LOCAL GOVERNMENTS UNDERWATER: TIME TO CORRECT PRINCIPAL BALANCES

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

We now have a growing group of unlikely bedfellows — investors, homeowners and local governments who were all duped and whose claims are being treated as though each one was unique when in fact the entire plan was a highly organized crime. Add the Federal government to that group who has also demanded “buy-back” of fake mortgages and fake mortgage bonds, although it is highly probable that the government was complicit, certainly in the BUSH administration when the Government and the Fed started all these bailout programs whose total seems to exceed the total of ALL credit that was extended in the original transactions!?!

MY QUESTION IS WHETHER DIMON IS RIGHT: DOES HE LIVE IN A COMPLETELY RISK-FREE ENVIRONMENT OR ARE WE GOING TO APPLY THE LAW TO HIM? GOD HELP US IF HIS ASSUMPTION IS CORRECT.

THE MORE IMPORTANT QUESTION IS WHETHER WE ARE FINALLY GOING TO MAKE THE OBVIOUS CORRECTION OF AN OBVIOUS LIE ABOUT THE VALUE OF THE PROPERTIES AND THE ELABORATELY CONSTRUCTED ILLUSION OF “GROWTH” ? IT ISN’T “PRINCIPAL REDUCTION” TO CUT IT DOWN TO THE REAL FIGURE THAT SHOULD HAVE BEEN USED — IT’S PRINCIPAL CORRECTION.

STATES, COUNTIES, CITIES, TOWNS, INVESTORS AND HOMEOWNERS CAN ONLY GET OUT FROM UNDER THE ILLUSION OF DEBT BY ACKNOWLEDGING THE OBVIOUS — IT ISN’T REALLY THERE IF YOU APPLY THE LAW. IT’S ONLY THERE IF YOU APPLY UNBOUNDED POWER.

EDITOR’S COMMENT: Time for local government to start seeking debt relief and doing those securitization reports and research. Whether they received money from the banks or not, officials in local government are being forced to face the reality that they are presiding over the collapse of our social system for lack of money.

They are in debt — and the amount of debt so vastly exceeds their ability to pay or any prospect to pay that defaults are inevitable — including strategic defaults and bankruptcies where the debt is modified downward. In other words, they are in the same boat as the homeowners.

Actually they are worse off because Wall Street had the nerve to sell local governments triple-A rated mortgage bonds that were worthless, putting them both in the same boat as homeowners and the same boat as other investors.

And if you dig deeper you will connect the dots — the appraisal fraud and other misleading information led these municipalities, towns and counties into planning and for phenomenal growth in demand for services over wider geographical areas, each local government believing that their revenue stream and population would grow at a rate that was both unprecedented and unsupported by any economic fundamentals. They are now stuck with debt to pay for services, they won’t deliver, roads they won’t build, and buildings that are being abandoned or sold.

In plain language, the argument that the crisis grew from greedy homeowners must also be extended to greedy politicians who intentionally bankrupted their cities and towns in the misguided attempt to make a fast buck. Few people will argue whether people are greedy, whether they are homeowners or politicians, but the argument that they would intentionally put themselves in a position of drowning in debt is absurd. There is only one reason this all happened — Wall Street sales machine went to work selling people on “concept” and funding it with other people’s money to create a vast illusion for which we are all paying whether we  participated or not.

The astonishing reversal of fortune for virtually all Americans (except a select few who continue to lie about what they did and when they knew what they were doing) and all their societal structures, governments and government services (police, fore, medical, education etc) is in stark contrast to the massive profits and bonuses that continue to be reported and paid on Wall Street. The entire country has been tilted past the tipping point, so that everything of value went from the the nation as a whole to Wall Street.

In a NY Times Magazine article on Jamie Dimon he continues the BIG LIE strategy that Moynihan over at BofA is using: we had didn’t realize the extent of the lying on stated income loans. He’s staying on message because it is working. As a group, most of us still want to believe and do believe that our system will not break down, but it IS breaking down. The process is already underway. Dimon’s current lie is intended to distract us from considering that the lie was created by him and his officers and employees. The lie works because you must take the time away from your job-hunting and ask yourself how all those applications were filled with bad information without anyone knowing about it. “Due diligence,” a term coined on Wall Street for inspecting the chicken before you buy it, is NEVER overlooked.

Countrywide, Chase, Citi, Goldman and others lied about the quality of the loans and the values of the real property and the documentation of the loans, notes and mortgages because they could. They controlled the entire apparatus. The sheer size made it look “institutionalinstead of organized crime. Of course they knew, but they were acting in a totally risk-free environment because they were using other people’s money — investors to whom they lied with the same lies that were told to borrowers — we have reviewed the application, verified the data, verified the value of the property, and the loan meets with underwriting standards. The loan is approved. Or in the case of local government, the bond is approved, the underwriting and selling of it shall begin.

We now have a growing group of unlikely bedfellows — investors, homeowners and local governments who were all duped and whose claims are being treated as though each one was unique when in fact the entire plan was a highly organized crime. Add the Federal government to that group who has also demanded “buy-back” of fake mortgages and fake mortgage bonds, although it is highly probable that the government was complicit, certainly in the BUSH administration when the Government and the Fed started all these bailout programs whose total seems to exceed the total of ALL credit that was extended in the original transactions!?!

MY QUESTION IS WHETHER DIMON IS RIGHT: DOES HE LIVE IN A COMPLETELY RISK-FREE ENVIRONMENT OR ARE WE GOING TO APPLY THE LAW TO HIM? GOD HELP US IF HIS ASSUMPTION IS CORRECT.

THE MORE IMPORTANT QUESTION IS WHETHER WE ARE FINALLY GOING TO MAKE THE OBVIOUS CORRECTION OF AN OBVIOUS LIE ABOUT THE VALUE OF THE PROPERTIES AND THE ELABORATELY CONSTRUCTED ILLUSION OF “GROWTH” ? IT ISN’T PRINCIPAL REDUCTION TO CUT IT DOWN TO THE REAL FIGURE THAT SHOULD HAVE BEEN USED — IT’S PRINCIPAL CORRECTION.

