Levitin and Yves Smith – TRUST=EMPTY PAPER BAG

Living Lies Narrative Corroborated by Increasing Number of Respected Economists

It has taken over 7 years, but finally my description of the securitization process has taken hold. Levitin calls it “securitization fail.” Yves Smith agrees.

Bottom line: there was no securitization, the trusts were merely empty sham nominees for the investment banks and the “assignments,” transfers, and endorsements of the fabricated paper from illegal closings were worthless, fraudulent and caused incomprehensible damage to everyone except the perpetrators of the crime. They call it “infinite rehypothecation” on Wall Street. That makes it seem infinitely complex. Call it what you want, it was civil and perhaps criminal theft. Courts enforcing this fraudulent worthless paper will be left with egg on their faces as the truth unravels now.

There cannot be a valid foreclosure because there is no valid mortgage. I know. This makes no sense when you approach it from a conventional point of view. But if you watch closely you can see that the “loan closing” was a shell game. Money from a non disclosed third party (the investors) was sent through conduits to hide the origination of the funds for the loan. The closing agent used that money not for the originator of the funds (the investors) but for a sham nominee entity with no rights to the loan — all as specified in the assignment and assumption agreement. The note and and mortgage were a sham. And the reason the foreclosing parties do not allege they are holders in due course, is that they must prove purchase and delivery for value, as set forth in the PSA within the 90 day period during which the Trust could operate. None of the loans made it.

But on Main street it was at its root a combination pyramid scheme and PONZI scheme. All branches of government are complicit in continuing the fraud and allowing these merchants of “death” to continue selling what they call bonds deriving their value from homeowner or student loans. Having made a “deal with the devil” both the Bush and Obama administrations conscripted themselves into the servitude of the banks and actively assisted in the coverup. — Neil F Garfield, livinglies.me

For more information on foreclosure offense, expert witness consultations and foreclosure defense please call 954-495-9867 or 520-405-1688. We offer litigation support in all 50 states to attorneys. We refer new clients without a referral fee or co-counsel fee unless we are retained for litigation support. Bankruptcy lawyers take note: Don’t be too quick admit the loan exists nor that a default occurred and especially don’t admit the loan is secured. FREE INFORMATION, ARTICLES AND FORMS CAN BE FOUND ON LEFT SIDE OF THE BLOG. Consultations available by appointment in person, by Skype and by phone.

————————————

John Lindeman in Miami asked me years ago when he first starting out in foreclosure defense, how I would describe the REMIC Trust. My reply was “a holographic image of an empty paper bag.” Using that as the basis of his defense of homeowners, he went on to do very well in foreclosure defense. He did well because he kept asking questions in discovery about the actual transactions, he demanded the PSA, he cornered the opposition into admitting that their authority had to come from the PSA when they didn’t want to admit that. They didn’t want to admit it because they knew the Trust had no ownership interest in the loan and would never have it.

While the narrative regarding “securitization fail” (see Adam Levitin) seems esoteric and even pointless from the homeowner’s point of view, I assure you that it is the direct answer to the alleged complaint that the borrower breached a duty to the foreclosing party. That is because the foreclosing party has no interest in the loan and has no legal authority to even represent the owner of the debt.

And THAT is because the owner of the debt is a group of investors and NOT the REMIC Trust that funded the loan. Thus the Trust, unfunded had no resources to buy or fund the origination of loans. So they didn’t buy it and it wasn’t delivered. Hence they can’t claim Holder in Due Course status because “purchase for value” is one of the elements of the prima facie case for a Holder in Due Course. There was no purchase and there was no transaction. Hence the suing parties could not possibly be authorized to represent the owner of the debt unless they got it from the investors who do own it, not from the Trust that doesn’t own it.

This of course raises many questions about the sudden arrival of “assignments” when the wave of foreclosures began. If you asked for the assignment on any loan that was NOT in foreclosure you couldn’t get it because their fabrication system was not geared to produce it. Why would anyone assign a valuable loan with security to a trust or anyone else without getting paid for it? Only one answer is possible — the party making the assignment was acting out a part and made money in fees pretending to convey an interest the assignor did not have. And so it goes all the way down the chain. The emptiness of the REMIC Trust is merely a mirror reflection of the empty closing with homeowners. The investors and the homeowners were screwed the same way.

BOTTOM LINE: The investors are stuck with ownership of a debt or claim against the borrowers for what was loaned to the borrower (which is only a fraction of the money given to the broker for lending to homeowners). They also have claims against the brokers who took their money and instead of delivering the proceeds of the sale of bonds to the Trust, they used it for their own benefit. Those claims are unsecured and virtually undocumented (except for wire transfer receipts and wire transfer instructions). The closing agent was probably duped the same way as the borrower at the loan closing which was the same as the way the investors were duped in settlement of the IPO of RMBS from the Trust.

In short, neither the note nor the mortgage are valid documents even though they appear facially valid. They are not valid because they are subject to borrower’s defenses. And the main borrower defense is that (a) the originator did not loan them money and (b) all the parties that took payments from the homeowner owe that money back to the homeowner plus interest, attorney fees and perhaps punitive damages. Suing on a fictitious transaction can only be successful if the homeowner defaults (fails to defend) or the suing party is a holder in due course.

