AMGAR

After years of writing about the AMGAR program, people are finally asking about this program. So here is a summary of the program. As usual I caution you against using my articles as the final word on any subject. Before you make any decisions about your loans, whether you are in foreclosure, collection or otherwise you should seek competent legal counsel who is licensed in the jurisdiction in which the collateral is located. Also for those who think they would invest in such a program, you should seek both legal advice and consult with a person qualified and licensed as a financial adviser. And for full disclosure, this plan does include an equity provision and fees to the livinglies team.

The AMGAR program was first developed by me when I was living in Arizona where, after the 2008-2009 crash, the state was facing a $3 Billion deficit. The Chairman of the Arizona House Judiciary Committee invited me to testify about possible solutions to the foreclosure crisis, which at that time was just ramping up. So I developed a program that I called the Arizona Mortgage Guarantee and Resolution plan, which was dubbed “AMGAR.” Now the acronym stands for American Mortgage Guarantee and Resolution program. In Arizona it was mostly a governmental program with some private enterprise components.

For a while it looked as though Arizona would adopt the program and pass the necessary legislation to do it. All departments of the legislative and executive branches of government had examined it carefully and concluded that I was right both as to its premises and its results.

The objective was to tax and fine the various entities that were “trading” in loans improperly, illegally and failing to report it as taxable income, as well as failing to pay the fees associated with filing such transfers in the County records of each county.

The State would essentially call the bluff of the banks, which was already obvious in 2008 — they did not appear to have any ownership interest in the loans upon which they initiated foreclosures.

Thus the State and private investors would offer to pay off the mortgage at the amount demanded if the foreclosing party could prove ownership and the balance (it was already known that the banks had received a lot of money from both public and private sources that reduced the loss and thus should have reduced the balances owed to investors, which in turn reduces the balance owed from borrowers).

The offer to pay off the the money claimed due by the forecloser was on behalf of the homeowner who would enter into an agreement with AMGAR for a new, real, valid mortgage at fair market value with industry standard terms instead of the exotic mortgages that borrowers were lured into signing when they understood practically nothing about the loan. The State would levy a tax or enforce existing taxes against the participants in the alleged securitization plan for the trading they had been doing. The State would foreclose on the tax liens thus opening the door to settlements that would reduce the amount expended on paying off the old loan.

The AMGAR program would receive a mortgage and note equal to what was actually paid out to the foreclosing parties, which was presumed to be discounted sharply because of their inability to prove ownership and balance. Hence the state would receive a valid note and mortgage for every penny they paid and it would receive the taxes and fees that were due and unpaid, and then sell these clean mortgages into the secondary market place. Both the legislative and executive branches of Arizona government — all relevant departments — concluded that the plan would erase the $3 Billion Arizona deficit and put a virtual halt on foreclosures that had already turned new developments into ghost towns.

But the plan went dark when certain influential Republicans in the state apparently received the word from the banks to kill the program.

Not to be deterred from what I considered to be a bold, innovative program aimed at the truth about the hundreds of thousands of wrongful foreclosures, I embarked on a persistent plan of to raise interest and capital to put the program into use. This time the offer to payoff the old loan would come from (1) homeowners who could afford to make the offer and (2) investors who were willing to assume the apparent risk of paying $700,000 as a payoff, only to receive a mortgage and note equal to a much lower fair market value. But the new plan had a kicker for investors to assume that risk.

The plan worked for the few people who were homeowners, in foreclosure and who had the resources to make the offer. Unlike the buyback issue raised by Martha Coakley last week, the plan avoided any possible rule prohibiting the homeowner from getting the house back and in fact employed existing laws permitting the borrower to pay off the loan rather than suffer the loss of the property.

The offer specifies what constitutes proof for purposes of the offer and thus avoids varying interpretations by judges who might think one presumption or another carries the day for the banks. This plan requires actual transactional proof of payments for the origination and acquisition of the loan, and actual disclosure of the loss mitigation payments received by or on behalf of the creditors (investors).

