COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

EDITOR’S COMMENT: Starting in 2008 I began a series of interviews off the record with local and state officials in over a dozen states. They don’t want the locations disclosed because it would be open invitation for things to get worse if that is possible. The net result is that even in our own country the number of ghost towns with brand new construction is astonishing. My estimate is that in Arizona alone the number of communities where the houses are more than 90% vacant is growing rapidly with dire consequences. My estimate is that there are at least 15,000 homes that fall into this category, many of them stripped beyond repair, some of them used as gang headquarters, and serving as the basis for the creation of a shadow society where no person would dare tread — including police.

This is not a new development actually. In big, older cities like New York, there are miles of unused or abandoned subways tunnels where entire societies are in their third and fourth generations consisting of tens of thousands of residents. The stark reality presented in the article below shows the problem is world-wide. As the number of homeless people, and the number of gangs increases (there are 6,000 gangs that are being tracked by law enforcement in this country alone), we are creating a safe haven from which they can operate. Like Mexico and countries in the middle east, as these societies evolve and create infrastructure for utilities, education and food, as well as free housing,  they will attract more and more people who give up not only on the American dream, but on America itself.

Seem like chicken little? Take a look at today’s news. You’ll see the exact same thing going on in the government of Mexico and the government of the United States. In one place the banks and drug cartels have paralyzed lawmaking, and in the other the banks and drug cartels have paralyzed lawmaking. Go ahead —- look it up on the internet or whatever you use for news sources — you’ll see a bottle neck of hundreds of laws that are needed and wanted that are never going to see the light of day — the only difference between Mexico and the U.S. is language, but then again, that might be changing too.


Newly Built Ghost Towns Haunt Banks in Spain


YEBES, Spain — It is a measure of Spain’s giddy construction excesses that 250 row houses carpet a hill near this tiny rural village about an hour by car outside of Madrid.

Most of these units have never sold, and though they were finished just three years ago, they are already falling into disrepair, the concrete chipping off the sides of the buildings. Vandals have stolen piping, radiators, doors — anything they could get their hands on.

Those few families who live here keep dogs to ward off strangers.

Yebes is hardly unique. The wreckage of Spain’s once booming construction industry is everywhere. And much of it sits as bad debt on the books of Spain’s banks, which once liberally offered financing to developers and homeowners alike.

Just how big a loss the banks are facing is unknown, at least publicly, and that has investors worried — the cost of financing Spain’s debt rose 18 percent in the last month alone. But the potential costs of failure go far beyond that. Spain’s economy, the fifth largest in Europe, is much bigger than Ireland’s or Greece’s, and a bailout of its banks could be far more costly, an event that could push the government into default and end up dooming the euro itself.

The Bank of Spain says the banks have about $240 billion in “problematic exposure” out of $580 billion invested in real estate and construction, a situation, they say, the banks are capable of handling.

But not everyone believes that. Unlike American banks, Spanish banks have done little to open their books. Along with other banks in the euro zone, they underwent a stress test last July, and all but five of Spain’s smaller savings banks passed.

The trouble is that some Irish banks that also got a clean bill of health in that round of tests subsequently collapsed, raising a threat to the country’s solvency that has still not been quieted — on Friday, Moody’s slashed Ireland’s credit rating to near-junk status and warned of further downgrades — despite a bailout. Those failures undermined the credibility of the whole stress-test exercise and forced regulators to announce recently that the results of further tests would be published early next year.

The Bank of Spain is moving to lift confidence in its banks by forcing them next year to disclose more details about their holdings and to start acknowledging troubled assets faster. But just how much are those assets worth?

Rafael Valderrabano, who founded the Básico real estate company 18 months ago to help banks sell property they are repossessing from developers, says the country is full of situations like Yebes. Right now, he says, he is trying to sell units in 40 apartment blocks near Cuenca, an area southeast of Madrid that is sparsely populated.

“Who went to develop in this place?” Mr. Valderrabano asked. “Who did this? Worse, who financed this?”