Trusts Are Empty Paper Bags — Naked Capitalism

student-loan-debt-home-buying

Just as with homeowner loans, student loans have a series of defenses created by the same chicanery as the false “securitization” of homeowner loans. LivingLies is opening a new division to assist people with student loan problems if they are prepared to fight the enforcement on the merits. Student loan debt, now over $1 Trillion is dragging down housing, and the economy. Call 520-405-1688 and 954-495-9867)

The Banks Are Leveraged: Too Big Not to Fail

When I was working with Brad Keiser (formerly a top executive at Fifth Third Bank), he formulated, based upon my narrative, a way to measure the risk of bank collapse. Using a “leverage” ration he and I were able to accurately define the exact order of the collapse of the investment banks before it happened. In September, 2008 based upon the leverage ratios we published our findings and used them at a seminar in California. The power Point presentation is still available for purchase. (Call 520-405-1688 or 954-495-9867). You can see it yourself. The only thing Brad got wrong was the timing. He said 6 months. It turned out to be 6 weeks.

First on his list was Bear Stearns with leverage at 42:1. With the “shadow banking market” sitting at close to $1 quadrillion (about 17 times the total amount of all money authorized by all governments of the world) it is easy to see how there are 5 major banks that are leveraged in excess of the ratio at Bear Stearns, Lehman, Merrill Lynch et al.

The point of the article that I don’t agree with at all is the presumption that if these banks fail the economy will collapse. There is no reason for it to collapse and the dependence the author cites is an illusion. The fall of these banks will be a psychological shock world wide, and I agree it will obviously happen soon. We have 7,000 community banks and credit unions that use the exact same electronic funds transfer backbone as the major banks. There are multiple regional associations of these institutions who can easily enter into the same agreements with government, giving access at the Fed window and other benefits given to the big 5, and who will purchase the bonds of government to keep federal and state governments running. Credit markets will momentarily freeze but then relax.

Broward County Court Delays Are Actually A PR Program to Assure Investors Buying RMBS

The truth is that the banks don’t want to manage the properties, they don’t need the house and in tens of thousands of cases (probably in the hundreds of thousands since the last report), they simply walk away from the house and let it be foreclosed for non payment of taxes, HOA assessments etc. In some of the largest cities in the nation, tens of thousands of abandoned homes (where the homeowner applied for modification and was denied because the servicer had no intention or authority to give it them) were BULL-DOZED  and the neighborhoods converted into parks.

The banks don’t want the money and they don’t want the house. If you offer them the money they back peddle and use every trick in the book to get to foreclosure. This is clearly not your usual loan situation. Why would anyone not accept payment in full?

What they DO want is a judgment that transfers ownership of the debt from the true owners (the investors) to the banks. This creates the illusion of ratification of prior transactions where the same loan was effectively sold for 100 cents on the dollar not by the investors who made the loan, but by the banks who sold the investors on the illusion that they were buying secured loans, Triple AAA rated, and insured. None of it was true because the intended beneficiary of the paper, the insurance money, the multiple sales, and proceeds of hedge products and guarantees were all pocketed by the banks who had sold worthless bogus mortgage bonds without expending a dime or assuming one cent of risk.

Delaying the prosecution of foreclosures is simply an opportunity to spread out the pain over time and thus keep investors buying these bonds. And they ARE buying the new bonds even though the people they are buying from already defrauded them by NOT delivering the proceeds fro the sale of the bonds to the Trust that issued them.

Why make “bad” loans? Because they make money for the bank especially when they fail

The brokers are back at it, as though they haven’t caused enough damage. The bigger the “risk” on the loan the higher the interest rate to compensate for that risk of loss. The higher interest rates result in less money being loaned out to achieve the dollar return promised to investors who think they are buying RMBS issued by a REMIC Trust. So the investor pays out $100 Million, expects $5 million per year return, and the broker sells them a complex multi-tranche web of worthless paper. In that basket of “loans” (that were never made by the originator) are 10% and higher loans being sold as though they were conventional 5% loans. So the actual loan is $50 Million, with the broker pocketing the difference. It is called a yield spread premium. It is achieved through identity theft of the borrower’s reputation and credit.

Banks don’t want the house or the money. They want the Foreclosure Judgment for “protection”

 

ALERT: COMMUNITY BANKS AND CREDIT UNIONS AT GRAVE RISK HOLDING $1.5 TRILLION IN MBS

I’ve talked about this before. It is why we offer a Risk Analysis Report to Community Banks and Credit Unions. The report analyzes the potential risk of holding MBS instruments in lieu of Treasury Bonds. And it provides guidance to the bank on making new loans on property where there is a history of assignments, transfers and other indicia of claims of securitization.

The risks include but are not limited to

  1. MBS Instrument issued by New York common law trust that was never funded, and has no assets or expectation of same.
  2. MBS Instrument was issued by NY common law trust on a tranche that appeared safe but was tied by CDS to the most toxic tranche.
  3. Insurance paid to investment bank instead of investors
  4. Credit default swap proceeds paid to investment banks instead of investors
  5. Guarantees paid to investment banks after they have drained all value through excessive fees charged against the investor and the borrowers on loans.
  6. Tier 2 Yield Spread Premiums of as much as 50% of the investment amount.
  7. Intentional low underwriting standards to produce high nominal interest to justify the Tier 2 yield spread premium.
  8. Funding direct from investor funds while creating notes and mortgages that named other parties than the investors or the “trust.”
  9. Forcing foreclosure as the only option on people who could pay far more than the proceeds of foreclosure.
  10. Turning down modifications or settlements on the basis that the investor rejected it when in fact the investor knew nothing about it. This could result in actions against an investor that is charged with violations of federal law.
  11. Making loans on property with a history of “securitization” and realizing later that the intended mortgage lien was junior to other off record transactions in which previous satisfactions of mortgage or even foreclosure sales could be invalidated.

