New York Judge Orders Release of Hidden Documents

This is just the beginning of what I have been predicting for 10 years. When the public finds out that the government itself is addicted to the false scheme of securitization — and that this has led to abandonment of policies and rules of law that have continued to depress the U.S. economy — the “movements” of Sanders and Trump will look like garden parties.

The mortgage loan schedules, assignments, and endorsements are all pure fabrication, illusion smoke and mirrors. This is why 10 years ago the banks were denying the existence of the trusts. They created a void between the investors and their money on the one hand and the homeowners and their homes on the other. They stepped into the void acting as principals when they were in fact rogue intermediaries.

“In the discovery battle in these suits, the government’s pleas for secrecy were so extreme that it asked for, and received, “attorneys’ eyes only” status for the documents in question. This meant that not even the plaintiffs were entitled to see the raw papers. This designation is usually reserved for cases involving national security or proprietary business secrets.”

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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Matt Taibbi is one of the few journalists in existence who has actually taken the time to gain some real understanding of the financial crisis that was revealed in 2008-2009. I would only add that this is like the tobacco litigation where the states became addicted to revenue from the tobacco companies in order to pay their “fines.”
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There are many reasons why the Bush and Obama administrations moved to “save” the TBTF banks at the expense of the rule of law and on the back of homeowners who were lured into unworkable debt masquerading as mortgage debt.
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And the outcome of this leadership by example is that the mortgages are treated as valid encumbrances, the mortgage bonds are treated as viable assets on the balance sheets of banks, and the one source that could save the economy — consumers — is being cutoff from any form of relief.
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This is like the Fortune 500 companies who have decided that their stock is their product, and the higher their stock price the better they are doing — even if it means that they artificially inflating their stock price by purchasing the stock at high levels with company funds. It’s like oil companies who continue to value the oil in the ground as though they were going to suck it all out and make a profit when we all know that oil is largely going to be left intact and not subject to sale or use. The bubble is here and this decision by a federal judge forces the hand of the Obama administration to lift the veil of secrecy on the pact between the TBTF banks and the U.S. government.
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THE SIMPLE TRUTH: The “Trusts” were nothing but names on paper. And the paper allegedly issued by the “Trusts” was as worthless as the Trusts themselves. The investors advanced money under the belief that it would mean their money was going through a “pass-through” entity to be managed by the Trust; but the money never went to the trusts and the trusts never acquired any assets from any source, leaving the trusts at best “inchoate” and at worst nonexistent depending upon the state.
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The mortgage loan schedules, assignments, and endorsements are all pure fabrication, illusion smoke and mirrors. This is why 10 years ago the banks were denying the existence of the trusts.
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They created a void between the investors and their money on the one hand and the homeowners and their homes on the other. They stepped into the void acting as principals when they were in fact rogue intermediaries.
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And to cover their tracks they funded loans with money they stole from investors, thus stealing the money and the debt, while at the same time defrauding the borrower and the courts with false claims of ownership leading to the pinnacle of their scheme — a forced sale of property that in fact they had no interest in, based upon a loan that they never funded or acquired. Getting to that auction is the first legal document in the whole fabricated illegal chain of documentation — and it gives them the right to use that foreclosure sale as proof that everything that went before the sale was true and valid. It wasn’t.
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About Those 1099 and Other Tax Filings from Servicers and Banks …

The problem for everyone involved is that in reality the investors made nothing and merely received a portion of their own money as though it had come from the trust. But it didn’t come from the trust because the trust didn’t even have a bank account. If the banks had disclosed the truth of the matter the investors would have known this is a Ponzi scheme. Imagine what would happen if someone claimed sub S treatment when the corporation they had formed did no business, had no bank account and never had any business activity, never had any assets or liabilities and never had any income or expenses.

