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The pretender lenders have lots of problems. But there is one HUGE problem that is floating up to the surface that could cost them somewhere between $650 BILLION and perhaps three time that amount. The Dodd-Frank Bill has a requirement that the pretender lenders keep a 5% interest in the securitized loans. It doesn’t sound like much. The problem they have is that virtually none of the loans have actually been securitized YET. That’s why they have the paperwork mills working so hard. So the securitization of any of these loans might be deemed incomplete until somehow they come up with paperwork scheme that is acceptable to the courts.
The problem is that under the finance reform bill that was passed and is now law the pretenders (investment banks) probably would be required to come up with 5% of the deal on completion of each one. Oops. So instead of concentrating on the individual loan that is in dispute, they have to seal up the deal on all loans that are claimed as part of the pool and relate it (CUSIP) to the issuance of bonds to investors. Let’s forget about the fact that investors are not going to accept loans that do not qualify under the securitization documents. Let’s say they can do it, force it through or slip it by a Judge whose mind is crumpled by the complexity of the scheme times 10 for the complexity of how they varied their practice from the written scheme in the securitization documents.
THAT would mean the pretenders would have to cough up 5% of the deal. “The deal” collectively is estimated at a minimum of $13 trillion. 5% is $650 BILLION. If they don’t complete the deal, they don’t have a loan to enforce and there is no creditor because the loan originator wasn’t the creditor and now neither is anyone else. Remember the bonds were sold first; THEN the loan applications were accepted and the investor money was matched up with homeowner deals.
But the problem is worsens. Only a fraction of the total mortgages are in foreclosure, but the successful conclusion of the securitization process would require 5% from the investment banks on all the loans in every pool that has even one foreclosure in it. So on a $200,000 foreclosure of a loan made from investor funding (i.e., the real lender) the investment bank could be required to cough up 5% of the total deal. Each deal averaging around $2 billion, that would mean that to foreclose on a $200,000 mortgage, their regulator is going to insist they come up with $100 million, accepting 5% of the risk. The effect on their reserve capital will be, well, gargantuan.
Apparently this scenario is not as far fetched as you might think, because along with the MERS initiative, required because a majority of all mortgages name MERS, a non-existent nominee party with no interest in the deal, the pretender lenders are drafting legislation and pushing it on capital hill for an exemption. The exemption would effectively pardon them for their sins, exempt them from the 5% requirement and continue screwing the country by sucking all the capital out of it. The really interesting thing about this is that after all the money the pretenders spent electing people into congress and state houses, some of the bell ringers recognize two problems and are currently back-peddling away from the very proposals they promised when they took Wall Street money.
It seems that any relief granted to the banks would be unpopular across all demographics. These newbies and oldies want to get re-elected. And now they are also running into a second problem which is the ultimate third rail of American politics — states’ rights (remember that thing we call the Civil War or the War of Great Northern Aggression?) Apparently a lot of bell ringers and newcomers are concerned about the effort at federal preemption of property rights within the states, an area that has long been verified, ratified and acknowledged as exclusively subject to state legislatures and state courts.
It remains to be seen how this will all play out — whether Wall Street will maintain its death grip on government or if their 15 minutes is up — AGAIN.
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud |
Anonymous,
Now a huge number of filings are occurring at the county recorders office for certain “Trade-Names” of defunct corporations, or at least ones where all assets were bought out in ‘bankruptcy-remote’ transactions.
Now, given that the company who’s trade name it is has ceased to function for at least a couple of years, and that these 2010 document creations and ‘signings’ SHOULD require more that a Power of Attorney to sign something after the fact, WHY are these not generating some form of class action or intervention by ANY of the state’s Attorneys General?
Concerned
Yes – know that – have been looking at chain for securitization for quite some time. And, not only were loans removed – they were “traded.” There are no public records to demonstrate removal or trading or derivative contracts..
But, I want to know why courts are ignoring homeowners right to know their current creditor.
Anonymous,
There are reports that, in looking at the Lehman Brother’s records with the Trusts, that mortgages were shuffled in and out of the Trusts constantly, especially to make the quarterly profits look better for the parent company.