STATES, COUNTIES, CITIES, TOWNS, INVESTORS AND HOMEOWNERS CAN ONLY GET OUT FROM UNDER THE ILLUSION OF DEBT BY ACKNOWLEDGING THE OBVIOUS — IT ISN’T REALLY THERE IF YOU APPLY THE LAW. IT’S ONLY THERE IF YOU APPLY UNBOUNDED POWER.

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Mounting State Debts Stoke Fears of a Looming Crisis

By MICHAEL COOPER and MARY WILLIAMS WALSH

The State of Illinois is still paying off billions in bills that it got from schools and social service providers last year. Arizona recently stopped paying for certain organ transplants for people in its Medicaid program. States are releasing prisoners early, more to cut expenses than to reward good behavior. And in Newark, the city laid off 13 percent of its police officers last week.

While next year could be even worse, there are bigger, longer-term risks, financial analysts say. Their fear is that even when the economy recovers, the shortfalls will not disappear, because many state and local governments have so much debt — several trillion dollars’ worth, with much of it off the books and largely hidden from view — that it could overwhelm them in the next few years.

“It seems to me that crying wolf is probably a good thing to do at this point,” said Felix Rohatyn, the financier who helped save New York City from bankruptcy in the 1970s.

Some of the same people who warned of the looming subprime crisis two years ago are ringing alarm bells again. Their message: Not just small towns or dying Rust Belt cities, but also large states like Illinois and California are increasingly at risk.

Municipal bankruptcies or defaults have been extremely rare — no state has defaulted since the Great Depression, and only a handful of cities have declared bankruptcy or are considering doing so.

But the finances of some state and local governments are so distressed that some analysts say they are reminded of the run-up to the subprime mortgage meltdown or of the debt crisis hitting nations in Europe.

Analysts fear that at some point — no one knows when — investors could balk at lending to the weakest states, setting off a crisis that could spread to the stronger ones, much as the turmoil in Europe has spread from country to country.

Mr. Rohatyn warned that while municipal bankruptcies were rare, they appeared increasingly possible. And the imbalances are so large in some places that the federal government will probably have to step in at some point, he said, even if that seems unlikely in the current political climate.

“I don’t like to play the scared rabbit, but I just don’t see where the end of this is,” he added.

Resorting to Fiscal Tricks

As the downturn has ground on, some of the worst-hit cities and states have resorted to fiscal sleight of hand to stay afloat, helping them close yawning budget gaps each year, but often at great future cost.

Few workers with neglected 401(k) retirement accounts would risk taking out second mortgages to invest in stocks, gambling that the investment gains would be enough to build bigger nest eggs and repay the loans.

But that is just what Illinois, which has been failing to make the required annual payments to its pension funds for years, is doing. It borrowed $10 billion in 2003 and used the money to invest in its pension funds. The recession sent their investment returns below their target, but the state must repay the bonds, with interest. The solution? Illinois sold an additional $3.5 billion worth of pension bonds this year and is planning to borrow $3.7 billion more for its pension funds.

It is the long-term problems of a handful of states, including California, Illinois, New Jersey and New York, that financial analysts worry about most, fearing that their problems might precipitate a crisis that could hurt other states by driving up their borrowing costs.

But it is the short-term budget woes that nearly all states are facing that are preoccupying elected officials.

Illinois is not the only state behind on its bills. Many states, including New York, have delayed payments to vendors and local governments because they had too little cash on hand to make them. California paid vendors with i.o.u.’s last year. A handful of other states, worried about their cash flow, delayed paying tax refunds last spring.

Now, just as the downturn has driven up demand for state assistance, many states are cutting back.

The demand for food stamps has been rising significantly in Idaho, but tight budgets led the state to close nearly a third of the field offices of the state’s Department of Health and Welfare, which take applications for them. As states have cut aid to cities, many have resorted to previously unthinkable cuts, laying off police officers and closing firehouses.

Those cuts in aid to cities and counties, which are expected to continue, are one reason some analysts say cities are at greater risk of bankruptcy or are being placed under outside oversight.

Next year is unlikely to bring better news. States and cities typically face their biggest deficits after recessions officially end, as rainy-day funds are depleted and easy measures are exhausted.

This time is expected to be no different. The federal stimulus money increased the federal share of state budgets to over a third last year, from just over a quarter in 2008, according to a report issued last week by the National Governors Association and the National Association of State Budget Officers. That money is set to run out next summer. Tax collections, meanwhile, are not expected to return to their pre-recession levels for another year or two, given that the housing market and broader economy remain weak and that unemployment remains high.

Scott D. Pattison, the budget association’s director, said that for states, next year could be “the worst year of this four- or five-year downturn period.”

And few expect the federal government to offer more direct aid to states, at least in the short term. Many members of the new Republican majority in the House campaigned against the stimulus, and Washington is debating the recommendations of a debt-reduction commission.

So some states are essentially borrowing to pay their operating costs, adding new debts that are not always clearly disclosed.

Arizona, hobbled by the bursting housing bubble, turned to a real estate deal for relief, essentially selling off several state buildings — including the tower where the governor has her office — for a $735 million upfront payment. But leasing back the buildings over the next 20 years will ultimately cost taxpayers an extra $400 million in interest.

Many governments are delaying payments to their pension funds, which will eventually need to be made, along with the high interest — usually around 8 percent — that the funds are expected to earn each year.

New York balanced its budget this year by shortchanging its pension fund. And in New Jersey, Gov. Chris Christie deferred paying the $3.1 billion that was due to the pension funds this year.

It is these growing hidden debts that make many analysts nervous. States and municipalities currently have around $2.8 trillion worth of outstanding bonds, but that number is dwarfed by the debts that many are carrying off their books.