A better known real estate debacle is a sprawling development in Seseña, south of Madrid, one of Spain’s “ghost towns.” It sits in a desert surrounded by empty lots. Twelve whole blocks of brick apartment buildings, about 2,000 apartments, are empty; the rest, only partly occupied. Most of the ground floor commercial space is bricked up.

The boom and bust of Spain’s property sector is astonishing. Over a decade, land prices rose about 500 percent and developers built hundreds of thousands of units — about 800,000 in 2007 alone. Developments sprang up on the outskirts of cities ready to welcome many of the four million immigrants who had settled in Spain, many employed in construction.

At the same time, coastal villages were transformed into major residential areas for vacationing Spaniards and retired, sun-seeking northern Europeans. At its peak, the construction sector accounted for 12 percent of Spain’s gross domestic product, double the level in Britain or France.

But almost overnight, the market disappeared. Many immigrants went home. The national unemployment rate shot up to 20 percent. And the northern Europeans stopped buying, too. But government officials now say the worst is over, with housing prices down a modest 12.8 percent from the peak, according to the Bank of Spain.

“Most of the adjustment in housing prices has already taken place,” José Manuel Campa, Spain’s deputy finance minister, said recently, though he allowed that there was a lack of good information on real estate sales.

Still, skeptics abound. One is Jesús Encinar, the founder of Spain’s most popular property Web site, He says that the Spanish authorities are striving to engineer a soft landing of the housing market that would give more time to offload surplus housing at reasonable prices.

But he believes prices still have a long way to fall, by 30 or 40 percent, maybe more. “Some people who said there was no housing bubble are now saying we are at the bottom,” Mr. Encinar said. “But I say we have several years to go.”

He is not alone in scoffing at some of Spain’s numbers. In a report last April, the French bank Société Générale dismissed many of the assertions made by Spain’s banks, pointing out that Spain had one of the fastest rates of expansion in construction, had the largest number of mortgages per capita and was the most overbuilt among its peers. Yet prices had fallen the least. “We find it impossible to reconcile the banks’ claims of asset quality stability and the macro facts,” the report said.

There is also little agreement even on the number of housing units for sale. José Manuel Galindo, president of Madrid’s association of real estate developers, noted that one of Spain’s leading property appraisers, Tinsa, recently estimated that there were 10,000 unsold housing units around Spain’s capital city. Government figures, however, put the figure as high as 50,000 units, he said.

“What is amazing to me is that nobody is investing in doing a very thorough and reliable study of what is the exact supply and demand,” Mr. Galindo said.

There is, however, broad agreement that many of Spain’s empty units are in areas where there is little demand for them, particularly along the southern coastal areas where hills have disappeared under vast housing developments. Practically overnight, Spain’s banks have been forced to begin managing vast real estate portfolios, a role most were ill equipped to take on.

“They do not know how to take care of this housing stock or how to rehab properties,” said Raúl García García, from Tinsa.

While some banks have set up networks to sell property, many others are floundering, having trouble just keeping track of the keys. “They take the old guys who are sitting around and say: ‘Hey, you are in charge of real estate now,’ ” Mr. Encinar of said. “Some are not even answering the phone.”

Experts say that whatever is on the market now is only a piece of what is in the pipeline from distressed homeowners and developers. Mr. Encinar says the banks are holding back on putting property on sale, afraid to bring prices crashing down.

Fernando Acuña, co-founder of, a Web site that sells housing on behalf of the banks, said as many as 100,000 repossessed units were now for sale in Spain, a number that “could double or triple.”

Still, eager to begin getting some of the property off their balance sheets, some banks have been offering deep discounts and special mortgage rates.

Experts say the banks are being slightly more choosy these days about who lend to. But the new loans — almost all of which are at variable rates — could create a second wave of defaults down the road when interest rates rise. Next year may produce a new round of defaults from developers as well. In the early days of the crisis, many banks renegotiated their loans. But experts say many of those deals will expire next year, and without any significant change in the economy, most developers will be no better off.