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER. HIRE AN ACCOUNTANT OR OTHER QUALIFIED TAX ANALYST

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Few people can say they understand the Internal Revenue Code (IRC), and far fewer understand the statute that gave birth to the idea of a REMIC pass through entity (REAL ESTATE MORTGAGE INVESTMENT CONDUIT). The banks lobbied heavily for this section because it left open doors that could be exploited for the benefit of banks selling the “investment products” to the huge detriment of (1) the investors who advanced money into what turned out to be a nonexistent trust, (2) borrowers who were coaxed into signing “closing” documents as though the party named on the documents was lending them money, and (3) the US Government and the taxpayers who ultimately picked up the tab for a “bailout” of banks who had lost nothing from the actual “loans” nor the “mortgage bonds” because the banks were selling them not buying them. The bailouts from the US Treasury and the Federal Reserve in reality only added to the pornographic profits made by the banks by rewarding them with payments on losses incurred by others.

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Follow the money. Because of tacit agreements with Bush and Obama administrations the IRS has been granting repeated safe harbor extensions to the banks and servicers who have filed documents that  say that a REMIC was formed. Such filings were mostly false.  The problem is that the money and the acquisitions of “loans” MUST be through the trusts in order to get pass-through treatment. Without pass-through treatment, (like a sub S corporation) the cash received by investors is taxable income — even the portion, if any, that is attributable to principal. But the banks have been telling investors that they are getting the interest payment that they signed up for — according to the Prospectus and Pooling and Servicing Agreement. What they are actually getting is their own money back from the investment they  thought they made.

[NOTE: The part attributable to principal would be taxable because the notes themselves, even if they were valid, are not the source of income to investors as far as the investors know. The source is supposedly the REMIC Trust — an entity that was created on paper but never used. In reality the source was a pool of dark money consisting entirely of investor money. But the banks and servicers are reporting to the investors that the money they are receiving is “income”from interest due from the REMIC Trust that never operated. The banks and services are obviously not reporting the cash as part of a Ponzi scheme. So the investors are paying taxes on the return of their own money. Hence the part of the payment from the “borrower” that has been designated as “principal” is reported as “interest” in reports to the investors. In reality the money from “borrowers” merely dumped into a dark pool along with all the other money received from investors.  The entire “loan closing” and subsequent foreclosures are a charade adding the judgment from a court of law that is treated as giving a stamp of approval for everything that preceded the judgment.]

The problem for everyone involved is that in reality the investors made nothing and merely received a portion of their own money as though it had come from the trust. But it didn’t come from the trust because the trust didn’t even have a bank account. If the banks had disclosed the truth of the matter the investors would have known this is a Ponzi scheme. Imagine what would happen if someone claimed sub S treatment when the corporation they had formed did no business, had no bank account and never had any business activity, never had any assets or liabilities and never had any income or expenses.

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The forms filed with the IRS are fraudulent. The 1099 issued to borrowers who avoided deficiency judgments are fraudulent because they come from entities that had no loss and never had the authority to collect or enforce. In reality if the true facts were followed there would be no taxable event for getting their own money back from their “investment.” But the way it is reported, the investors are getting “income” on which they owe taxes. The real taxes on real income should come from the banks that stole a large part of the money advanced by investors. It’s like Al Capone — in the end it was income tax that brought him down.

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Instead the investors are being taxed for interest received and are exposed to more taxes when they get money reported as “principal.” Neither the investors nor the borrowers should be paying taxes on any money or “benefit” they reportedly received (because there was no benefit). So the end result is that the banks made all the money, paid no taxes, and are taking a deduction for payments made to investors and for waivers of deficiency on loans they never owned.

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I have been telling borrowers for years to send the IRS a latter or notice in which they flatly state that the  form filed with the IRS was wrong, fraudulent and inoperative. The borrower received no benefit from the bank or servicer that filed it. Hence no tax is due. Thus far I have seen no evidence that the IRS is attempting to enforce the payment of income taxes from people who have challenged the the authenticity of the report. The IRS apparently does NOT want to be in the shoes of the banks trying to prove that the bank who filed the form owned the loan when they already know that the transaction was not actually a loan and that the “loan closing” transaction was the the result of the unauthorized and fraudulent use of investor money.

