Eric Schneiderman’s team on yesterday’s damaging expose of the securitization fraud working group. Here’s what it has to say:

• There are 50 staffers “across the country” working on the RMBS working group (the official title).
• DoJ has asked for $55 million for additional staffing.
• The five co-chairs of the working group meet formally weekly, and talk daily.
• There are no headquarters for the working group, but that’s because it’s spread across the country.
• There is no executive director.
• Activists still think the staffing level is too low.

If any of this looks familiar, it’s because it’s EXACTLY what Reuters and I reported a week ago. In other words, it was unnecessary. And it doesn’t contradict what the New York Daily News op-ed said yesterday, either. Like that op-ed, this confirms that there is no executive director and no headquarters for the working group, which sounds more like a central processing space for investigations that could have happened independently, at least at this point.

Meanwhile, if you want actual news, you can go to this very good story at MSNBC, revealing the truth that nobody wants to talk about: the inconvenient detail that the land title and property rights system that has served this country well for over 300 years has been irreparably broken by this gang of thieves at the leading banks.

In a quiet office in downtown Charlotte, N.C., dozens of Wells Fargo’s foreclosure foot soldiers sit in cubicles cranking out documents the bank relies on to seize its share of the thousands of homes lost to foreclosure every week [...]

The Wells Fargo worker, who first contacted msnbc.com via email in late January, told of a wide range of concerns about the foreclosure documents she processes. Some families apparently were denied loan modifications after only cursory interviews, she said. Other borrowers applying for help sent comprehensive personal financial documents to a fax machine that she discovered had been unattended for weeks. Others landed in foreclosure after owing interest payments of as little as $1.18 a day, according to documents she said she reviewed.

“There was one file where they weren’t even past due and they were in foreclosure status,” the loan processor said. “They’re pushing these files and pushing these files….”

Five years into the worst housing collapse since the Great Depression, the foreclosure pipeline that is removing tens of thousands of families from their homes every month rests on a legal process that has been badly compromised by errors, misrepresentation and outright fraud, according to consumer attorneys, state attorneys general, federal investigators and state and federal judges.

I must confess that I don’t throw this in everyone’s face nearly enough. What is being described in this article is the product of a completely broken system. The low-level grunts are being forced to sign off on a quota of loan files every day, and push the paper through the pipeline. Veracity, or even knowledge of the underlying data in the files, is irrelevant. This is precisely what got us into this mess in the first place, and it’s still happening. And these grunts, making $30,000 a year, are given titles like “Vice President of Loan Documentation” to sign off on affidavits attesting to the loan files. That’s basically robo-signing. It’s still happening.

Check out this part about LPS:

Like many mortgage servicers, Wells Fargo relies on a company called Lender Processing Services to assemble some of the information used to foreclose on properties.

With each file they prepare, the bank’s document processors must swear “personal knowledge” the information in each affidavit was properly collected and is accurate and complete.

But they have no way of making good on that promise because they are not able to check whether LPS properly collected and processed the data, according to the document processor.

“We’re basically copying and pasting” information from the LPS system, she said. “It’s data entry. We just input (on the affidavit) what’s on that system. And that’s it. We don’t go back through system and look.”

You’re talking about massive, massive fraud. And this is what the state Attorneys General and the federal regulators gave up, in exchange for their non-investigatory investigation.

This story is familiar here, but not necessarily to the MSNBC.com audience. I applaud them for putting this long piece together that synthesizes a lot of the information that’s been out there for years. This is the real scandal here, a corrupted residential housing market that actually cannot be put back together.

 

Citi’s Parsons Blames Glass-Steagall Repeal for Crisis

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Editor’s Comment: So here we have one of the guys that was part of the team that overturned Glass-Steagal saying that their success led to the failure of our financial system. But then he says it is too late to change what we have done. It is not too late and if we are ever going to correct the financial system and hence the economy, we need to fix what we have done — separate the banks back into investment banks that take risks and commercial banks that are supposed to minimize risks. Instead we have a system where there is a virtually unlimited supply of other people’s money in the form of deposits and taxpayer bailouts that is the engine for leading what is left of the financial system into another ditch, this one deeper and worse.

Think about it. The banks are reporting record profits while the rest of us are experiencing record problems. That means that the banks are reporting gargantuan profits trading paper based upon economies that are in a nose-dive. How is that possible. We have less commerce (buying and selling) and more money being made by banks trading paper to each other. Or is this simply money laundering — bringing back and repatriating the money they stole in the mortgage meltdown and paying little or no tax?

Parsons Blames Glass-Steagall Repeal for Crisis

By Kim Chipman and Christine Harper 

Richard Parsons, speaking two days after ending his 16-year tenure on the board of Citigroup Inc. (C) and a predecessor, said the financial crisis was partly caused by a regulatory change that permitted the company’s creation.

The 1999 repeal of the Glass-Steagall law that separated banks from investment banks and insurers made the business more complicated, Parsons said yesterday at a Rockefeller Foundation event in Washington. He served as chairman of Citigroup, the third-biggest U.S. bank by assets, from 2009 until handing off the role to Michael O’Neill at the April 17 annual meeting.

A Citigroup Inc. Citibank. Photographer: Dado Galdieri/Bloomberg

April 20 (Bloomberg) — Bloomberg’s Erik Schatzker and Stephanie Ruhle report that Richard Parsons, speaking two days after ending his 16-year tenure on the board of Citigroup Inc. and a predecessor, said the financial crisis was partly caused by a regulatory change that permitted the company’s creation. They speak on Bloomberg Television’s “Inside Track.” (Source: Bloomberg)

“To some extent what we saw in the 2007, 2008 crash was the result of the throwing off of Glass-Steagall,” Parsons, 64, said during a question-and-answer session. “Have we gotten our arms around it yet? I don’t think so because the financial- services sector moves so fast.”

The 1998 merger of Citicorp and Sanford I. Weill’s Travelers Group Inc. depended on the U.S. government overturning the portion of the Depression-era act that required banks to be separate from capital-markets businesses like Travelers’ Salomon Smith Barney Holdings Inc. Parsons, who was president of Time Warner Inc. (TWX) at the time, had been a member of the Citicorp board before joining the board of the newly created Citigroup.

“Why didn’t he do something about it when he had a chance to?” Mike Mayo, an analyst at CLSA in New York who rates Citigroup shares “underperform,” said in a phone interview. “He’s a couple days out the door and he’s publicly criticizing the ability to manage the company.”

‘Dynamic World’

Unlike John S. Reed, the former Citicorp CEO who said in 2009 that he regretted working to overturn Glass-Steagall, Parsons said he didn’t think that the barriers can be rebuilt.

“We are going to have to figure out how to manage in this new and dynamic world because there are good and sufficient business reasons for putting these things together,” Parsons said. “It’s just that the ability to manage what we have built isn’t up to our capacity to do it yet.”

