Bank Fraud News: The reason why banks and servicers should receive no presumption of reliability

The following is but a short sampling supporting the argument that any document coming from the banks and servicers is suspect and unworthy of any legal presumption of authenticity or validity. Judges are looking into self-serving fabricated documentation and coming to the wrong conclusion about the facts.

Chase following bank playbook: screw the customer

“Chase provided no prior notice to its cardholders that their crypto ‘purchases’ would be treated as ‘cash advances’ on a going forward basis,” according to the suit.

Tucker claims he was hit with about $140 in fees and a “sky-high” interest rate of 26 percent without warning after Chase reclassified his purchases as cash advances, a violation of the Truth in Lending act.

Fannie Mae and Freddie Mac Stealth: Hiding the elephant in the living room

Its never been a secret that Freddie Mac’s business policy is to remain stealth in any chain of title if possible, and to rely on the servicers to keep its presence a secret in foreclosure proceedings. In fact, this PNC case which was overturned against PNC, involved the Defendant’s assertion that PNC was concealing Freddie Mac’s interest in the loan. Freddie Mac’s business policy appears to rely upon nothing more than handshakes with the originators and servicers. Here is some verbiage from a “Freddie Mac – Mortgage Participation Certificates” disclosure (See: Freddie Mac – Mortgage Participation Certificates):

Deutsch files lawsuit against private mailbox troller following the Deutsch playbook of foreclosure

“Defendants, and each of them initiated a malicious campaign to disrupt the chain of title to prevent Plaintiff from enforcing its contractual rights in the 2006 DOT by way of recording fraudulent documents to purportedly assign the rights under the 2006 DOT without the consent of Plaintiff, and otherwise thereafter fraudulently transfer all rights via a trustee deed upon sale, even though no trustee sale was ever conducted. All subsequently recorded or unrecorded transactions are therefore null, void, and of no effect.”

EDITOR COMMENT: So Deutsch is admitting that its practice of recording fraudulent documents are “null, void and of not effect.” In order to get to that point Deutsch is going to be required to prove standing — i.e., definitive proof that it paid for the debt, which it did not. Deutsch is on dangerous ground here and might deliver a bonus for homeowners. As for the defense, is it really a crime to steal a fraudulent deed of trust supported by fraudulent assignments and endorsements?

Barclays Bank settles for $2,000,000,000 for fraud on investors

Barclays’ offering documents “systematically and intentionally misrepresented key characteristics of the loans,” and more than half of the loans defaulted, federal officials said.

Additionally, the Department of Justice reached similar settlements with two Barclays’ employees involved with subprime residential mortgage-backed securities. They will pay $2 million collectively.

The agreements mark the latest in a string of U.S. settlements with major banks over sales of tainted mortgage securities from 2005 to 2007 that helped set the stage for the real estate crash that contributed to the financial crisis.

Deutsch Pays $7.2 Billion for Fraudulent securitizations

Confirming settlement details the bank disclosed in late December, federal investigators said Deutsche Bank will pay a $3.1 billion civil penalty and provide $4.1 billion in consumer relief to homeowners, borrowers, and communities that were harmed.

The federal penalty is the highest ever for a single entity involved in selling residential mortgage-backed securities that proved to be far more risky than Deutsche Bank led investors to believe. Nonetheless, the agreement represents relief of sorts for the bank and its shareholders, because federal investigators initially sought penalties twice as costly.

Credit Suisse‘s announcement said it would pay the Department of Justice a $2.48 billion civil monetary penalty. The bank will also provide $2.8 billion in consumer relief over five years as part of the deal, which is subject to negotiations over final documentation and approval by Credit Suisse’s board of directors. [Credit Suisse owns SPS Portfolio Servicing.]

Ocwen Settles with 10 States for Illegal Servicing

“The consent order provides that Ocwen will transition its servicing portfolio off of its current servicing platform to a platform better able to manage escrow accounts and establish a new complaint resolution process,” the Georgia Department of Banking and Finance said in a press release. “Ocwen shall hire a third-party firm to audit a statistically significant number of escrow accounts in high-risk areas of the portfolio to determine whether problems continue to exist around the management of escrow accounts and to identify the root cause of those problems.

“Ocwen has faced many legal and regulatory challenges in recent years. In December 2013 it reached a settlement over foreclosure and modification processes with the CFPB and state regulators. A year later, it made a separate agreement with New York regulators that removed company founder William Erbey as CEO.

Wells Fargo Whistleblower is Fired Among Others Who refused to Lie to Customers

In 2014, according to Mr. Tran, his boss ordered him to lie to customers who were facing foreclosure. When Mr. Tran refused, he said, he was fired. He worried that he wouldn’t be able to make his monthly mortgage payments and that he was about to become homeless.

Joining a cadre of former employees claiming they were mistreated for speaking out about problems at the bank, Mr. Tran sued. He argued in court filings that he had been fired in retaliation for blowing the whistle on misconduct at the giant San Francisco-based bank. Mr. Tran said he didn’t want his job back — he wanted Wells Fargo to admit that it had been wrong to fire him and wrong to mislead customers who were facing foreclosure.