The tension between banks and developers, once happy accomplices in a booming business, is palpable. Mr. Galindo says that the banks are not lending to developers who have half-built projects and that they are favoring customers who want to buy bank-owned property when giving out mortgages.

The biggest challenge for the banks is that they are likely to end up owners of vast amounts of undeveloped land. José Luis Suárez, an expert on real estate at the IESE business school, said 65 percent of bank lending to developers is tied up in land, enough to build 758,000 more housing units. “That gives you an idea of how long it could take for the market to digest all this,” he said.

14 Responses

  1. Neil,
    Since you do speak about what happens in nations abroad, why not post some info on how the Palestinians are constantly being evicted from their homes. Because what is happening to them will be the same thing happening here.

  2. The National Bank of America, Bank of the Successors and assigns, the “New” CitiBank (TBA) made up of all the old Citi Players grnated immunity and of course the Bank of G Soros may want to consider enhancing the FDIC “give away” program by offering to negotiate upcoming put or maturity obligations. Its surely an interesting approach or even just an approach for companies to negotiate with existing debt holders who thought they were creditors – suckers!
    It can be an attempt to restructure or refinance the outstanding debt and restore this countrys forgotton banking system based on a free market “rip off” economy. LOL

    Such restructuring or refinancing transactions typically involve a modification like the kind you need when you fail a smog test.

    Seriously, you take existing conversion, put or other terms and extend the life under the mod proposal. This is accomplished by consent upon which banks solicit investors consent from its debt holders who thought they were creditors and currently holding cracker “jack”.

    The concept is to modify the existing terms of the debt, and compromise the investment with a viable alternative by way of an exchange offer.

    The rational for tnedering solicitations considers a consent payment to the debt holders to induce them to agree to the modification of debt terms. Like paying them a “fractional” lump sum of what they are owed over the last 36 months.(and would probably reject)

    In these situations is to delay the upcoming maturity or put right in exchange for improved terms or concessions granted to the holder (e.g., higher coupon, greater principal amount, addition or improvement of a conversion feature, etc.).


  3. We stopped paying on our credit cards some 1 year ago. We don’t answer the phone, we ignore all collection letters, we do not dend a debt verification letter, we do nothing. We are all cash and it is great, we bank at a local credit union, we keep cash saved elsewhere. Our credit score is 525 but who cares. Banks and CC companies are a business, traded on the stock exchange, so we have been ousted from obtaining credit from them, doing business with them – good, that’s how we want it. Collection companies who buy bad debt buy bad debt, then they try to get you to pay for their purchase, funny when you think about it, nice game but we don’t play along. We attempted a loan mod but the servicing rights was sold to another right in the middle of it. We stopped paying the mortgage to obtain a loan mod. I have now sent a written request letter for a copy of their PSA and original loan docs, They wrote back and said they will investigate and report findings in 60 days. We will then send another letter written request to ask for copy of the original assumption agreement. We can file bankruptcy at anytime, we can persue quiet title. That’s my story. If everybody did this they would fall. If you ask me the You Walk Away movement was started by the banks, it is not what you need to do. Stay put and fight it out, even if you have to do it alone cuz you can’t afford a lawyer, what have you got to loose if you are in a similar situation to me. Go to a court house and watch what happens, get familar with the courts, the people – you won’t be so nervous or unsure if you have to go to court. My wife and I have realized that no matter what happens at this point or future point in time, we will have won. We have started a new life and it is fun again. Our hope is our scene will drag on and we can save enough money and/or with help from friends just buy a house cash in a few years – no mortgage, no CC cards, no debt. That’s it for their debt slavery game for us. I believe one needs to be Fabian in the mortgage arena, look up Fabian in the dictionary. What if they had a war and no one showed up, what if they issued debt and nobody took it?

  4. kickboxer, & A – Man

    I may be on the streets soon as well. But I will not pay for the crimes paid by these dirty bastards. Delinquency is not a crime, Foreclosure is not a crime and Bankruptcy is not a crime. But these bastards belong in jail . The first to go should be Phil Graham.
    Just remember, They can not kill you but they will try to worry you to death.