Parsons didn’t refer to Citigroup specifically during his comments and Shannon Bell, a spokeswoman for the bank in New York, declined to comment. Mayo said Parsons’ comments show he views the New York-based bank as “too big to manage.”

“This gives more support to the new chairman to take more radical action,” said Mayo, whose book “Exile on Wall Street” was critical of Parsons and the management of banks including Citigroup. “Citigroup needs to be reduced in size whether that’s breaking up or additional asset sales or whatever it takes.”

‘Separate Houses’

Parsons said in a phone interview after the event that it was difficult to find executives who could run retail banks and investment banks in the U.S. because the two businesses had been separated by Glass-Steagall for about 60 years.

“One of the things we faced when we tried to find new leadership for Citi, there wasn’t anybody who had deep employment experience in both sides of what theretofore had been separate houses,” he said. Chief Executive Officer Vikram Pandit is trying to change that, Parsons said. “I think if you ask Vikram he’d say probably his biggest challenge long-term is developing the management.”

Banks are growing because corporations and other clients want them to, and management must meet the challenge, he said.

U.S. Bailout

“People have a sort of a notion that ‘well, we can decide that’s too big to manage,’” he said. “But it got that way because there was a market need and institutions find and follow the needs of the marketplace. So what we have to do is we have to learn how to improve our ability to manage it and manage it more effectively.”

Citigroup, which took the most government aid of any U.S. bank during the financial crisis, has lost 86 percent of its value in the past four years, twice as much as the 24-company KBW Bank Index. (BKX) Most shareholders voted this week against the bank’s compensation plan, which awarded Pandit about $15 million in total pay for 2011, when the shares fell 44 percent.

Shareholders’ views shouldn’t be “given the same level of weight” as those of the board and management, Parsons said. Companies “shouldn’t make the mistake of putting them in the driver’s seat.”

To contact the reporters on this story: Kim Chipman in Washington at kchipman@bloomberg.net; Christine Harper in New York at charper@bloomberg.net.

To contact the editors responsible for this story: Colleen McElroy at cmcelroy@bloomberg.net; David Scheer at dscheer@bloomberg.net.

 

OCC Review Getting Few Takers

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Demand an Administrative Hearing

Very few people have asked for a review of their wrongful foreclosures. Maybe it is because we are all war-weary from this constant barrage of illegal activity from the banks. But there are avenues to travel, whether your foreclosure is past, present or even future. While the OCC review process has some restrictions announced, it nonetheless allies to all foreclosures whether they like it or not. They are the regulatory agency for certain types of banks and servicers, just like OTS, and the Federal Reserve. If one of their chartered and regulated members commits an atrocity, the agency is required by law to do something about it.

And one more thing. The OCC should be setting up review panels and administrative hearing processes because you can be sure that homeowners are not going to agree with the “review” that is conducted by the bank that is accused of committing the error, which is what the “review process” is all about. Why not ask a rapist to investigate whether he did it or if she was just asking for it?

This stuff is not just made up out of my head. It comes from the Administrative Procedures Act and its likeness in the federal, state and even local systems where any government agency is involved.

So if you are alleging wrongdoing in ANY foreclosure — past, present or future — you should be making your allegations. What do you allege? That is where the COMBO product linked next to my picture comes in and there are other people who do similar work although it is true that the title companies are trying their best to obscure the searches for title information. Getting a loan specific title analysis and a loan specific securitization analysis should provide you with enough information to allege wrongful foreclosure. Getting a Forensic Analysis and loan level analysis might also be helpful in rounding out the allegations.

Here are just a few items to get you going:

  • The debt wasn’t due
  • The debt wasn’t due to the party who  foreclosed
  • The party who foreclosed misrepresented itself as the owner of the debt
  • The debt was paid in full by insurance, credit default swaps or federal bailouts
  • The monthly payment was paid by the servicer to the creditor (or the party they claim is the creditor) at the same time that the servicer was declaring a default to the borrower. If the creditor was getting paid, where is the default?
  • The credit bid was submitted by a party who was not a creditor and therefore should have paid cash at the auction
  • The auction was conducted by an employee or agent of the party seeking to foreclose
  • Payments were improperly applied or were not applied
  • Charges were illegal and unfair and were the reason for the foreclosure
  • You were tricked into foreclosure by the pretender lender’s agent telling you had to skip payments before you could be considered for modification. (known in the industry as dual tracking)
  • The “lender” failed to comply with Reg Z on rescission
  • The loan violated TILA, RESPA
  • The “lender” failed to comply with RESPA

 

Hoping Canadians are Stupid, Stewart Title Skips Warranties of Title

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I’ve been telling Canadians that there is considerable doubt as to whether the investment properties they are buying in the context of foreclosure are going to work out for them because of title defects. Some of them are listening and most see the deals as too good to be true. They are right — it is too good to be true, which means it isn’t true that the prices and title are just find, eh?

Here is the new disclaimer (see below). If you can find anything that protects anyone other than the title company then you are able to drill down further than we can. This disclaimer shows what we have been saying — the very use of the term “virtual” title tells us that there is no basis upon which the title agent or carrier will be held accountable or will pay anything if you buy property and take a policy from any of the major carriers.

Up until now it was standard practice in the industry that lawyers and lay people would rely upon the title report issued by the title company. Now they say it is for general information and you can’t rely on it. This means that virtually every buyer should have an attorney who is competent and has the resources to obtain and independent title report and is able to advise people holding or intending to hold title, mortgage or anything else. This gives them a license to insert or delete almost anything. The only way you can really know your chain of title is to go down to the county recorder’s office and examine the chain, one instrument at a time and to check for cross references where a parcel number or name might have been transposed.

What this also means is that anyone seeking to foreclose now must go through the same process and prove to the judge with a certified copy of the title registry that the mortgage is on there and that no satisfaction or other impediments to foreclosure are present. This is a new development and it therefore calls for new tactics and strategies.

Virtual Underwriter® is an underwriting tool. Stewart Title Guaranty Company and its affiliated underwriters (collectively “Stewart”) does not guarantee the accuracy, adequacy, or completeness of any content of Virtual Underwriter®, and you may not rely upon any such content. Only Stewart Issuing Offices may rely on Virtual Underwriter and only to issue Stewart insurance forms. Stewart makes no express or implied warranties with regard to Virtual Underwriter® and shall have no liability for any errors or omissions or for the results of the use of such material. You should not assume that Virtual Underwriter® is error-free or that it will be suitable for the particular purpose that you have in mind. Any material, forms, documents, policies, endorsements, annotations, notations, interpretations, or constructions included in Virtual Underwriter® are made available as a convenience only and should not be considered as altering or modifying the text of any matter to which they relate. Virtual Underwriter® should not be relied upon as a basis for interpreting the forms contained herein. Virtual Underwriter® is made available with the understanding that Stewart is not engaged in rendering legal, accounting, or other professional advice or services. If legal advice or services or other expert assistance is required, the services of a competent professional person should be sought. The material contained in Virtual Underwriter® is not a substitute for the advice of an attorney or other professional person. Preparation/facilitation of documents other than by an attorney may constitute the unauthorized practice of law.

see vubulletins.jsp?displaykey=BL133368894600000002

 

Banks Slammed for Misrepresenting Themselves as Owners of the Loan

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2008 Legal Memo at BKR Conference

Cautions Banks and Lawyers Against Lying About Ownership

A legal compendium of cases published by the American Bankruptcy Institute establishes a pattern of conduct by Ameriquest, Wells Fargo and Chase dating back before 2008 in which these and other banks have intentionally misrepresented themselves to the court as owners of the note, entitled to foreclose and seeking to lift the automatic stay in bankruptcy court under “color of title” arguments. The link to the entire article is below.