 

 

 

Investigator Bill Paatalo: A Plea To These Conspirators – You Have The Power To End This Nightmare.

 http://bpinvestigativeagency.com/a-plea-to-these-conspirators-you-have-the-power-to-end-this-nightmare/

I received an email yesterday morning that starts out with this:

On Mon, Apr 24, 2017 at 9:18 AM, the author wrote:

Please help save longtime Sandy Oregon resident Robynne Fauley’s life. She had major cancer surgery less than two weeks ago is getting chemo and is VERY ill. She will be evicted from her home on May 1st if we don’t help.  She has nowhere to go. The ordeal is very likely to kill he[r;].
I happen to have some knowledge about this case, as I was called in as an expert last year to assist an ABC News investigative journalist in Dallas, TX. Unfortunately, after all the time spent conducting interviews and laying out the evidence of fraud on a platter, corporate counsel for ABC News quashed the story. I’m sure this surprises no one. The reality is that the media will continue to plug its ears, while law enforcement will continue to view and categorize crimes of counterfeiting, forgery, tax evasion, and mail/wire fraud as “civil matters” in the context of foreclosures.
So with the clock ticking, I thought I’d throw up a “Hail Mary” plea in the direction of “Diane Meistad” and the rest of these conspirators. Diane, Michael, and the rest of you –  if you’re out there and see this, fix it!
The following email strand (2008 Internal Emails – MGC – RFC – Quality Loan Servicing – Fauley Case) is a rare glimpse of bank employees conspiring to forge, back-date, and fraudulently produce a chain of title.
July 11, 2008
From: Monica Hadley – MGC Mortgage
To: Chris Malapit – (Trustee) Quality Loan Service of Washington
Hadley: Chris, Does this loan have title issues? I was going through the original documents and the chain of title seems to be missing some assignments. It could have been that this was missed in the file and all is well. I want to make sure.
July 11. 2008
From: Chris Malapit
To: Monica Hadley
Subject: *12125 Se Laughing Water, Sandy, OR 97055* Robynne Fauley
The DOT was assigned to WAMU,FA as of 5/3/2007 by instrument#2007-038181. Once we are able to proceed we will then need an assignment from WAMU, FA in LNV Corporation.
July 14, 2008
From: Monica Hadley
To: Chris Malapit
Chris, That is what I see too. We received the loan from Residential Funding Company, LLC and have an AOM from RFC to LNV Corporation. Why did RFC assign the loan to WAMU? Do you have a contact at WAMU who will assign the file to LNV Corporation?
July 14, 2008
From: Chris Malapit
To: Monica Hadley
Doing more research I don’t think Residential Funding Co, LLC had the authority to transfer the interest as the last bene of record per our title report was Deutsche Bank Trust not Residential Funding Co.
July 16, 2008
From: Monica Hadley – MGC Mortgage
To: Chris Malapit – (Trustee) Quality Loan Service of Washington
Subject: Subject: *12125 Se Laughing Water, Sandy, OR 97055* Robynne Fauley
Here is a copy of the most recent title update from the attorney office and the email chain from our attorney.
[FAST FORWARD]
October 17, 2008
From: Michael Barnett (MGC Mortgage, Inc.)
To: Shanda Foreman (entity unknown)
Cc: Carissa Golden (entity unknown)
Subject: Intervening Assignments to Deutsche Bank
 
Shanda, I have 2 RFC loans that are needing assignments from Deutsche Bank to RFC. Please check to see if they are on the list you sent to RFC. See the loan numbers below.
 
17103058/Robynne Fauley, Oregon
17102692/Stuart Berg, New Jersey
 
 
October 24, 2008
From: Michael Barnett
To: ‘Meistad, Diane’ (entity unknown)
 
Diane, this loan was last assigned to Washington Mutual from RFC but, prior to this assignment was assigned from Washington Mutual to Deutsche Bank and recorded in Clackamas County, Oregon. We need an assignment from Deutsche Bank to RFC and from Washington Mutual to LNV Corp. I have templates for both assignments. We will be re-recording the assignment from RFC to Washington Mutual to correct the chain of title with both of these assignments. Also, please find Note Allonge from Deutsche Bank to RFC as well. Please forward these signed assignments back to me via our federal express account #252870180. Thanks Michael.
 
(Assignments & Allonge attached)
[Note: WAMU no longer existed on October 24, 2008. This is a huge problem! But this doesn’t stop MGC from creating the necessary “templates” to solve this problem. Furthermore, Diane Meistad is believed to have been employed by RFC. Yet, MGC creates an “Alonge” from Deutsche Bank to RFC seeking RFC’s execution, not Deutsche Bank.]
October 27, 2008
From: Diane Meistad
To: Michael Barnett
Subject: RE: Default Assignment Request loan #7889719/17103058 (Fauley, Robynne)
 
Michael, If the assignment was recorded from WAMU to DB and another assignment f/RFC to WAMU – technically the second assignment is ‘invalid’ because RFC was not in title to record the second assignment and it should not effect title.
 
Because of the assignment was invalid technically it didn’t transfer ownership.
 
October 27, 2008
From: Michael Barnett
To: Diane Meistad
 
Diane, since the assignment from RFC to WAMU is of record we have to correct the chain of title. At this point the county recorder’s office shows that WAMU is the assignee of record for this loan (which is wrong), right? RFC did assign this loan and shouldn’t have but, in order to fix this one the correct chain should be from Deutsche to RFC, then from RFC to WAMU, then WAMU to LNV Corp, which will correct the chain of title. Litton Loan Servicing LP prepared and recorded the assignment from RFC to WAMU, which should not have been recorded. We still need to get this loan from RFC to LNV to properly convey this property, since we purchased it from RFC. Please call me if you still concerns about the chain of assignments. Borrower loan #7889719/17103058 – Robynne Fauley. Thanks Michael.
 