The courts are not viewing these trusts as they REALLY worked, let alone even viewing them in the way they were actually intended to work (which STILL had legal issues).
WORST PRESIDENT! DO NOT EXPECT REELECTION IN 2012. WILL TAKE AWAY YOUR RIGHTS IF YOU ALLOW IT! NO PARDON FOR MERS!
President Barack Obama defended his administration’s beleaguered foreclosure-prevention initiatives on Wednesday by arguing that more aggressive steps to assist homeowners might help people who don’t deserve to be helped.
Asked if his administration had done enough to stem the foreclosure crisis, Obama opted not to address the foreclosure fraud scandal that has forced banks to temporarily halt home repossessions across the country. Instead, he claimed that the government’s efforts had stabilized the housing market, and argued that the “biggest challenge” was to make sure speculators and deadbeats didn’t take advantage of the government’s help.
“The biggest challenge is how do you make sure that you are helping those who really deserve help and if they get some temporary help can get back on their feet, make their payments and move forward and stay in their home versus either people who are speculators, own second homes that they really couldn’t afford because they’d gotten a subprime loan, and people who through no fault of their own just can’t afford their house anymore because of the change in housing values or their incomes don’t support it,” Obama said during a roundtable discussion with a handful of progressive bloggers at the White House.
Lucy
Reading again – it appears that the author is interpreting Mr. Obama’s comments and concluding that Mr. Obama’s conclusion for “biggest challenge” is speculators and deadbeats. It is the author’s interpretation of Mr. Obama’s comments. Nevertheless, Mr. Obama’s quoted referral to “temporary help” – refers to those who are not paying (i.e. – a deadbeat). Temporary help to pay inflated mortgage loans on inflated home appraisals – is not a solution- my own words – to get people paying their debt (in full) again. Loan mods only extend the terms of the mortgage loan so that the borrower can have extra time to pay what is supposedly owed in full.
Lucy
Think he did – quote “biggest challenge was to make sure speculators and deadbeats didn’t take advantage of the government’s help.” Definition of “deadbeat” is “One who does not pay one’s debts.” .While the “debt” is certainely in question – Mr. Obama is referring to foreclosures – and, in his mind – “those who do not pay”.
And,, we have to ask – what government help is Mr. Obama referring to?? Loan mods? – this is secondary fraud – principal reductions? non-existent. Pres. Obama also refers to “temporary help” — temporary help is just help to make sure that the borrowers pay the false debt – in full!!
Heard bond dealers talking today. Kathleen Hayes – Bloomberg talk show host – actually stated that valid loan mods could help the economy!!! Bond fund managers whined – “but we want the yield we promised our investors.” Bond managers failed to say that once home goes into foreclosure – there are NO MORE “bond yields” – all that is left is foreclosure proceed recoveries that are not recouped by the bond yield investors.
But, again, securities DO NOT CHANGE hands when the income to MBS ceases to exist. Rather, foreclosure recovery proceeds are transferred by derivative contracts to unidentified derivative contract holders. Once those derivative contract holders receive – or attempt to receive – their proceeds – the whole loans – which the bank converted to securities – are written off by the bank. Bank must allow those derivative contracts to be executed as agreed to by the bank – even though the banks do not receive the foreclosure recovery proceeds.. Cannot write-off the whole loan asset securities until the derivative contracts are executed and completed. And, this is why the government wants the foreclosures to proceed.
The conflict is this – borrowers have a right to know their creditor – and the income security holders are no longer the creditor once the loan is in default and the derivative contract holder is attempting to effectuate the derivative contract. The government is protecting those derivative contract holders – and, in the process, is ignoring the borrowers right to know their current and actual creditor to whom the foreclosure proceeds will be paid.
This is something that is NOT being addressed in courts – and should be addressed by higher courts. Derivative contract holders are NOT security holders – and not part of the original “set-up” off-balance sheet trust.. Courts have to start addressing the identity of the current creditor – and in compliance with the TILA May 2009 Amendment.
No one – including courts – can even examine the conflict as to false attachment to named trust – until the derivative contracts are exposed and accounting is provided. Government is preventing this – and courts are complicit.
DERIVATIVES are NOT SECURITIES.
