BOA SAYS NO TO CORRECTION OF PRINCIPAL: “UNFAIR AND UNEXPLAINABLE”

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EDITOR’S NOTE: Moynihan is pulling out the old argument, trying to stir up people who have been paying their mortgage so he and the other mega banks won’t be required to cough up trillions of dollars they stole through fraudulent appraisals of property inducing people to get into “loan” transactions that were guaranteed to fail, which the mega banks were betting on, so they would win going both ways. They did the same thing to investors with fraudulent appraisals (ratings) inducing people to get into MBS transactions, which were guaranteed to fail, and which the mega banks were betting on, so they could win going both ways.

What he is saying is that it is too hard to explain to people who have been paying their mortgage payments why others, who were not paying their mortgage payments, are getting a break. What he means is that if they DID explain it as a clawback from a fraudulent series of transactions, millions more people, whether they were paying or not, would demand their money back too. They will realize that just because they CAN afford to take the loss on a fraudulent transaction, doesn’t mean they SHOULD take the loss any more than anyone else.

And THAT in turn would be the end of the mega banks and the grip on this country’s power structure. because it would deplete every bit of equity they have and remove them from the table of active players in banking, leaving the REST of the banking industry, consisting of over 7,000 banks and credit unions to pick up the pieces which will be remarkably easy to do, and will produce no catastrophe other than for the those who continue to benefit from a PONZI scheme that is remaining alive, morphing into the next great catastrophe.

See Simon Johnson’s extremely clear, well written analysis, with citations and back-up for everything he says and I say www.baselinescenario.com.

AND Moynihan is issuing a tacit threat: everyone who relies on dividend income and is expecting dividend income from BOA will be on the short end of the stick — kind of like the lowest people in every PONZI scheme. I’m not saying they should be punished for believing this drivel from Moynihan. In a nation of laws, however, it is no argument at all to leave “well enough alone” if it means that victims remain uncompensated because other people, possibly without knowledge of the tainted aspect of the money, will lose.  Such shareholders in the mega banks may also be victims, at least some of them, and they may have their remedies too. In the end, there won’t be enough money to go around to satisfy everyone, but one thing is for sure — in a nation of laws — the perps should do the walk, not the victims.

LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL

NY Times

Bank Chief Rejects Idea of Reducing Home Loans

By NELSON D. SCHWARTZ

Showing resistance for the first time against government pressure to write off tens of billions worth of mortgage debt, Bank of America executives said on Tuesday that the idea was unworkable and warned that it would be unfair to borrowers who had managed to stay current on their loans.

“There’s a core problem that if you start to help certain people and don’t help other people, it’s going to be very hard to explain the difference,” said Brian T. Moynihan, the chief executive of Bank of America. “Our duty is to have a fair modification process.”

All 50 state attorneys general, as well as a host of federal agencies, are pushing for a settlement over investigations into foreclosure abuses by major mortgage servicers that could cost the industry $20 billion or more. Much of that money would be earmarked to reduce principal owed by homeowners facing foreclosure.

But picking just who to help is among the thorniest questions facing government regulators, as well as the banks themselves. Even the most outspoken attorney general on the issue, Tom Miller of Iowa, acknowledged on Monday that too generous a program might encourage homeowners to walk away from properties where the value of the loan exceeded how much the underlying property was worth.

Indeed, industry experts estimate that nearly a trillion dollars worth of mortgage debt is “underwater,” a result of house prices having fallen since the original loans were made. Federal officials hope a settlement with the servicers will help individual borrowers and provide a cushion for the weak housing market.

Officials of Bank of America, the nation’s biggest mortgage servicer, argue that any effort to help troubled borrowers should not penalize borrowers who are underwater but have managed to make their monthly payments.

“There may be as much as $1 trillion worth of mortgages that are underwater,” said Terry Laughlin, the Bank of America executive whose unit, Legacy Asset Servicing, handles mortgages that are delinquent or in default. “What do you do for those borrowers that have a job but have negative equity and have paid on time and honored their obligations?”

“This is an unsolvable question,” he said. “It’s a very slippery slope.”

The comments by Mr. Moynihan and Mr. Laughlin came at a daylong meeting with investors and analysts in New York, the first of its kind for Bank of America since 2007.

Despite fierce criticism by regulators and political leaders that its efforts to help troubled borrowers have fallen short, Bank of America executives insist that the number of successful modifications the bank has completed is on the rise. The bank says more than 800,000 mortgages have been modified in the last three years.