State and local pensions — another form of promised debt, guaranteed in some states by their constitutions — face hidden shortfalls of as much as $3.5 trillion by some calculations. And the health benefits that state and large local governments have promised their retirees going forward could cost more than $530 billion, according to the Government Accountability Office.

“Most financial crises happen in unpredictable ways, and they hit you when you’re not looking,” said Jerome H. Powell, a visiting scholar at the Bipartisan Policy Center who was an under secretary of the Treasury for finance during the bailout of the savings and loan industry in the early 1990s. “This one isn’t like that. You can see it coming. It would be sinful not to do something about this while there’s a chance.”

So far, investors have bought states’ bonds eagerly, on the widespread understanding that states and cities almost never default. But in recent weeks the demand has diminished sharply. Last month, mutual funds that invest in municipal bonds reported a big sell-off — a bigger one-week sell-off, in fact, than they had when the financial markets melted down in 2008. And hedge funds are already seeking out ways to place bets against the debts of some states, with the help of their investment banks.

Of course, not all states are in as dire straits as Illinois or California. And the credit-rating agencies say that the risk of default is small. States and cities typically make a priority of repaying their bond holders, even before paying for essential services. Standard & Poor’s issued a report this month saying that the crises that states and municipalities were facing were “more about tough decisions than potential defaults.”

Change in Ratings

The credit ratings of a number of local governments have improved this year, not because their finances have strengthened somewhat, but because the ratings agencies have changed the way they analyze governments.

The new higher ratings, which lower the cost of borrowing, emphasize the fact that municipal defaults have been much rarer than corporate defaults.

This October, Moody’s issued a report explaining why it now rates all 50 states, even Illinois, as better credit risks than a vast majority of American non-financial companies.

One reason: the belief that the federal government is more likely to bail out a teetering state than a bankrupt company.

“The federal government has broadly channeled cash to all state governments during recent recessions and provided support to individual states following natural disasters,” Moody’s explained, adding that there was no way of being sure how Washington would respond to a bond default by a state, since it had not happened since the 1930s.

But some analysts fear the ratings are too sanguine, recalling that the ratings agencies also dismissed the possibility that a subprime crisis was brewing. While most agree that defaults are unlikely, they fear that as states struggle with their growing debts, investors could decide not to buy the debt of the weakest state or local governments.

That would force a crisis, since states cannot operate if they cannot borrow. Such a crisis could then spread to healthier states, making it more expensive for them to borrow, if Europe is an example.

Meredith Whitney, a bank analyst who was among the first to warn of the impact the subprime mortgage meltdown would have on banks, is warning that she sees similar problems with state and local government finances.

“The state situation reminded me so much of the banks, pre-crisis,” she said this fall on CNBC.

There are eerie similarities between the subprime debt crisis and the looming municipal debt woes. Among them:

¶Just as housing was once considered a sure bet — prices would never fall all across the country at the same time, conventional wisdom suggested — municipal bonds have long been considered an investment safe enough for grandmothers, because states could always raise taxes to pay their bondholders. Now that proposition is being tested. Harrisburg, the capital of Pennsylvania, considered bankruptcy this year because it faced $68 million in debt payments related to a failed incinerator, which is more than the city’s entire annual budget. But officials there have resisted raising taxes.

¶Much of the debt of states and cities is hidden, since it is off the books, just as the amount of mortgage-related debt turned out to be underestimated. States and municipalities often understate their pension liabilities, in part by using accounting methods that would not be allowed in the private sector. Joshua D. Rauh, an associate professor of finance at Northwestern University, and Robert Novy-Marx, an assistant professor of finance at the University of Rochester, calculated that the true unfunded liability for state and local pension plans is roughly $3.5 trillion.

¶The states and many cities still carry good ratings, and those issuing warnings are dismissed as alarmists, reminding some analysts of the lead up to the subprime crisis.

Now states are bracing for more painful cuts, more layoffs, more tax increases, more battles with public employee unions, more requests to bail out cities. And in the long term, as cities and states try to keep up on their debts, the very nature of government could change as they have less money left over to pay for the services they have long provided.

Richard Ravitch, the lieutenant governor of New York, is among those warning that states are on an unsustainable path, and that their disclosures of pension and health care obligations are often misleading. And he worries how long it can last.

“They didn’t do it with bad motives,” he said. “Ninety-five percent of them didn’t understand what they were doing. They did it because it was easier than taxing people or cutting benefits. We’re getting closer and closer to the point where we can’t do that anymore. I don’t know where that is, but I know we’re close.”

19 Responses

  1. Joyce Louise

    I have seen it. Provide your email address if you can.

    Like

  2. Anonymous

    Did you get a chance to look at the site for
    Ameriquest MDL Settlement?

    Like

  3. Joyce Louise,

    You are 150% accurate. And, we need an organization that has voice. This does not mean to discontinue individual claims, it just means that we need a public voice. We have none.

    PJ

    Also — accurate. Hearing from all sources – including this post – states are in bad shape. And, look at what Quantitative easing is doing – it is pushing investments out of safer investments into higher risk equities — the stock market. This is harming the state budget portfolios – that should be conservative and were devastated because they could not realize the high yields they though they would earn from subprime borrower fraudulent loans.

    I have in the past, done research on corporations that were acquired due to financial distress — traced much to pension funding — portfolios that could not realize the targeted yield to meet benefits.

    This is a serious problem that has hit finally hit our state and local government. Tax appraisals are way out of line in certain areas of this country. And, as I recall, PJ, you are from NY — one of the most outrageous in property taxes.

    Now, how is the government going to fix this — including not only fat state/local obligations — but also an economy based on consumption — in which they are now throwing homeowner victims of fraud into foreclosure mayhem. The process will continue to derail economic recovery – despite the false claims of those in authority.

    President OBAMA – finished — it is a shame.

