EDITOR’S COMMENT: Let’s assume that the banks are right, that the foreclosures are all legal, and that any errors are legally and properly correctable. And, for the sake of argument, let’s also assume that the homeowners are to blame for the financial crisis — that a viral fad spread throughout the country and the world wherein the borrower in 60 million transactions lied and deceived the lenders who were caught blindsided by the acts of greedy wannabe’s who were trying to make a fast buck by flipping homes and are now trying to wriggle out of their predicament with a fancy dance of legal technicalities. And let’s further assume that all the homeowner defenses proposed here and else where lack any merit whatsoever.

We are left with 2 glasses of water sitting on opposite ends of a board. One glass is filled to the top and spilling over with excess and the other is nearly drained with nothing left. The board is sitting at the edge of a cliff and the full glass is on the end of the board just barely protruding from the edge of the cliff. The empty glass is sitting all the way at the other end moving slowly toward the full glass because the board is starting to tip toward the chasm beyond the cliff from the sheer difference in weight of the glasses. The outcome is obvious. Both glasses and the board are going to fall into the abyss shattering the glasses, dispersing the water, and splintering the board into thousands of pieces. What if we wanted to stop the glasses and the board from falling? What would you do?

The full glass is the financial sector that is brimming with money that was once in the hands of government, taxpayers and homeowners. It’s full both because we are assuming that they played the game fairly and won, but also because they made some bad bets and the government decided they were too big to fail. Thus the decision was made that regardless of blame, the biggest risk takers who claimed the biggest losses were given money under the theory that it would save the economy from collapse and save our nation’s standing in the world. Let’s further assume that the decision to give the banks the money they claimed they lost was the right one and that the reasoning was right — that it stopped the imminent collapse of the nation’s economy and preserved our standing in the world.In other words the receiving banks were in fact too big to fail and the bailout was the only way to save the situation regardless of ideology, philosophy or theory.

We are still left with the two glasses perched at the edge of the cliff moving inevitably and inexorably toward the fall into the abyss. Without adding weight to the other glass and moving it back toward the other end of the board to gain more leverage, the weight of the full glass will cause the board to tip over the cliff. The board, if you haven’t guessed, is our system of government, our society and our economy.

If the only answer to stopping the board from tipping was to put some of the water from the full glass and some of the spill off from the excess water from the spill off back in the empty glass where it came from, under what theory of government would we not do that? What is good for the goose is good for the gander. Giving every benefit of every doubt to the banks we bailed them out simply because the of the practical reality that they were too big to fail, even though we were made as hell at them over what they had done. We knew they were wrong but we helped them anyway because it was the only practical thing to do.

I put forward the following proposition: that the homeowners, local and state government and the federal governments are too big to fail. Our economy has always been driven by consumer spending and now consumers have negative net worth, no credit, no savings, and not enough income to survive without 2 or more jobs in each household. As it stands, regardless of the reason, consumer spending in this country is not going to recover measurably without a change in their ability to spend. We are about out of paper and ink to print more money to give it to them so there must be some other way. It turns out there is another way.

By shifting the losses back to the financial sector from which they came, the government can shift the balance of wealth, spending and and consumer spending, without spending one dime. Adjusting the correcting the mortgage terms on 60 million transactions to reflect the current reality of the fair market values of homes and the awkward loan to value ratios, homeowners can be returned to some measure of equity or at least hope of equity, both of which are lacking under current circumstances. This is going to happen whether it is done purposely or not. The board will not tip. The glasses will not fall — because either the branches of government are going to come to grips with reality and govern and guide the shift of wealth or it is going to happen chaotically as more and more people simply stop paying their mortgage.