The problem, as these small financial institutions are just beginning to realize, is that the MBS instruments that were supposedly so safe, are not safe and may not be worth anything at all — especially if the trust that issued them was never funded by the investment bank who did the underwriting and sales of the MBS to relatively unsophisticated community banks and credit unions. In a word, these small institutions were sitting ducks and probably, knowing Wall Street the way I do, were lured into the most toxic of the “bonds.”

Unless these small banks get ahead of the curve they face intervention by the FDIC or other regulatory agencies because some part of their assets and required reserves might vanish. These small institutions, unlike the big ones that caused the problem, don’t have agreements with the Federal government to prop them up regardless of whether the bonds were real or worthless.

Most of the small banks and credit unions are carrying these assets at cost, which is to say 100 cents on the dollar when in fact it is doubtful they are worth even half that amount. The question is whether the bank or credit union is at risk and what they can do about it. There are several claims mechanisms that can employed for the bank that finds itself facing a write-off of catastrophic or damaging proportions.

The plain fact is that nearly everyone in government and law enforcement considers what happens to small banks to be “collateral damage,” unworthy of any effort to assist these institutions even though the government was complicit in the fraud that has resulted in jury verdicts, settlements, fines and sanctions totaling into the hundreds of billions of dollars.

This is a ticking time bomb for many institutions that put their money into higher yielding MBS instruments believing they were about as safe as US Treasury bonds. They were wrong but not because of any fault of anyone at the bank. They were lied to by experts who covered their lies with false promises of ratings, insurance, hedges and guarantees.

Those small institutions who have opted to take the bank public, may face even worse problems with the SEC and shareholders if they don’t report properly on the balance sheet as it is effected by the downgrade of MBS securities. The problem is that most auditing firms are not familiar with the actual facts behind these securities and are likely a this point to disclaim any responsibility for the accounting that produces the financial statements of the bank.

I have seen this play out before. The big investment banks are going to throw the small institutions under the bus and call it unavoidable damage that isn’t their problem. despite the hard-headed insistence on autonomy and devotion to customer service at each bank, considerable thought should be given to banding together into associations that are not controlled by regional banks are are part of the problem and will most likely block any solution. Traditional community bank associations and traditional credit unions might not be the best place to go if you are looking to a real solution.

Community Banks and Credit Unions MUST protect themselves and make claims as fast as possible to stay ahead of the curve. They must be proactive in getting a credible report that will stand up in court, if necessary, and make claims for the balance. Current suits by investors are producing large returns for the lawyers and poor returns to the investors. Our entire team stands ready to assist small institutions achieve parity and restitution.

FOR MORE INFORMATION OR TO SCHEDULE CONSULTATIONS BETWEEN NEIL GARFIELD AND THE BANK OFFICERS (WITH THE BANK’S LAWYER) ON THE LINE, EXECUTIVES FOR SMALL COMMUNITY BANKS AND CREDIT UNIONS SHOULD CALL OUR TALLAHASSEE NUMBER 850-765-1236 or OUR WEST COAST NUMBER AT 520-405-1688.

BLK | Thu, Nov 14

BlackRock with ETF push to smaller banks • The roughly 7K regional and community banks in the U.S. have securities portfolios totaling $1.5T, the majority of which is in MBS, putting them at a particularly high interest rate risk, and on the screens of regulators who would like to see banks diversify their holdings. • “This is going to be a multiple-year trend and dialogue,” says BlackRock’s (BLK) Jared Murphy who is overseeing the iSharesBonds ETFs campaign. • The funds come with an expense ratio of 0.1% and the holdings are designed to limit interest rate risk. BlackRock scored its first big sale in Q3 when a west coast regional invested $100M in one of the funds. • At issue are years of bank habits – when they want to reduce mortgage exposure, they typically turn to Treasurys. For more credit exposure, they habitually turn to municipal bonds. “Community bankers feel like they’re going to be the last in the food chain to know if there are any problems with a corporate issuer,” says a community bank consultant.

Full Story: http://seekingalpha.com/currents/post/1412712?source=ipadportfolioapp

Reuters: Credit Unions Fail As a Result of Buying Mortgage Bonds

As regulators conclude their long investigation into the cloud of companies and the maze of paths of paperwork and money the real victims are being revealed. We know Pension funds got hit hard and are now underfunded strictly as a result of buying worthless mortgage bonds from investment bankers who promised them protection and transparency but instead proved to be the predator. Now regulators are suing Morgan Stanley for defrauding two credit unions that failed as a result of taking a loss on those bonds — a loss that was a gain to the investment banker.

But they still don’t have it exactly right. The regulators are now freely describing mortgages that were “faulty”, “defective”‘ or “non-conforming”. They are describing bonds whose indentures were violated. Yet the government still stands on the sidelines when we look at the damage caused to millions of homeowners who have been forced from their homes and lost everything. The guise is “personal responsibility” — meaning that homeowners are to blame for what happened to them. Meanwhile the question of ownership of who owns the loan and the balance of the loan are being circumvented through destructive litigation, led by judges who are ill-informed mostly because lawyers have failed to learn securitization of debt.

Thus the government has failed to lead the way to stopping Foreclosures. It is still a basic axiom in the offices of regulators, the courtrooms of the judiciary and in mainstream media that individual borrowers are the people who must take responsibility and pay for the fraud. They should have known better. They should have read the documents. But this “logic” flies in the face that two branches of government have already recognized is that the one party who is at a disadvantage in a mortgage loan transaction and credit generally is the borrower — not the lender.