    Like

  4. PJ

    I think the appraisals must be based on true appraised values supported by sales comps and if you don’t agree with that, you protest.. There have been arguments regarding the effect on values affected by foreclosures in the neighborhood and what the true value of the other homes would be. Most say it brings the value down. You simply protest and fight for what you believe is correct with the proper support. I am sure the Appraisal Districts base it on what they believe the appraised value is which would be the values that were plugged in during the bubble. And if you don’t speak up, of course they are going to bill it that way. Shame on them, but that is what they do and after a great period of time like 2003 – 2007, we had inflated appraised values and a homeowner has to be on top of the going values based on realistic figures tied to the market after all variances have been applied. They know what they should be doing but they don’t always do it until it is protested. Just my 2 cents worth. The appraisal district cannot tax on

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  5. 2 Anonymous…have worked with many people that had “unsustainable” property assessments resulting in oppressive property taxes… what do the local goverments do now … reduce assessments to reflect curent market value but keep the taxes at “bubble” levels…instead of assigning tax values based on actual sales during the “bubble” all residents were assessed as if they would flip their house in a heart beat… all based of course on the fraud. A very well planned scheme that local and state goverments were quite happy to partake in!

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  6. Anonymous has it right and it is key: Had the government bailed out the homeowners first, the outcome would have changed substantially. However, it still looks like the investors are going to be on the receiving end 1) because the homeowners do not know what the AG’s are doing and 2) The SEC appears to be negotiating settlements with Wall Street that will to some degree protect the investors. Makes me sick and it may be that those of us who are going after the securities dealers in our own lawsuits, will be greatly affected by what we can and can not do. The SEC and the OCC absolutely failed to protect the homeowners who were ignorant of what was going on and I do not see any moves being addressed by the AG’s as to what they think they are doing. It is a dangerous situation for the homeowners because we will be the last man standing, homeless and broke. Now Fannie may be planning on selling their non performing loans, again without a resolution as to how to help the homeowners other than to subject them to the vultures flying high ready for the kill. The AG’s better get it together and the senators as well and the homeowners better make sure that we move on it and move quickly. I cannot tell you how important the timing of what we do, if anything, needs to be done NOW. Even if the banks are required to buy them back what help will we get. Tim Geither and his bunch selling off the toxic assets at prices to investors (a planned event) with little or no interest and no recourse. Talk about setting up the American TAX Payer. Goldman Sachs settlement was a joke at $500 million. Yet the SEC thought it was a tremendous win. Well it wasn’t. Every dime the investors paid to them should have been returned. Now that I see how securities dealers worked in such close tandem with the banks or originators, those old boys knew which loans were classified and going into which designated pools so they bet on them. How can
    there be any question. I see we are all still talking, but I don’t see a leader coming forward so we can take a stand. All of the non profits up in washington are doing nothing but collecting their monthy grants because they are non profit pretending just like the scoundrels who set up the pooled loans. I glad I covered the securities dealers in our 2007 suit. WE were not waiting for the rest of the world to catch up. The Congress was a joke and still are. Where I come from, everyone associated with the regulatory need to be fired and the congressional people that encouraged and supported these deals need to be dismissed and that isn’t isn’t even possible, but I am mad..

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  7. Pj

    Believe you meant to use the word “complicit.” And, although we have disagreed in the past, I agree with you here..

    Big problem with state and local municipalities has been the task of funding of very generous pensions for state and local workers. While I do not dispute that these workers may work hard — taxpayers just cannot continue to support such generous government employee pensions – when they can barely fund their own pensions. Most corporations, – long ago, stopped generously funding employee pensions. However, state and local governments continued excessive funding of pensions.

    As the burden increased to fund the state/local pensions, administrators sought risky investments for higher returns. It is not that these government administrators lost money in the home loan securitizations (as most have been returned principal investment) – is that the administrators can longer realize the yields – they thought they had invested in – since the investments are now “dead.” Thus, portfolio returns cannot support funding commitments – and, there are no alternatives.

    I have sympathy for investors – that may have banked on high returns – which are no longer available. But, no one should be earning high returns on fraudulent investments – whether or not they – too – were duped – because the investments are fraudulent to begin with. You cannot earn money on fraudulent investments – just does not work that way. And, as PJ says – that is the “complicity” in the “mess.”

    Investors are accountable for their own risk – it is not the same as homeowner victims – who are not sophisticated – but, instead rely on what they are told..

    In any event, investors have been – for the most paid back their investment — they just need to find another source that will generate the yield they require to fund their budgets. And, right now, that yield is not available.

    Everyone one bailed-out – except homeowners — and, if government had bailed out homeowners FIRST – perhaps we would not have these government budget problems today. But, the government – like so many – are always looking for a “fast” fix — they refused to take the hard steps that would secure a long term better future for all. They acted quickly – and without thought to long-term consequence. Did they avert, temporarily, an immediate depression? Maybe, but only temporarily – and their actions may cause a future crisis much longer lasting – and, very possibly, not fixable..

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  8. […] This post was mentioned on Twitter by USA Advocate, fastpup. fastpup said: LOCAL GOVERNMENTS UNDERWATER: TIME TO CORRECT PRINCIPAL BALANCES: http://t.co/fUdlEye It's not just "deadbeat" homeowners anymore. […]

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  9. […] LOCAL GOVERNMENTS UNDERWATER: TIME TO CORRECT PRINCIPAL BALANCES Posted on December 6, 2010 by Neil Garfield […]

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  10. GEORGIA RESIDENTS e-mail me for info on a CLASS ACTION LAWSUIT against Bank of America & BAC. sonya36767@yahoo.com

    Like

  11. GEORGIA RESIDENTS: I have an attorney in GEORGIA who wants to file a CLASS ACTION LAWSUIT against Bank of America & BAC. If you want more info Call 706-295-0333 & ask for Mr. Guldenschuh or e-mail sonya36767@yahoo.com of dfg@guldenschuhlaw.com

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  12. Neil, state & local goverments are complicate in this mess. In area such as NY people living in modest homes on a 50 x 100 plot, saw their “property assessments” thus taxes quadrupled at best, the state and local goverments could not spend the money fast enough.. they have budgets and commitments ( secured vote buying) that is unsustainable.