What I see is not just wrongful conduct in court but a continuous pattern of lying, fabricating, forging and cheating that has left millions of homeowners without possession of their rightful homes. The ONLY REMEDY in my opinion is to restore these homes to the bankruptcy estate and that the debtor’s be allowed to assert claims attacking the supposed mortgage liens that were based upon false identification of the lender, false and predatory figures used in borrowing and servicing and a large shroud thrown over the entire fictitious securitization process as a place to hide an illegal scheme to issue multiple securities in which the borrower was the issuer of the promissory note under false pretenses and the REMIC was carefully constructed to issue bogus mortgage bonds.

In both cases, the issuer and the investor were dealing with participants in the securitization chain who had no intention of allowing them to keep or recover their investment. In both cases, the instrument was a security that did NOT fall under the exemptions previously used to protect the banks. The borrower as issuer was induced to enter into a securities transaction in which he purchased a loan product under the false assumption created and promoted by the Banks that the real estate market never went down and would always go up, thus allaying the borrowers’ fear that the loan was not affordable. In fact that loan was not affordable and would violate the affordability guidelines in TILA and RESPA if it was classified as a residential mortgage loan. The REMIC that issued the bonds did so without any assets, and even though the disclosure was in the prospectus buried in parts where one would not be looking for that risk, that fact alone removes the REMIC issuance as a REMIC under the Internal Revenue Code, and removes the issuance of the mortgage bond from the cover of exemption under the 1998 Act.

We have all seen Wells Fargo, BOA, Chase, US Bank, Ameriquest and others banged repeatedly fro misrepresenting themselves in court as the owner of the loan when in fact they were not the owner of the loan, never loaned the money to begin with and never purchased the loan obligation from anyone because no money exchanged hands. Even if they tried, the only party who could sell or release claims to the receivable from the “borrower” (issuer) would have been the partnership or individuals or as a group pooled their money into leaky, fictitious entities created for the express purpose of deceiving the pension funds and other investors.

The bottom line is that when it suits them (when they want the property, in addition to the unearned insurance payments, proceeds of credit default swaps and proceeds from other credit enhancements and federal bailouts) these banks assert falsely that they are the creditor, claiming the losses that trigger payments to them rather than the investor. When it does not suit them, like when they abandon the property, or are subject to imposition of fees, sanctions or fines or attorney fees, then they finally fess up and state that they are not the owner of the loan in order to avoid paying appropriate costs, fines, fees, penalties and fees.

Here are some of the notable quotes from the piece written by Catherine V Eastwood, Esq., of Partridge, Snow and Hahn, LLP. At some point the lawyers must be subjected to the same sanctions knowing in the public domain that these practices exist as a pattern of conduct. see Consumer_Sept_2008_NE08_Messing_Mortgages_Cases

QUOTES FROM ARTICLE:

Make Sure Your Pleading Contains Accurate Information Regarding The Identity Of The Real Party In Interest
[AMERIQUEST FINED $250,000, LAW FIRM FINED $25,000, WELLS FARGO FINED $250,000 FOR A TOTAL OF $525,000] On April 25, 2008, Judge Rosenthal issued an memorandum of decision regarding an order to show cause why sanctions should not be imposed in the matter of Nosek v. Ameriquest Mortgage Company, 2008 Bankr. LEXIS 1251 (Bankr. D. Mass. 2008). Ameriquest had maintained throughout a prior adversary proceeding and bankruptcy case that it was the “holder” of the note and mortgage. When the debtor filed a second adversary proceeding requesting trustee process from two Chapter 13 Trustees to collect payment on the judgment issued in the prior case, Ameriquest argued that it was merely the servicer of the loans and that it was not the owner of the funds sought to be collected. The court noted that Ameriquest and its attorneys had made misrepresentations to the court throughout the prior proceedings regarding its status as noteholder. Wells Fargo, NA as Trustee for Amresco Residential Securities Corp. Mortgage Loan Trust, Series 1998-2 was the real holder of the note. The Court issued a Notice to Show Cause why sanctions should not be imposed

Make Sure Your Pleading Contains Accurate Financial Information or Fed. R. Bankr. P. 9011 May Be Imposed: Judge Bohm asked counsel why a motion from relief from stay was being withdrawn. The lawyer’s answer resulted in the judge issuing two show cause orders in In re Parsley, 2008 Bankr. LEXIS 593 (Bankr. S.D. Texas 2008). The real answer should have been that the motion for relief was filed in error on account of an erroneous payment history. Unfortunately, counsel misrepresented to the court that it was a “good motion” and that set off an explosion, leading to evidence of other misrepresentations…. Testimony also revealed that the payment histories were prepared by paralegals and were not reviewed by any attorneys. Countrywide did not review the loan histories either. No one was catching the errors under this system. Judge Bohm wrote “what kind of culture condones its lawyers lying to the court and then retreating to the office hoping that the Court will forget about the whole matter.”

[$75,000 Sanction against Law Firm] In an earlier matter, also in the Southern District of Texas, the Court sanctioned a law firm in the amount of $75,000 for filing an objection to plan and subsequent withdrawal of the objection that was deemed to be “gibberish.”    In re Allen, 2007 Bankr. LEXIS 2063 (Bankr. S.D. Texas 2007). It was clear to the Court that the pleadings were not being reviewed by an attorney after being generated by a computer as the objection listed reasons that were completely unrelated or blatantly opposite of the contents of the Chapter 13 plan filed by the debtor.

[Chase required to pay legal fees of debtor] On April 10, 2008, Judge Morris, a bankruptcy court judge for the Southern District of New York, issued a decision in the case of In re Schuessler, 2008 Bankr. LEXIS 1000 (Bankr. S.D. NY. 2008) regarding an order to show cause why Chase Home Finance, LLC should not be sanctioned for submitting pleadings that were misleading and that had no factual support.