    Strength & Honor….

  5. E. Tolle,

    I too – am not violent — but you write a powerful and insightful post.

  6. Gretchen — long time teller of the truth — has to dig a little deeper.

    This is about removal of loans from so-called securitized trusts. Not about rights of the Trust – when the loan is in default — there are NO rights to the Trust when loan is in default. This is about the sale of collection rights to unidentified parties- whose identity is concealed by deregulation that allows the party to remain unknown.

    This is about a government — state AGs included – and state Banking Commission employees who have done nothing to investigate and expose the fraud. It is time to demand action from our state Attorney Generals. It is time to prosecute the perpetrators of the fraud. It is time to investigate the path of monetary pay-offs — and for the IRS to investigate tax evasion fraud.

    Neil has been a front-runner in exposing the fraud — but he can only do so much. It is up to our government to stand up for the victims and hold those that perpetrated the fraud accountable.

    It is time to question those in authority – who have covered up the fraud – to account for their own actions.

    It is time to form a coalition that will present all to Congress — and demand action from those representatives.

    The fraud is massive. And, while the perpetrators continue to be bailed out — we are fighting individual claims against a huge enterprise of power.

    Need someone here with the courage and conviction to organize a coalition to expose the fraud– as it is really is — to those who can influence prosecution.

    Without this — it will continue to be a individual battle in courts — courts that remain clueless.

  7. As for running the politicos out of town on a rail, there’s this little known vote that went down yesterday. H.R.5510, the “Aiding Those In Foreclosure Act of 2010”.

    Geithner has, on several occasions, opined how he couldn’t legally help foreclosure victims, or simply homeowners needing assistance due to the restraints put on him by the Tarp restrictions. He did this in the spring and again just recently.

    Then the Federal Reserve disclosures showed that he was not restrained at all when it came to helping out anyone and everyone i.e. banksters, from sea to shining sea and all the way to Korea and Japan and all stops in between. McDonalds? GE?

    Marcy Kaptur, D. Ohio, one of the few in D.C. who I would applaud if she were to walk by, presented this bill. The bills intent was to “to assist homeowners with legal issues directly related to such default, delinquency, foreclosure or any deed in lieu of foreclosure or short sale.”

    Folks, this is near and dear to my heart as I’m working in this arena trying to get legal defense $$$ available to people who have no resources, and believe me, it’s a tough gig.

    BTW, Kaptur is the brave soul who recently introduced another bill into Congress, which would dissolve the relationship between the government-sponsored enterprises(Fannie and Freddie) and Mortgage Electronic Registration System that we all love so. If we only had a capitol filled with her clones….

    So Geithner, banker boy Tim, sees the writing on the wall and is assured by John Boehner and some other republicans that this thing won’t get the 2/3rds majority that it needs to pass, so he throws in his support big time, knowing full well it’s doomed. But boy does he try and look good for the flashbulbs.

    Folks, these are the exact kind of politicians that DON’T need to be run out of town. These are the kind of corrupt politicians that need matching bracelets and long stays in small drab rooms with a toilet for furniture.

    The vote was yesterday. It went down in flames. It would seem that even though there were nearly 13 trillion dollars doled out for everyone who is on banker boy Tim’s speed dial, oh, and Bernanke’s too, there’s not any monies available to help out us undeserving deadbeats.

    The vote was like this:

    Dems yeas = 204
    Dems nays = 5

    Pubs yeas = 6
    Pubs nays = 140

    Read the writing clearly on the wall here people. Although I’m apolitical and not trying to get into a pissing match here, would everyone in foreclosure defense please come to the realization that there is not a single ally in the republican party. Obviously there are few in the democratic party as well, or we wouldn’t have our government representatives basically green-lighting fraudulent behavour while pretending not to notice.

    The time has come people. It’s now or never, because none of us will have a home to plan the next move out of if they are left to their own devices.