[NOTE: This was a WAMU originated loan. WAMU sold this loan in a number of undocumented transactions that wound up in the hands of “Deutsche Bank as Trustee.” This means that the Fauley loan was securitized into some trust years prior, to which Deutsche Bank was acting as Trustee. MGC is claiming they purchased this loan when they clearly do not have clear title. They admit in this email that in order to correct the chain of title, they need the final transfer from WAMU to LNV Corp, which at this point in time is an impossibility. The next responsive email shows that Diane Meistad disagrees with MGC’s position / request.]
October 27, 2008
From: Diane Meistad
To: Michael Barnett
Subject: RE: Default Assignment Request loan (Fauley, Robynne)
 
I disagree since RFC was not in position (title position) to transfer the asset.
 
I will need to refer your request for this assignment to our Records Services team in Iowa to begin the process. Diane
[NOTE: Meistad, who is believed to work for RFC, does not believe RFC was in title position to transfer the Deed of Trust. The reference to the “Records Services team in Iowa” means it is likely that Wells Fargo was involved as a master servicer / custodian for the unidentified trust for which Deutsche Bank was Trustee.]
October 27, 2008
From: Michael Barnett
To: Diane Meistad
Subject: RE: Default Assignment Request loan (Fauley, Robynne)
 
Okay Diane, I had my manager look at this file with me and we have determined that we need the following assignments to correct the chain of assignments:
 
1) Corrective Assignment from WAMU TO Deutsche Bank (to correct the assignment from RFC to WAMU, which was recorded in error) & Note Allonge
2) Assignment from Deutsche Bank to RFC & Note Allonge
3) Assignment from RFC to LNV Corp (Note allonge in file already)
 
The assignment from RFC to WAMU was recorded in error so it is not needed. We also have 2 endorsements on the original Note WAMU to RFC to Deutsche Bank which should be cancelled, to correct the Endorsement chain on the Note. We will just need the okay from you via email to cancel these endorsements. Will this work for you? Thanks Michael.
[NOTE: MGC has decided what was done right and wrong in prior transactions for which it has no knowledge, and what now needs to be done in its own best interest to steal and harvest the home. The transfers to and from WAMU as described above would be fraud due to WAMU being defunct. Then there is the request to have RFC cancel out the endorsements and replace with allonges. The third request in the sequence states that an allonge is already in the file from RFC to LNV Corp even though there are no assignments, yet, to support that allonge. That allonge created by MGC is fraudulent, and represents yet another broken sequence in the chain of title.]
Four days after this last email on October 27, 2008, the following two attached assignments are recorded simultaneously in Clackamas County, Oregon (Recorded Assignments – October 31 2008 – Fauley). The first assignment (and I call it the “first” because of its fraudulently back-dated) is executed on “March 10, 2008″ and notarized as such by “Diane Meistad” – Notary Public – State of Minnesota.” The assignor is “Residential Funding Company, LLC fka Residential Funding Corporation” with no Assignee named. NO ASSIGNEE! However, the second assignment is executed on October 27, 2008 with the Assignor named as “Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company) and the Assignee – “Residential Funding Company, LLC.” This assignment is also notarized by “Diane Meistad.” As admitted by Meistad above, RFC was not in title position to transfer the asset as of October 27, 2008. Yet, she acquiesced to MGC’s fraudulent conspiracy to forge, fabricate, and alter documents.
So, Diane Meistad, Michael Barnett, and all the rest of you who where involved in this deceit, this one’s on you. You are the only ones who can put a stop to this injustice. Robynne Fauley, who is elderly and very sick, has suffered immensely from your actions. In six-days she is scheduled to be evicted from her home. Fix this!
Bill Paatalo
Private Investigator – OR PSID$ 49411
BP Investigative Agency, LLC
(406) 328-4075
bill.bpia@gmail.com

Deutsche Bank survives on investor Life-Support

by K.K. MacKinstry

Deutsche Bank announced that it will create more shares and sell them at a 35% discount. Existing shareholders are not happy and in the first four days since the offer was announced, the value of existing shares dropped by 13% as shareholders began sharing off their shares.

Why would Germany’s largest bank do something so drastic? In recent years, the bank like other large American banks, has been involved in countless arbitrations, litigations, and regulatory proceedings as a result of its fraudulent activities, including the manipulation of markets and currencies. Having been found guilty, Deutsche now owes $7.2 billion to the United States Department of Justice and still are on the hook for an additional $10 billion litigation bill. Despite what the mainstream media reports, Deutsche bank is broke. Even if Deutsche sells the new shares, the $8.6 billion they hope to generate will not be able to keep them from filing bankruptcy.

Deutsche lost nearly $2 billion in the last two years, instituted a hiring freeze, cut bonuses by 80%, and are now facing a $2.5 million civil penalty from the Commodity Futures Trading Commission for failure to report transactions and have been downgraded.

The German government claims they will not bail Deutsche out and under the EU agreement, they are prevented from doing so. It is likely that an extinction event is on the horizon despite the billions of dollars it has made from fraudulently foreclosing on thousands of American homes and selling heavily discounted stock.

It is noteworthy that Deutsche is the bank that funds the Euro system, which they can now no longer do. Deutsche is ten times larger than Lehman Brothers, the American bank that engineered the loan crisis and was dissolved in 2008.  Also, 90 percent of Deutsche’s revenue is derived from derivative trading- the same activity that destroyed Lehman.