Standing Challenges: Make Sure The Company Bringing The Action Has The Legal Right To Do So
[RELIEF FROM STAY DENIED RETROACTIVELY ON DEBTOR'S MOTION] In re Schwartz, 366 BR 265 (Bankr. D. Mass. 2007) that parties who do not hold the note or mortgage and who do not service the mortgage do not have standing to pursue motions for relief or other actions arising out of the mortgage obligation. In Schwartz the creditor was seeking relief to pursue an eviction action following a foreclosure sale. The assignment of mortgage into the foreclosing mortgagee was executed four days after the foreclosure sale took place. The Court stated that while the term “mortgagee”, as used in M.G.L. c. 244 §1, “has been defined to include assignees of a mortgage, there is nothing to suggest that one who expects to receive the mortgage by assignment may undertake any foreclosure activity.” Id. at 269. The motion for relief was denied.
While not a bankruptcy court case, a United States District Court case worthy of inclusion in this section is In re Foreclosure Cases, 2007 WL 3232430 (N.D. Ohio 2007). The District Court issued an order covering numerous foreclosure cases that were pending in the state. The creditor was ordered by the Court to produce evidence that the named plaintiff was the holder and owner of the note and mortgage as of the date the foreclosure complaint was filed. The court dismissed the foreclosure complaints when the lenders were unable to produce the assignments.
How Many Times Can A Lender Continue a Foreclosure Sale?
In re Soderman, 2008 Bankr. LEXIS 384 (Bankr. D. Mass. 2008). In Soderman the court recited the “one-time” postponement blessing in order to seek relief from stay but that repeated continuances may be a violation of the automatic stay.    The repeated continuances will be deemed a violation of the stay if the postponements are made in order to harass the debtor, gain an advantage for the creditor or renew the financial strain that led the debtor to file for bankruptcy protection. Id.    One month after the decision in Soderman was released, Judge Hillman also ruled that repeated continuances of a foreclosure sale was a violation of the automatic stay. In re Lynn-Weaver, 2008 Bankr. LEXIS 1101 (Bankr. D. Mass 2008).
Challenging the Assessment of Mortgage Fees to a Loan and the United States Trustee’s Office’s Investigation of Countrywide Home Loans, Inc.
In an unprecedented move, Judge Agresti of the Pennsylvania Bankruptcy Court, in April 2008, approved the Justice Department’s further investigation of Countrywide due to widespread allegations that the lender is filing false or inaccurate claims, misapplying funds, assessing unreasonable fees to borrowers’ accounts or ignoring the discharge injunction and other court orders. Countrywide Homes Loans, Inc. f/k/a Countrywide Funding Corp., 2008 Bankr. LEXIS 1023 (Bankr. W.D. PA. 2008).
This matter was precipitated by a Standing Chapter 13 Trustee in Pennsylvania originally filing for sanctions against Countrywide Home Loans, Inc. due to her experience with the lender
The Pennsylvania matters have led the United States Trustee’s Office to file similar suits in Georgia1 and Ohio2 seeking to investigate the servicing practices of Countrywide. Various subpoenas have also been served by the United States Trustee’s office upon Countrywide in Florida regarding the assessment of fees on borrower’s accounts.

1 The United States Trustee’s Office filed a complaint on February 28, 2008 styled as Walton v. Countrywide Home Loans, Inc.,08-06092-mhm in the Northern District of Georgia. The related bankruptcy case is In re Atchley, 05- 79232-mhm. In Atchley, the homeowners eventually sold their home to avoid foreclosure but believe the payoff amount cited by Countrywide contained excessive fees and that Countrywide continued to accept trustee payments after the loan paid off.
2    The United States Trustee’s Office filed a complaint on February 28, 2008 styled as Fokkena v. Countrywide Homes Loans, Inc., 08-05031-mss in the Northern District of Ohio. The related bankruptcy case is In re O’Neal, 07- 51027. In O’Neal, Countrywide filed a proof of claim and objection to plan when it had already accepted a short sale on the property prior to the bankruptcy filing.

ALL LENDERS ARE FAIR GAME
[Forensic Audits Suggested --- $10,000 damages, $12,350 Legal Fees, Wells Fargo sanctioned $5000] in the matter of In re Dorothy Stewart Chase, Docket 07-11113, Chapter 13 (Bankr. E.D. LA 2008), Judge Magner issued a 49 page decision on April 10, 2008 which ordered Wells Fargo to audit every proof of claim it filed in the district since April 13, 2007 and to provide a complete loan history on every account. If the audits reveal additional concerns, the judge reserved the right to appoint experts to do forensic accountings at the expense of Wells Fargo. She also ruled that Wells Fargo was negligent in the loan servicing of Ms. Chase’s loan and assessed damages of $10,000, legal fees of $12,350 and sanctioned Wells Fargo $5,000 for filing a consent order that did not reflect the agreement of the parties and for filing erroneous proofs of claim.
[Wells sanctioned $67,202.45] The decision in Chase was on the heels of Judge Magner’s earlier decision in In re Jones, 2007 Bankr. LEXIS 2984 (Bankr. E.D. LA. 2007). In Jones, Judge Magner sanctioned Wells Fargo $67,202.45 for violating the order of confirmation and the automatic stay by improperly assessing the debtor’s loan with fees in the amount of $16,852.01 and diverting payments made by the Chapter 13 trustee and the Debtor to satisfy fees that had not been authorized by the Court. The judge stated that the Jones case would provide guidance in the post-petition administration of home mortgage loans to a degree that, until this decision issued, had been lacking in the industry.

Moynihan Must Testify in Fraud Suit Brought by Bond Insurer

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Editor’s Comment; The fact they he is being forced to testify is a major breakthrough the wall silence used by the banks and servicers. BY this article I am asking for people to review the court file, get the pleadings and memorandums and send them to me at neilFgarfield@hotmail.com. Everyone should be paying attention to this case, and everyone should be reading everything. The insurer is making the case for the borrowers at the the same time as they are making the case for recovery of money paid by them under false pretenses to the wrong parties, screwing both the investors and the borrowers.

NEW YORK | Thu Apr 12, 2012 10:00pm EDT

(Reuters) – A New York judge has ruled that Bank of America (BAC.N) CEO Brian Moynihan must testify in a lawsuit brought by bond insurer MBIA Inc.(MBI.N) which claims the bank fraudulently induced it to insure risky mortgage-backed securities.

The judge said Moynihan could provide relevant testimony in the case due to his position as CEO, former president of investment banking and the fact that he oversaw the process of integrating Countrywide into Bank of America.

Bank of America acquired mortgage lender Countrywide in July 2008. MBIA filed a Countrywide later that year. In 2009, MBIA claimed Bank of America was liable for Countrywide’s conduct.

Bank of America, the second-largest U.S. bank by assets, is fighting several legal cases following the global financial crisis and had sought to block MBIA efforts for Moynihan to give evidence.

MBIA was once the largest U.S. municipal bond insurer. It announced a restructuring in 2009 after incurring large losses insuring mortgage debt.