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Eventually the truth comes out. The problem for the banks is that they stole money and didn’t pay tax on their ill-gotten gains. Every time a “servicer” “recovers” “servicer advances” they are taking more money from investors because every “advance” was taken from a pool of money that consisted solely of investor cash. When they “recover” it they book it as return of capital rather than pure income which is what it really is, even if it is illegally obtained.

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If they admitted what it was then the banks would be required to pay huge sums in taxes. But they would also be facing angry investors who, upon realizing that every cent they received was their own money and not return on capital “invested” into a trust, would press claims and in many cases DID press claims and settled with the bank that defrauded them. So the banks and servicers are attempting to avoid both jail and huge sums in back taxes that would put a significant dent in the “deficit” of the U.S. government caused by the illegal and fraudulent activity of the banks.

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Mozilo Goes free

Someone needs to go back to the Declaration of Independence. Government exists only by consent of the governed. People are withdrawing their consent on a daily basis now. Where do you think that will lead?

see http://www.housingwire.com/articles/37308-countrywides-mozilo-reportedly-off-the-hook-for-all-those-subprime-mortgages?eid=311685972&bid=1437193#.V2RJhpGUqsU.email

Revenge is not the point. But justice is important. Mozilo was, in my opinion, just a bag man for the mega banks, making Countrywide into a giant holographic image of an empty paper bag.

DOJ is continuing to follow the rules set informally by the Bush administration and later ratified by the Obama administration in which it was assumed that the foxes would help “find” the chickens and put them back in the hen house. It was absurd to all of us who were even reasonably well versed in the language and culture of finance and economics.

Here is what we missed: a DOJ prosecution would have enabled the free flow of information back to the White House where decisions could be made about (1) what went wrong (2) who did it and (3) how to claw back trillions of dollars in ill-gotten gains. Instead both Bush and Obama went to the foxes to ask where the chickens were. The foxes still had chicken blood dripping from their mouths when they said “I don’t know but we’ll help you find out.” Both the Republican President and the Democratic President were clueless about finance. They had to rely on people who at least said they understood what was going on. They went to people from Wall Street who were fat, happy and getting more jovial with each passing month.

Here is what COULD have happened: the absence of a clear definition of a real creditor could have been exposed, making all the mortgages essentially unenforceable. The notes would have been unenforceable because they named parties who did NOT give the loan nor did those parties represent anyone who did give a loan. An announcement of this sort would have toppled the derivative market which is all based upon smoke and mirrors and would  have stopped the progression of the current derivative markets being used as a free zone for theft from investors.

The DEBT would still have been enforceable in favor of the investors, instead of the unused Trusts and other conduits and “originators.” But the real debt owed by homeowners would have been the value of the home, not the imaginary price of the home. All those crazy mortgage products were a cover-up for what the Wall Street banks were stealing from investors. The investors were not just some financial institution; they were managed funds for people’s retirement and savings. In a cruel irony, Wall Street cheated the same people against whom they were foreclosing. They stole the retirement money, covered it up in impossible loans, and then foreclosed saying they were doing so on behalf of the investors — i.e., the same people who were losing their homes, their pensions, retirement and their savings. In short Wall Street banks’ schemes resulted in the middle class suing itself for foreclosure, thus losing both their retirement, pension and savings and then their home.

Wall Street Banks could have been pushed aside as investors and homeowners figured out creative ways to remove the bad mortgages from the title chain and replace them with real mortgages that were based upon principal balances that were economically realistic. Neither the investors nor the borrowers knew that the banks had created a culture of false appraisals creating the illusion of a spike in land VALUE by manipulating the PRICE of  real property. Foreclosures could have been reduced to nearly zero. And the stimulus of maintaining household wealth would have made the recession a much milder affair. Instead there was an epic transfer of wealth from the vast population of people who were sucked into investing in the scheme to provide the food, and vast population of people who were duped into accepting the illusion of mortgage loans whose value was zero.