The homeowners are too big to fail — having a claim to more than $13 trillion in wealth (nearly the entire GDP of this country as it is currently measured). They are far bigger than the banks although not bigger than the shadow banking system we allowed the banks to create. In real money (not nominal value of derivative “currency”) the homeowners are bigger than anyone. So if you want the board to stop tipping toward disaster, and save BOTH the full glass and the empty glass, we need to recognize that the property is not worth and will never be worth the obligation claimed to be owed on it. “Do the right thing” is not just a philosophical idea. It is a practical solution to a practical problem. One way or the other, most homeowners are going to either get the modifications they seek or they will walk away from the homes. The process can be orderly or it can be chaotic but it cannot be stopped. If it were stopped, both glasses, all the water, and the board itself would be gone forever.


November 19, 2010

Hiding From Reality


However you want to define the American dream, there is not much of it that’s left anymore.

Wherever you choose to look — at the economy and jobs, the public schools, the budget deficits, the nonstop warfare overseas — you’ll see a country in sad shape. Standards of living are declining, and American parents increasingly believe that their children will inherit a very bad deal.

We’re in denial about the extent of the rot in the system, and the effort that would be required to turn things around. It will likely take many years, perhaps a decade or more, to get employment back to a level at which one could fairly say the economy is thriving.

Consider this startling information from the Pew Hispanic Center: in the year following the official end of the Great Recession in June 2009, foreign-born workers in the U.S. gained 656,000 jobs while native-born workers lost 1.2 million. But even as the hiring of immigrants picked up during that period, those same workers “experienced a sharp decline in earnings.”

What this shows is not that we should discriminate against foreign-born workers, but that the U.S. needs to develop a full-employment economy that provides jobs for all who want to work at pay that enables the workers and their families to enjoy a decent standard of living. In other words, a resurrection of the American dream.

Right now, nothing close to that is happening.

The human suffering in the years required to recover from the recession will continue to be immense. And that suffering will only be made worse if the nation embarks on a misguided crash program of deficit reduction that in the short term will undermine any recovery, and in the long term will make true deficit reduction that much harder to achieve.

The wreckage from the recession and the nation’s mindlessly destructive policies in the years leading up to the recession is all around us. We still don’t have the money to pay for the wars that we insist on fighting year after year. We have neither the will nor the common sense to either raise taxes to pay for the wars, or stop fighting them.

State and local governments, faced with fiscal nightmares, are reducing services, cutting their work forces, hacking away at health and pension benefits, and raising taxes and fees. So far it hasn’t been enough, so there is more carnage to come. In many cases, the austerity measures are punishing some of the most vulnerable people, including children, the sick and the disabled.

For all the talk about the need to improve the public schools and get rid of incompetent teachers, school systems around the country are being hammered with dreadful cutbacks and teachers are being let go in droves, not because they are incompetent, but strictly for budget reasons. There was a time when the United States understood the importance of educating its young people and led the way in compulsory public schooling. It also built the finest higher education system in the world. Now, although no one will admit it publicly, we’ve decided to go in another direction.

In New York City, for example, Mayor Michael Bloomberg’s choice to run the public school system is Cathleen Black, a wealthy corporate executive with no background in education whose children attended expensive private schools. Mr. Bloomberg has asserted that Ms. Black’s management expertise will be a boon to the city’s public school children. But the truth is that Ms. Black, if she gets a necessary waiver for her new job, will be presiding over budget cuts that can only hurt the schools. As part of a proposed austerity budget, the mayor is planning to eliminate the jobs of thousands of public school teachers over the next two years. Take that, kids.

We’ve become a hapless, can’t-do society, and it’s, frankly, embarrassing. Public figures talk endlessly about “transformative changes” in public education, but the years go by and we see no such thing. Politicians across the spectrum insist that they are all about job creation while the employment situation in the real world remains beyond pathetic.

All we are good at is bulldozing money to the very wealthy. No wonder the country is in such a deep slide.

We don’t even seem to realize how deep a hole we’re in. If student test scores jumped a couple of points or the jobless rate fell by a point and half, the politicians and the news media would crow as if something great had been achieved. That’s how people behave when they’re in denial.

America will never get its act together until we recognize how much trouble we’re really in, and how much effort and shared sacrifice is needed to stop the decline. Only then will we be able to begin resuscitating the dream.