Bank of America had asked New York Supreme Court Justice Eileen Bransten to rule that Moynihan did not need to testify, arguing that MBIA was seeking his deposition only to harass the bank and that Moynihan had no unique knowledge about the case.

But the judge on Wednesday denied the request, according to court papers made public on Thursday.

“The knowledge Moynihan gained as part of the (Countrywide) Steering Committee is unique, and it is material and necessary to MBIA’s successor liability claim,” the judge said.

Moynihan was involved in “high-level decisions regarding the Countrywide transaction” and his testimony will not duplicate that of lower-level employees, she said.

MBIA declined to comment and Bank of America did not immediately respond to requests for comment.

The cases is MBIA Insurance Corp v. Countrywide Home Loans Inc et al, New York State Supreme Court, New York County, No. 602825/2008.

State and Federal Agencies Should Brace for Demands for Administrative Hearings

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Editor’s Comment: We had an interesting exchange in a civil, almost charming meeting with the Arizona Secretary of State last night at Darrell Blomberg’s Tuesday night meeting. He has the  AZ AG coming in a couple of weeks.

One thing that came out is that the oath of the notary is missing in many cases and there were some people who thought this might be the magic bullet that would bring down the entire foreclosure process. I don’t know how this got started but the responses from the Secretary and his manager of business affairs were mostly correct — although they point to serious deficiencies in the system and training of the people.

The oath and the bond are usually on the same page. That it is not recorded anywhere is flimsy at best and even if correct would be a source of annoyance to a judge rather than convincing him that the mortgage origination was defective and the foreclosure wrongful.Proving the notary to have been incorrectly affixed might accomplish a right to have the mortgage or deed of trust removed from the title records — but it does NOT invalidate the document itself. There is no magic bullet.

I again say: there is no magic bullet, and there is no paper defect that will discharge a debt. Debts are discharged by payment or waiver of payment (and waived could be involuntary, like in bankruptcy). By concentrating upon the possibility of a defect in the process of record-keeping on the oath of office of a judge or notary, you are essentially admitting the debt, the default and the right to collect and even foreclose, although your intent is otherwise.

The attestation by the notary has nothing to do with the validity of the contents of the document. It serves only to say that a person appeared before the notary and fulfilled the statutory requirements by identifying themselves. The notary is merely attesting to the fact that this is what happened. Someone appeared, gave a drivers license etc., and signed in front of the notary. That is the fullest extent of the attestation of the notary and the power of the notary.

In Arizona, any attestation by the notary that includes corroboration that the person whose signature is being notarized is in fact that person or has a particular relationship with a particular company is void to the extent that the attestation of the notary includes assurance of the signor’s official position or representative powers.

California has a similar provision but allows notaries — if they actually know — to attest to the official capacity of the signor. But California law has an important caveat. Any attestation as to the powers, rights and obligations of the signor cannot be used and is of no effect if it is being used outside the state. So if you are in Arizona and the notary was in California and included an attestation that the signor was vice president of MERS, the part about the signor being a VP of MERS counts for nothing.

The secretary stepped in immediately when his manager tried to say that any decision by the office of the secretary of state is final and cannot be reviewed. However, as he pointed out, the finding of an administrative agency is presumptively true unless you can prove otherwise. That is why the OCC decrees etc. should be viewed as valuable to homeowners because there have already been admissions and findings that the foreclosures were wrongful, and in some studies (San Francisco). Those findings after investigations are also entitled to a presumption of validity and throws the burden of proof onto the the pretender lender IF you show that the bad practices cited by the agencies show up in your particular case.

It is disturbing that (a) a state official second only to the secretary of state himself actually believed that she had supreme authority that was never subject to review. And (b) although the secretary affirmed his believe that his office was a record keeper and not an enforcement arm of the executive branch, I think that is a contradiction in terms. The purpose of the executive branch of government is to enforce the law. If a filing is required with the Secretary of State providing information about the activities of a limited partnership along with the fees payable to the State of Arizona, it is a mistake, in my opinion, to believe that such an agency lacks the right to prosecute those who fail to register, do business in the state and don’t pay their fees.

After decades of practice in administrative law all over the country, I believe I have discovered a mistaken impression that is often found amongst state departments, both as to their powers and their obligations to enforce those powers. I think a lawsuit in mandamus against the office of Secretary of State requiring them to use the Administrative Procedures Act and participate in hearings conducted by administrative hearings judges who are objective and unbiased, may well be necessary unless the Secretary rethinks his position and does so on his own.

This might be particularly important to the State of Arizona and other states since the REMIC pools appear to be either general or limited partnerships and not Trusts as they are described in the PSA and prospectus. This ought to be at least tested.

But whether the restrictive power of the secretary of state extends only to limited partnerships and not corporations and other business entities ( division that is peculiar at best) the major point is still the same. A foreign entity or person holding money in their hands, solicited applicants for loans and then closed transactions for those loans within the state of Arizona and with respect to an interest or potential interest in real property located strictly within the state of Arizona, violated state law and must suffer the consequences.

If they want to say that these leads to an unfair or inequitable result, they must allege and prove that they will lose money by applying the law and that means proving that they funded the loan, bought it or otherwise advanced real money where money exchanged hands. At this point everyone who knows the logistics here knows that there is not one party, group or person that can prove that case, which is why the rejection of modifications is so ridiculous and born of pure arrogance.

The real lender or creditor is now admitted to be an out of state group or entity of some kind that never registered in the state, never paid the fees, and never gave any required information about the group or entity. Perhaps the Secretary of state should be more intrigued when he realizes that hundreds of thousands of such transactions occurred in the State of Arizona over the last 12 years and they continue to be conducting business activity and legal activity in the state all without the required registration. The exemptions from registration do not apply.

Under normal rules of engagement, the party failing to properly register is subject to fees, fines and penalties for doing business without registration and may neither bring any legal claim or defend against one in the absence of the proper registration. So whether it is the office of the Secretary of State or some other department that somehow does not fall under the authority of the secretary of state (a peculiar circumstance at best) the State is (a) missing out on hundreds of millions of dollars in revenue from out-of-state carpet baggers and (b) missing its chance to stop the foreclosures and even return the wrongfully foreclosed homes to their rightful owners.

So my question to the Secretary of State is this: As the putative lieutenant governor of the State who might be seeking higher office (the governor’s mansion), which would you rather do — run with the backing of back s  tabbing bankers who have already shown their willingness and desire to lie, forge documents and otherwise cheat the state’s citizens out of the right to possession of their own homes AFTER payment has been received in full — or would you rather ride the crest of anti-bank sentiment that can be found lurking in almost every voter regardless of the status of the ir mortgage or living arrangements? My bet is that the politician who seeks higher office or to maintain incumbency, would best be served by leading a populist revolt against the major out of state banks and a movement toward local in-state banks that had nothing to do with the mortgage mess created by false claims of securitization.