As expected, the banks tried to say that they didn’t have to accept the money. They wanted the foreclosure. But nobody bought that argument. The myth that the bank was “reclaiming” the property was just that — a myth. The bank never owned the property. It was interesting watching the bank back peddle on producing proof that it MUST have had if it brought foreclosure proceedings. But they didn’t have it because it didn’t exist.

Banks claimed to have loaned money to the homeowner and thus were entitled to payment first, or failing that, THEN foreclosure. And what has resulted is an array of confidential settlements in which I cannot reveal the contents without putting the homeowner in danger of losing their home. Suffice it to say they were satisfied.

The reason I am writing about this again is that the latest development is a series of investors have approached me with a request for development of a plan that would put AMGAR into effect. They are looking for profit so that is what I am giving them in the new plan. This has not yet been launched but there are several iterations of the plan that may be offered through one or more entities. You might say this plan is published for comment although we are already processing candidates for which the plan would be used.

If I am right, along with everyone else who says the mortgages, assignments, transactions are all fake with no canceled checks, wire transfer receipts or anything else showing that they funded the origination or acquisition of the loan, then it follows that at the very least the mortgage is an unenforceable document even if it is recorded.

If things go according to plan, then the bank will be forced to either put up or shut up in court — either providing the reasonable proof required by the commitment or offer or suffer a dismissal or judgment for the homeowner. It would not be up to the Judge to state what proof was required. Instead the Judge would only be called upon to determine that the bank had failed to properly respond — giving information they should have had all along. The debt might theoretically exist payable to SOMEONE, but it wouldn’t be secured debt and therefore not subject to foreclosure. The mortgage encumbrance in the public records could then be removed by a court order. Title would be cleared.

Investors would be taking what appears to be a giant risk but obviously perception of the risk is declining.   If the bank comes up with verifiable proof of ownership and balance (according to the terms of the offer or commitment), then the investor pays the bank and gets back a note and mortgage for much less. If the bank loses and the mortgage encumbrance is removed as a result of the assumption of that risk, then the investor gets a fee — 30% of the original loan balance expressed in a new mortgage and note at market rates over 30 years.

So the payoff is quite large to the investors if their assumptions are correct. If they are incorrect they lose all the expenses advanced for the homeowner, all the expenses of selection and potentially the money they put in escrow or the court registry to show proof that the offer is real.

We are currently vetting potential candidates for this program both from the homeowner side and the investor side. This type of investment while potentially lucrative, poses a large risk of loss. People should not invest in such a program unless they do not rely on the money invested for their income or lifestyle. They should be qualified investors as specified by SEC rules even if the SEC rules don’t apply. No money will be accepted and no homeowner will be signed up for the program until we have concluded all registrations necessary for launching the program.

Homeowners who want to be considered as candidates for this program should acquire a title and securitization report, plus a review by our staff, including myself.

You should have a title and securitization report anyway, in my opinion. If you already have one then send it to neilfgarfield@hotmail.com. If you don’t have such a report but would like to obtain one call 954-495-9867 or 520-405-1688 to order the report and review. If you already know someone who does this work, then call them, but a review by a qualified person with a financial background is important as well as a review by a qualified, licensed attorney.

Dozens of Cases Rolling in from Bankruptcy and Civil Courts Reversing Foreclosures, Evictions

The whole thing is unraveling just we predicted 18 months ago. The largest transfer of wealth in world history is starting. The question is who is going to be behind the curve and who is going to be ahead of it?

We are getting daily reports of many cases in which cases that have gone as far as a writ of possession being completely reversed, putting the homeowner not only in possession of the house, but free from the threat of foreclosure. In many cases we are seeing quiet title actions being granted. They won’t be publicized until after the time for appeal has run. It would seem that the foreclosing parties are not likely to appeal because the result, if negative, will apply not only to the case they appealed but to all their cases, past, present and future. The cases differ in procedural and substantive facts, so don’t be thinking that there is a single magic wand to waive over all the cases at one time. The Federal government programs won’t provide any relief for the majority of people injured by the predatory and fraudulent financial, securities and lending practices sponsored by the Wall Street barbarians.