If and when Deutsche Bank crashes, some analysts predict that four major US banks would be expected to become insolvent in a matter of days. And the fallout would impact the entire United States economic system.  Despite the fact that the mainstream media is reporting that home sales are up, inventory is down and the housing market is in full recovery, other economic events paint a more negative scenario.  For example:

  • Foreign governments have been selling US Treasuries back into the US market at the fastest rate in history (thus predicting a future devaluation of the dollar).
  • The Dodd-Frank Act of 2010 was intended to end the possibility of future quantitative easing. However, it legalized the “bail-in”, thus authorizing banks to confiscate customer’s deposits. In other countries where a bail-in has been implemented, governments also seized pension funds, retirements, etc., The government then issued shares in a failing bank or a bond, then proceeded to default on the bond.
  • The stock market is in a larger bubble than in 2008 and is overdue for a crash.
  • Derivatives, which triggered the last major crash, are now at a higher level than in 2007 before the housing market tanked.
  • The petrodollar is in decline and countries are implementing other currencies like the Chinese PetroYuan.
  • On March 15th, the US hit its debt ceiling and can no longer legally continue to borrow money. It’s estimated that the money remaining in the Treasury will be exhausted by June 1st. After that point, if no major money infusions don’t occur the US government ceases to fund itself, its many agencies, and its entitlements.

Meanwhile the federal government is more concerned with destroying a Syrian runway that creating a contingency plan to operate the government.

This isn’t a matter of “if” but “when.”   Does anyone remember how quickly the market crashed in 2007-2008?  Americans tend to have short memories.  It is amazing that our great-grandparents and grandparents that lived through the depression never forgot what it was like. Most were scarred for life by the experience of financial trauma.  It is not unusual to see people who lived through the Great Depression save everything they have ever owned and have active emergency plans ready.

It has only been ten years since the market crashed and most Americans have completely forgotten the lessons from the crash.  Many homeowners who lost one home to foreclosure eagerly jumped in to buy another in a once-again inflated market.  Anyone who is dependent in any significant way upon the government, financial institutions, and/or American financial markets should be on guard.  Furthermore, if you have a home that you know you can sell for premium dollar right now in a market driven by low down payments and low interest rates- you might want to downsize and simplify.  Don’t say we didn’t warn you.

http://www.cnbc.com/2017/04/07/deutsche-bank-completes-8-5-billion-cash-raising-exercise.html

Deutsch Bank on Verge of Collapse?

there is no such thing as a soft landing in a cornered marketplace

Despite claiming $52 TRILLION “notional” value in derivatives (nearly all the money in the world) DB has posted a shattering loss and according to the IMF poses the most serious systemic loss to the financial system. Reports indicate that 29 DB employees were at the root of manipulating the LIBOR index which is used as the primary index for variable rate loans. Nobody has addressed the issue of whether adjusted payments should be scrutinized even while knowing that the index was rigged.

 

see http://www.visualcapitalist.com/chart-epic-collapse-deutsche-bank/

Nothing equals nothing. The fact is that DeutschBank allowed itself to be window dressing on bogus REMIC Trusts as though the DB trust department was managing the money for investors. Other than ink on paper, the trusts did not exist and neither did any assets of the purported trusts. DB led the way as a principal party in creating the illusion of “something” when in fact there was nothing at all.

Then DB executives took highly leveraged risks in betting on the bogus mortgage bonds (and other “asset-backed” securities) issued by those bogus REMIC Trusts. Then they papered it over with all kinds of complex derivative products — all of which were based upon the nonexistent ownership of the primary asset — loans. DB claims over $52 Trillion in “value” for those derivatives as a tier 3 asset (i.e., it is worth what management says it is worth). The current leverage ratio for DB is reported at 40x, which is just 2 points lower than Bear Stearns before it toppled over. The leverage is disguised as “sales” for which DB has subsequent liability. All of this was predicted and described by Abraham Briloff  in Unaccountable Accounting published by Harper and Rowe in 1972. Nearly all of these “trades” are merely devices to kick the can down the road, covering over losses that DB would rather not admit.

This situation reminds me of a scene long ago when I was working on Wall Street as a Trainee security analyst in the research department of a medium sized brokerage firm. One of the family partners came into our research department and told us confidently that despite all rumors to the contrary there would be no layoffs in our department. I think I had another job before he returned to his office just ahead of the layoff of the entire department 2 weeks later. My intuition told me that he was lying. On Wall Street it’s not the lying that is frowned upon, it is getting caught. My experience has taught me that the bigger the entity the bigger the lies and the more serious the systemic risk to the whole of society. That was in 1968-9.

At that time the crisis was the “paper crash” — meaning that Wall Street firms had “lost track” of the location and ownership of stock and bond certificates. Now they are filing “lost note” complaints like confetti. When you send a Qualified Written Request or Debt Validation Request, you get nothing unless you are already in litigation where suddenly “original” documentation pops up.

This time it is far more serious as the fortunes of many investors, banks and other institutions rely on the value of DB stock and promises to pay. The problem in 1968-1969 was addressed by “best guesses” and converting from a system where investors received actual certificates to a system where trades were recorded privately on the books and records of the brokerage houses and investors had to rely on the statements from their broker as evidence of their asset holdings.

But the systemic problem is the same. Today it is the notes and loan documents that are lost. The conversion to using a private record of transactions sounds like MERS today. And the claim to $52 Trillion in “notional value” is pure obfuscation. The total of all real money in the world is probably under $70 Trillion. So does DB own most or all of it? I don’t think so and neither does anyone else, which is why DB is in trouble. They got caught.

The report in the link above says that DB is in full crisis mode as DB tries to escape the death spiral that took down Lehman, Bear Stearns, Merrill Lynch and others.