    No one ever talks about the many people out there with no skin in this game that had to budget cut household income to meet property taxes that were placed on them during the “bubble”.. and I am talking about retired people living in homes completely paid off, and young families that had to move because their escrowed property taxes eclipsed monthly mortgage payments.

    Fear tactics, close a firehouse? Then what are people paying “property taxes” for… some intrenched friend of an elected official to maintain a job and accrue “lifelong” benefits?

    Like

  13. Looks like we might have the great depression back for 2011. More job losses,i.e., more foreclosures, because public workers, firemen, police, local government will be laid off. If they cut off Social Security and then tell us that we have to give them our guns, that ought to do it. Violent insurrection anyone? Praying for Wikileaks to disclose all the bank skullduggery. Dimon can get rode outta town on a rail with tar and feathers. There are lots more banksters and politicians out there to get as well. I, personally, don’t think they (banksters, politicians, certain government officials) think we have it in us to do anything about the coming great depression. I think we do. You see, revolutions come about when you have nothing left to lose. The Wall Street thieves have pretty much gotten us there. http://www.challengingforeclosure.com Sirak@challenging.com

    Like

  14. “MY QUESTION IS WHETHER DIMON IS RIGHT”

    Richard Davet

    2009 JPM Shareholder’s meeting

    Exchange with James Dimon CEO and Chairman

    As you know, for years, the Bank has been and continues to be major players in its mortgage business in what has come to be known as the “Government Sponsored Enterprise (GSE) Business Model”.

    In September of 2008, Treasury Secretary Paulson declared that, and I quote, “these enterprises pose a systemic risk”. Your mortgage business goes 90%+ to Fannie Mae on a daily basis.

    Much has been written about the GSE flawed business model, including a Wall Street op-ed by George Soros which calls the models “hopelessly conflicted” and “it simply doesn’t work”.

    ? 1, When do you and the Board intend to disclose to shareholders the consequences of the Bank’s vigorous involvement with this fatally flawed business model?

    ? 2 Isn’t this business a little like your running a house of ill repute while knowing that all your ladies have aids and what are you doing to your client base?

    ? 3, What would you say to the skeptics that are out there that think that all players involved with the GSE Business Model are engaged in a simple criminal scheme, albeit of a dimension that we have never seen before, that a prosecutor would call “theft by deception” with the American taxpayer as the victim

    Like

  15. When one considers that the top dollar areas funded are los angeles and california–for Q2 2010,…

    and that Indymac, Wells, Deutsche Bank as Trustee, Countrywide–and that Jerry Brown’s sister works for the Banks.-

    –and that there is little help from the Attorney General …

    …and the California non judicial foreclosures for the largest areas in the country do not require the note or the deed of trust to be produced cc 2924.

    …and that the banks are located–in Califronia–

    it seems odd that only Maxine Waters speaks out for the homeowners.

    Like

  16. Neil,
    You really need to stop making the investors and governments out to be victims, when they all had power to do something to help people and they all still have a place they can call home.

    Your movement (if you even have one) still seems to be going nowhere REALLY fast. Some info you give is good, but you’re starting to look more like disinfo because you do nothing with the good information you do have. If you’re gonna lead, then lead.

    Like

  17. http://www.scribd.com/doc/44778776/Mortgage-Stats-second-quarter-2010-top-servicer

    second quarter servicing numbers and loan totals.

    Like

  18. Remember the old german word , who did not
    work :
    Groessenwahn = megalomania

    Like

  19. COMMENTS ON CALIFORNIA MELLO ROOS FRAUDS PERPERTRATED BY LENNAR, RYAND, SUNCAL.

    THE BUILDERS AND SUNCAL THE DEVELOPER FUNDED BY LEHMAN BROTHERS GOT THE APPRAISER (IN THE 990 PAGE MELLO ROOS DOCUMENT ATTACHED) TO SAY THAT A RECENTLY SOLD DEVELOPMENT WAS WORTH $81 MILLION.

    THIS APPRAISER FRAUD WAS BASED ON SALES PRICES TO THE SOLD BUILDER AREAS A FEW MONTHS BEFORE.

    THIS FRAUD DID NOT INCLUDE AREA COMPS BUT COMPS SOLD TO THE SAME PLAYERS. THE BUILDERS RECEIVED CREDITS (KICKBACKS) OF $13-15,000 PER LOT. THE SCHOOL TAX WAS PAID.

    OUT OF THE AMOUNT THE DEVELOPER WAS PAID 25% ADMINISTRATIVE HIDDEN FEES, AND WERE REIMBURSED FOR MANY ITEMS ALREADY PAID FOR.

    THIS THIEVERY WAS SO OUTRAGEOUS THAT THERE WAS $1.6 MILLION CHARGED BY THE DEVELOPER (SUNCAL SEE WSJ ARTICLE ON LEHMAN HOLDS SUNCAL CEO PERSONALLY FOR BONDS AND OTHER DEBTS) WHICH WERE FOUND TO BE PRIVATE STREETS. THEY WERE REIMBURSED FOR MANY UNQUALIFIED PROJECTS. THAT AMOUNTED TO BREAKING THE TAX FREE STATUS OF THE BOND OFFERING.

    THE WORST THING IS THAT THERE WAS AN AREA 2, ADDED TO THIS MELLO ROOS TAX AREA.

    AREA 2 WAS NOT PROPERLY ANNEXED, BUT REGARDLESS IT WAS PUSHED THROUGH AND SOUTHWEST SECURITIES, FULLBRIGHT AND JAWROSKI LLP APPROVED IT. THE OFFERING WAS SOLD AND THE FUNDS DISTRIBUTED.