The tide is turning. Dozens of Judges in courts of all jurisdictions are questioning the right of MERS, servicers or other “nominees” to even be present in court much less initiate the foreclosure action. It is basic black letter law that you can’t’ go to court and ask for relief unless you are the person who was injured. No matter how they mince the words, the only parties with any potential to apply for relief in non-judicial or judicial states are the investors. ALL the rest of the would-be foreclosers and parties who actually foreclosed are impostors seeking to get around due process requirements by invoking non-judicial procedure or by outright lying in judicial actions. In a securitized loan situation non-judicial procedure is unavailable and improper. Invoking it doesn’t make it right. It should be challenged from the start. every non-judicial state has a judicial procedure as well. ALL these cases can ONLY be processed by satisfying the requirements of pleading, notice and hearing on the merits at which real witnesses with personal knowledge must account for the securitized transaction from one end to the other.

Many homeowners are now considering filing damage actions for abuse of process and lawyers are getting the point. Several actions have shown the inherent conflict between the apparent authority of the Trustee on the Deed of trust, the trustee of the pooled assets and the trustee for the holders of mortgage backed securities. Similar conflict exists between MERS, the “depositor” (custodian of the alleged mortgages and notes that were securitized), the Trustees, and the certificate holders (investors).

Inflation: TILA-based Foreclosure Defense Key to Staunching the Bloodflow

Despite all efforts to conceal the pernicious effects of inflation and the rising tide of credit warning signals, it is now crystal clear that the underlying inflation rate in the United States is over 15% while the dollar declines in value at about the same rate. This double whammy is showing up in our pocketbooks, the gas pumps, the grocery stores and other retail stores. Americans are no loner the consumer of last resort for the world because they are out of money and out of credit. 

The cause was triggered by the Mortgage Meltdown. But the ripple effects are far more reaching than the housing sector. $500 trillion in derivatives have been planted in the marketplace and many of them are at risk. Even the ones that are not at conventional risk are still at risk because of currency exchange values. The articles written about turning the corner are way too premature.

With a fairly good-looking bill to help the housing sector meandering its way through congress, and the likelihood that the stuff will hit the fan before anything meaningful is done out of Washington, it is up to individuals to find their own ways to game the system, stop the foreclosures, sales and evictions and pivot back on the lenders, mortgage brokers, appraisers, investment bankers et al to get the money that was promised to them through fraudulent closings using hyper-inflated “market” values. 

The existing laws on the books are enough to help you if you use them. Start with the Truth in Lending Act (TILA) and get a TILA audit from people who know what they are doing. TILA is very heavily weighted in favor of consumers and borrowers. It just has not been used much until now. It can be used with mortgage loans, student loans, credit cards and all kinds of other debt, secured and unsecured. One little mistake by the lender either in assessing your ability to pay or in the disclosures made to you entitles you to relief beyond your imagination. It’s already there — USE IT!

And your efforts, combined with millions of other people (like the 9 million who now have negative equity in their homes) will force both government and the financial sector to come to the table, hat in hand, pleading for mercy. But you have to be resolute and willing to go after them. And you have to change your perception of them as the the big guys who cannot be defeated. They can be and in fact they already are defeated. All you have to do is pick up the pieces, which means reducing the mortgage on your home, getting refunds of all the interest you paid, getting refunds on the closing points and closing costs, etc. It means receiving payment for damages caused by the fraud and quite possibly a recovery or partial recovery of the expenses you pay to lawyers and experts to get you there. 