I can catch them. I’m a former Legislative Aide who owned a house that was wrongfully foreclosed on in WA State. I can analyze legislation and write about it. But my blog is new.
For those with more established blogs, please include the bill number of the bill you are analyzing. OpenCongress.org will pick up blog posts that refer to the bill number.
http://www.opencongress.org/
[…] the article here: 5% SOLUTION: BANKS FRANTIC FOR PARDON (EXEMPTION) « Livinglies's … Tags: analysis, banks, combo, documents, posted-on-november, report, securitization, […]
I like the idea of petitions, If this website comes up and it should be soooon, post it here in BOLD so we can all join in. We are power in numbers here. And more are viewing each day.Neil is an ongoing support for all of us and we seem to be sticking together. That’s the glue that’s going to get things done.We are lobbyists, we help the cause everyday right on this site.
Neil- Thanks for your response.
I will look in to it. I own several properties and have been reading your site for 3 years and it has helped me Pro Se turn some attorneys hair grey, catching the fraud in filings and forcing fair dealing. I will look in to how to start a coalition group or site. We need power in numbers.
IF Livinglies Readers could pelase post any Foreclosure Defense Blogs around the country that need to be contacted….I will go to work.
Call it:
THE FORECLOSUREGATE COALITION
* NONPROFIT
* Membership Registry of emails to be able to start a massive “UNIFIED” movement of our displeasure to fight Legislation and the Pretend Lenders.
IF anyone has direct contact with these blogs, let me know, so we can start linking all of fighter toegether from living lies and others;
http://stopforeclosurefraud.com/
http://mattweidnerlaw.com/blog/
http://www.foreclosurehamlet.org/
CATCH THEM: GOOD IDEA. BUT HOW ABOUT YOU START THE SITE AND I’LL PROMOTE IT. I’M SURE THE OTHER MAJOR BLOGGERS WOULD PROMOTE IT TOO.
The word “deadbeat” is not used. The meaning of ” might help people who don’t deserve it” is crystal clear. That is politico speak for “deadbeat”.
I bet he was speaking of the 90 year old lady I just read about that was homeless after Foreclosure. She thought she had taken out a car loan…
“It seems that any relief granted to the banks would be unpopular across all demographics.”
Damn right! “Unpopular” to say the least. As grandpa used to say, “They made their own bed, now let them lie in it.”
Neil- Please start a petition opposed to the Forgiving of Robo signers and the Fraud paperwork legislation your have been writing about! Please?
Neil- what about also starting a group for your website and other fighters; that is a coalition of members that can join forces with other blog fighters and attorneys, other big websites that are fighting like you are below. THEN we have strength in numbers and can start a movement…or become our own Lobbyists.
http://stopforeclosurefraud.com/
http://mattweidnerlaw.com/blog/
Did Obama really call us “deadbeat”
This is the article that everyone was referring to, so can someone clarify for me how he called us “deadbeats”?
Arthur Delaney
Arthur Delaney
arthur@huffingtonpost.com | HuffPost Reporting
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Obama: More Aggressive Anti-Foreclosure Efforts Would Help People Who Don’t Deserve It
First Posted: 10-28-10 04:10 PM | Updated: 10-28-10 05:15 PM
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WASHINGTON — President Barack Obama defended his administration’s beleaguered foreclosure-prevention initiatives on Wednesday by arguing that more aggressive steps to assist homeowners might help people who don’t deserve to be helped.
Asked if his administration had done enough to stem the foreclosure crisis, Obama opted not to address the foreclosure fraud scandal that has forced banks to temporarily halt home repossessions across the country. Instead, he claimed that the government’s efforts had stabilized the housing market, and argued that the “biggest challenge” was to make sure speculators and deadbeats didn’t take advantage of the government’s help.
“The biggest challenge is how do you make sure that you are helping those who really deserve help and if they get some temporary help can get back on their feet, make their payments and move forward and stay in their home versus either people who are speculators, own second homes that they really couldn’t afford because they’d gotten a subprime loan, and people who through no fault of their own just can’t afford their house anymore because of the change in housing values or their incomes don’t support it,” Obama said during a roundtable discussion with a handful of progressive bloggers at the White House.
“And we’re always trying to find that sweet spot to use as much of the mone