This issue was officially decided by the Federal Government in The Federal Truth in Lending Act was enacted for just that purpose and reason. The Federal Real Estate Settlement Procedures Act was enacted for just that purpose. And the many states that have enacted deceptive lending statutes that freely borrow from TILA and RESPA. Lawyers need to include this in their pleadings, memorandums and oral arguments to start where we should start — at the beginning. If those mortgages are being settled with the creditors who loaned the money because the loans were defective, and they are being settled with shared risk of loss, then why should our attitude toward borrowers be any different as to the same defective mortgages?

A good starting point would be to find the list of defective mortgages to see if your mortgage is in the
list of mortgages claimed to have been securitized, where the mortgages were described as defective, and where the mortgage bonds were described as fraudulent. Fraudulent appraisals are being ignored in the courtroom despite the clear provisions TILA that makes the appraisal and the viability of the loan the responsibility of the lender. Foreclosure defense attorneys are missing an important part of their argument when they fail to start with the responsibilities of the lender, the reasons why those standards were not applied, and the fact that the real lenders in millions of table-funded (predatory per se– I.e. Presumptively predatory) were being defrauded in two ways — non-conforming defective loans and mortgage bonds.

Of course the agencies could make thing easy by forcing publication of a list of REMIC trusts that have been subject to settlements relating to fraudulent and deceptive lending, and fraudulent and deceptive sale of mortgage bonds. But the truth is that the false axioms of the cloud of companies acting under cover of false claims of securitization are settling in the minds of judges, lawyers and regulators that somehow tens of millions of mostly unsophisticated people conspired to defraud the system. How likely is that? Or is it more likely that mortgage companies were pushing, coercing, lying, and deceiving the borrowers — just as the the lawsuits against the investment banks state? And just as they have done in the past?

Those lawsuits frequently allege that the underlying mortgages were non-compliant and unenforceable. If the investment bankers and investors, insurers and government agencies can agree that those mortgages were not enforceable, why is it that lawyers have not brought that message with them into the courtroom? And when they do, why are judges ignoring the argument. It has already been decided at the highest levels of government that the homeowner is hopelessly outgunned at closing. Why assume anything different? When those laws were passed , the number of loan options was 4 or 5. During this period of mortgage madness and meltdown, the number of mortgage products climbed to over 400 options. Borrowers didn’t do that. It was the mortgage originator who had no risk of loss because the money of the investor was what ended up on the table at closing.

Morgan Stanley
http://www.reuters.com/article/2013/09/24/us-morganstanley-creditunion-lawsuit-idUSBRE98N02E20130924

ELIZABETH WARREN AND JOHN MCCAIN TEAM UP TO REIGN IN BANKS

Go to http://www.msnbc.com. CONTACT YOUR SENATORS AND CONGRESSMEN AND WOMEN. LET THEM KNOW THEY ALREADY HAVE YOUR SUPPORT FOR THIS LAW AND THAT THEY DON’T NEED TO SELL THEMSELVES TO GET SUPPORT FROM THEIR CONSTITUENCY.

MSNBC had a segment today in which they interviewed Elizabeth Warren about a new set of laws reinstating the old style of Chinese walls. There are probably similar interviews on other channels with Senator Warren or Senator McCain and others. Just go to your favorite news channel and look it up. Their approach has bi partisan support because of its simplicity and its history. Historically it is merely a tune-up of the old laws to include definitions of new financial products that did not exist and were not adequately considered in the 1930’s when EVERYONE AGREED THE RESTRICTIONS WERE NEEDED.

Bottom Line: RETURN TO THE BORING BANK SAFETY WITHOUT BOOMS AND BUSTS FROM 1930’s into the 1990’s: leading republicans and democrats are stepping out of gridlock into agreement. They want to stop Wall Street from access to checking and savings accounts for use in high risk investment banking because that is what brought us to the brink and some say brought us Into the abyss. And it would stop commercial banks that are depository institutions for your checking and savings accounts from using your money on deposit in ways where there is a substantial risk of loss that would require FDIC ((taxpayer) intervention.

Banking should be boring. In the years when restrictions were in place we only had one serious breach of banking practices — the S&L Scandal in the 1980’s. But it didn’t threaten the viability of our entire economy and more than 800 people were serving prison terms when the dust cleared. Of course Bankers saw prison terms as an invasion of their business practices and regulation as unnecessary.

But the simple reason for bipartisan support is that the public is enraged that the mega banks (too big to fail) have GROWN 30% SINCE THE 2007-2008 while the people on Main Street are losing jobs, homes, businesses, families (divorce), thus stifling an already grievously injured economy because credit and cash are now scarce — unless you are a mega bank that made hundreds of billions or even trillions of dollars because they were able to create an illusion (securitization) and at the same time, knowing it was an illusion, they bet heavily using extreme leverage on the illusion being popped.

They made it so complex as to be intimidating to even bank regulators. So no wonder borrowers could not realize or even contemplate that their mortgage was not a perfected lien, so they admitted it. Foreclosure defense attorneys made the same mistake and added to it by admitting the default without knowing who had paid what money that should have been allocated to the loan receivable account of the borrower that was supposedly converted for a note receivable from the borrower to a bond receivable from an asset pool that supposedly owned the note receivable account.

The complexity made it challenging to enforce regulations and laws. The complexity was hidden behind curtains for reasons of “privacy”. The real reason is that as long as bankers know they are acting behind a curtain, they are subject to moral hazard. In this case it erupted into the largest PONZI scheme in human history.