ECONOMIC REPORT
Producer prices rise tame 0.2% in April
Core PPI surprises with 0.4% gain in April and is up 3% in past year
WASHINGTON (MarketWatch) – Wholesale prices rose a smaller-than-expected 0.2% in April after seasonable adjustments, with food prices flat and energy prices falling, the Labor Department reported Tuesday.
The producer price index has risen 6.5% in the past year, the government said.
The core PPI – which excludes food and energy prices – rose 0.4% in April, more than expected. Core prices are up 3% in the past year, the biggest year-over-year rise since late 1991.
The PPI had risen 1.1% in March. Read the full report.
Economists surveyed by MarketWatch expected a 0.4% rise in the headline PPI and a 0.2% gain in the core rate.See Economic Calendar.
The PPI figures are likely to have a muted effect on markets, because they came in after the consumer price index was released last week. And, to be blunt, markets don’t seem to trust the government’s inflation figures that show falling energy prices in a world of record crude oil prices.
The government’s data are seasonally adjusted to hide the impact of normal seasonal variations to focus on fundamental changes in prices that are not driven by the ebbs and flows of the seasons. Because energy prices typically rise more in April than they did this year, the seasonally adjusted figures showed a 0.2% decline. In unadjusted terms, energy prices rose 2.9%.
Wholesale gasoline prices fell 4.6% in seasonally adjusted terms, but rose 3.2% in unadjusted terms.
The opposite case was seen in food prices. In seasonally adjusted terms, food prices were flat. But in unadjusted terms, prices fell 0.3%.
Over the course of a year, the seasonal issues balance out.
In April, core prices at the finished level were pushed higher by a 1.3% increase in wholesale light truck prices and a 0.4% increase in wholesale car prices. Commercial furniture prices rose 1.8%, the most in 27 years. Drug prices rose 0.7%. Alcohol prices rose 1%. Capital goods prices rose 0.4%.
Higher seasonally adjusted prices were seen further back in the production pipeline as well.
Prices of intermediate goods destined for further processing rose 0.9%, led by energy goods, chemicals and steel. Intermediate food prices fell 0.6%, including the biggest drop in flour prices in 33 years.
The core intermediate PPI — a key leading indicator of inflation — rose 1.2% in April and is up 5.8% in the past year, the biggest rise in nearly two years.
Prices of crude materials rose 3.2%, including a 4.1% rise in crude energy goods. Crude petroleum prices rose 4.5% and natural gas prices rose 4.3%. The core crude PPI rose 7.9%, behind a 32% rise in iron and steel scrap prices.
Crude food prices fell 0.9%, including a record 23% drop in wheat prices. End of Story
Rex Nutting is Washington bureau chief of MarketWatch

Democracy Inaction: Bill Moyers Speaks the Truth

EXPLAINING MORTGAGE MELTDOWN, IRAQ AND INEQUALITY OF WEALTH AND OPPORTUNITY

The truth we don’t want to hear is the same truth we shout down as unpatriotic. It is the essence of patriotism and good journalism to speak the truth and to back it up with solid facts that are congruent with the reality we experience in our daily lives. This piece by Moyers is the one of his best, and worth reading and re-reading.

Moyers: ‘Democracy in America Is a Series of Narrow Escapes, and We May Be Running Out of Luck’

By Bill Moyers, Doubleday
Posted on May 17, 2008, Printed on May 18, 2008
http://www.alternet.org/story/85521/

The following is an excerpt from Bill Moyers’ new book, “Moyers on Democracy” (Doubleday, 2008).

Democracy in America is a series of narrow escapes, and we may be running out of luck. The reigning presumption about the American experience, as the historian Lawrence Goodwyn has written, is grounded in the idea of progress, the conviction that the present is “better” than the past and the future will bring even more improvement. For all of its shortcomings, we keep telling ourselves, “The system works.”

Now all bets are off. We have fallen under the spell of money, faction, and fear, and the great American experience in creating a different future together has been subjugated to individual cunning in the pursuit of wealth and power -and to the claims of empire, with its ravenous demands and stuporous distractions. A sense of political impotence pervades the country — a mass resignation defined by Goodwyn as “believing the dogma of ‘democracy’ on a superficial public level but not believing it privately.” We hold elections, knowing they are unlikely to bring the corporate state under popular control. There is considerable vigor at local levels, but it has not been translated into new vistas of social possibility or the political will to address our most intractable challenges. Hope no longer seems the operative dynamic of America, and without hope we lose the talent and drive to cooperate in the shaping of our destiny.