    Be prepared to march and protest. Get arrested if need be. Non violence is key. But the time to act is now, not later. These criminals must be stopped, and our government will have to learn that we will not sit idly by while our entire way of life is dismantled. While our families and friends are thrown out into the streets. Enough is enough. Let’s show them that we remember that we have a voice in our government, and that it can be loud when necessary. Deafening when need be.

  8. It is looking alot like the divide of the king and the peasents. But people are starting to take to the streets and yes this is going to get violent,There maybe alot of bloodshed in this coming year. You can only push people so far then it’s survival mode for you and your family.Keep the faith swd, if I were you I would move right back into the home you lost and board up.

  9. There’s only one way out of this mess and that’s through strategic default on a global scale. All of these problems, every single crisis, is due to debt, and the elite who own the banks that handled the derivatives that conned every government, from countries down to counties into believing that they too could have the good life. Something tells me it didn’t work out that way.

    Screw the financiers and their shareholders. They’re nothing but pimps. They’re the same ilk that sent ships to Africa for labor way back when, only the called it trade. Slave trade.

    The same mindset that gathered millions of people together to in Europe and gassed them, and called it cleansing. Ethnic cleansing.

    To the elite we’re simply chattel, we do the lifting, tote the bales, make things work, while they wile away their days in the Hamptons, Zurich, Monaco or wherever, playing Monopoly with our houses, businesses, skilled trades, with a complete disconnect from even the slightest feeling of responsibility for their actions.

    I have no qualms about the world deciding en masse to shaft the banks. Turn about is fair play. We have an opportunity to help ourselves out of this hole we find ourselves in by simply refusing to play the game any longer. And it’s not wrong, because it’s painfully obvious to even the most obtuse among us that the game is rigged. It doesn’t have any benefits for the lower 99%.

    Only when we refuse to satiate their gluttony through worldwide take away will equilibrium return. In the U.S., this will mean divorcing the government from the financial community, through whatever means necessary. Ship them out of D.C. in disgrace, or threaten them with jail time for aligning themselves against the people and for special interests.

    Anarchy? Not at all. Anarchy is what we have now. Anarchy means: Absence of government; a state of lawlessness due to the absence or inefficiency of the supreme power; political disorder.

    There’s no better description of the world’s so called governing bodies at present. There’s absolutely nothing sustainable here folks. It will end in ruin-nation one way or the other, either due to the next collapse brought on by their averice and greed, or by us taking matters into our own hands.

    I’d much rather control the fight than simply endure. I’d rather die on my feet than live on my knees. It’s literally them or us. 1% v. 99%. Pretty good odds from where I sit.

  10. Kickboxer dont ever give up.

  11. Gretchen of the New York Times is at it again Thanx

    If this is how our Government treats its own Citizens no wonder everybody hates us in the Middle East, Latin America etc….


  12. We worked hard for what we got and eventually lost it all because we lost our business. We did charity work, gave to charities regularly, helped out our neighbors and friends and never asked for a dime. We thought that we were doing the right thing in life; something that our higher power would want us to do.

    When we lost everything, there was no one to help us. We got called deadbeats and had our home stolen. Yes, I know that we could not afford the house any longer, but we did not deserved the treatment that we received. Living in a non-judicial state and no money to fight the foreclosure, our house was sold REO even though there was an obvious broken chain of title.

    Now next month we will have to move from the place that we are renting. We won’t be able to make rent so we become homeless. We may end up living in an abandoned home just like countless other people.

    People are sick and tired of our government and banks thinking that we deadbeats don’t deserve anything. There will be a day when law abidding citizens take to the streets for justice that was denied us by our own government because the banks were to big to fail. This is not America anymore. God help us all.

  13. There is no longer any incentive to work hard. My family worked hard and we made so many sacrifices, and for what? We now have nothing.

    The scariest and worse menace to society are those persons that no longer feel they have anything to lose.

    Scary times ahead.

  14. […] This post was mentioned on Twitter by John Carmine. John Carmine said: GHOST TOWNS CREATED BY WALL STREET — A GROWING MENACE …: “Some people who said there was no housing bubble are… […]

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