Writing down billions of principal now could actually retard the recovery by encouraging borrowers to default, they argue. “It’s not that we don’t want to help troubled borrowers,” Mr. Laughlin said. “It’s a moral hazard issue.”

Late last week, the attorneys general presented the five biggest mortgage servicers, including Bank of America, with a 27-page proposal that would drastically reshape how they deal with homeowners facing foreclosure. It did not include a specific dollar figure, but government officials say they want to combine any overhaul of the foreclosure process with a monetary settlement that could finance more modifications for troubled borrowers.

The existing modification program created by the Obama administration, known as HAMP, has helped far fewer borrowers than originally promised. It also faces fierce opposition from Republicans in the House of Representatives, who voted last week to kill the program.

Mr. Moynihan believes investors who hold trillions in mortgage securities have to be involved in any settlement. It is not exactly clear what role they would play as part of the settlement with the federal government.

Officials at Bank of America, as well as other large servicers, declined to comment on the specifics of the 27-page proposal, and the industry has been cautious about fighting back too aggressively, mindful of the tales of robo-signing and other abuses that prompted the investigation by the attorneys general and federal regulators last fall.

What’s more, consumers and politicians are keenly aware that Bank of America and other financial giants have staged a remarkable turnaround since the government bailed out the industry after the collapse of Lehman Brothers in 2008.

“I think reasonable minds will prevail on this,” Mr. Moynihan said. “We do push back and we get to reasonableness.”

Still, the comments at Tuesday’s investor meeting are a preview of the arguments the industry is poised to make more forcefully in the weeks ahead as it negotiates with the attorneys general and other regulators behind closed doors. On Monday, Mr. Miller said he hoped a settlement could be reached within two months.

As the huge volume of loan losses recedes and the economy improves, Mr. Moynihan said his company had the power to earn $35 billion to $40 billion a year. Bank of America lost $2.2 billion in 2010, weighed down by special charges and the lingering effects of the housing bust and the recession on consumers.

He also reiterated his position that the long wave of acquisitions undertaken by his predecessors was over. “I can’t stress enough to you how much of a peace dividend we’ll get without mergers,” Mr. Moynihan said. “That peace dividend is effectively a permanent dividend.” The bank intends to resume payouts to shareholders in the second half of 2011.

27 Responses

  1. Anonymous is right.

    http://www.economywatch.com/finance/high-finance/reserve-banking.html

    “The remainder of the deposits can be used by the banks in high-return investments. ” from above.

    And what banks do:

    http://www.economywatch.com/finance/high-finance/loan-securitization.html

    http://www.economywatch.com/finance/high-finance/backed-commercial-paper.html

    http://www.economywatch.com/finance/high-finance/cds-credit-default-swap.html

    So, you average humanoid, you consumer (who uses credit cards and takes out home loans and Helocs) who deposits your money in a bank, BOA, CHASE, CITI, etc, why you are allowing your combined money to be used so they can make high return investments. Why you get nowadays .01% interest or whatever it is. And this is all done so they can have a secondary market of investors who can trade and game the system. This is all based on debt – loans and credit. This huge secondary market with lots of zeros after a one.

    They will never give in to wholescale principle reduction, if they did the whole secondary market would collapse. You are on your own and you may get lucky. Game it for as much as you can for your own benefit, there is no right or wrong here on your part, it is pure survival. And if they come to take your keys, why make them pay you for leaving to relocate. And if you wish to fight, then do it as cheap as possible. And if you need to do bankrupcy, why do it, you are your own business and if it didn’t work out, why start over.
    They have the whole world in debt so they can play the reserve banking game and now coupled with ABS, MBS, CDO’s, etc.

    I recommend not being part of the being in debt game.

  2. This is an interesting Story. Forget the Religous part for a moment.

    The Pharoahs of Ancient Egypt were not accustomed to receiving commands from others, particularly from such “lowly” people as Moses.

    http://www.keyway.ca/htm2002/20020326.htm

  3. Cheryl I can second that. Not exactly your case but the same alleged B2llSh@t

    Be Strong and courageous

    Pharoah (Banksters) Let My People Go.
    It Took Ten Plagues for Pharoah. How many for the Banksters?

  4. BOA reports they have done 800,000 modifications. How many of these are legitimate mods? BOA has me reported that I am in the HAMP program. It is on my loan activity. I am not in the HAMP program and you are making money off false reporting that I am. Wonder how many other falsely reported mods and HAMP programs they reported. BOA is the moral hazard.