The earth we share as our common gift, to be passed on in good condition to our children’s children, is being despoiled. Private wealth is growing as public needs increase apace. Our Constitution is perilously close to being consigned to the valley of the shadow of death, betrayed by a powerful cabal of secrecy-obsessed authoritarians. Terms like “liberty” and “individual freedom” invoked by generations of Americans who battled to widen the 1787 promise to “promote the general welfare” have been perverted to create a government primarily dedicated to the welfare of the state and the political class that runs it. Yes, Virginia, there is a class war and ordinary people are losing it. It isn’t necessary to be a Jeremiah crying aloud to a sinful Jerusalem that the Lord is about to afflict them for their sins of idolatry, or Cassandra, making a nuisance of herself as she wanders around King Priam’s palace grounds wailing “The Greeks are coming.” Or Socrates, the gadfly, stinging the rump of power with jabs of truth. Or even Paul Revere, if horses were still in fashion. You need only be a reporter with your eyes open to see what’s happening to our democracy. I have been lucky enough to spend my adult life as a journalist, acquiring a priceless education in the ways of the world, actually getting paid to practice one of my craft’s essential imperatives: connect the dots.

The conclusion that we are in trouble is unavoidable. I report the assault on nature evidenced in coal mining that tears the tops off mountains and dumps them into rivers, sacrificing the health and lives of those in the river valleys to short-term profit, and I see a link between that process and the stock-market frenzy which scorns long-term investments — genuine savings — in favor of quick turnovers and speculative bubbles whose inevitable bursting leaves insiders with stuffed pockets and millions of small stockholders, pensioners, and employees out of work, out of luck, and out of hope.

And then I see a connection between those disasters and the repeal of sixty-year-old banking and securities regulations designed during the Great Depression to prevent exactly that kind of human and economic damage. Who pushed for the removal of that firewall? An administration and Congress who are the political marionettes of the speculators, and who are well rewarded for their efforts with indispensable campaign contributions. Even honorable opponents of the practice get trapped in the web of an electoral system that effectively limits competition to those who can afford to spend millions in their run for office. Like it or not, candidates know that the largesse on which their political futures depend will last only as long as their votes are satisfactory to the sleek “bundlers” who turn the spigots of cash on and off.

The property qualifications for federal office that the framers of the Constitution expressly chose to exclude for demonstrating an unseemly “veneration for wealth” are now de facto in force and higher than the Founding Fathers could have imagined. “Money rules Our laws are the output of a system which clothes rascals in robes and honesty in rags. The parties lie to us and the political speakers mislead us.” Those words were spoken by Populist orator Mary Elizabeth Lease during the prairie revolt that swept the Great Plains slightly more than 120 years after the Constitution was signed. They are true today, and that too, spells trouble.

Then I draw a line to the statistics that show real wages lagging behind prices, the compensation of corporate barons soaring to heights unequaled anywhere among industrialized democracies, the relentless cheeseparing of federal funds devoted to public schools, to retraining for workers whose jobs have been exported, and to programs of food assistance and health care for poor children, all of which snatch away the ladder by which Americans with scant means but willing hands and hearts could work and save their way upward to middle-class independence. And I connect those numbers to our triumphant reactionaries’ campaigns against labor unions and higher minimum wages, and to their success in reframing the tax codes so as to strip them of their progressive character, laying the burdens of Atlas on a shrinking middle class awash in credit card debt as wage earners struggle to keep up with rising costs for health care, for college tuitions, for affordable housing — while huge inheritances go untouched, tax shelters abroad are legalized, rates on capital gains are slashed, and the rich get richer and with each increase in their wealth are able to buy themselves more influence over those who make and those who carry out the laws.

Edward R. Murrow told his generation of journalists: “No one can eliminate prejudices — just recognize them.” Here is my bias: extremes of wealth and poverty cannot be reconciled with a genuinely democratic politics. When the state becomes the guardian of power and privilege to the neglect of justice for the people as a whole, it mocks the very concept of government as proclaimed in the preamble to our Constitution; mocks Lincoln’s sacred belief in “government of the people, by the people, and for the people”; mocks the democratic notion of government as “a voluntary union for the common good” embodied in the great wave of reform that produced the Progressive Era and the two Roosevelts. In contrast, the philosophy popularized in the last quarter century that “freedom” simply means freedom to choose among competing brands of consumer goods, that taxes are an unfair theft from the pockets of the successful to reward the incompetent, and that the market will meet all human needs while government itself becomes the enabler of privilege — the philosophy of an earlier social Darwinism and laissez-faire capitalism dressed in new togs — is as subversive as Benedict Arnold’s betrayal of the Revolution he had once served. Again, Mary Lease: “The great evils which are cursing American society and undermining the foundations of the republic flow not from the legitimate operation of the great human government which our fathers gave us, but they come from tramping its plain provisions underfoot.”