    AREA 2 THE INELIGIBLE AREA BY ALL LAND RECORDS AND LAWFUL ANNEXATION PROCEDURES, RECIEVED $6 MIILION OF INFRASTRUCTURE UPGRADES.

    THESE WERE BACK BONE STRUCTURES. THEY ARE IN THE GROUND NOW AND THE AREA 1 WHO PAID FOR THEM WILL NEVER BENEFIT. IT WAS A SCAM AND IT IS IN CALIFORNIA.

    A GOOD NEWSPAPER COULD EASILY AGREE WITH THE ASSESSMENT. HOWEVER IT IS TOO DIFFICULT.

    THIS AREA WAS NOT ANNEXED TO THE DEVELOPMENT PROPERLY. IN FACT THERE WAS A LETTER WHERE BY THE DEPT OF THE INTERRIOR SAID THAT THEY DAMAGED ENDANGERED SPECIES.

    THEY DID NOT CARE AND THE DEPT OF THE INTERRIOR HAS NO POWER ONCE THE CITY WHO FACILITATED THIS MASSIVE CONSPIRACY ALLOWED THE PULLING OF PERMITS.

    I HAVE ALL THIS DOCUMENTED. THE OVERSIGHT BODIES ARE WEAK. THIS $26.3 MILLION DOLLAR MELLO ROOS TAX IS NOW ITSELF OVER 2% OF THE TAX AMOUNT.

    THAT MAKES THE TOTAL TAX OVER 3.5% FOR THESE PEOPLE. THIS IS WELL DOCUMENTED AND IT IS SO BAD. THIS IS ONLY PART OF THE STORY. THE DEVELOPER/BUILDERS STEERED 70% OF THE LOANS TO THEIR SUBSIDIARIES. FOR A $500,000 HOME THEY MADE $25,000.00.

    CALIFORNIA DOES NOT CARE. THE AUTHORITIES DO NOT UNDERSTAND THIS COMPLEXITY, AND IT IS CRIMINAL.

    http://www.scribd.com/doc/10738315/City-of-Indio

    HERE IS THE BOND OFFERING. I HAVE DOCUMENTED THE ENTIRE SCAM. THE CITY HAS DEFEASED $ 3MM OF A SPECIAL ESCROW TAX. THAT WE HAD TO FIGHT SO THE DEVELOPER WOULD NOT GET IT. IF THERE WERE NOT ACTIVISTS HERE WE WOULD HAVE LOST THAT PART ALSO.

    http://www.scribd.com/doc/38833584/Letters-to-Indio-City-Manager-December-5-2009-MELLO-ROOS-TAXES-BURDENED-HOMEOWNERS-2-30-YEAR-TAX

    Department of the Interior Report for Area 2
    United States Department of the Interior
    FISH AND WILDLIFE SERVICE
    Ecological Services
    Carlsbad Fish and Wildlife Office
    6010 Hidden Valley Road
    Carlsbad, California 92009
    In Reply Refer To: FWS-ERIV-4301.1
    Dec 10 2004
    Ms. Susan E. Williams Community Development Services
    Building and Safety Director
    100 Civic Center Mall
    Indio, California 92201
    Subject: Notice of Intent to Adopt a Mitigated Negative Declaration and Draft
    Environmental Assessment for the Proposed Terra Lago East Project, City of Indio, Riverside County (EA No. 04-11-404)
    Dear Ms. Williams:
    This letter responds to your request for agency comment on the above referenced Notice of Intent (NOI) and draft Environmental Assessment (EA) for the proposed Terra Lago East project, dated November 4, 2004. The U.S. Fish and Wildlife Service (Service) has reviewed the subject notice and accompanying draft EA, and we offer the following recommendations to assist you in planning for the conservation of sensitive wildlife species and plant communities within the project area. In particular, the Service has concerns regarding impacts to the federally endangered Coachella Valley milk-vetch (Astragalus lentiginosus var. coachellae; hereinafter milk-vetch) and its habitat. This species is known to occur just east of the proposed project boundary and suitable habitat occurs on portions of the project site. We are concerned that impacts have recently occurred to the milk-vetch adjacent to the project site that were to be avoided under the former SunCal project. Furthermore, we are concerned with the lack of effective mitigation measures proposed in the Mitigated Negative Declaration for project impacts on the Palm Springs ground squirrel (Spermophilus tereticaudus chlorus; hereinafter ground squirrel) and the honey mesquite (Prosopis glandulosa) hummock plant community found on-site. Additionally, the Biological Resources section of the draft EA does not address Environmental Evaluation letter f: “Conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional, or state habitat conservation plan?” This section should be completed and circulated for public review.
    According to the EA, the proposed Terra Lago East project is a consolidation of the previously approved Hills (November 1996) and Indian Lakes (May 2000) projects, and is designed to be consistent with the SunCal Indio