Somehow the media has concentrated on transfer of wealth as though it means the rich must give to the poor. But anyone with a high school degree can do this arithmetic — the transfer clearly went from the populous to the fraction of the 1% who had concocted this epic fraud. Our population went from middle class to below the poverty line while Mozilo and his counterparts made hundreds of millions of dollars at a minimum. Some made tens of billions of dollars that has not yet been revealed. All of that money came from the middle class and then the theft was rewarded with more trillions of dollars from the Federal government. Until we claw that money back our economy will remain forever fragile.

Mozilo earned nothing. He merely followed the instructions of people who had his complete attention. A civil or criminal prosecution would have led to the specific people whose orders he was following and an unraveling of a scheme that even Alan Greenspan admitted he didn’t understand. In short we would have known the truth and we would have had much greater trust in our Government institutions and our judiciary, who blindly accepted the nutty premise that the party suing for foreclosure wouldn’t be in court if there was no liability owed to them. Between the outlandishly cruel and biased criminal justice system and the tidal wave of foreclosures that never needed to happen, people have an historically low opinion of government and the Courts; and it seems that ordinary people have a greater understanding of what happened to the country at the hands of Wall Street banks than the officials who serve in the positions where such banks and such behavior is supposed to be regulated and stopped.

Bottom Line: As long as the Federal government fails to reign in illegal derivative activity (masking PONZI schemes and other illicit behavior) Judges will not reject the erroneous premise that homeowners got greedy and are deadbeats for failing to pay their debts. And as long as THAT continues, our economy cannot recover and our society will continue splitting apart. Someone needs to go back to the Declaration of Independence. Government exists only by consent of the governed. People are withdrawing their consent on a daily basis now. Where do you think that will lead?

Pretender Mender: Foreclosure Crisis Continues to Rise Despite Obama Team Reports

Despite various “reports” from the Obama Administration and writers in the fields of real estate, mortgages and finance, the crisis is still looming as the main drag on the economy. Besides the fact that complete strangers are “getting the house” after multiple payments were received negating any claim of default, it is difficult to obtain financing for a new purchase for the millions of families who have been victims of the mortgage PONZI scheme. In addition, people are finding out that these intermediaries who received an improper stamp of approval from the courts are now pursuing deficiency judgments against people who cooperated or lost the foreclosure litigation. And now we have delinquency rates rising on mortgages that in all probability should never be enforced. And servicers are still pursuing strategies to lure or push homeowners into foreclosure.

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

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Most people simply allowed the foreclosure to happen. Many even cleaned the home before leaving the keys on the kitchen counter. They never lifted a finger in defense. As predicted many times on this blog and in my appearances, it isn’t over. We are in the fifth inning of a nine inning game.

Losing homes that have sometimes been in the family for many generations results in a sharp decline in household wealth leaving the homeowner with virtually no offset to the household debt. Even if the family has recovered in terms of producing at least a meager income that would support a down-sized home, they cannot get a mortgage because of a policy of not allowing mortgage financing to anyone who has a foreclosure on their record within the past three years.

To add insult to injury, the banks posing as lenders in the 6 million+ foreclosures are now filing deficiency judgments to continue the illusion that the title is clear and the judgment of foreclosure was valid. People faced with these suits are now in the position of having failed to litigate the validity of the mortgage or foreclosure. But all is not lost. A deficiency judgment is presumptively valid, but in the litigation the former homeowners can send out discovery requests to determine ownership and balance of the alleged debt. Whether judges will allow that discovery is something yet to be seen. But the risk to those companies filing deficiency judgments is that the aggressive litigators defending the deficiency actions might well be able to peak under the hood of the steam roller that produced the foreclosure in the first instance.