The importance of these events goes far beyond the significance of DB itself. DB, whose stock is selling at 8% of what it was selling at in 2007, is unfortunately only a symbol of an epic disaster that is slowly unfolding. The fundamentals have changed. Nearly all “debt” that was created over the past 15 years is fatally defective — leaving enforcement only to the good graces of judges who are willing to overlook centuries of law governing the purchase and sale of negotiable paper.

The reason for the continuing weakness in economic systems around the world is that most of the money was sucked out of those systems. The method of the banks in achieving this non-heroic status is responsible for the continuing recession that is creating so much disturbance around the world. Leaders of those countries have been sucking it up in order to create a soft landing.

But here is what we know from history — there is no such thing as a soft landing in a cornered marketplace. The banks converted our economies from 85% reliance on manufacturing and services to an economy where half of the economic activity consists of trading securities back and forth — i.e., trading the same securities over and over again. That means that actual economic activity in the production and delivery of goods and services has declined from 85% to 50% and it is still dropping. The rest is smoke and mirrors. It is the belief or entanglements with the banks that keeps us from moving on, clawing back, and restoring household wealth to the only place that will actually generate real economic activity — the middle class and lower economic tiers.

Henry Ford proved the point spectacularly about 100 years ago when he doubled the wages of his workers — to the astonishment and dismay of his competitors. It was clear to everyone but Ford that he had obviously lost his mind. Despite that clarity that everyone agreed was the true way of looking at things, Ford’s move created the middle class and thus created a stable demographic who continue to buy what he was selling. In a short time, Ford was the dominant player in the marketplace selling automobiles and the “realists” were gone.

Until the middle class is restored (i.e., it gets back the money that was distributed away from them into the hands of a handful of men who had used their positions of influence to corner the market on money), the “recovery” will continue to be smoke and mirrors, the society will be disrupted and eventually companies that do rely on people to purchase their goods and services won’t have anyone to sell them to. And creating debt to cover the shortfall doesn’t work anymore. The middle class must have a pathway to financial security, not to financial ruin.

Perils of Pooling: OneWest

Apparently my article yesterday hit a nerve. NO I wasn’t saying that the only problems were with BofA and Chase. OneWest is another example. Keep in mind that the sole source of information to regulators and the courts are the ONLY people who understand mergers and acquisitions. So it is a little like one of those TV shows where the only way they can get an arrest and conviction is for the perpetrator or suspect to confess. In this case, they “confess” all kinds of things to gain credibility and then lead the agencies and judicial system down a rabbit hole which is now a well trodden path. So many people have gone down that hole that most people that is the way to get to the truth. It isn’t. It is part of a carefully constructed series of complex conflicting lies designed carefully by some very smart lawyers who understand not just the law but the way the law works. The latter is how they are getting away with it.

Back to OneWest, which we have detailed in the past.

The FDIC has posted the agreement at http://www.fdic.gov/about/freedom/IndyMacMasterPurchaseAgrmt.pdf

OneWest was created almost literally overnight (actually over a weekend) by some highly placed players from Wall Street. There is an 80% loss sharing arrangement with the FDIC and yes, there appears to be some grey area about ownership of the loans because of that loss sharing agreement. But the evidence of a transaction in which the loans were actually purchased by a brand new entity that was essentially unfunded is completely absent. And that is because OneWest and Deutsch take the position that the loans were securitized despite IndyMac’s assurances to the contrary. The only loans in which OneWest appears to be a player are those in which the loan was subject to (false) claims of securitization. No money went to the trustee, no money went to the trust, no assets went into the pool because the REMIC asset pool lacked the funding to purchase any assets.

Add to that a few facts. Deutsch is usually the “trustee”of the REMIC asset pool, but Reynaldo Reyes says he has nothing to do. He has no trust accounts and makes no decisions and performs no actions. Sound familiar. I have him on tape and his deposition has already been taken and publicized on the internet by others. Reyes says the whole arrangement is “counter-intuitive” (a very creative way of saying it is a lie). It is up to the servicer (OneWest) to decide what loans are subject to modification, mediation or even reinstatement. It is up to the servicer as to when to foreclose. And the servicer here is OneWest while the Master Servicer appears to be the investment banking arm of Deutsch, although I do not have that confirmed.

The way Reyes speaks about it the whole thing ALMOST makes sense. That is, until you start thinking about it. If Deutsch Bank has an extensive trust subsidiary, which it does, then why is a VP of asset management in control of the trust operations of the REMIC asset pools. Answer: because there are no funded trusts and there are no asset pools with assets. Hence any statement by OneWest that it is the owner of the loan is untrue as is the allegation that Deutsch is the trustee because all trustee duties have been delegated to the servicer. That leaves the investor with an empty box for an asset pool and no trustee or manager or even an agent to to actually know what is going on or who is monitoring their money and investments.

Note that like BOfA using Red Oak Merger Corp., there is the creation of a fictional entity that was not used by the name of, no kidding, “Holdco.” This is to shield OneWest from certain liabilities as a lender. Legally it doesn’t work that way but practically it generally does work that way because judges listen to bank lawyers to tell them what all this means. That is like asking a 1st degree murder defendant to explain to the jury the meaning of reasonable doubt.

Now be careful here because there is a “loan sale” agreement referenced in the package posted by the FDIC. But it refers to an exhibit F. There is no exhibit F and like the ambiguous agreements with the FDIC in Countrywide and Washington mutual, there are words there, but they don’t really say anything. Suffice it to say that despite some fabricated documents to the contrary, there is no evidence I have seen that any loan  receivable was transferred to or from a REMIC asset pool, Indy-mac, or Hold-co.