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    Project Master Plan that was approved December 2003. The proposed Terra Lago East project is geographically located within a subset of these previously approved projects. A biological assessment (BA) was prepared for the proposed SunCal project by James Cornett, dated June 28, 2003, which enveloped the project footprint for the proposed Terra Lago East project. A review and update of the 2003 BA was prepared for the Terra Lago East project by AMEC Earth and Environmental, Inc., dated September 20, 2004. We appreciate the opportunity to comment on the NOI and draft EA and our concerns are addressed in detail below.
    Coachella Valley Milk-vetch
    According to the 2003 BA (page 13) for the SunCal project, milk-vetch was detected in eastern portions of the site adjacent to Dillon Road, and ‘habitat was found to be suitable for this species on portions of the project site.” The conditions of approval (condition number 4) and Mitigation Monitoring and Reporting Program (BS-2) for the SunCal project required the project proponent to confer with the Service regarding acceptable mitigation for the milk-vetch and to ‘provide proof to the City of Indio of consultations held with the U.S. Fish and Wildlife Service regarding any mitigation measure requirements for loss of potential milk-vetch habitat.” However, a letter submitted to our office by the law office of Hewitt & O’Neil, dated March 12, 2004, stated that ‘no mitigation is offered as no impacts to the milk-vetch will occur as a result of SunCal’s project.” Nonetheless, according to the 2004 BA (page 2), site visits conducted by John Green and Dave Kajtaniak in September 2004 found that extensive blading had recently occurred in the eastern portion of the project site. Though the 2004 BA does not clarify if the occupied milk-vetch habitat was disturbed by the blading, the area has been cleared to Dillon Road, which undoubtedly adversely impacted the milk-vetch population on-site. Because the proposed Terra Lago East project is proposed to be consistent with the approved SunCal project, the City’s mitigation measures for milk-vetch have not been complied with, and this outstanding responsibility still needs to be satisfied. Please see our recommendations below.
    The eastern boundary of the proposed Terra Lago East project has been moved to the west, apparently to avoid the previously identified milk-vetch occurrences, however, the 2004 updated BA (page 1) states that, ‘Habitat is similar on the adjacent Terra Lago East site, so by natural seed dispersal, there is at least a chance that it could now occur there as well. Focused surveys during the blooming season of this plant would be required to confirm this possibility.” If the grading that occurred earlier this year redistributed and leveled sandy soils without transporting this material off-site, milk-vetch seeds would remain on-site and the seed bank should remain viable, assuming that some of the bank remains within sprouting depth of the soil surface.
    Mitigation measures to offset impacts to milk-vetch should be included as permit conditions for the proposed Terra Lago East project. We recommend that the City require the project proponent to restore and protect, with a permanent conservation easement, the entire milk-vetch habitat that was to be avoided, per the letter from the law office of Hewitt & O’Neil. This area includes those lands along Dillon Road that the current project was reconfigured to avoid. Additionally, focused surveys for this species should be conducted on the remainder of the site during the appropriate blooming season and survey reports, including survey methodology, date of surveys, survey results, and surveyor qualifications should be submitted to the Service and the City for review prior to permitting the proposed project. This information is required to adequately evaluate the current status of this species on the project site, and determine the significance of potential impacts and appropriate mitigation measures.
    Palm Springs Ground Squirrel and Mesquite Hummocks

    The 2003 BA for the SunCal project reports more than 50 observations of the ground squirrel on-site and states that this species can be expected over most of the area surveyed, which includes the proposed Terra Lago East project site. The 2004 updated BA concludes that, despite clearing of many mesquite hummocks (discussed below), ground squirrels are still likely to be present on-site. This species is a candidate for Federal listing (candidate species are those for which the Service has on file sufficient information indicating that listing as threatened or endangered is warranted by the species has not yet been proposed for listing), and is considered a species of special concern by the California Department of Fish and Game (CDFG), because it is a narrow endemic species that largely occurs in the Coachella Valley within sandy habitats, and is most abundant in mesquite hummock habitat. In addition, the ground squirrel is proposed for conservation in the draft Coachella Valley Multiple Species Habitat Conservation Plan (draft CVMSHCP) to avoid the need for future listing, and provide adequate conservation so that if the species were to be listed in the future, additional funding or habitat would not be needed in the plan area.
    Though the draft CVMSHCP provides a habitat model for the ground squirrel that suggests relatively widespread distribution in the Valley, the Service has conducted a 2-year study of the ground squirrel and found that it is largely restricted to stands of mesquite, including substantially higher population densities than in other habitat types, and currently appears absent from much of the modeled suitable habitat. Given the substantial reliance of the regional ground squirrel population on mesquite habitat, the future survival of the ground squirrel appears dependent on the conservation of that habitat type. Historically, the amount of mesquite hummocks in the Valley has been dramatically reduced by agricultural and urban development, to the extent that only about 945 acres of such habitat currently remain. Most of this habitat (about 570 acres, as calculated in the draft CVMSHCP) occurs in isolated patches that were excluded from the proposed CVMSHCP reserve design because of disjunct distribution, small size, and lack of connectivity with larger blocks ofhabitat. Therefore, only about 375 acres of mesquite hummocks may be protected in the future if the draft CVMSHCP is approved. However, most of the habitat that is proposed for conservation under the draft CVMSHCP is threatened by groundwater over-draught, and substantial death and degradation of the remaining mesquite habitat currently is evident. As such, the future survival of the ground squirrel in Valley appears to be at high risk, which adds to the significance of conserving those remaining stands of mesquite that still support the ground squirrel. The CDFG considers this community to be a rare vegetation element in California and of significant importance regionally due to high ecological value and increasing rarity/threat. Please see Enclosure 1 for additional information on the regional importance of mesquite hummocks and threats to this vegetation community type.
    The 2003 BA for the SunCal project identified mesquite hummocks (some as high as fifteen feet) within the northeastern and southwestern portions of the proposed Terra Lago East project site, and the 2004 updated BA reports “extensive, extant hummocks within the existing golf course, particularly in the eastern portion of the course, north of the canal, and west ofWasteway Number Three” that were not identified in the 2003 BA. According to the 2004 BA (page 2), site visits conducted in September 2004 confirmed that all of the mesquite hummocks in the northeastern project area and some hummocks in the southwestern area had been bladed. Observations by Service biologists in April 2004 found that all of the mesquite hummocks onsite were undisturbed. Therefore, blading occurred between April and September 2004. Based on available information, the bladed area between the eastern boundary of the proposed Terra Lago East project and Dillon Road is no longer part of any proposed project for unexplained reasons. That the former SunCal project boundary was moved farther west in the current Terra Lago East proposal, suggests that an attempt was made to avoid the area previously documented to support the milk vetch. However, why this area would have been bladed before the City and developer completed its coordination with the Service, pursuant to the City’s mitigation requirement for the milk-vetch, is perplexing. The 2004 BA reports that extant mesquite roots that were bladed this summer are