What they will find is that there is an absence of actual transactions supporting the loans, assignments, endorsements etc. that were used to get the Court to presume that the documents were valid — i.e., that absent proof from the borrower, the rebuttable assumption of validity of the documents that refer to such transactions forces the homeowner to assume a burden of proof based upon facts that are in the sole care, custody and control of the pretender lender. If the former homeowner can do what they should have done in the first place, they will open up Pandora’s box. The loan on paper was not backed by a transaction where the “lender” loaned any money. The assignment was not backed by a purchase transaction of the loan. And even where there was a transfer for value, the “assignment turns out to be merely an offer that neither trust nor trustee of the REMIC trust was allowed to accept.

All evidence, despite narratives to the contrary, shows that not only have foreclosures not abated, they are rising. Delinquencies are rising, indicating a whole new wave of foreclosures on their way — probably after the November elections.

http://www.housingwire.com/blogs/1-rewired/post/31089-are-we-facing-yet-another-foreclosure-crisis

http://www.newrepublic.com/article/119187/mortgage-foreclosures-2015-why-crisis-will-flare-again

http://susiemadrak.com/2014/08/25/here-comes-that-deferred-mortgage-crisis/

CBO: principal reduction best for economy

Three cheers for Chris Hayes on MSNBC. In his new show, ALL IN, last night he reported and editorialized on the mistakes of giving banks relief and “screwing” homeowners since 2008. On his show he had Elliot Spitzer who took the administration to task for not doing something before this time. And to top it off DeMarco, the head of the former government sponsored entities (GSE), who has single-handedly blocked principal reduction is being removed and his replacement is an ardent consumer advocate currently a Representative from North Carolina. Things are changing.

The Congressional Budget Office is accepted as a non-partisan agency which has torpedoed both Democratic and Republican proposals on the economy. Upon request from Congress, the CBO studied the mortgage and foreclosure market and concluded that principal reduction should be the keystone of policy for Fannie and Freddie because it is a win-win that will return money to the taxpayers, spur the economy with an fiscal stimulus with a program that costs nothing, increasing GDP and employment. The CBO unequivocably recommended immediate implementation of large-scale reductions in mortgage principal.

The momentum is growing for the reduction of household debt just as this blog, numerous economists and financial experts have been virtually demanding. Iceland has proved the point. We have there a live experiment. Iceland has adopted a policy of continual reduction of household debt. The result was a healthier economy growing at a higher pace than any other country hit by the world- wide recession because consumer wealth, confidence and earnings increased allowing for consumption of goods and services that are in sharp decline in the U.S. and Europe. And the banks in Iceland are healthier and better regulated than at any time before the crash.

It is clearly a win- win situation for all stake holders. All this is providing fuel for the policy of principal reduction in household debt, including mortgages, forcing the banks to eat the difference. Of course Iceland also jailed the bankers who created the conditions that caused the Iceland economy to crash n 2008. Now you wouldn’t know it ever happened — but only if live in Iceland. Policy experts here and the CBO that measures past, present and future effects of economic policies are now moving away from the disastrous European experiment in reduced spending (“austerity”) which kicked the Euro economy when it was already down.

This means that homeowners will fight even harder to stay alive while the new policies go into effect and the right thing is done for consumers and homeowners in particular, that will provide trillions in fiscal stimulus for the economy with little negative impact on the banks who were using other people’s money to fund the mortgages, suffered no loss in mortgage defaults and only reported losses on bogus mortgage bonds backed by mortgage loans, which in turn were guaranteed by Fannie and Freddie 90% of the time. Those GSE entities under a single Federal Agency now guarantee or own more than 90% of all U.S. mortgages.