And the proof of that just beginning to come out in the courts as judges are confronted with an absurd position — where the banks “foreclosing” on homes and businesses want delays and the borrower wants to move the case alone; and where those same banks want a resolution (FORECLOSURE OR BUST) that ALWAYS yields the least possible mitigation damages, the least coverage for the alleged loss on the note because they would be liable for all the money they made on the bond. Just yesterday I was in Court asking for expedited discovery and the Judge’s demeanor changed visibly when the Plaintiff seeking Foreclosure refused to agree to such terms. The Judge wanted to know why the defendant borrower wanted to speed the case up while the Plaintiff bank wanted to slow it down.

And because of all the multiple sales, the insurance funds, the proceeds of credit default swaps, because the initial money funding mortgages came from depositors (“investors”), and all the money from the Federal Reserve who is still paying off these bond receivables 100 cents to the dollar — all that money amounting to far more than the loans to borrowers — because it related to the bond receivable, the banks think they can withhold allocation of that money to the receivable until after foreclosure and avoid refunding all the excess payments to the borrower the investor and everyone else who paid money in this scheme. And the system is letting them because it is difficult to distinguish between the note receivable and the bond receivable and the asset pool that issued the bond to the actual lender/depositor.

Senators Warren and McCain and others want to put an end to even the illusion that such an argument would even be entertained. Support them now if not for yourselves then for your children and grandchildren.

Fannie and Freddie Platinum Sponsors with (MERS and LPS) of Upscale Event for Bankers

MOST POPULAR ARTICLES

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

UNDERLYING THEME: HOW TO GET THE SIGNATURE OF HOMEOWNER WITHOUT ALERTING ALL HOMEOWNERS THAT THEIR SIGNATURE IS NOW A VALUABLE COMMODITY

AHC AND LIVINGLIES ANNOUNCE LAUNCH OF AMGAR

EDITOR’S COMMENT: Are they really that tone deaf? It appears the answer is yes as Fannie and Freddie Joined Hands with MERS and LPS to become Platinum Sponsors of this Bankers Convention. If they had the slightest notion of the mayhem caused by these two culprits, neither Fannie nor Freddie should have avoided the event altogether and certainly not underwritten the expenses.

MERS was the vehicle used to hide the real parties in interest, allow trading behind the scenes and leave clouds on title compounded by frivolous and heart-breaking actions taken by the Banks to foreclose on properties based upon alleged mortgages that were never perfected as liens for debts that were not owed to the Banks and never acquired by them. The paper shuffle to give the appearance of a real party in interest was accomplished by a document fabrication mill — LPS.

Fannie and Freddie are now effectively nationalized, which means that in addition to the bailout, they are still underwriting costs for the banking industry. Small wonder that protests are taking to the streets.

Well, they had a lot to talk about — especially the growing acknowledgment and recognition that the signatures of evicted homeowners on fresh documents were necessary to clear title whether or not they were successful in pushing or bullying through their bogus foreclosure. The market is growing for for programs that entice homeowners to sign documents under one pretense that are being used for the secret agenda of the banks to simply get a waiver that they can waive in front of a Judge and say the homeowner waived any defenses.

The principal weapon of choice now is the offer of a modification plan that will later be rejected. But in the meanwhile, the homeowners signs an application in which he or she has waived all rights to contest the foreclosure — even if the the party initiating the foreclosure doesn’t have a dime in the deal and even if that subjects the homeowner to double or multiple financial jeopardy. The second line of defense is the new BOA pilot in which it is offering a “cash for keys” program in which they offer up to $20,000, as long as the homeowner signs a waiver and release of all claims.

Livinglies and http://www.AmericanHomeownersCoop.com (site still under construction) have come together in a joint venture called American Mortgage Guarantee and Resolution (AMGAR) to provide an open auction in which those homeowners who choose to take a little money rather than go for the brass ring in litigation can exchange their signatures on a package of waivers, releases, assignments and conveyances to anyone who wants to buy them. BOA has set the price range, but the market will dictate the rest.

AMGAR is outcome-neutral. No guarantees are expressed or implied as to the success of litigation or the value of the package. It’s purpose is to provide a vehicle where the homeowners who have decided to step away from fighting can provide the signatures necessary to clear title.

Junior or previous putative lienors may purchase the homeowner package and offer a value added package of the entire securitization chain. For those homeowners confused by this and the previous paragraph, it is not for you — it is directed at highly sophisticated qualified BUYERS, traders and alleged pretender lenders that wish to clear up entire chains of title. The risk of loss is entirely on the BUYER with no warranty or representations by the SELLER, except their identification.The BUYER assumes the risk of loss or further litigation without any representation from anyone upon which BUYER can reasonably rely.

There is a fee charged to the BUYER equal to $250 for the first $5,000 and $500 for any transaction that exceeds $5,000. This supports the trading desk and auction site at which the SELLERS and BUYERS “meet” electronically.

We would rather the homeowners stand and fight but if they are going to walk away, it might as well be with $20,000 (more or less, depending upon what the market will bear) in their pocket. The vehicle is named a Reverse Credit Default Swap which is sold by the homeowner or previous lienor and bought by hedge funds, Banks, CURRENT AND FORMER LENDERS, title companies and other qualified speculators. Until the auction site on the AHC site is fully functional, inquiries should be directed to amgar.livinglies@gmail.com.