  5. I know nothing, and if I think I know something I know nothing. I do not give legal advice because I don’t know legal things.

    Main problems that gives them no standing to take anyone’s home, ever, ever, ever again:

    Bifurcated. Assignment. Allonge.

    What they want to do to clear the title and make them a secured creditor again:

    Modification.

    In this settlement there is talk of how they have to treat customers and that they have to offer a modification. Is this settlement offering them a free pass to acquire the ‘standing’ to foreclose for non-payment of the debt without further penalty; after the settlement date?

    Can an AG negotiate that you must pay a business who is not entitled to be paid because you weren’t aware they weren’t entitled to be paid before the settlement date, so you kept paying them thinking that if times get hard you can say ‘show me the note’ and not realize the settlement with the AGs said they didn’t have to have it? Is that a possibility?

    These AGs are making agreements that are private. They aren’t sharing the details. No one gets to vote on it before it’s implemented. This agreement affects everyone state-wide and it’s private between them and does not include any victim representation.

    Is it possible, that in this agreement, they are negotiating how to foreclose on homes they have no right to, as part of the settlement.

    Prior to this settlement discussion; If they didn’t have standing in a judicial state, they didn’t have standing in a non-judicial state. What is going to be the case afterwards?

    They will start up the foreclosure engine again, but they will offer mods to people first, to get that title legally unclouded by the terms of the AG settlement, and then foreclose?

    Is part of the settlement paying the counties the fees they were cheated out of so that from the settlement date on, they can file a transfer of title and that be recognized?

    It’s so easy for people to forget that there was ‘never’ a concern for the women and children made homeless during this ‘financial war’.

    Those bankers statements were never meant for the people they are taking out of their homes through fraud.

    Forget what the MSM (main stream media reporter above,said), pull this their quotes out and get the message they conveyed…anything not quoted is hearsay or an opinion anyway.

    Brian T. Moynihan, the chief executive of Bank of America, said:

    “There’s a core problem that if you start to help certain people and don’t help other people, it’s going to be very hard to explain the difference,”

    “Our duty is to have a fair modification process.”

    (my note – there’s that word modification..is that what the AGs are settling too for every state?)

    Terry Laughlin, the Bank of America executive whose unit, Legacy Asset Servicing, handles mortgages that are delinquent or in default said:

    “There may be as much as $1 trillion worth of mortgages that are underwater,”.

    “What do you do for those borrowers that have a job but have negative equity and have paid on time and honored their obligations?”

    “This is an unsolvable question,” he said. “It’s a very slippery slope.”

    “It’s not that we don’t want to help troubled borrowers,”

    “It’s a moral hazard issue.”

    (my note: The moral hazard is the poor schmuck who keeps paying and when they hit hard times, the bank they were so loyal to will not be able to make a commitment of any type because no one in their customer service can make a decision except offer a mod and either accept or reject the application and foreclose anyway)

    So the moral hazard is theirs, they want modifications, they know how much underwater these loans are, and they know how messed up things will be to their ledgers if they do a reduction instead of a foreclosure.

    They never put any energy into the creation of a single home. They are only generating energy to stay a business that can keep taking title to our land otherwise the principal reductions would have happened and not a single foreclosure would continue on any loan that already exists, and they’d have to start from scratch and only loans created after the settlement would give them a security interest in the property and they had better not securitize that if they want to keep the perfection of the security interest.

    All my opinion and not worth the webpage it’s written on.

    I’ve been through the fire…just making comments to get more things on the table, for what it’s worth.

    Light and Love,
    Trespass Unwanted, alive, allodial, corporeal, life, free, live born, born alive, whole blood, freeman, in jure proprio, in jure divino

  6. The reason Bofa will not do principal reductions is because they CANNOT do principal reductions – it is not up to BofA to decide.

    First, this is not about giving everyone a mod — it is about those that were victimized during the height of the mortgage fraud. It is a period of time in which can easily be isolated to compensate for the fraud. Those that already have a great interest and are only slightly underwater — would benefit by stopping the foreclosure hemorrhage.

    Second, there are no MBS investors, other than the US Government – who holds pass-through tranche remnants. The MBS investors have been paid. by swaps. Only the support tranche holders remain — and they claim attachment to a trust that has been dissolved in structure.