Our democracy has prospered most when it was firmly anchored in the idea that “We the People” — not just a favored few — would identify and remedy common distempers and dilemmas and win the gamble our forebears undertook when they espoused the radical idea that people could govern themselves wisely. Whatever and whoever tries to supplant that with notions of a wholly privatized society of competitive consumers undermines a country that, as Gordon S. Wood puts it in his landmark book The Radicalism of the American Revolution, discovered its greatness “by creating a prosperous free society belonging to obscure people with their workaday concerns and their pecuniary pursuits of happiness” — a democracy that changed the lives of “hitherto neglected and despised masses of common laboring people.”

I wish I could say that journalists in general are showing the same interest in uncovering the dangerous linkages thwarting this democracy. It is not for lack of honest and courageous individuals who would risk their careers to speak truth to power — a modest risk compared to those of some journalists in authoritarian countries who have been jailed or murdered for the identical “crime.” But our journalists are not in control of the instruments they play. As conglomerates swallow up newspapers, magazines, publishing houses, and networks, and profit rather than product becomes the focus of corporate effort, news organizations — particularly in television — are folded into entertainment divisions. The “news hole” in the print media shrinks to make room for advertisements, and stories needed by informed citizens working together are pulled in favor of the latest celebrity scandals because the media moguls have decided that uncovering the inner workings of public and private power is boring and will drive viewers and readers away to greener pastures of pabulum. Good reporters and editors confront walls of resistance in trying to place serious and informative reports over which they have long labored. Media owners who should be sounding the trumpets of alarm on the battlements of democracy instead blow popular ditties through tin horns, undercutting the basis for their existence and their First Amendment rights.

Bill Moyers is the author of “Moyers on Democracy” (Doubleday, 2008) and the host of the PBS show, Bill Moyers Journal.

Mortgage Meltdown Revealed in Harvard Study

In this study, the authors provide an exhaustive and invaluable aid, with plenty of charts and explanations of the mortgage meltdown, sub-prime and general credit crisis. This is MUST reading for anyone who is filing securities actions and foreclosure defense. With this paper, you can understand who the players are and what they were doing. This paper is thus far more inclusive than what we have written here which is designed to give you the information in bite-sized pieces.

harvard-paper-diagrams

Foreclosure Defense: Countrywide Ruling Can be Cited as Persuasive Support for Bad Lending Practices

COUNTRYWIDE SUED FOR IMPROPER LENDING PRACTICES BY ITS SHAREHOLDERS: GOOD MATERIAL HERE FOR BORROWERS TO ALLEGE IN THEIR LAWSUITS AND DEFENSIVE ACTIONS

In these posts I am trying to keep pace with the events unfolding on the investor side of the Mortgage Meltdown. That is because these lawsuits are more sophisticated than the usual fair you find with lawyers representing individual borrowers in foreclosure defense, bankruptcy or non-judicial sales.

Our theme is simply this: lender practices went astray because of lack of supervision, failure of regulation, improper oversight by stockholders and congress, and direct collusion with the even more sophisticated Wall Street firms offering “securitization” of risk products that removed the risk element from the loan underwriting process. The result was predictable — lending standards not only fell, they were smashed under a cloud of plausiable deniability. 

countrywide_class_action_defense_stay_ord

Note the article below and in particular, the bold sections which this editor has added.

May 15, 2008

Judge Says Countrywide Officers Must Face Suit by Shareholders

Directors and officers of Countrywide Financial, the beleaguered mortgage lender, must answer shareholder accusations of insider trading and an overall failure to monitor lending practices that led to the company’s collapse, a federal judge in California has ruled.

Rejecting the arguments of Countrywide executives and directors that they were unaware of lax loan operations that led to ballooning defaults, Judge Mariana R. Pfaelzer of Federal District Court in Los Angeles ruled Tuesday that she found confidential witness accounts in the shareholder complaint to be credible and that they suggested “a widespread company culture that encouraged employees to push mortgages through without regard to underwriting standards.”