13 Responses

  1. Dear Gregory Bryl, Esq.:

    Respectfully, your statements that there is no administrative process, are in part in error.

    The T.I.L.A. 3-yr extended-rescission letter on a refinance is an administrative process.

    So is a QWR request.

    So is an F.D.C.P.A. credit dispute; so are letters demanding correction of various wrongs, as well as administrative letters demanding the name(s) of the real party in interest, and letters demanding the names of the investor pool owners, if any.

    I know four people who are still in their homes, over one year later, with the right combination of administrative letters to the pretender lenders. Puts pretenders such as One West on notice we are on to them and their lies. Some pretenders are smart enough, not to fall into their own lies trap, and further harass the damaged homeowner.

    Frankly, it sounds like we stepped on some monopolistic toes at times in your post.

    You are correct that SOME so-called administrative processes are questionable and dicey. Explain further in detail so we are aware & careful to do them right, or avoid.

    Livinglies is a 1st amendment, free-speech zone for Americans in this common fight.

    You are a fighter. Nevertheless, there aren’t enough of you to even dent the million wrongful, null foreclosures this coming year. The banks are gleefully using ‘law licenses’ to monopolize, neutralize, and contain the damages of the freely well-priced information shared here.

    Please respect the rest of us to debate any subject without condemnation. We need the truth through unhindered truthful debate, now. We literally are on the Sinking Titanic at 2:00 a.m.

    EMERGENCY – We need someone with mass-production skills to get this out cost-effectively to the public at large, probably in large part administratively.

    There are not aren’t enough court judges either.

    Quality multiple Administrative letters in short term, and….

    State Executive Orders Now!

  2. If we could just get one of the mega banks into receivership, it would start to turn the tide. Lots of ears throughout the world would perk up, and, maybe, the USofA would start to get some of its respect back. The war in Afghanistan has to go as well as at least half of the military bases we have all over the world. The Soviet Union fell in large part because of currency problems and problems paying their army in Afghanistan. Be careful! It could happen to us. If you think housing is bad now, wait until the currency crashes. I don’t think the mega banks and Wall Street realize that they have shot the golden goose–the middle class. This biggest of all crime sprees cannot go unpunished.

  3. Folks, there is no such thing as “administrative process.” This is some pseudo-legal gobbledygook that someone came up with during the foreclosure crisis to make a quick buck. Also, just because someone shows you a recorded “deed of full reconveyance”, don’t assume that it is a valid document. The moment that person stops making payments (and they still do, believe me), the bank will declare all the documents recorded by the homeowner a nullity and will foreclose just like with any other property.
    What’s worse, I’ve seen some bankruptcy judges declaring some such documents (e.g. appointment of substitute trustee by the debtor) outright fraud and stating on the record that it warrants criminal prosecution.
    It is frankly still a mystery to me how people selling the “administrative process” system still get away with it, especially in light of the unauthorized practice of law rules. I guess it’s just a matter of time.

  4. Dear PAM,

    I believe I understand what you may call “administrative” alternatives, however, having navigated that process several times, I must tell you it does not get you anywhere.

    If you send QWR’s, Validation letters, complaints, etc, that is all fine just to get you on the record and establishing some apparent effort on your part to get some answers and that is all you will accomplish. The bankers will not even bother to answer many times those letters and if they do they will tell you they do not care about your concerns and questions because they feel and know that they are above the law. Their arrogance and disdain for our troubles is just one more of the obstacles we need to overcome. For them to forge and fabricate evidence is a technical procedural mistake, for us it is a felony.

    It is not as simple as we would like for it to be. But believe me it is not impossible to get justice served on these criminals.

    RESPA, TILA, have no real teeth unless you are in court. Although the statutes are very clear and direct in many instances, the bankers and many courts feel that our RESPA and TILA claims are a real nuisance, that all you are trying to do is to GET A FREE HOUSE. And of course that is far from the truth. Just understand, the banksters have been very successful because they have usually faced people on the brink of bankruptcy and for them to allegedly prove that you allegedly owe them is rather easy, and for them to get some judge to side with them and not allow you to go deeper into the reality of it all is very common.