These people were not stupid and they are not idiots. And their lawyers are pretty smart too. They know that with the presumption of a funded loan in existence, the banks could pretty much get away with saying anything they wanted about the ownership, the identity of the creditor and the ability to make a credit bid at the auction of a property that should never have been foreclosed in the first instance — and certainly not by these people.

But if you dig just a little deeper you will see that the banks are represented to the regulatory authorities that they own the bonds (not true because the bonds were created and issued to specific investors who bought them); thus they include the bonds as significant items on their balance sheet which allows them to be called mega banks or too big to fail when in fact they have a tiny fraction of the reserve requirements of the Federal Reserve which follows the Basel accords.

Then when you turn your head and peak into courtrooms you find the same banks claiming ownership of the loan receivable, which was created when the funding occurred at the “closing” of the loan. They know they are taking inconsistent positions but most judges lack the sophistication to pinpoint the inconsistency. And that is how 5 million people lost their homes.

On the one hand the banks are claiming there was no fraud in the issuance of mortgage backed bonds by a REMIC asset pool formed as a trust. In fact, they say the loans were transferred into the REMIC asset pool. Which means that ownership of the mortgage bonds is ownership of the loans — at least that is what the paperwork shows that was used to sell pension funds on buying these worthless bogus bonds. Then they turn around and come to court as the “holder” and get a foreclosure sale in which the bank submits the credit bid and buys the property without spending one dime. What they have done is, in lay terms, offered the debt to pay for the property. But the debt, according to the same people is owned by the investors or the REMIC trust, not the banks.

Then they turn to the insurers and counterparties on credit default swaps, and the Federal reserve that is buying these bonds and they say that the banks own the bonds, have an insurable interest, and should receive the proceeds of payments instead of the investors who actually put up the money. And then they say in court that the account receivable is unpaid, there is a default, and therefore the home should be foreclosed. What they have done is create a chaotic complex of lies and turn it into an illusion that changes colors and density depending upon whom the banks are talking with.

There is no default on the account receivable if the account was paid, regardless of who paid it — as long as it was really paid to either the owner of the loan receivable or the authorized agent of the owner (i.e., the investor/lender). And so it is paid. And if paid, there can be no action on the note because the loan receivable has been satisfied. There can be no action on the mortgage because it was never a perfected lien and because the loan receivable was extinguished by PAYMENT. You can’t use the mortgage to enforce the note which is evidence for enforcement of a debt when the debt no longer exists.

Judges are confused. The borrower must owe money to someone so why not simply enter judgment and let the creditors sort it out amongst themselves. The answer is because that is not the rule of law and if a creditor has a claim against the borrower it should be brought by that creditor not some stranger to the transaction whose actions are stripping the real creditor of lien rights and collection rights over the debt. What the courts are doing, by analogy, is saying that you must have killed someone when you fired that gun so we will dispense with evidence and a jury and proceed to sentencing. We will let the people in the crowd decide who is the victim who can bring a wrongful death action against you even if we don’t even know when the gun was fired and who pulled the trigger. In the meanwhile you are sentenced to death or life in prison under our rocket docket for murders of unknown persons.

 

 

FDIC ($677.4 Billion) Charges Banks With Fraud, Illegal Underwriting Practices

Has Obama Awakened?

Appraisal Fraud Alleged by this Blog

is found to be Centerpiece of this Action

Editor’s Note: The FDIC claims it studied a rough sampling of the securitized loans and alleges more than 60% of the loans packed into each deal contain material untrue or misleading statements.

In a resounding acceptance of the principles enunciated first on this blog, the FDIC, being the best regulator to file the charges, has moved against the big banks and servicers in the false scheme of securitization resulting in trillions in losses to the government, investors and homeowners.

Central to the allegations are that “defendants made untrue statements or omitted important information about such material facts as the loan-to-value ratios of the mortgage loans, the extent to which appraisals of the properties that secured the loans were performed in compliance with professional appraisal standards, the number of borrowers who did not live in the houses that secured their loans (that is, the number of properties that were not primary residences), and the extent to which the entities that made the loans disregarded their own standards in doing so.”

The allegations are so serious that it is unlikely that there will be any slap on the wrist coming out of this. The result of this lawsuit will have a profound impact on the housing market, the financial community and best of all, homeowners who have been using these allegations as defenses for years. It is apparent that the false premises upon which the bogus mortgage bonds were sold, combined with the complete avoidance of the supposed securitization scheme that was “in place,” has prompted this huge lawsuit. It is the tip of an iceberg where the administration is finally bringing the war to the door of the banks and will most likely lead to criminal charges as the cases progress.

 

The Federal Deposit Insurance Corp. filed three lawsuits against big banks, alleging the lenders misrepresented the quality of securitized loans sold to the now defunct Texas firm, Guaranty Bank.

The FDIC took Austin, Texas-based Guaranty Bank into receivership back in Aug. 2009.

This week, the regulator filed multiple lawsuits in Austin, Texas, suggesting Guaranty suffered major losses from toxic RMBS loans sold and packaged by mega banks and other financial institutions.

Defendants named in the multibillion-dollar lawsuits includeCountrywideJPMorgan Chase ($38.04 0%)Ally Financial,Deutsche Bank Securities ($34.07 0%)Bank of America ($8.190%) and Goldman Sachs ($105.32 0%) among others.

FDIC, on behalf of Guaranty, claims the banks misrepresented loan-to-value ratios, underwriting criteria and appraisal amounts when selling, packaging and underwriting home loans that became collateral for mortgage securities sold to Guaranty.