My second piece of advice is that the head of any agency having anything to do with regulation of business entities , banking and lending had best brush off their old copy of the Administrative Procedure Act because in my view there is right to bring a complaint against the agency that cannot be denied. And without having procedures and facilities for administrative hearings, complainants cannot fulfill the requirement of exhaustion of administrative remedies. That allegation alone in state or federal court could bring a mountain of constitutional issues crashing upon the shoulders of agency heads who thought they were immune from some issues.

Occupy Homes Protest Forces Delay of Sheriff Sale

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Occupy Homes Protest Forces Delay of Sheriff Sale
By Ty Moore

US Bank buckles under pressure, delaying sale of veteran John Vinje’s home until May 29th

After a week of escalating pressure demanding US Bank postpone the sheriff’s sale of John and Lucinda Vinje’s home, Occupy Homes won another 11th hour victory today. John Vinje led a contingent of 50 Occupy Homes MN supporters into the Hennepin County Sheriff’s Office Civil Division where the sale was to take place at 11:00am this morning.

Speeches, chants, and song filled the marbled hallways in the ground floor of city hall. No potential buyers were seen entering the courtroom the entire time, and just after 11:30am it was announced that US Bank had delayed the sale to May 29th. Following the victory, John said: “This shows that the power is now with the people, and not with large, monolithic corporations, like US Bank.

Homeowners throughout Minnesota facing foreclosure, facing sheriff’s sales, should get together with their community and demand a postponement and renegotiation. They should get connected with Occupy Homes because we can save homes throughout the state of Minnesota when we all work together.” Today’s action followed a week of escalating pressure on US Bank, including a national call-in campaign aimed to VP Tom Joyce, and a march on US Bank CEO Richard Davis’ mansion on April 7th. Ty Moore, an organizer with Occupy Homes explained: “We’ve got the banks scrambling already, but this fight is just beginning. John’s victory, following Monique and Bobby’s victories, is sending a message. Minnesota homeowners aren’t going to leave their homes quietly and in shame anymore. It’s the banks and CEOs like Richard Davis who should be ashamed!”

Occupy Homes MN achieved national media attention after winning Bobby Hull’s foreclosed home back after US Bank bought his property at a sheriff sale, and repeatedly delaying the eviction of Monique White, who also received her original mortgage through US Bank. John and Lucinda Vinje are among a growing number of homeowners joining together through Occupy Homes to fight back against the unjust and illegal banking practices behind the foreclosure crisis. John and Lucinda Vinje bought their home in 2008, the first house either of them had ever owned. John is an Air Force veteran now working as a security guard, and Lucinda has worked a government job for ten years.

But when financial difficulties caused them to fall behind on payments by just two months, US Bank refused their request to repay their arrears in installments and immediately began foreclosure proceedings. Meanwhile, Lucinda has been forced into “medical retirement” due to a chronic condition, adding financial strain on the family. If US Bank would renegotiate their mortgage to current market value as the Vinje’s request, they could afford the payments. After six months of delays, in March US Bank offered them a measly $97 less on their monthly payments. Both John and Lucinda have worked their entire lives, but now stand to lose the only home they have ever owned.

 

Home Prices Still Spiralling down

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EDITOR’S ANALYSIS: As this article demonstrates in sampling some counties in the Northeast, there is no indication that the prices of homes are stabilizing nor that there is any prospect of anything but further reductions in prices of homes. The reason is simple. Price is not the same as value. The value of the homes are still at least 15% lower than the current prices. Thus it is not difficult to recognize that when the market catches up with the current reality, the prices will come down to meet the actual values.

That is exactly how in 2007 I was able to call with precision, the collapse of the housing market, the collapse of the stock market and the freezing of the credit markets — and the resulting effect on some brokerage houses who neither loaned any money nor bought any of the bogus mortgage bonds they were selling, but rather created fictitious losses that were carefully manipulated to extract taxpayer money for toxic assets that could have been protected and improved but for the narrative created and controlled by the banks and servicers.

Brad Keiser deserves some credit here for predicting the actual order and timing of the crash of each investment house. All he did was put pen to paper and figure out how many time each investment firm was leveraged on the same bond pools. He was exactly right. You can see it on the DVD package we offer that describes securitization.

The more pernicious part of this process is that the capital sucked out of the economy by the banks (who are now reporting “profits” of high magnitude) this money was tucked away and NOT used to finance start-ups, expansion or even maintenance of existing business. Just as the clear policy of the banks and service is to foreclose on residential property, they have followed the path of starving new and existing capital for the sole purpose of favoring competition and financing the purchase of what is left after these companies die, laying off hundreds of thousands of workers.

As for the workers, they are still out there or giving up on finding a job that will pay anything for their household expenses after deductions of work-related expenses. Hence median income has no current prospect of stabilizing or increasing under the current circumstances. In fact median income continues to decline. A decline in median income means that there will be further decline in home values which in turns means further decline in home prices.

Add to this deadly cycle the fact that title to the “foreclosed” properties is very much in doubt, at best, and probably fatally defective at worst, and you have a very slow moving, downward market in residential home sales and financing for at least the next ten years. My projection is that overall, there will be at least another 30% drop in prices over the next 10 years. This will be offset by inflation averaging at least 3% per year under the best of circumstances. We have now more than tripled our currency volume and we still can’t get out of this mess. Follow the example of Iceland and watch what happens — huge fiscal stimulus to the economy, the banks taking the hit for their own misdeeds, the each household getting enough relief that they can start purchasing things besides  food.

Follow the examples of our own common law history and the homes that were the subject of wrongful foreclosure are re turned to their rightful owners and if someone wants to make a claim for collection or even foreclosure they still can — if they can prove each and every essential element of their case.

And it seems clear that nothing can stop this drag on the entire U.S. economy except the application of law. BUT the application law goes both ways. Having truth on your side makes no difference at all if you don’t present in the right way, at the right time and prove it. And THAT is the reason for the many negative positions taken by Judges. If you go in and concede that you know owe the money, you agree you failed (not refused) to make scheduled payments, and that you defaulted on the loan, the Judge really has very little choice except granting whatever motions the banks and servicers present. You have conceded your case away.

This is why you need title, securitization and forensic reporting from reliable third parties whose credentials are indisputable in court. Take these issues to your accountants and see what they think. You may come up with some surprising answers.

The point you need to know and believe is that the money went down one path and the documents went down an entirely different path so the banks could oversell the loans and the bets on those loans. This leaves the banks and servicers in a vulnerable position but it is a complex set of facts. You have about 30 seconds to get the Judge’s attention and 5 minutes to make your point. After that, expect nothing.