    The only progress I have personally seen is by aggressively pursuing the matter in the courts, by educating yourself enough to be very dangerous for the bankers, to be an activist for the truth, to increase the pressure at the local and federal level, to sue the hell out of these people and to grow titanium ovaries and testes.

    This blog site in particular is a treasure trove and an unselfish info sharing outlet. Make sure you interview several lawyers, look for people with consumer law experience, be aware of some lawyers that only deal with BK and advertise as consumer protection lawyers. Yes BK is an option and a very powerful tool, but there are also other legal venues you may benefit in exploring, of course always based on you personal circumstances.

    Although it may feel like is your own little battle, please do not forget that at this very moment there are over 4.5 million families who are struggling to keep their homes. It is not an individual battle, it is a war against our families, property and constitutional rights. We at the end of the day will need each other to legally defeat the enemy, the corrupt, criminals and thieves that work for WALL STREET and their hired whores.

  5. Neil’s editorial:
    We can’t have it both ways. Either this is a state issue or a Federal issue. If you’re going to Federalize it, it can be Federalized to either party’s advantage. So far, it looks to me like it’s the banks that are calling the shots at the Federal level, e.g., with the interstate notary bill and the retroactive MERS bill. On the other hand, the homeowners appear to be faring better with the States’ Atty Generals. So it looks to me like we ought to keep this away from the Feds.

    Sorry, not buying it. NY has the highest public school budgets in the nation, yet rates 49 in outcomes. If you want that kind of spending, you better be number 1 in outcomes, or vice versa. Ditto for public employees and their union members. Adding all these social service and dependency programs and the associated agencies and public employees that go with them over the decades is the equivalent to phony real estate appreciation creep: it ought not to have happened and it’s unsustainable. Period.

  6. I enjoyed reading your article and agree in theory. However the problem is that those who made all the money DONT CARE. The wealthiest “AMericans” DONT CARE they are American (besides the likely hood that many/most already have multiple citizenships AND out-of-USA property (too.) Moreover, most all at that level CAN aquire duel-citizenship and/or could live whereever they want. The “true” America never touches them! Now they also have the POWER to “control” the government (via lobhby etc) and they are NOT going to change the policies – and wil NOT SUPPORT those who would enact such a policy.

    Unfortunately that IS the problem – and thus although everything your article avers is obviously a reality THEY DONT CARE (most are already investing in the Chinese economy.) The system that must first be “fixed” is the USA lobby system and campaign financing policy – or there is no one listening to your issue who has the ability to change it.

    THAT is the true obsticle we must overcome – the people WITH the power to change the inevible crash DONT CARE. Its NOT hurting them – because THEY arent hurt if America (or Americans) crash.

    Bob Kennzington

  7. I am not in foreclosure, but I am interested in the prospect of pursuing an “administrative” process to challenge the banks legal status using another websites 90-day process and paperwork. Does anyone or Neil have any feedback about this? I realize there are different entities offering different programs and without naming names, I’d like to know whatever anyone has learned about the various programs before spending any money and time on it.

    You can email me at


  8. No one ever transfered the notes, bears stearns, mers and all the above , the in between , the outside, the inside, The Outside being the media siding for the banks, not reporting all the evidence, the Inside being the COP,FDIC,FBI,SEC,OCC,FTC, The Banking and commerce commission,our government is no longer for the people, stand by the people they are all self serving , blaming everything on what the Media wishes to tell. The real story is here with me, but the banks have money, money changes hands everyday with all the above, but some need to realize it was the people that put them in places and it’s gonna have to be the people,that taketh away.