    These support tranche holders are hedge funds/ distressed debt buyers who paid little principal amount in return tor the swap out (of trust) collection rights. It is these third parties that are blocking any meaningful settlement. WHY?? the profit potential to them is huge – but not by modifications.

    Third, the derivative contracts with these third parties is NOT part of the trust. These contracts are derived from the trust securities — and are NOT securities themselves.

    Fourth, BofA does not want to divulge these contract agreements — which are not regulated. If they do — BofA would be hit with larger lawsuits that anything they can expect from homeowners. And, by powerful law firms.

    Fifth, securities do not change hands by derivative contract and “support” tranching (remember support tranches were sold BEFORE MBS securities were sold to the bank itself (via accounting gimmick). This is why government needed to take these toxic securities off the banks books (on or off).

    These securities cannot be “closed” until all derivatives and contracts are executed — servicer services for someone else — not the bank. It is these contract holders that are the creditor – and call the shots – and principal reduction is not in their profit agenda.

    Basically, banks hands are tied — they cannot modify with principal reductions or they will be sued to hilt. So, banks answer is — blame the people – they must be punished. That is, turn the fraud into a “philosophical” conversation.

    AG settlement is not productive because they did not – and could not – examine the books of the banks – including BofA – before they drew up the settlement. You cannot structure a settlement — when you do not know what is going on.

    We are back to square one.

  7. I agree Ashley. Who pays John Walsh his salary?

  8. Wait are they forgetting that the loans were NEVER ASSIGNED to anyone and some of the original companies are defunct and they can’t go back… What is done is done. The AG’s need to realize there was never any securities only fraud but not on the borrower: The Borrower borrowed and paid , the servicer , MERS , Trustee, successor Trustee stole, lied and cheated everyone else WE ARE THE INNOCENT ! Quit trying the innocent and start trying the GUILTY!

  9. BOA is “right”, it is unfair for people who are paying their mortgage…but these people may have funds too to pay somebody from Neil’s list to file QUIET TITLE if they have MERS named in their mortgage. No reason to wait !

  10. Writing down billions of principal now could actually retard the recovery by encouraging borrowers to default, they argue. “It’s not that we don’t want to help troubled borrowers,” Mr. Laughlin said. “It’s a moral hazard issue.”

    What a bunch of hooey. Skank of America deliberately and maliciously lied to borrowers and told them to default so they could be in the HAMP program. Now these scumbags are worried about “moral hazard”. That’s a real rich steaming pile.

  11. Is it possible for the home owners to do a “citizens arrest” of the CEOs of these banks? ..or would we be charged with kidnapping?. “….unfair and unexplainable”? Are their illegal actions fair and explainable? This is ridiculous and irrational. The tail is wagging the dog so far as law enforcement against these thieves is concerned. If a homeless person walked into a supermarket , hungry , cold and dying of hunger, and took a loaf of bread: they would give a year in prison. However the justice (sic) system cheers on the sidelines as these bank robbers ..(home robbers) ruin the country and peoples lives.

  12. A Man–that’s exactly what I needed to hear: be strong and courageous! I’ve been freaking out lately…

  13. So many lies. So much deceit. When is it ever going to stop. Moral hazard?? BOA IS the moral hazard. How in the world will any one on this planet ever TRUST any banks or AGs ever again?? So corrupt so sick so disgusting. The fraud continues and greed still prevails. Horrifying place to have to live in. The united states of liars….nice. Debi

  14. The banks will never agree to anything unless the courts force them to do it. Luckily, we are starting to see some traction in Texas. Several TRO’s being granted and the bank’s attorneys have no clue what to do about it. I’m not going to turn Neil’s blog into an advertisement, but check out http://www.theforeclosurelawblog.com if you want to know more.

  15. BOA IS SAYING THIS BECAUSE THEY SET UP ANOTHER COMPANY THAT DEALS WITH THE BAD LOANS.

    BE STRONG AND COURAGEOUS

  16. G-d has hardened the Banksters Hearts just like The Pharoah in Egypt.

    LET MY PEOPLE GO.