The remaining correction in describing the mortgages that were supposedly filed on record is that the mortgages were for the most part unenforceable, as is consistently alleged by investor lawsuits against investment banks that created and sold the bogus mortgage bonds AND that the “reduction” is really CORRECTION to adjust for fraudulent appraisals on which homeowners, the government and investors relied.

For the first time the reception of homeowners has changed from deadbeat to the ultimate resource to restore economic growth and who were screwed worse than anyone in the criminal enterprise that Wall Street called “securitization.” There was no securitization. Wall Street banks put the money in their own pockets instead of funding the so-called asset pools, “trusts” and other special purpose vehicles that the investors belied was receiving their money. The paperwork is all a sham from origination, where the “lender” never loaned a penny through assignments that conveyed nothing and were completely unsupported by value or consideration.

CONGRATULATIONS TO THE SOLDIERS IN THIS WAR AGAINST OPPRESSION OF THE AVERAGE CITIZEN.

Foreclosure Review Process Handed Over to the Banks

CHECK OUT OUR DECEMBER SPECIAL!

What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment: Along with members of Congress and millions of homeowners I remain deeply disappointed in the failure of the Obama administration to grapple with the mortgage meltdown. The current path will lead to more of the same and it never does anything but escalate when somebody gets away with theft, fraud and PONZI schemes.

The prior so-called “review” process involved people who were neither independent nor skilled nor trained to find wrongful practices and the damage caused by those wrongful practices. They were given inadequate information by the banks who continue to hide the fake securitization scheme and PONZI scheme.

The agencies are complaining that it takes too long to process the review. Let’s see. If John Jones was foreclosed by somebody who had no right to do so on a loan that was unsecured and paid down to zero, and then he was evicted, just how long is too long for the agency to slam the offending bank? Are you kidding? What kind of double-standard are we setting up here? If I do it, I go to jail. But if a bank does it then it is an error and here is $2,000 for your trouble. Now under the new settlement agreement, if I do it, the agency is telling me to determine whether I committed a crime or civil theft. Yeah, I’ll get right back to you on that.

Obama and his administration continue to buy into the bank myth that these were bad lending practices instead of being intentional acts of fraud, theft, forgery and fabrication. They still think the loan receivables are “out there” somewhere but they have no evidence to substantiate that belief because there isn’t any. Those loan balances were paid down long ago.

The plain truth is right in front of them and there is no good reason to say that this task is too onerous for the regulators so we are just going to turn it over to the banks that were guilty of the wrong-doing. Does ANYONE really think that a bank is going to review its files and declare that a terrible injustice has been done?

Everything is tied to this mortgage mess. Consumers have been slammed with most of their wealth siphoned off by banks who were acting intentionally to screw the pension funds and the people who rely on those pension funds. The loan balances, if adjusted to reflect payments by insurance, credit default swaps and bailouts — all promised to the investors — are far less than anything demanded and in many cases are zero.

Nobody wants to give a windfall to the homeowner and nobody wants to give a windfall to the banks. But our government has decided that between the two, the banks ought to get it in order to preserve stability in the financial system. The stability of the financial system is, in my opinion, secondary to the stability of our economy. Our debt and deficits collectively and individually are all tied to the wrongdoing of about 2 dozen banks.

And I strongly disagree with the notion that the break-up of the mega banks will destabilize the financial system. When the dust clears, we simply won’t have banks that are too big to regulate, as shown in this review process. There is no evidence that clawing back the money for the pension funds that invested in fake mortgage bonds issued by fake investment pools will destabilize anything except the lives of some people who really need to go to jail.

Quite the contrary, putting the money back where it belongs with the pension funds and doing an accounting for the money in and the money out related to these mortgages will produce mortgage balances, without “forgiveness” that are far lower than demanded in foreclosure or end of month statements. Underwater homes will be a thing of the past, and mortgage payments can be adjusted to the real balances enabling the consumers in a consumer driven economy to spend.