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    currently resprouting. This regeneration indicates that despite the significant degradation caused by the grading, the mesquite stands remain alive and likely will naturally reestablish if left undisturbed, to again provide suitable habitat for the ground squirrel.
    The two BAs and the draft EA do not quantify the acreage of mesquite hummocks that occurred on the property at the time of the 2003 assessment for the SunCal project, the amount of mesquite hummocks that have subsequently been bladed, nor the amount of mesquite hummocks still extant on the proposed Terra Lago East project site. Given the proposed elimination of an unquantified amount of mesquite for housing within the existing golf course matrix, and the documented presence of ground squirrels in the existing golf course/mesquite hummock complex, a thorough assessment of the extent of mesquite and ground squirrel habitat is needed to assess the adverse effects of the project proposal. The Service has performed a preliminary assessment based on available aerial photography to help determine a threshold of significance for these potentialimpacts. Though a more careful assessment is needed, we have initially estimated that at least 50 acres of contiguous mesquite hummocks
    occurred in the eastern area of the project site, and this entire area was bladed, as reported in the 2004 updated BA and confirmed per personal communication with John Green ofAMEC on December 10, 2004. We did not estimate the acreage of mesquite hummocks that were reported bladed in the southwestern portion of the proposed site. Additionally, we preliminarily estimate that at least an additional 20 acres of mesquite hummocks are extant within the rest of the project site. Based on the potential significance for adverse effects that this threshold assessment has identified, a more rigorous and accurate analysis is needed to quantify adverse effects so that effective mitigation measures can be formulated.
    Given our threshold analysis above, the mesquite hummocks on the project site represent one of the largest remaining contiguous blocks of such habitat in the Coachella Valley. These mesquite hummocks are contiguous with, and part of, the regional habitat linkage that supports and connects the ground squirrel population along Dillon Road with those on the Coachella Valley Preserve. This linkage is identified in the draft 2004 CVMSHCP as part of the East Indio Hills Conservation Area.
    Based upon review of our records, it appears that the City did not require mitigation for impacts to the ground squirrel and mesquite hummocks, perhaps based on findings in the 2003 BA (page 17), where Cornett suggested that due to the limited size of onsite mesquite hummocks, their isolation from other such habitats, and off-road vehicle impacts, payment of the $600 per acre Coachella Valley fringe-toed lizard Habitat Conservation Plan (CVFTLHCP) fee is adequate mitigation for loss of this community type on-site. The Service does not agree with this assessment. As described above, the extensive acreage of mesquite hummocks that remain extant and those that were bladed are contiguous with, and part of, an important regional habitat complex that supports and connects the ground squirrel population in this area with the populations to the west in the Coachella Valley Preserve. The CVFTLHCP mitigation fee was designed solely for that species and planning program, which did not address the conservation needs of other species, such as the ground squirrel and milk-vetch. To suppose that mitigation for the fringe-toed lizard also offsets significant adverse effects to other species with different habitat requirements suggests an inappropriate double counting of mitigation credits. Therefore, payment of the CVFTLHCP fee does not offset the significant impacts to the ground squirrel from the proposed project.
    Summary
    The proposed Terra Lago East project is associated with several previously authorized projects (Hills, Indian Lakes, and SunCal), however, it appears that adequate mitigation for impacts to Palm Springs ground squirrel and mesquite hummocks was not provided in the permits associated with these related projects. Furthermore, the

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    permit condition to avoid impacts to Coachella Valley milk-vetch associated with the SunCal project apparently has been violated. Any impacts that have occurred, or potentially could occur, to sensitive species and habitats should be addressed through the permit requirements for the Terra Lago East project.
    Because of the regional biological significance of the project site for the ground squirrel that cannot be mitigated through off-site replacement/fee payment, we recommend that the project (1) be reconfigured to avoid and connect the extant (ungraded) mesquite hummocks throughout the project site, and (2) protect the graded mesquite hummock habitat along Dillon Road that has been avoided in the current project proposal. As discussed above, the bladed mesquite hummocks are resprouting, which we anticipate will reestablish former hummocks over time, to again provide habitat for the ground squirrel and milk-vetch. Given the unaddressed impacts and mitigation responsibilities discussed above, (3) intensive restoration and management also should be required to accelerate natural regeneration and recolonization processes, and (4) all mesquite hummocks that were bladed (both within the proposed project site and east of the project site) should be monitored for recovery. As previously discussed, on-site restoration and preservation is required to achieve conservation of the regionally significant ground squirrel population found on-site; however, any mesquite hummocks that do not recover despite adequate recovery efforts should be mitigated off-site through habitat replacement at a 3:1 ratio, and (5) the on-site and off-site mesquite hummock habitat should be permanently protected through a conservation easement or donation to a public agency. Additionally, (6) all impacts to the Coachella Valley milk-vetch habitat that were to be avoided, per the letter from the law office of Hewitt & O’Neil, should be offset through restoration and protection of the graded area along Dillon Road, as discussed in #2 above.
    If the City does not require mitigation adequate to offset significant effects to Palm Springs ground squirrel and Coachella Valley milk-vetch in the Mitigated Negative Declaration, additional environmental analysis and documentation, and coordination with the Service would be needed to address the unmitigated significant effects of the proposed project.
    Please contact Sandra Marquez of my staff at 760/431-9440 if you have any questions or comments concerning this letter.
    Sincerely,
    //s//Sorensen, for
    Therese O’Rourke Assistant Field Supervisor
    Enclosure
    cc: Kim Nicol, CDFG, Bermuda Dunes
    Brian,
    I understand from my colleagues in Western Riverside County that you may have more questions about the process on the Terra Lago East project. That

    falls within my Division, so I don’t think they will be able to help you. Let me know what your questions are, and I’ll try to come up with some answers!
    -Carol
    __________________________
    Carol A Roberts
    Division Chief, Coachella and Imperial Valleys Carlsbad Fish and Wildlife Office 6010 Hidden Valley Road, Suite 101 Carlsbad, CA 92011
    (760) 431-9440 ext. 271/fax -5902
    carol a roberts@fws.gov

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