Specifically, the FDIC alleges the financial firms violated federal and Texas securities laws by failing to fully disclose or truthfully represent the quality of mortgages backing the security certificates.

In the first case, the FDIC accuses Countrywide Securities, Bank of America, Deutsche Bank and Goldman Sachs of playing a role in the packaging, selling or securitization of mortgages sold off to Guaranty Bank for $1.5 billion. The suit says Guaranty Bank acquired 8 certificates in the transaction.

The FDIC claims it studied a rough sampling of the securitized loans and alleges more than 60% of the loans packed into each deal contain material untrue or misleading statements.

The FDIC is suing for an undetermined amount that is no less than $559.7 million in damages.

The bank regulator also sued Ally Securities, Goldman Sachs, Deutsche Bank Securities and JPMorgan Securities among others. In that suit, the regulator claims, the firms were involved in the packaging, underwriting and sale of eight RMBS certificates valued at $1.8 billion.

The FDIC alleged in court records that the “defendants made untrue statements or omitted important information about such material facts as the loan-to-value ratios of the mortgage loans, the extent to which appraisals of the properties that secured the loans were performed in compliance with professional appraisal standards, the number of borrowers who did not live in the houses that secured their loans (that is, the number of properties that were not primary residences), and the extent to which the entities that made the loans disregarded their own standards in doing so.”

In that complaint, the FDIC is asking for at least $900.6 million in damages.

The regulator also sued JPMorgan Securities, Merrill Lynch, RBS Securities and WaMu Asset Acceptance Corp., making similar claims about 20 RMBS certificates that Guaranty paid $2.1 billion to acquire. The FDIC is requesting at least $677.4 billion in damages.

Local Governments on Rampage Against Banks’ Manipulation of Credit Markets

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“When both government and the citizens start acting together, things are likely to change in a big way. There appears to be a unity of interests — the investors who thought they were buying bonds from a REMIC pool, the homeowners who thought they were buying a properly verified and underwritten loan from a pretender lender, and the local governments who were tricked into believing that their loans were viable and trustworthy based upon the gold standard of rate indexes. In many cases, the only reason for the municipal loan, was the illusion of growing demographics requiring greater infrastructure, instead of repairing the existing the infrastructure. As a result, the cities ended up with loans on unneeded products just like homeowners ended up with loans on houses that were always worth far less than the appraisal used.” — Neil F Garfield, www.livinglies.me

Editors Note: Hundreds of government agencies and local governments are on the rampage realizing that they were duped by Wall Street into buying into defective loan products. This puts them in the same class as homeowners who bought such loan products, investors who believed they were buying Mortgage Bonds to fund the loans, and dozens of other institutions who relied upon the lies told by the banks who were having a merry old time creating “trading profits” that were the direct result of stealing money and homes, and misleading the financial world on the status of the interest rates in the financial world. All loans tied to Libor (London Interbank Offered Rate), which was the gold standard,  are now in question as to whether the reset on those loans was true, correct or simply faked.

The repercussions of this will grow as the realization hits the victims of this gigantic fraud broadens into a general inquiry about most of the major practices in use — especially those in which claims of securitization were offered. It is now obvious that the deal proposed to pension funds and other investors was simply ignored by the banks who used the money to create faked trading profits, removing from the pool of investments money intended for funding loans that were properly originated and dutifully underwritten.

Cities, Counties, Homeowners and Investors are all victims of being tricked into loans that were simply unsustainable and were being manipulated to the advantage of the banks they trusted to act responsibly and who instead acted reprehensibly.

The ramifications for the mortgage and foreclosure markets could not be larger. If the banks were lying about the basics of the rate and the terms then what else did they do? As the Governor or of the Bank of England said, the business model of the banks appears to have been “lie More” rather than living up to the trust reposed in them by those who dealt with them as “customers.” Specifically, the evidence suggests that while the funding of the loan and the closing documents were coincidentally related in time, they specifically excluded any reference to each other, which means that the financial transaction as it actually occurred is undocumented and the document trail refers to financial transactions that did not involve money exchanging hands.

The natural conclusion created by the coincidence of the funding and the documents was to conclude that the two were related. But the actual instructions and wire transfers tell another story. This debunks the myth of securitization and more particularly the mortgage lien. How can the mortgage apply to a transaction described in the note that never took place and where the terms of the loan were different than what was expected by the creditors (investors, like pension and other managed funds) in the mortgage bond. The parties are different too. The wires funding the transaction are devoid of any reference to the supposed lender in the closing documents presented to borrowers. Thus you have different parties and different terms — one in the money trail, which was undocumented, and the other in the document trail which refers to transactions in which no money exchanged hands.

When the municipalities like Baltimore start digging they are going to find that manipulation of Libor was only one of several issues about which the Banks lied.

Rate Scandal Stirs Scramble for Damages

BY NATHANIEL POPPER

As unemployment climbed and tax revenue fell, the city of Baltimore laid off employees and cut services in the midst of the financial crisis. Its leaders now say the city’s troubles were aggravated by bankers’ manipulation of a key interest rate linked to hundreds of millions of dollars the city had borrowed.

Baltimore has been leading a battle in Manhattan federal court against the banks that determine the interest rate, the London interbank offered rate, or Libor, which serves as a benchmark for global borrowing and stands at the center of the latest banking scandal. Now cities, states and municipal agencies nationwide, including Massachusetts, Nassau County on Long Island, and California’s public pension system, are looking at whether they suffered similar losses and are weighing legal action.