But the single-most important ingredient in the recovery is the resistance and fear of the borrowers who feel like deadbeats, and do not appreciate how they were used as pawns in getting  tons of money from investors that far exceeded the amount of their loans. There is a new diagnosis created by the authors of the book, Legal Abuse Syndrome. You all ought to look it up, and order it. They hit the nail on the head. Without the outrage shown in Iceland, our country’s finances will never be fixed.

www.businessinsider.com/home-prices-across-the-northeast-are-still-declining-2012-4

The Truth About The ‘Housing Bottom': Home Prices Across The Northeast Are In Total Freefall

Keith Jurow | Apr. 16, 2012, 9:00 AM
For nearly two years, I have been warning in my articles posted on BUSINESS INSIDER that there is no housing bottom in sight.  I’ve been correct.

Yet one analyst after another has been proclaiming that the housing bottom is finally here.  This is nonsense!

Many of these “experts” have skin in the game and hope to lure you back into the market. They base their assumptions on the fact that housing prices seem to be falling more slowly.  They’re not.  Take a look at these shocking numbers I uncovered in the last two weeks:

SINGLE-FAMILY HOME PRICES IN THE NORTHEAST
February 2012

Location      Avg. Price Per Sq. Ft     Change from Feb. 2011
Connecticut
Fairfield County              $260           down 16.6%
City of Bridgeport              $86           down 17.3%
City of New Haven              $88           down 31.2%
City of Hartford              $72           down 10.1%
Westport              $311           down 30.3%
Greenwich              $481           down 34.8%
Darien              $354           down 19.3%
New Canaan              $371           down 10.1%
Branford              $126           down 41.4%
Glastonbury              $161           down 19.1%
Simsbury              $129           down 13.2%
Massachusetts
Framingham              $157           down 9.2%
Newton              $313           down 13.5%
Scituate              $215           down 16.5%
Rhode Island
Providence              $101           down 5.5%
Warwick              $120           down 12.2%
Pawtucket              $91           down 18.3%
New York State
Westchester County              $276           down 10.1%

Source:  Wm. Raveis & Co. – raveis.com

These are real, raw numbers, not an index like Case-Shiller.  They come from the largest family-owned brokerage firm in the northeast — Raveis and Co. whose reputation is impeccable.  I spent several days reviewing the terrific raveis.com search tool and found similar price declines in more than 150 towns and cities.

Sales volume was way down in most towns in the northeast.  To my surprise, inventories are up substantially from a year earlier.  All that talk last fall about shrinking MLS inventories is history.  Listings are soaring in most towns.

Some people I speak with are skeptical about these numbers.  Check them for yourself if you think I’m making them up.   Go to the raveis.com homepage and the drop-down menu for “Housing Data.”  Then hit the link to “View local housing data” and this will take you to their search page where you can see the latest sales and price statistics for towns in seven northeast states.  You’ll be as shocked as I was.

Here is my warning:  Prices are crumbling and homeowners have perhaps six months to decide what to do.  I strongly suspect that a year from now will be too late.

Iceland Forgives Household Debt and Now leads the Way to Economic Recovery

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Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.

It’s Not a Theory

When it was Wrong from the Beginning:

The Highest Form of Economic Stimulus is to

Correct Debt Balances

Editor’s Comment: Iceland has taken the obvious common sense approach — fueled by an outraged population — and ended up creating the largest fiscal stimulus of any developed country without spending one cent of taxpayer money and without printing any “quantitative easing” currency debasing their currency. By the way more than 90 bankers there are headed for jail. Sounds like magic? That is what U.S. Banks would have you believe. But it is true as you can see from the Bloomberg article below.

The problem has been that the populations cannot pay the interest or the principal on debts that were so exotic in their construction that Alan Greenspan confesses he never understood them, let alone the borrowers. Borrowers were forced to rely on misrepresentations by the Banks and their agents as to the value of the loan, the value of the collateral and the viability of the transaction.

People in Iceland rioted in the streets throwing rocks at politicians and government buildings — not because they owed the money but because they knew that (a) they were victims of bank fraud and (b) the banks owed them money, not the other way around.

Under pressure from the government, the banks have decreased household debt by around 25% so far. The banks have not collapsed, financial system is in good shape and Iceland leads the developed world in economic recovery. The risk fell back on the Banks, the perpetrators of this mess.

The relief was and is being shared by two victims — the households tricked into buying these debt packages and the investors who pooled their money to fund the exotic debt structures. The claims of bank losses have been ignored as being not (and never were) economically real.

That’s what happens when the populations rises up and says “NO!” Similar programs here even on a small scale have corroborated the Iceland experience. And yet we continue to support the banks whom we believe are too big to fail. Following the Iceland example — now in its 3rd year — would provide many trillions of dollars in fiscal stimulus to our economy, launch the economy into a full recovery and clear up the budget deficits of local, state and federal government agencies.

It’s a choice. What do you choose?

Icelandic Anger Brings Debt Forgiveness in Best Recovery Story

By Omar R. Valdimarsson

Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.

Enlarge image Icelandic Anger Brings Debt Forgiveness

Icelandic Anger Brings Debt Forgiveness

Icelandic Anger Brings Debt Forgiveness

Paul Taggart/Bloomberg

A cyclist passes an Icelandic national flag hanging in a popular shopping street in Reykjavik, Iceland.

A cyclist passes an Icelandic national flag hanging in a popular shopping street in Reykjavik, Iceland. Photographer: Paul Taggart/Bloomberg

“You could safely say that Iceland holds the world record in household debt relief,” said Lars Christensen, chief emerging markets economist at Danske Bank A/S in Copenhagen. “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”

The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.

The island’s households were helped by an agreement between the government and the banks, which are still partly controlled by the state, to forgive debt exceeding 110 percent of home values. On top of that, a Supreme Court ruling in June 2010 found loans indexed to foreign currencies were illegal, meaning households no longer need to cover krona losses.

Crisis Lessons

“The lesson to be learned from Iceland’s crisis is that if other countries think it’s necessary to write down debts, they should look at how successful the 110 percent agreement was here,” said Thorolfur Matthiasson, an economics professor at the University of Iceland in Reykjavik, in an interview. “It’s the broadest agreement that’s been undertaken.”

Without the relief, homeowners would have buckled under the weight of their loans after the ratio of debt to incomes surged to 240 percent in 2008, Matthiasson said.

Iceland’s $13 billion economy, which shrank 6.7 percent in 2009, grew 2.9 percent last year and will expand 2.4 percent this year and next, the Paris-based OECD estimates. The euro area will grow 0.2 percent this year and the OECD area will expand 1.6 percent, according to November estimates.

Housing, measured as a subcomponent in the consumer price index, is now only about 3 percent below values in September 2008, just before the collapse. Fitch Ratings last week raised Iceland to investment grade, with a stable outlook, and said the island’s “unorthodox crisis policy response has succeeded.”

People Vs Markets

Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn.

Once it became clear back in October 2008 that the island’s banks were beyond saving, the government stepped in, ring-fenced the domestic accounts, and left international creditors in the lurch. The central bank imposed capital controls to halt the ensuing sell-off of the krona and new state-controlled banks were created from the remnants of the lenders that failed.