Justice is more in this case than simply doing the right thing. It is a fiscal stimulus that does not cost one dime. If we can spend a trillion dollars on a war for the security interests of our country, then why can’t we spend 1/10 of 1% of that amount on following the money trail and determining the identity of the stakeholders, the amount of their stake and the terms of repayment?

The precedent here is dangerous. If “I am too important to go to jail” actually works as a defense, then we have changed the rule of law in ways that will haunt us for hundreds of years.

Agencies Give Up and hand the Mortgage Mess Over to the Banks to Resolve

Major Economists Tell Obama to Reduce Mortgage Debt

What’s the Next Step? Consult with Neil Garfield

CHECK OUT OUR NOVEMBER SPECIAL

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment: I think Obama is stuck on the idea that correction of loans to reflect their true value is a gift to undeserving people — because that is the message he is getting from Wall Street. I have demonstrated on these pages that correction of loan principal is not a gift, it is paid in full, and even if you disagree with indisputable facts, it is the only practical thing to do as Iceland has clearly shown, with the only growing economy in Western nations.

Now we find out that Obama was given exactly that advice 18 months before he won reelection. Let’s see if he does it. He sought got the advice of seven of the world’s leading economists who all agreed that reduction of household debt — and in particular the dubious mortgage debt that Wall Street is using to make more and more profit, is something that the administration should do right away.

We can only guess why the administration has not done it, but I know from background sources that this ideological battle has been going on in the White House since Obama was first elected. What is needed is for Obama to take the time to get to know the real facts. And those facts show clearly that (1) the foreclosures that already were allowed to proceed did so on imperfected liens which is to say the right to foreclose was absent regardless of the amount and (b) the principal claimed as due on those loans was (1) not due to the people who claimed it and (2) far above the real amount that was due because the banks stole the money from insurance, credit default swaps and federal bailouts from investing pension funds and other managed funds.

The banks claimed ownership of loans they neither funded nor purchased and also had the audacity to claim the losses and then overstated the losses by a factor of 10. The insurance companies and counterparties on the credit default swaps, along with the federal government, paid the banks who didn’t have a dime in the deal and therefore lost nothing. The investors received small pittances in settlements when they should have received from their investment bankers (agents of the investors) the money that was received.

An accounting from the Master Servicer and the trustee or manager of the “pools” would clearly show that the money was received and not allocated in accordance with the contrnacts nor common law. As a result we are left with a fake loss that was tossed over the fence at the investors. Had they allocated the gargantuan payments received from multiple insurance policies on the same bonds and loans, the principal would be reduced anyway.

This is why I keep saying that you should use Deny and Discover as  your principal strategy and direct it not just to the subservicer who deals directly with the homeowner borrowers but also the Master Servicer who deals with the subservicer, the insurance companies, the counterparties on credit default swaps, and the federal government.

Following the money trial will in most cases show that the lien recorded was imperfect and not enforceable because the party who was designated as the lender was not the lender, hence “pretender lender.” Following this trail from one end to the other and forcing the books open will show that most loans were table funded (predatory per se as per TILA reg Z) — and not for the benefit of the investors, but rather for the benefit of the bankers (a typical PONZI scheme).

In an economy driven by consumer spending, the reduction in household debt will drive the economy forward and upward. The real total in many cases is zero after credits for insurance, CDS, and federal bailouts. If you leave the tax code alone, and let the “benefit” be taxed, the federal government will receive a huge amount of taxes that the banks evaded, but they would get it from homeowners, whose tax debt would be a small fraction of the mortgage debt claimed by the banks.

The problem can be solved. It is a question of whether the leader of our nation studies the issues and comes to his own conclusions instead of being led on a string by Wall Street spinning.

Failure to act will produce a wave of strategic defaults because like any business failure, the “businessman” — i.e., the homeowner — has concluded that the investment went bad and they will just walk away — resulting in another windfall to the banks who after cornering the world’s supply of money will have cornered the world’s supply of real estate.

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