  17. The banks do not need to cooperate with anyone. They own the country in collusion with the so-called regulatory agencies. We are screwed and will continue to be screwed until we all march in the streets. We should have a Fourth of July event countrywide that will make the banks and the rest of the crooks sit up and take notice. This is our country, not theirs. Go Wisconsin! Burmese8@yahoo.com

  18. The State Attorneys should go after the AVM , who tells you, you are under water. May be a new ponzi scheme. How can you be under water , if 10 years ago an certified apparaiser give you a higher price,appraisal ordered by the bank , and was higher than todays UNDERWATER.I see already CHASE and Deutsche Bank have the same mailbox . Next step : Century 21 buy the foreclosure homes and , FIX IT UP?? , to sell it .WHO WILL GET THE PROFIT ???

  19. And this bit that the banks harp on, about not wanting to correct the problems…that it would not be fair to the homeowners who do pay their mortgages…ENOUGH already!

    The truth is they don’t want the word to spread because, of course, everyone will stop paying…at least they will question what’s going on.

    Let the AVALANCHE begin!!

  20. The banks need to review every single loan and if the problems are fixable, fix them. If not, work out something else with the homeowner. Otherwise, these messes will pop up years to come. No end in sight.

    Maybe they should discharge all our alleged “debts” in bankruptcy court.

    They are lucky to get any money at all from the homeowners !! They can’t just be grateful they are not going to jail, they have to keep defending their fraud….to their detriment and death.

  21. Brian M. doesn’t want his bank to be hurt, that’s all he is saying. If Sheila Bair can’t pay, and is signifigantly underwater, she too should be elgible for “principle correction.”

  22. these idiots started the PONZI scheme and victimized million of homeowners by using our signature on the notes and sold them to all states pensions fund, insurance and other foreign investors believing that their investments were good, with the help of credit rating agencies. it turn out all those investments were craps. every citizen in this country suffered by their FRAUD.

    THEY STARTED THIS FRAUD THEY HAVE TO SUFFER THE CONSEQUENCES. PUT THESE PEOPLE IN IN JAIL.

  23. ASHLEY…I LOVE your idea!

    OREGON NON-JUDICIAL FRAUDCLOSURE UPDATE
    http://dtc-systems.net/2011/03/update-foreclosures-oregon/

    Posted by Dan Edstrom on March 9, 2011
    And the title company specifically refers to the McCoy decision as the basis for the exception. What purchaser would want to buy at a foreclosure sale or from the lender after a foreclosure sale with this exception to title?
    In Deschutes County, Oregon, one of the hardest hit counties in Oregon, there were almost 290 rescissions recorded in February, 2011, and more than 130 rescissions recorded in the past week or so.

  24. I’m starting to think that the government is the one that actually wants to have people to do “something” about it, because they are certainly NOT doing a damn thing about it!!! F***k the big banks!!! UNFAIR AND UNEXPLAINABLE????????? get the hell out of here!! sometimes i seriously think that all those stories about out of space aliens are true, and all these banksters are IT!!, they with no doubt think we are totally stupid!!! Why is anyone asking this idiots if they want to do anything? why aren’t they just being told what to do? OH WAIT!!!! my bad, they run the country and they run themselves!!!!!!!! sorry my fault!!!! we the american people are simply their servants, sorry i forgot!!!

  25. BOA is pulling an Enron, only this time they might have more friends in the right places.
    Read this dreck: “borrowers should not penalize borrowers who are underwater but have managed to make their monthly payments.” Those who have “managed to make payments” are victims as well.
    They too would beneift from cramdown.
    BOAs statements are propoganda, but it has traction, and they are saying this because it is completely political. Even though BofA has been mismanged into failure, they are smart enough to appeal to this false sense of “fairness”. Receivership for BOA.

  26. Hey I’m with you on this Ashley,
    If they werent so greedy as in the last statement mentioned “being able to earn 30~40 billion a year” why not just do a cramdown and actually help people out? Perhaps they will actually make earnings instead of a couple billion of losses. The fraud and lies are out in the open what the heck are homeowners waiting for? Me i’m ready I’ve been dealing with these crooks for years, they will not help period. My pitchfork is in hand, I’m willing and ready to restore our property rights back to Americans let me know when you are ready to roll.

  27. Screw it, lets just pick people that must be jailed. Let’s start with OCC’s John Walsh. We could start a campaign to arrest him & with enough signatures from every foreclosed and underwater victim he may start seeing things from a different perspective. Once he is behind bars we will move on to the next until we see some real changes and compensation. What do you guys think? I say go after the regulators because they are the ones who should be upholding the law. They know exactly what is happening here. Are they willing to go to jail for a bank? My guess is they will all start talking once we show them the bars and 3 million signatures for their arrest.

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