  9. Countrywide and Bank of America published case.

    This could be an IMPORTANT development. It could mean proof that the securitized trusts were routinely NEVER consummated. That would mean Countrywide-cum-BOA legal actions being taken in the name of their securitized trusts lack “Standing” and or “Capacity”. Those actions would then likely be dismissed(hopefully with prejudice). It would also mean that MANY people who have already LOST their property under some circumstances could RECLAIM them. The foreclosures may be “void or voidable”.

    Countrywide Routinely Failed to Send Key Docs to MBS Trustees, B of A Employee Says
    Written on November 19, 2010 by admin
    Another American Banker article (subscription required) and some more quotes by Max.
    Countrywide, the mortgage giant that’s now part of Bank of America Corp., routinely didn’t bother to transfer essential documents for loans sold to investors, an employee testified.
    The testimony — which a New Jersey bankruptcy judge cited in dismissing a B of A claim against a debtor — could complicate attempts by the company to foreclose on soured loans that Countrywide originated and sold in better times.
    The B of A employee’s admission that the lender customarily held on to promissory notes could also undermine the industry’s position that document transfers to securitization trusts are fundamentally sound.O. Max Gardner, a North Carolina consumer bankruptcy lawyer who was not involved in the case, called the testimony “a major problem” for B of A, which acquired Countrywide, the country’s largest servicer of residential mortgages, in 2008.
    “These original notes were supposed to be transferred and delivered all the way up the line and for this witness to admit they were never transferred is pretty amazing,” Gardner said.“I’ve never seen this admitted anywhere.” …In a Nov. 17 ruling, Chief Judge Judith Wizmur of the U.S. Bankruptcy Court in New Jersey rejected Countrywide’s claim that it had standing to foreclose on a borrower who owed $211,202.41 on a Haddon Heights, N.J., home.
    Countrywide originated and serviced the loan.
    It securitized the mortgage in 2006 but failed to endorse or deliver the note and other related mortgage documents to the bond trustee, Bank of New York Mellon, the court found. (BNY Mellon had no comment on Friday.)Linda DeMartini, a supervisor and operational team leader in B of A’s litigation management department, testified that “the original note never left the possession of Countrywide,” and was instead transferred to the lender’s foreclosure unit, as shown by internal FedEx tracking numbers, according to the ruling.
    DeMartini “testified further that it was customary for Countrywide to maintain possession of the original note and related loan documents,” Judge Wizmur wrote.
    Attempts to reach DeMartini for comment were unsuccessful.
    In private-label residential mortgage-backed security transactions, it was supposed to be standard practice for the sponsor of a securitized trust to physically deliver the original mortgage notes to the trustee or custodian at the closing of the securitization.
    Typically, lenders endorse a mortgage note “in blank,” similar to a bearer bond or a check made out to cash, giving the holder any ownership rights.
    “Most significantly for purposes of this discussion, the note in question was never endorsed in blank or delivered to the Bank of New York,” Judge Wizmur wrote.
    Whether a servicer or investor has the standing to foreclose on a borrower has become a major issue since late September, when B of A, Ally Financial Inc.’s GMAC Mortgage and JPMorgan Chase & Co. first admitted problems with robo-signers — employees who signed thousands of foreclosure affidavits without personal knowledge of the borrowers’ debts and without signing in the presence of a notary.
    Many defaulted borrowers and mortgage investors are now questioning whether mortgage documents were properly transferred, and whether servicers or third-party foreclosure attorneys may have fabricated documents in courts to prove underlying ownership of the debt.
    Judge Wizmur wrote that, in a bizarre twist, Countrywide had filed a “lost note certificate” in 2007, claiming the original note had been “misplaced, lost or destroyed.”
    But two years later, in September 2009, it suddenly found the note and attorneys were unable “to explain the inconsistencies between the lost note certification, Ms. DeMartini’s testimony and the ‘rediscovery’ of the note,” the judge wrote. …

    Subject: RE: NDEX WEST CONFERENCE CALL. THEY SAY THEY MAKE NO MISTAKES—HAVE QUALITY CONTROLS—————- QUIET TITLE–A HOW TO DO WORKBOOKSecuritizations review of contract rigidness. Timely to read.