Plaintiffs also identified “numerous red flags” that would have warned directors of increasingly risky loans made by Countrywide, according to the judge, who rejected a motion to dismiss the suit. “It defies reason, given the entirety of the allegations,” Judge Pfaelzer wrote, “that these committee members could be blind to widespread deviations from the underwriting policies and standards being committed by employees at all levels. At the same time, it does not appear that the committees took corrective action.”

Hundreds of mortgage companies have failed in the last year or so, but few executives or directors have taken responsibility. That makes the ruling significant, said Blair A. Nicholas, one of two lawyers at Bernstein Litowitz Berger & Grossmann representing the plaintiffs.

“It is a critical step enabling Countrywide and its shareholders to hold accountable the officers and directors who looted the company and were responsible for its devastating collapse,” Mr. Nicholas said.

Countrywide shareholders have lost billions of dollars since 2007 when its shares hit a high of $45.03. They closed on Wednesday at $4.85.

“As institutional investors, it is our duty to seek recourse when a company’s directors engage in practices that are not in the best interests of shareholders,” said Christa S. Clark, chief legal counsel of the Arkansas Teacher Retirement System, the lead plaintiff in the case. “We are pleased with the court’s ruling as it enables the shareholders to move forward with our case and remedy this wrong.”

A Countrywide spokesman declined to comment on the ruling.

The plaintiffs in the case said they hoped to recover money for shareholders from Countrywide officials named in the case who sold $850 million in stock from 2004 to 2007. The plaintiffs contend that the directors and officers dumped shares even as the company spent $2.4 billion to repurchase its own stock in late 2006 and early 2007.

The chief executive of Countrywide, Angelo R. Mozilo, has argued that his $474 million in stock sales during the three-year period complied with securities laws under a planned selling program. But he revised the program, known as a 10b5-1 plan, several times, each time increasing the shares to be sold.

As a result, the judge wrote: “Mozilo’s actions appear to defeat the very purpose of 10b5-1 plans,” created to allow corporate insiders to sell stock regularly and without direct involvement.

Gerald H. Silk, who also represents the plaintiffs, said: “Corporate fiduciaries cannot expect to evade liability by blaming a general market downturn when there is specific and systematic misconduct taking place right beneath their noses.”

The suit names 14 current and former directors and officials as defendants; it is known as a derivative action because shareholders of Countrywide are suing its officers and directors on behalf of the company.

Lawyers for the plaintiffs said that they would ask the judge to expedite discovery so that they can get testimony before the proposed purchase of Countrywide by Bank of America takes place. The deal is expected to close in the third quarter.

Senator Charles E. Schumer, Democrat of New York, asked the Federal Trade Commission on Wednesday to investigate whether Countrywide took advantage of borrowers who filed for bankruptcy protection to try to keep their homes.

In the letter to William E. Kovacic, the F.T.C. chairman, Mr. Schumer said, “An investigation by the Federal Trade Commission would help pull the curtain back on a hidden corner of the existing foreclosure crisis, and could help stem the tide of homeowners who are now unnecessarily being forced into bankruptcy and foreclosure.”

Mortgage Meltdown: Credit Crisis Spreads

 

Credit Crisis Over? — Not by a Long Shot

 

As you can imagine I get emails and comments from hundreds of people seeking help and whose houses are going into sale or foreclosure, most of whom are completely unaware that they have rights superior to the lender, if they can find someone to help them like www.repairyourloan.com

 

Lawyers won’t help you until you get the mortgage audit completed. It is then that you will know the extent of your claims and what you do to stop the foreclosure, the eviction or even extinguish the mortgage and release yourself from liability on the mortgage note. 

 

Here is an article which illustrates why you need to beware of both the government and the lenders. They are trying to give the impression that the credit crisis is (a) not as bad as people thought and (b) over. What they are really trying to do is pivot your attention away from the fact that the massive mortgage meltdown has caused a meltdown in all the credit markets. It has caused a massive meltdown in asset values for individuals, corporations and government entities. 