Dozens of lawsuits filed by municipalities, pension funds and hedge funds have been consolidated into a few related cases against more than a dozen banks that are involved in setting Libor each day, including Bank of America, JPMorgan Chase, Deutsche Bank and Barclays. Last month, Barclays admitted to regulators that it tried to manipulate Libor before and during the financial crisis in 2008, and paid $450 million to settle the charges. It said other banks were doing the same, but none of them have been accused of wrongdoing. Libor, a measure of how much banks must pay to borrow money from one another in the short term, is set through a daily poll of the banks.

The rate influences what consumers, businesses and investors pay on a wide range of financial contracts, as varied as mortgages and interest rate swaps. Barclays has said it and other banks understated the rate during the financial crisis to make themselves look healthier to the public, rather than to make more money from clients. As regulators and lawmakers in Washington and Europe assess the depth of the Libor abuse and the failure to address it, economists and analysts are already predicting it could be one of the most expensive scandals to hit Wall Street since the financial crisis.

Governments and other investors may face many hurdles in proving damages. But Darrell Duffie, a professor of finance at Stanford, said he expected that their lawsuits alone could lead to the banks’ paying out tens of billions of dollars, echoing numbers from a recent report by analysts at Nomura Equity Research.

American municipalities have been among the first to claim losses from the supposed rate-rigging, because many of them borrow money through investment vehicles that directly derive their value from Libor. Peter Shapiro, who advises Baltimore and other cities on their use of these investments, said that “about 75 percent of major cities have contracts linked to this.”

If the banks submitted artificially low Libor rates during the financial crisis in 2008, as Barclays has admitted, it would have led cities and states to receive smaller payments from financial contracts they had entered with their banks, Mr. Shapiro said.

“Unambiguously, state and local government agencies lost money because of the manipulation of Libor,” said Mr. Shapiro, who is managing director of the Swap Financial Group and is not involved in any of the lawsuits. “The number is likely to be very, very big.”

The banks have declined to comment on the lawsuits, but their lawyers have asked for the cases to be dismissed in court filings, pointing to the many unusual factors that influenced Libor during the crisis.

The efforts to calculate potential losses are complicated by the fact that Libor is used to determine the cost of thousands of financial products around the globe each day. If Libor was artificially pushed down on a particular day, it would help people involved in some types of contracts and hurt people involved in others.

Securities lawyers say the lawsuits will not be easy to win because the investors will first have to prove that the banks successfully pushed down Libor for an extended period during the crisis, and then will have to demonstrate that it was down on the day when the bank calculated particular payments. In addition, investors may have to prove that the specific bank from which they were receiving their payment was involved in the manipulation. Before it even reaches the point of proving such subtleties, however, the banks could be compelled to settle the cases.

One of the major complaints was filed by several traders and hedge funds that entered into futures contracts that are traded through the Chicago Mercantile Exchange and that pay out based on Libor. These contracts were a popular way to protect against spikes in interest rates, but they would not have paid off as expected if Libor had been artificially lowered.

A 2010 study cited in the suit — conducted by professors at the University of California, Los Angeles and the University of Minnesota — indicated that Libor was significantly lower than it should have been throughout 2008 and was particularly skewed around the bankruptcy of Lehman Brothers.

A separate complaint filed in 2010 by the investment firm Charles Schwab asserts that some of its mutual funds, including popular ones like the Schwab Total Bond Market Fund, lost money on similar investments.

The complaints being voiced by municipalities are mostly related to their use of a popular financial contract known as an interest rate swap. States and cities generally enter into these swaps with specific banks so that they can borrow money in the bond market. They pay bondholders based on a floating interest rate — like an adjustable-rate mortgage — but end up paying their bankers a fixed rate through a swap. If Libor is artificially lowered, the municipality is stuck paying the same fixed rate, but it receives a smaller variable payment from its bank.

Even before the current controversy, some municipal activists have said that banks took advantage of the financial inexperience of municipal officials to sell them billions of dollars of interest rate swaps. Experts in municipal finance say that because of the particular way that cities and states borrow money, they are especially liable to lose out on their swaps if Libor drops.

Mr. Shapiro, who helps cities, states and companies negotiate these contracts, said that if a city had interest rate swaps on bonds worth $1 billion and Libor was artificially pushed down by 0.30 percent, which is what the lawsuits contend, that city would have lost $3 million a year. The lawsuit claims the manipulation occurred over three years. Barclays’ settlement with regulators did not specify how much the banks’ actions may have moved Libor.

In Nassau County, the comptroller, George Maragos, said in a statement that according to his own calculations, Libor manipulation may have cost the county $13 million on swaps related to $600 million of outstanding bonds.

A Massachusetts state official who spoke on the condition of anonymity because of potential future legal actions, said the state was calculating its potential losses.

“We are deeply concerned and we are carefully analyzing all of our options,” the official said.

Anne Simpson, a portfolio manager at the California Public Employees’ Retirement System — the nation’s largest pension fund — said that the fund’s officials “are sifting through the impact, but there certainly is an impact.”

In Baltimore, the city had Libor-based interest rate swaps on about $550 million of bonds, according to the city’s financial report from 2008, the central year discussed in the lawsuit. The city’s lawyers have declined to specify what they think Baltimore’s losses were.

The city solicitor, George Nilson, said that the rate manipulation claims meant that the city lost out on money when it needed it the most.

“The injury we suffered during the time we suffered it hurt more because we were challenged budgetarily,” Mr. Nilson said. “Every dollar we lost due to illegal conduct was a dollar we couldn’t pay to keep open recreation centers or to pay police officers.”


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