The service is free to homeowners who are members of livinglies or members of the new cooperative American Homeowners Cooperative. However, it is strongly recommended that you purchase the COMBO before making the decision as to whether to fight or sell and that you seek the services of competent legal counsel licensed in the jurisdiction in which your property is located. In addition to providing the prospective SELLER (homeowner) with vital information with which to make a decision to fight or sell, the link to the COMBO results will provide a prospective Buyer easy access to information needed to assess the value proposition (prices are set by the SELLER, i.e., homeowners).

Fannie and Freddie, Still the Socialites

By

THE mortgage business is moribund. New loans are down. New foreclosures are up.

But why let a little sorry news get in the way of a good party? Last week, almost 3,000 people descended on the Hyatt Regency in Chicago for the 98th annual convention of the Mortgage Bankers Association.

The price of admission: about $1,000 a head. But for that grand, you got to hear the band Chicago play hits from the ’70s. And David Axelrod and Jeb Bush give speeches. And experts discuss things like demographics, the politics of housing and the future of the mortgage industry, according to a flier for the event.

“Gather the information you need to help your business and our industry drive change,” the pitch went.

The city of Chicago was no doubt grateful for the conventioneers’ dollars. Besides, Mayor Rahm Emanuel knows something about this industry: he used to be a director at the mortgage giant Freddie Mac.

Nothing wrong with a bit of schmoozing. But it might seem jarring that Freddie, which was rescued by Washington and today exists at the pleasure of taxpayers, paid $80,000 to become a “platinum” sponsor of this shindig. Fannie Mae, that other ward of the state, paid $60,000 to become a “gold” sponsor.

Keep in mind that taxpayers bailed out Fannie and Freddie to the tune of about $150 billion.

Today, Fannie and Freddie are about the only games in mortgage town. Yes, banks make loans, but more often than not they hand them off to one of the two. So it’s a mystery why Fannie and Freddie needed to help foot the bill for the gathering.

Freddie’s companions in the platinum sponsor list make for interesting reading. One was the Mortgage Electronic Registration System, or MERS, which has repeatedly foreclosed on troubled homeowners and made a hash of the nation’s real estate records. Another was Lender Processing Services of Florida, which made robo-signing a household word.

MERS and Lender Processing Services are at the center of the foreclosure crisis. Why would Freddie keep such company?

Perhaps more disturbing is that Fannie and Freddie sent an army of their own to Chicago: 87 people in all. According to a list of registrants, that’s more than hailed from the Mortgage Bankers Association (60 people), Bank of America (58), Wells Fargo (54) and JPMorgan Chase (24).

Only Lender Processing Services had more — 91 — than Fannie and Freddie. (Perhaps they robo-signed their registrations.)

The C.E.O.’s of Fannie and Freddie were conference headliners and gave presentations. But Freddie also sent 15 vice presidents and 14 directors from various units. Fannie’s list included 12 vice presidents, 12 unit directors and three events managers.

I asked Fannie and Freddie what they got out of sending all of these people to Chicago. Representatives of both said participation was an efficient use of taxpayer dollars because it allowed their employees to hold crucial meetings with hundreds of customers to discuss ways to address the housing crisis.

Fannie Mae’s spokeswoman, Amy Bonitatibus, added that it has “significantly reduced sponsorship and support of events and industry-related conferences.”

Representative Randy Neugebauer, the Texas Republican who heads the oversight and investigations subcommittee of the House Financial Services Committee, said he was disturbed by the turnout from Fannie and Freddie. It reflected a troubling “business as usual” approach by the mortgage giants, he said.

“They don’t act like companies that have had a huge infusion of taxpayer money,” he told me. “Why do they feel the need to go out and spend the money for networking when they have all of the mortgage market in its entirety?”

Trying to tally the costs borne by the taxpayers for the four-day event in Chicago, Mr. Neugebauer sent a letter last week to the Federal Housing Finance Agency, conservator for Fannie and Freddie. “I am concerned that the expenditures that Freddie and Fannie made in connection with the conference bear no relation to furthering the actual purposes of the conservatorship,”he wrote.

He requested a rundown of amounts paid by the companies to cover travel, lodging, entertainment and sponsorship. He also asked for details about whether Fannie and Freddie had consulted with the agency beforehand about sponsoring and attending the conference. The agency was asked to respond within a week.

”We’re going to really look through their entire budget and see if we can see signs where they are tightening their belt,” Mr. Neugebauer said, referring to Fannie and Freddie. “The American people are tightening their belts, businesses all over the country are tightening their belts. These entities can certainly do the same.”

3,900,000 Visits and Moving Faster. OUR 3RD ANNIVERSARY — THANK YOU!!

SUBSCRIBE TO LIVINGLIES MEMBERSHIP FOR DISCOUNTED SERVICES, NEWSLETTER AND FREE TELECONFERENCES

Livinglies fulfills its commitment to becoming the #1 internet resource in foreclosure defense and offense (claims for damages for wrongful foreclosure or improper lending practices).

  • DON’T ASSUME YOUR LOAN IS IN DEFAULT — IT PROBABLY ISN’T EVEN IF YOU DIDN’T MAKE A PAYMENT!

  • DON’T ASSUME YOU OWE THE MONEY!

  • DON’T ASSUME YOU ARE UNDERWATER — YOU HAVE CLAIMS THAT MAY MORE THAN OFFSET THE LOSS!

  • DON’T ASSUME YOU HAVE A MORTGAGE — YOU MAY HAVE A DEBT BUT IT PROBABLY IS UNSECURED!