 

This is not the beginning of the end. It is, as Winston Churchill said in World War II “the end of the beginning.” We have years to go before this shakes out just in terms of education of the public. And we have decades to go to recover from this utter failure of government to do its job — to referee between those who know things and those who don’t. 

 

In the process the government, the corporations and the individuals owning houses or doing their jobs have all been smacked in the face, really hard and have snapped out of their wishful confidence in their government and in the “good faith” of a good faith estimate before closing on a loan.

 

Credit Crisis

Congress And The Credit Crisis

Joshua Zumbrun 05.14.08, 6:00 AM ET

 

Washington, D.C. – 

A congressional panel meets Tuesday morning looking to answer two big questions about the economy: Is the credit crisis over? And can anything be done to prevent another crisis in the future? 

 

To both questions, the answer is “No. And proceed with great caution.”

 

For the credit crisis, reasons for optimism are emerging. Monday morning, Federal Reserve Chairman Ben Bernanke outlined positive signs: confidence between banks has risen, the market for repurchase agreements of Treasury securities has improved, secondary markets even for troubled mortgage-backed securities have more liquidity than they did in May.

 

“These are welcome signs, of course, but at this stage conditions in financial markets are still far from normal,” Bernanke cautioned. (See “Recovery: Are We There Yet?”)

 

Still, the battered housing market continues to drag. Data released Monday from the National Association of Realtors showed that home prices are still falling. In the first quarter of this year, the median home price dropped 7.7% from a year ago–the biggest decline in the 29 years NAR has compiled the prices.

 

The number of borrowers who owe more than their house is worth is still growing. Loan defaults and foreclosures are likely to continue, as will losses to the lenders. Foreclosures tend to drag down the prices of their entire neighborhoods. But even here, Lawrence Yun, chief economist of the National Association of Realtors, sees some signs of optimism: “Neighborhoods with little subprime exposure are holding on very well.” And at least banks are not originating new subprime loans.

 

Now for the second question: How to prevent risk in the future. That’s what makes Tuesday morning’s hearing significant. The early advice Congress receives could shape regulation of banks and the financial market for years or even decades. And, as Treasury Secretary Henry Paulson noted in proposing a series of regulatory reforms in March, “few, if any, will defend our current balkanized system as optimal.”

 

The March collapse of Bear Stearns exposed a weakness in the Gramm-Leach-Bliley Act, a 1999 law that removed the barriers between commercial banks, investment banks and insurance companies. The amount of systemic risk was not recognized until too late.

 

After Gramm-Leach-Bliley, banks and insurance companies were allowed to undertake the same activities, but they still answered to their old regulators. Five federal regulators oversee deposits, in addition to regulation from state governments. Futures and securities are regulated by separate agencies. Insurance regulation is spread across more than 50 regulators.

 

The result was a confused alphabet soup–SEC, CFTC, OCC, NCUA, FDIC–with muddled boundaries or, as SEC Chairman Christopher Cox described the result, “a statutory no-man’s land.”

 

But regulation presents pitfalls as well. It must be considered not in terms of more or less regulation but rather in terms of flexibility and efficiency. 

 

“In the wake of a bust, there is always a predictable series of political activities,” says Alex Pollock, former president of the Federal Home Loan Bank of Chicago, who will testify before the committee. “First, the search for the guilty; second, the fall of previously esteemed heroes; and third, legislation and increased regulation to ensure that ‘this will never happen again.’ But, with time, it always does happen again.”

 

The guilty have been identified as the twin bogeymen of the subprime underworld: “speculators” and “unscrupulous lenders,” enabled by banks unable to price risk and an irrational belief that home prices would always rise. The esteemed heroes have fallen: the collapse of Bear Stearns, disappointing results from Wall Street’s banks. Even Alan Greenspan has lost some of his luster.

 

The third act at the boom and bust theater is well under way. This week the Senate is ironing out its companion legislation to the House’s Foreclosure Prevention Act, which passed last week with a 266-154 margin. The president has indicated he would veto the bill’s current incarnation but could support a toned-down version. All that remains is the predictable regulatory overhaul and then a long wait for the inevitable cycle to begin in the future. 

 

 

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