Activists say the banks should go even further in their debt relief. Andrea J. Olafsdottir, chairman of the Icelandic Homes Coalition, said she doubts the numbers provided by the banks are reliable.

“There are indications that some of the financial institutions in question haven’t lost a penny with the measures that they’ve undertaken,” she said.

Fresh Demands

According to Kristjan Kristjansson, a spokesman for Landsbankinn hf, the amount written off by the banks is probably larger than the 196.4 billion kronur ($1.6 billion) that the Financial Services Association estimates, since that figure only includes debt relief required by the courts or the government.

“There are still a lot of people facing difficulties; at the same time there are a lot of people doing fine,” Kristjansson said. “It’s nearly impossible to say when enough is enough; alongside every measure that is taken, there are fresh demands for further action.”

As a precursor to the global Occupy Wall Street movement and austerity protests across Europe, Icelanders took to the streets after the economic collapse in 2008. Protests escalated in early 2009, forcing police to use teargas to disperse crowds throwing rocks at parliament and the offices of then Prime Minister Geir Haarde. Parliament is still deciding whether to press ahead with an indictment that was brought against him in September 2009 for his role in the crisis.

A new coalition, led by Social Democrat Prime Minister Johanna Sigurdardottir, was voted into office in early 2009. The authorities are now investigating most of the main protagonists of the banking meltdown.

Legal Aftermath

Iceland’s special prosecutor has said it may indict as many as 90 people, while more than 200, including the former chief executives at the three biggest banks, face criminal charges.

Larus Welding, the former CEO of Glitnir Bank hf, once Iceland’s second biggest, was indicted in December for granting illegal loans and is now waiting to stand trial. The former CEO of Landsbanki Islands hf, Sigurjon Arnason, has endured stints of solitary confinement as his criminal investigation continues.

That compares with the U.S., where no top bank executives have faced criminal prosecution for their roles in the subprime mortgage meltdown. The Securities and Exchange Commission said last year it had sanctioned 39 senior officers for conduct related to the housing market meltdown.

The U.S. subprime crisis sent home prices plunging 33 percent from a 2006 peak. While households there don’t face the same degree of debt relief as that pushed through in Iceland, President Barack Obama this month proposed plans to expand loan modifications, including some principal reductions.

According to Christensen at Danske Bank, “the bottom line is that if households are insolvent, then the banks just have to go along with it, regardless of the interests of the banks.”

To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net.

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net


Why the Banks Are Paying You to Sign the Deed in a Shortsale

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“The bottom line is that the value of a homeowner’s signature is going up and might be the best investment in existence. The walls are closing in on trillions of dollars in real estate that could be the subject of summary proceedings repatriating the property to their rightful owners using the most basic principles of property law.” — Neil F Garfield, livinglies.me

It isn’t just hype. Law firms like the one shown below are realizing that there really is money in servicing homeowners who are underwater. But lawyers should also beware of this offer. Think about it. What economic reason would there be to pay a distressed homeowner to enter into a short-sale? If they really thought they had the right to foreclose and/or collect on the promissory note they are using, the last thing they would do is pay a person who is  already delinquent in their payments.

The banks have realized that in a short sale they don’t sign the deed — that job goes to the homeowner who is usually giving a warranty that title is all fine and dandy. The pretender lender is not doing the lying; they are getting the homeowner to do their lying. All that is fine if there was only one owner of the property or one prior mortgagee who is joining in the transaction and registering the appropriate releases, satisfactions and warranties.

If a third party or prior owner makes a claim against title, the pretender lender has succeeded in placing another layer between them and claimants who want title vested or re-vested as a result of wrongful, illegal foreclosures — or wrongful or illegal satisfactions (release and reconveyance). They now have a stronger argument about why the “chain of title” while imperfect, should not be disturbed because of the transactions that were in the public records and notice to the world.

If you are buying one of these short-sales or other REO property, take a good long look at the title policy they are offering and make sure you get advice of competent legal counsel — because most of the new “replacement” policies have language that excludes risks associated with the chain of title being mangled by securitization or claims arising out of securitization. So if you buy, you are getting naked paperwork that may or may not be ratified later — or could be the target of a wave a repatriating property to their rightful owners because the foreclosures are and were wrongful. With no title insurance proceeds you could be out of a lot of money and still have a liability if you financed the purchase.

I’ve heard some talk of the statute of limitations being applied against claims of repatriating property. I don’t know of any statute of limitations on defects in the title chain but there might be some on theft, fraud and adverse possession that could provide some cover for the older mortgages. That alone could be an interesting question. Imagine representing the bank and arguing “yes your honor, we admit that we stole this property and illegally evicted the owner. However, under the statute of limitations I have shown you, the homeowner has no cause of action because it is barred by the expiration of time.”

THAT is where civil rights violations should be alleged in Federal courts. If the states failed to safeguard the rights of homeowners in their procedures for foreclosures then the civil rights of the homeowners may well be the last and only claim the homeowner can make even after it is admitted that the foreclosures are wrongful and illegal.

The lesson here is stop waiting to see what happens. Get on your horse and have your bags packed with as much proof as you can and start your actions now. At this point, you need to show that the general policies resulted in wrongful, illegal foreclosures with “strangers” taking title to property on which they loaned no money and never financed or purchased the property; and then show that those policies that have been the subject so many studies, orders, decrees, fines, penalties, settlements etc. are the same same policies that were used in your case.

Remember, the burden of proof shifts when you cross the line of establishing a prima facie case. At that point the pretender is dead in the water unless they still have more rabbits in that hat.

BANKS PAYING HOMEOWNERS TO AVOID FORECLOSURES

by Harold Shepley & Associates, LLC, see http://www.jdsra.com

Banks, anxious to move troubled mortgages off their books, have started offering cash incentives to homeowners to sell their properties for less than what they owe – typically called a “short sale.”

In the past, banks have balked or dragged their feet at short sales. However, lately, they have decided that short sales are more advantageous than foreclosures, which can take a year or more to process. Additionally, banks take about 15% less of a loss on a short sale than they do on a foreclosure.

Some banks are now offering cash incentives to homeowners to have them sell their homes at a loss—sometimes up to $35,000. Experts believe that banks just want to get rid of bad loans. They can often afford to forgive the debt and offer incentives yet still make a profit, because they usually purchase the loan from another bank at a discount.

For a bank, approving a short sale can cut a year or more off the process of unloading a home and its accompanying loan. A short sale takes about 123 days on average. On the other hand, it takes nearly a year to foreclose on a home and then another 175 days to re-sell the property.

Allowing your home to go into foreclosure is may not be your only option. Every situation is different. For a in depth look at your situation you should contact a full service debt relief law firm like Harold Shepley & Associates that can answer any questions you may have about debt relief, mortgage modification, and short sales.

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