  • DON’T ASSUME THAT YOU DID SOMETHING WRONG!

  • DON’T ASSUME YOU WILL LOSE! THERE IS HOPE!!!!

  • AND WE HAVE THE TOOLS NOW TO HELP YOU—–

SEE OUR YOU-TUBE VIDEOS FOR FREE! FORMS, CASES, STATUTES FOR NO CHARGE ON THIS SITE. WE WANT YOU TO WIN, NOT JUST DELAY. LAWYERS, JUDGES AND GOVERNMENT OFFICIALS ARE GETTING ON BOARD FOR PRINCIPAL REDUCTION EVERY DAY. IT WON’T BE LONG BEFORE WE REACH CRITICAL MASS!

COMBO TITLE AND SECURITIZATION ANALYSIS PAY MONTHLY

WE CAN HELP! YOU CAN SHOW BREAKS IN CHAIN OF TITLE, ABSENCE OF ASSIGNMENTS, REPORTS TO INVESTORS THAT YOUR LOAN IS NOT IN DEFAULT (BECAUSE OF THIRD PARTY PAYMENTS), FABRICATED DOCUMENTATION AND MORE!

JUST GIVE THE NAME OF THE TRUST, I\’LL DO THE REST

YOU MUST FILL OUT THIS FORM TO GET THE NAME OF THE TRUST

Come visit our store to purchase workbooks, sign up for workshops, videos or arrange for services.   www.livinglies-store.com

Don’t be so fast to leave your home just because you are “behind”. Those payments might not be due at all or if they are, they are probably not owed to the people you are paying.

We are very pleased with the responses from our devoted readers, many of whom are direct contributors to this site. The insights, forms and analysis from the many soldiers — lawyers and laymen alike has made this site the premier resource for assisting distressed homeowners in gaining relief — sometimes total relief — from Mortgages based upon false appraisals, using predatory lending practices and withholding vital information from borrowers at the closing table.

How many borrowers would have signed on the dotted line if they had known that they were signing a ticket for unprecedented and unjustified fees and profits earned by unknown parties — sometimes as much as the mortgage itself?

How many investors would have put up the money if they had known that only some of it was being used to fund mortgage transactions and that the rest was being kept as fees, profits and reserves to pay them out of their own money? EDUCATE YOURSELF! DOWNLOAD THE ATTORNEY WORKBOOK WITH FORMS, DISCUSSION, PRESENTATION SLIDES, GRAPHS, GLOSSARY AND STATUTES OR BUY THE LAWYER\’S DVD CLE FULL-DAY SEMINAR SET

The victims here are all homeowners and all consumers and all investors and all  taxpayers. The companies seeking to foreclose never owned the mortgage, note or obligation. They have no right to your property or the proceeds of sale to your property. Use this blogsite as your resource to educate yourself. Consult with local counsel. AT LEAST START WITH A LOAN SPECIFIC TITLE SEARCH WITHOUT COMMENTARY AND SEE FOR YOURSELF WHERE THE BREAKS ARE IN THE CHAIN OF TITLE. SUBSCRIBE AS A MEMBER TO GET MULTIPLE BENEFITS AND DISCOUNTS Get a forensic review NOT just a “TILA loan audit” and challenge EVERYTHING!

AND PLEASE SUPPORT THIS SITE WITH A $9.95 PER MONTH DONATION/SUBSCRIPTION LLB

Lakeside Bank, St. Charles, La — The Way Banking Should Be

Editor’s Comment: Only one Bank has failed in Louisiana since the financial crisis began. And only one bank in the United States has commenced operations in the year 2010 — this one in Louisiana. Despite an unofficial moratorium on new bank charters of 70-year-old retiree, Hartie Spence, managed to navigate the regulations and got the only new start-up bank to open in the country, operating out of a secondhand double wide trailer.

The probable reason for the apparent safety of banks in the state of Louisiana is the rampant poverty. But it shows that even where people have very little money the financial system can be stable as long as outsiders don’t meddle in their financial affairs. Louisiana was a bad target all Wall Street and thus avoided the absurd fraudulent increases in appraisal values that lie at the core of the financial crisis. Landing was based upon the actual value of the property, the willingness of a lender to take the risk, and the ability of the borrower to repay.

For hundreds of years that was the lending model and obviously the only one that makes any sense. For 10 years that model was turned on its head in places other than Louisiana where lenders were not lenders, where inflated appraisal values were a good thing, and where the ability of borrowers to repay a loan was obstructed by layers of unknown entities never disclosed at the time of closing and obstructed by exotic terms and presumptions that were plainly wrong but which work to the benefit of the intermediaries who had arranged for the funding of the loan from investors and the buying of the loan product by unwitting borrowers.

I don’t know anything about this particular bank other than what I have read. I don’t know the people in it and I don’t know their business model. But in an economy where new bank charters are being discouraged, and new start-ups of any kind of business are made increasingly difficult while the government aids the large corporations and financial institutions that got us into this mess, I think this bank deserves the support not only of its own community but anyone who is looking for a new banking relationship. Between the Postal Service, the Internet and the telephone your bank can be anywhere.

August 28, 2010

In Hard Times, One New Bank (Double-Wide)

By ANDREW MARTIN

LAKE CHARLES, La. — The only new start-up bank to open in the United States this year operates out of a secondhand double-wide trailer, on a bare lot in front of the cavernous Trinity Baptist Church. A blue awning covers the makeshift drive-through window.

Called Lakeside Bank, it is run by a burly and balding former tackle for Louisiana State’s football team named Hartie Spence, who doles out countrified humor along with deposit slips and the occasional loan.