  10. Countrywide NEVER Transferred Notes

    I’ve been on this specific point for more than a year. Why? Because I have had multiple people assert to me who were in a position to factually know that this took place.

    It also was the only way for certain “problems” (like writing crap paper) to remain undisclosed to auditors and investors.

    Now we have it on the record, in a lawsuit.

    Linda DeMartini, a supervisor and operational team leader in B of A’s litigation management department, testified that “the original note never left the possession of Countrywide”… DeMartini “testified further that it was customary for Countrywide to maintain possession of the original note and related loan documents”…

    There’s no cure for this at this point in time. The following problems are insurmountable:

    * Most if not all of the MBS trusts are organized under NY Trust Law. NY Trust Law requires that delivery be made “in as perfect a form as possible.” Intentionally not delivering anything is so far removed from this requirement that it is a near-certainty that the Trusts are in fact legally void.

    * IRS REMIC rules require that the trusts contain a static pool of loans, and that they all be in the trust as of the certification date. This is typically 90 days post-closing of the trust (the 90 days is to allow a few late deliveries.) If REMIC rules are not followed the entire trust loses its tax passthrough preference and back taxes are due on the operations of the trust back to the point of violation – in this case, back to the founding. The holders of the certificates could become held financially responsible for these taxes – at the corporate rate.

    * The Pooling and Servicing Agreements all contain certifications that the formalities of transfer were complied with, including all intervening assignments and delivery to the Trust. These are not certifications of something to be done prospectively, they are certifications of fact that have allegedly occurred. If in fact no transfers took place then the entire MBS chain is arguably void as there are no mortgages in the securities. This would constitute the largest fraud ever perpetrated upon investors in the history of the world.

    * And now, to top it off, we have in formal testimony an admission by Bank of America’s litigation management department, that they have concealed this fact from the public markets. Where is the notification required of a “material adverse event” in the firm’s 8Ks, 10K or 10Qs on this matter? This sort of knowledge certainly has the potential to be “material” (in that the liability would exceed the Bank’s capitalization several times over) and yet we first learn of this in a conclusive fashion in a lawsuit?



    This outcome cannot be avoided. We must do this in a form and fashion that is controlled, which means you must do it now, before the vultures get their teeth into these issues. There is no way to retroactively fix this – we’re talking about trillions of dollars here, more than you can print and play with, and there are international concerns that own these MBS as well.

    The rule of law must be upheld.
    View this entry with comments (registration required to post)

  11. […] This post was mentioned on Twitter by kim thomas, Financial Wellness. Financial Wellness said: EDITOR’S COMMENT: Let’s assume that the banks are right, that the foreclosures are all legal, and that any erro… […]


    The instant action arises out of Zaldana’s purchase of a home from defendant KB Home in November 2007. (See Fourth Am. Compl. for Damages and Injunctive Relief ¶ 1.)Zaldana alleges that KB Home collected kickbacks from the Countrywide Defendants and the First American Defendants in exchange for referrals, in violation of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617. (Id. at ¶ 3.) In particular,
    Zaldana alleges KB Home referred purchasers, including himself, to the Countrywide Defendants for mortgage lending services in exchange for a share of the fees and profits generated by said referral, as well as control over the appraiser and other settlement services to be used in connection with the sale. (Id. at ¶ 4.) Additionally, Zaldana alleges KB Home referred purchasers, including himself, to the First American Defendants for title
    insurance and escrow services in exchange for a “multi-million dollar lump sum advance referral fee payment . . . to subsidiaries of KB Home.” (Id. at ¶ 5.) In his Fourth Amended Complaint, Zaldana asserts three Claims for Relief under RESPA, the first against KB Home and the Countrywide Defendants (id. at ¶¶ 68-81), the second against KB Home and the First American Defendants (id. at ¶¶ 82-86), and the third solely against KB Home
    (id. at ¶¶ 87-90).

  13. Very well said Neil!

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