“This is the one place where the cause of death is mildew,” he quipped, standing outside the trailer in withering heat.

Asked how his bank in this steaming town of oil refineries and oversize casinos managed to win over federal regulators, Mr. Spence, 70, said, “I’m still thinking it’s my looks that did it.”

The dearth of new banks follows a particularly wrenching period for the industry. As the financial crisis deepened, hundreds of banks and thrifts closed and thousands more were saddled with bad loans and credit card defaults, costing the industry billions of dollars.

As a result, the number of investor groups applying to start a new bank from scratch has dropped precipitously. And for the intrepid few who have tried, regulators — sharply criticized for lax oversight in recent years — are being particularly stingy in granting approval.

So far this year, Mr. Spence holds the privilege of opening the only truly new federally insured bank. (In seven other instances, investors received regulatory approval to buy an existing bank, usually one that had failed, and reopen it).

Of course, many of the nation’s biggest banks were bailed out by the government, and have since rebounded. But since January 2008, more than 280 smaller banks and thrifts have been closed, and many community banks are struggling to recover from the real estate collapse.

Those bank failures have cost the Federal Deposit Insurance Corporation’s fund roughly $70 billion, and not surprisingly, the agency’s regulators are now giving greater scrutiny to new bank applications, according to bankers and industry officials.

Technically, banks obtain charters from their primary regulatory agency, either state banking regulators or, for national banks, the Office of the Comptroller of the Currency. But the charters are contingent on the applicants’ obtaining deposit insurance from the F.D.I.C.

The F.D.I.C. said the reduction in charters simply reflects the effects of the recession on new businesses. “There was considerable interest in forming banks before the economy deteriorated,” said an agency spokesman, David Barr. “In today’s climate we are seeing very little interest.”

However, last year the agency toughened its oversight of new banks, saying banks that had been open for fewer than seven years were “over represented” among failed banks in 2008 and 2009.

The reason, the agency said in a public release, is that many new banks strayed from their approved business plans and ran into problems because of “weak risk management practices,” among other problems.

Ralph F. “Chip” MacDonald III, a lawyer in Atlanta who advises banks on regulatory matters, said he believed the F.D.I.C. had imposed an “unofficial moratorium” on new bank charters, a charge that the agency denies.

Adam Taylor, president of the Bank Capital Group, an Atlanta company that helps investors set up new banks, said he had several recent clients, whom he declined to name, withdraw applications for new banks after it became clear that the F.D.I.C. would not approve them. He said the agency rarely denies charters — a fact confirmed by agency records — but that it places the applications in “purgatory” until the applicants give up.

The number of banks and thrifts — also known as savings and loans — in the United States has been declining steadily for 25 years, because of consolidation in the industry and deregulation in the 1990s that reduced barriers to interstate banking. There were 6,840 banks and 1,173 thrifts last year, down from 14,507 banks and 3,566 thrifts in 1984.

The number of charters has generally declined too, though there have been periodic swings. The lowest number of bank charters granted in any one year was 15, in 1942.

How, then, did Lakeside Bank win this year’s regulatory lottery?

Mr. Spence’s looks aside, he said that regulators were not ready to grant approval until Lakeside had raised enough capital, created a sufficiently conservative business plan and hired an experienced management team.

The initial idea for Lakeside Bank came from a local real estate developer, Andrew Vanchiere, who was dissatisfied with his existing bank. In 2007, he rounded up a group of local businessmen who set about raising $13 million in start-up capital and began looking for someone to run the bank.

The initial candidates were deemed too inexperienced by regulators. When the group contacted Mr. Spence in 2008, he was a few months into retirement and coming to the realization that fishing for trout and redfish just wasn’t enough to keep him occupied.

“I was bored absolutely stiff,” said Mr. Spence, who had successfully run several Louisiana banks during his career. “My response was, ‘Let’s do it!’

“You can manage a good bank in a bad economy, particularly when you are at the bottom,” he said. Noting that he has a clean balance sheet and can be selective about making loans, he added, “I thought it was a perfect time to be starting.”

Lakeside’s application was also helped by the surprising vitality of Lake Charles, a city of 72,000 roughly 30 miles from the Texas border. Lake Charles has gotten a boost from casino gambling and the oil and gas industry, as well as an infusion of new businesses, including liquefied natural gas terminals and a new plant that builds parts for nuclear reactors.

Louisiana, meanwhile, has fared better than many states during the economic downturn because of the petroleum industry and the infusion of government and insurance money to pay for damages from Hurricanes Katrina, Rita and Ike.

Only one bank has failed in Louisiana since the financial crisis began.

Regulators made it clear that Lakeside would not be approved if other banks in town were struggling to stay afloat, Mr. Spence said. But Lakeside, which opened on July 26, sits on a busy boulevard lined with about a dozen or more banks or credit unions, all of which appear to be thriving.

“There’s enough for all of us, and we are no threat to them for many, many years,” Mr. Spence said of his competitors.

Lakeside Bank is promoting itself as an old-fashioned community bank that focuses on customer service and bread-and-butter banking products, even though it also makes them available online.

Whereas loan decisions for many big banks are made in distant cities, Mr. Spence said that Lakeside will make them right there in the double-wide trailer, at least until the bank moves into a more permanent structure in a year or two.

“That’s our motto, ‘The Way Banking Should Be,’ ” he said, adding later, “It got rushed enough yesterday that I had to answer the phones and work the switchboard.”

%d bloggers like this: