JPM Makes $2 BILLION While Investors Lose $500 MILLION

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“The investment bank through a myriad of bankruptcy-remote controlled vehicles steps in and says WE ARE THE AGENT FOR THE LENDER AND WE WANT TO FORECLOSE. And then in the suit with investors says WE ARE NOT YOUR AGENT OR FIDUCIARY AND THIS MONEY WE COLLECTED IS OURS. In plain language the investment banks are claiming the full value of the original investment, the profit they made from the “failure of the investment,” and the house from the borrower. Somehow this has been translated into a free house for the borrower if the borrower successfully challenges this scenario. Considering that the investment bank and its remote vehicles never loaned a dime of their own money and never bought the receivable from the homeowner, it is an inescapable conclusion that under current conditions IT IS THE BANK THAT IS GETTING A FREE HOUSE.” — NEIL GARFIELD

HOW TO TURN A CLIENT LOSS INTO YOUR PROFIT TIMES FOUR

EDITORIAL NOTE: The idea that the banks could take $500 million from investors, turn the investment into a loss, and than make $2 Billion for themselves leaving the investors empty handed has been openly dismissed as ridiculous conspiracy theorizing. Nonetheless, I have consistently maintained on these pages that this is exactly what was done, that there were no losses to WALL STREET on mortgages, and that the bailout increased their profits instead of decreasing their alleged losses. It seems, as Renaldo Reyes of Deutsch Bank put it, “counter-intuitive.” If you put $500 into an investment how can anyone make any more than the $500 you invested. Enter the magic of Wall Street.

The unfairness of this turn of events is obvious and the subject of the lawsuit against JPM described below in the article from the NY Times. And the fact that JPM had direct knowledge of every part of this all the way up to Jamie Dimon doesn’t come as any surprise either. What is important here is that Wall Street found a way to create lousy investments in which investors would lose all their money and to multiply that loss into a grand windfall for the Wall Street firm that created or sold the investment in the first place.

It doesn’t take a rocket scientist to see where the incentive is. If you were the broker and you sold $500 million worth of securities to an investor you would get a fee. Fair enough. And you wouldn’t see another fee until the investor sold it, hopefully using your services. Fair enough. That is how Wall Street is supposed to work — putting buyers and sellers of various types of securities together and taking a fee for their services. This is the purpose of Wall Street which enables the marketplace to have liquidity — i.e., people can get money when they need it and can get a return on their investment when they have extra money.

Wall Street shifted the paradigm starting around 10 years ago when they essentially decided that neither their clients nor the people who were affected by investments made through Wall Street should get to keep any of the money or wealth they had at stake. They wanted it all and they set out to get it, quite successfully as it turned out. The current paradigm is to get investors to put their money into failures, create vehicles that essentially bet on the failure, put provisions in the documents that guarantees that you can call it a failure even if it isn’t, and then collect all the money back that SHOULD go to the investors, because that’s what it says in the fine print of what the investors bought.

Once you have a sure thing — a failure even if nothing failed — you can now place a bet, comfortably knowing that it will pay off because control over the “failure” is completely in your hands. I am of course referring to Credit Default Swaps and other more ornate synthetic collateralized debt obligation derivative instruments.

Back to the broker. If you were that broker, would you (a) wait until the investor decided to sell the investment and take a fee of 1% or (b) pull the plug on the client’s investment and earn 400% of the client’s money without any of your own money at risk? You might think that JPM would have at least offered the money back on the investment, but no, like I said, they want it all. You might say that the investment bank’s receipt of $2 Billion on the client’s $500 million investment was as a fiduciary for the client and not for themselves and you’d be wrong under the current rules. You might say this stupid — because it is. But I can’t see a scenario in which pension fund managers are going to keep buying failed investments, even if they are bribed. This is like any other PONZI scheme or house cards. They all come to an end and people get hurt.

Now move over to the homeowner who “borrower” money from a fund that came from many investors like the pension fund above. He borrowed $100,000 and owes it to somebody, but who? The investor has written off the investment and expects to get their money back from the investment bank because the loan was not what they were told they would be getting. The investor wants no part of the homeowner’s house of obligation and doesn’t care if the homeowner has any obligation.

The investment bank through a myriad of bankruptcy-remote controlled vehicles steps in and says WE ARE THE AGENT FOR THE LENDER AND WE WANT TO FORECLOSE. And then in the suit with investors says WE ARE NOT YOUR AGENT OR FIDUCIARY AND THIS MONEY WE COLLECTED IS OURS. In plain language the investment banks are claiming the full value of the original investment, the profit they made from the “failure of the investment,” and the house from the borrower. Somehow this has been translated into a free house for the borrower if the borrower successfully challenges this scenario. Considering that the investment bank and its remote vehicles never loaned a dime of their own money and never bought the receivable from the homeowner, it is an inescapable conclusion that under current conditions IT IS THE BANK THAT IS GETTING A FREE HOUSE.

JPMorgan Accused of Breaking Its Duty to Clients

By LOUISE STORY

In the summer of 2007, as the first tremors of the coming financial crisis were being felt on Wall Street, top executives of JPMorgan Chase were raising red flags about a troubled investment vehicle called Sigma, which was based in London. But the bank chose not to move out $500 million in client assets that it had put into Sigma two months earlier.

Sigma collapsed a year later. Now, new documents unsealed late last month as part of a lawsuit by bank clients against JPMorgan show for the first time just how high the warnings about Sigma went — all the way to the office of the bank’s chief executive, Jamie Dimon.

While the clients lost nearly all their money, JPMorgan collected nearly $1.9 billion from Sigma’s demise, according to the suit. That’s because as Sigma’s troubles worsened, JPMorgan lent the vehicle billions of dollars and received valuable assets in the form of a security deposit.

After Sigma came undone in September 2008, many of those assets ultimately became JPMorgan’s and eventually appreciated in value, giving the bank a large profit, the suit says.

The case, which is filed as a class action and includes several pension funds as named plaintiffs, accuses JPMorgan of breaching its responsibility to keep its clients in safe investments, and it sheds new light on one of Wall Street’s oldest problems — whether banks treat their clients’ money with the same care that they treat their own.

Joseph Evangelisti, a spokesman for JPMorgan, called some of the suit’s accusations “ludicrous” and said the bank lent more than $8 billion to Sigma to try to help the vehicle survive, not to profit from its failure. He said the bank did its best to protect its clients’ money and that its dealings with Sigma were to the clients’ benefit.

The suit, however, asserts that JPMorgan workers developed a “grand scheme” to profit from Sigma in the event of a collapse, even though employees at another part of the bank left client money invested in the vehicle.

One internal e-mail between top executives, for instance, states that the firm needed to protect its own interests in its dealings with Sigma, without taking into account the clients’ position. The suit also contends that the bank’s loans to Sigma gave it access to the vehicle’s best assets, at a discount, which proved to be a profitable trade for the bank.

JPMorgan has said in a court filing that no such scheme existed and that it acted properly in the way it managed client money.

The bank argues that by law, different units of the company that dealt with Sigma could not share information, because of so-called Chinese walls, which are meant to prevent the spread of nonpublic information within the firm. According to this argument, the unit that invested client money in Sigma could not confer with the arm that lent the vehicle money.

But because the information rose to executives who oversee the entire company and were in a position to intervene, analysts say the issue is trickier.

“In one sense, I don’t think it’s good enough to say, ‘We’re a large organization, we can’t relay information.’ That, in many respects, is a cop-out,” said William Fitzpatrick, a banking analyst at Manulife Asset Management, a Canadian insurance company that is not party to the case. “Does Jamie Dimon have some sort of veto power where he can overrule it? That gets very gray.”

But he added, “I can see where the banks would come back and say, ‘The Chinese walls are there for a reason. We don’t want to put in manual overrides.’ ”

In many cases, the rules and practices banks follow are based on nonpublic information they receive.

It’s not as clear what a bank’s obligations are with insights that are based on public information, like some of the information related to Sigma.

Within the financial services industry, the case is being closely watched. A victory by JPMorgan’s clients may mean that banks will have to be more careful about deciding whether to share — or silo — information that affects their clients’ investments. The Securities Industry and Financial Markets Association, a prominent trade group, wrote a brief in support of JPMorgan last month saying that the pension funds that are suing had an “unprecedented and novel theory” that “contradicts decades of Congressional and regulatory guidance.” The trade group said that if the plaintiffs won, it would impose greater costs on banks.

Whatever the legal outcome, the new documents paint a picture of how one of Wall Street’s strongest players profited in its deals with the weak.

The events described in the suit, which was filed in Federal District Court for the Southern District in New York, began in the summer of 2007. That June, JPMorgan’s unit put about $500 million from pension funds and other clients into notes issued by Sigma, meaning those clients would be repaid based on how Sigma’s financial bets performed.

The investments were made by the bank’s securities lending unit, which stood to share in profits if the bet was successful but would not share in losses if it wasn’t.

According to the new documents, by that August, JPMorgan executives elsewhere in the bank began to worry about Sigma and other similar entities called structured investment vehicles, or SIVs.

Mr. Dimon is named in several documents related to these vehicles.

One e-mail in August 2007 said Mr. Dimon was interested in hearing about “the systemic risk of a complete unwind of all SIVs,” according to the suit. Another e-mail told a bank worker to prepare “a very real picture of the assets that will be unwound with particular focus on Sigma.” At the end of August, Mr. Dimon received a memo on the SIV market, with a note about Sigma in the cover sheet, according to the lawsuit.

That same month, a fixed-income executive, John Kodweis, wrote in an e-mail that he believed it was probable the entire sector would run into trouble.

If that were to happen, the SIVs might have to unload $400 billion in valuable assets at fire-sale prices, he wrote. He suggested the bank create a team, which the suit says it did, to take advantage of the forced selling.

In the same e-mail, Mr. Kodweis noted that the block of SIV investments that JPMorgan had made on behalf of its clients was among the top 12 investors in all SIVs.

Other top officials at the bank were also aware of the conflict. In September that year, as the bank’s top brass considered lending money to Sigma, the bank’s chief credit officer, Andrew Cox, wrote that “I have heard JPM Asset Mgmt are large buyers of SIV and Sigma CP,” referring to short-term debt called commercial paper. “Do we need to consider the firmwide position?”

The bank’s chief risk officer, John Hogan, wrote back that JPMorgan needed to protect its own position and not worry about what its clients were invested in.

By February 2008, credit continued to tighten, and Sigma was desperate for cash to finance its operations. An executive in JPMorgan’s London office, Mark Crawley, wrote that it was “unlikely” that Sigma would survive. He also said there could be risks to the bank’s reputation if it went ahead with the loan. Still, JPMorgan proceeded.

As time passed in 2008, bank executives did more trades with Sigma.

Mr. Crawley e-mailed Mr. Cox to say that the bank was treating its loans to Sigma as a “trade,” rather than as support for Sigma and that there were “very big moneymaking opportunities as the market deteriorates” because Sigma had what he called high-quality assets.

Mr. Cox described Sigma’s health as “a race against time” in a note to Bill Winters, then co-head of the investment bank, and Mr. Crawley.

By September 2008, when Sigma defaulted, JPMorgan had lent it a total of $8.4 billion and had received $9.3 billion of assets as a security deposit, according to the suit. The value of the collateral was dubious at that point, given the panic of the financial crisis, and it was unknown if the assets would decrease in value.

But a year later, many investments had risen in value, the suit says. JPMorgan made over $470 million in profit within a year of the default by selling off some of the collateral and had recorded a paper gain of $1.2 billion on assets it still held, according to the suit. The bank had also made $228 million in fees from Sigma in exchange for the loans. The total gain was nearly $1.9 billion, the suit says.

The pension funds whose money JPMorgan had put into Sigma lost nearly all of their investment. The suit said their $500 million became worth 6 cents on the dollar.

Mr. Evangelisti, the JPMorgan spokesman, said the bank disputed the profit figures but he would not say how much the bank believed it made on the Sigma transactions.

He also said the unit that put the client money in Sigma “closely monitored” the investment and did its best to decide whether to sell it early. He said a different client investment in Sigma was repaid in full to JPMorgan clients just weeks before Sigma collapsed.

The bank also said in a court filing that it would have been irrational for its executives and traders to try to obtain Sigma’s assets by lending money to the vehicle. The bank could have instead just purchased some of those assets, though they might have come at a higher price.

In addition, Mr. Evangelisti said it was Sigma that approached JPMorgan about the loans, and Sigma executives told the bank the loans would help the JPMorgan clients who were Sigma investors.

He added that in the fall of 2008, when it came time for the bank to auction off some of the assets JPMorgan had received from the failed vehicles, “in many cases there were no takers.”

33 Responses

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  4. .
    Now — anyone here — with all the millions of foreclosures — does anyone really think that servicers were/are advancing payments on delinquent loans — to the trustee???

    You’re creating liability for yourself here Cathy. We know already how I am a Rip off bad person, servicer who the BBB does not like. But you’re so out of line here.

    Servicers don’t drive this bus – the master servicer does. Upon reconciling the payment received it can issue a put to the transferor and that can be devastating where the good will is often ten times the value of the common trust registration. In a robust market they are absolutely keeping the scheme alive with payments from the nether for replacement purposes under a deleted asset right of substitution.

    In a down market – what. They are going to forego making $ 4 or $ 5 K in payments spanning 3 months so to trigger MI and OC and a subrogation liability costing $1.0 million for a $100K loan.

    People are reading your guessing game and it’s a dangerous means and method to keep yourself busy all day.

    Take shots at me all day and…Hey ….that’s what rocks your world so is it. But your professing gibberish and eluding to something most attorneys can’t see is a killer cause of action for material misrepresentation in a counter parties deal in order to preserve a right to foreclose under a deceptive effort in violation of SEC disclosure rules 1122AB .

    Stop it – go to your room.

  5. WAKE UP – YOUR FIGHTING AN ENEMY THAT DOES NOT EXIST – THESE ARE NOT FORECLOSURES FOR GOD SAKE …DEBT COLLECTOR….CREDITOR UCC 1 GAAP, IASB HELLO

  6. Mary_Cochrane@saveamericaone.com,

    Yes, Mary — on your last post. And, if servicers deem payments as non-collectible — they can stop advances at any time.

    Now — anyone here — with all the millions of foreclosures — does anyone really think that servicers were/are advancing payments on delinquent loans — to the trustee???

    Not only are servicers not advancing payments on delinquent loans — servicers are not paying trustee payments on CURRENT loans — no payments are going to trustee. Only payments going to trustees are on NEW securitizations — after the crash – which are all owned by the government.

    So — again, and again, and again, —- either servicer is acting for itself (a debt buyer)– or for undisclosed distressed debt buyer (investor) who obtained collection rights via default swaps — or by direct sale to to third party “investors.”

    Servicers – who claim right to collect — are collecting for another party who OWNS the collection right.

    Do not care about complicated accounting — and courts do not care. Courts do — or should — care that the real party is not standing before the court — and, therefore, the foreclosure is fraudulent. This, in fact, applies to every “securitized” asset — including credit card, autos, student loans, — etc.

    But, if we keep defending “investors” — we will continue down the “Rabbit Hole.” Forever buried — your real creditor. Which means, — you always owe the debt — even after foreclosure is completed. You are finished. But, never mind, government does not need to “advance” the cause of any homeowners — who servicer deems a “deadbeat.” We are disposable.

  7. MASTER SERVICER ‘BEST INTERESTS’ OF TRUST FUND

    As related to interest in Countrywide and…

    Lehman Brothers Holdings Inc. “LBHI” SELLER
    conveyed certain mortgage loans as identified on Exhibit C (Mortgage Loans) to

    STRUCTURED ASSET SECURITIES CORPORATION,

    a Delaware special purpose corporation (“SASCO”) which in turn has conveyed the Mortgage Loans to Citibank NA as TRUSTEE pursuant to TRUST AGREEMENT dated 3/1/2006

    Sasco 2006-3h • 8-K • For 4/14/06
    SEC File 333-82904-19
    Accession Number 891092-6-953

    4/14/06 Sasco 2006-3h 8-K{8,9}
    Filing Agent Doremus Fin..Printing/FA
    ________________________________________Current Report • Form 8-K
    8-K Current Report
    EX-1.1 Terms Agreement : EX-4.1 Trust Agreement
    EX-99.1 Execution Copy EX-99.2 Servicing Agreement
    EX-99.3 Reconstituted Servicing Agreement
    EX-99.4 Reconstituted Servicing Agreement
    EX-99.5 Master Mortgage Loan Sale and
    Servicing Agreement
    EX-99.6 Seller’s Warranties and Servicing
    Agreement

    ________________________________________

    EX-99.3 Reconstituted Servicing Agreement

    EXHIBIT A Modifications to the Sale & Servicing Agreement
    EXHIBIT B Sale and Servicing Agreement
    EXHIBIT C Mortgage Loan Schedule
    EXHIBIT D [Reserved]
    EXHIBIT E Assignment & Assumption Agreement
    EXHIBIT F – TRANSACTION PARTIES

    SELLER – Lehman Brothers Holdings Inc.

    SERVICER – GMAC Mortgage Corporation, a PA corporation

    Trustee: Citibank, N.A.

    Securities Administrator: N/A

    Master Servicer: Aurora Loan Services LLC

    Credit Risk Manager: N/A

    PMI Insurer(s): N/A

    Interest Rate Swap Counterparty: N/A

    Interest Rate Cap Counterparty: N/A

    Servicer(s):
    1. Aurora Loan Services LLC,
    2. Countrywide Home Loan Servicing LP,
    3. GMAC Mortgage Corporation,
    4. SunTrust Mortgage, Inc. and
    5. Wells Fargo Bank, N.A.

    Originator(s):
    1. Commercial Federal Mortgage Corporation,
    2. Countrywide Home Loans Servicing LP,
    3. GMAC Mortgage Corporation,
    4. GreenPoint Mortgage Funding, Inc.,
    5. NBC Mortgage,
    6. Realty Mortgage Corporation,
    7. SouthTrust Corporation,
    8. SunTrust Mortgage, Inc.,
    9.and Wells Fargo Bank, N.A.

    Seller: Lehman Brothers Holdings Inc.
    745 Seventh Avenue, 7th Floor
    New York, New York 10019
    Attention: Leslee Gelber
    Telephone: (212) 526-5861
    E-mail: lgelber@lehman.com

    Copy: Dechert LLP, 2929 Arch Street,Philadelphia, PA 19104
    Attention: Steven J. Molitor, Esq.

    All notices required to be delivered to the Servicer hereunder
    shall be delivered to the Servicer at the following address:

    GMAC Mortgage Corporation (SERVICER / COMPANY)
    100 Witmer Road
    Horsham, PA 19044
    Attention: Mike Kacergis
    Telephone: (215) 682-1401
    Email: mike_kacergis@gmacm.com

    7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
    ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
    NOTWITHSTANDING NEW YORK OR
    OTHER CHOICE OF LAW RULES TO THE CONTRARY.

    Lehman Brothers Bank FSB (BANK) acquired certain fixed and adjustable rate,
    conventional, 103% loan-to-value ratio loans from the SERVICER
    (GMAC MORTGAGE CORPORATION.

    Such loans originated or acquired by the SERVICER pursuant to
    Master Mortgage Loan Sale and Servicing Agreement dated 6/1/2005,
    Amended as of 3/1/2006 (“Amendment Req AB”) and collectively,
    The “Sale and Servicing Agreement”) and annexed as Exhibit B hereto.

    Assignment and Assumption Agreement 3/1/2006
    Exhibit E hereto SELLER “LBHI” acquired from Lehman Brothers Bank FSB all of
    Lehman Brothers Bank FSB rights, titles and interests in and to
    mortgage loans currently serviced under the Sale and Servicing Agreement.

    Assumed for the benefit of each GMAC MORTGAGE CORP and Lehman Brothers Bank FSB
    The rights and obligations of Lehman Brothers Bank FSB as OWNER of such mortgage loans pursuant to the Master Mortgage Loan Purchase Agreement.

    Lehman Brothers Holdings Inc. “LBHI” conveyed certain mortgage loans as identified on Exhibit C (Mortgage Loans) to
    STRUCTURED ASSET SECURITIES CORPORATION, a Delaware special purpose corporation (“SASCO”) which in turn has conveyed the Mortgage Loans to Citibank NA as TRUSETT pursuant to TRUST AGREEMENT dated 3/1/2006.
    EXHIBIT A

    Modifications to the Sale and Servicing Agreement

    http://www.secinfo.com (Free Account)

    Search: SASCO 2006-3h
    Click on 8K document

    Reconstituted Servicing Agreement is the tricky part. When your loan is in default the SERVICER has agreements and new transactions that will guaranty currency transactions and movement of roles and responsibilities of the MEMBERS of the private financial exchange, updates to agreements, amendments, and omissions, substantive omissions.

    http://www.secinfo.com/dr66r.vTm.htm

    “Search Box” ‘Foreclosue”

    Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
    Master Servicer or the applicable Servicer has determined that all amounts that
    it expects to recover on behalf of the Trust Fund from or on account of such
    Mortgage Loan have been recovered.

    Liquidation Expenses: Expenses that are incurred by the Master Servicer or
    any Servicer in connection with the liquidation of any defaulted Mortgage Loan
    and are not recoverable under the applicable Primary Mortgage Insurance Policy,
    including, without limitation, foreclosure and rehabilitation expenses, legal
    expenses and unreimbursed amounts expended pursuant to Sections 9.06, 9.16 or
    9.22.

    Liquidation Proceeds: Cash received in connection with the liquidation of
    a defaulted Mortgage Loan, whether through the sale or assignment of such
    Mortgage Loan, trustee’s sale, foreclosure sale or otherwise, or the sale of the
    related Mortgaged Property (including any Additional Collateral) if the
    Mortgaged Property (including such Additional Collateral) is acquired in
    satisfaction of the Mortgage Loan, including any amounts remaining in the
    related Escrow Account.

    TRUST AGREEMENT

    Servicing Advances: Expenditures incurred by a Servicer in connection with the liquidation or foreclosure of a Mortgage Loan which are eligible for reimbursement under the applicable Servicing Agreement.

    (vii) for each Mortgage Pool and in the aggregate, any Realized
    Losses realized with respect to the Mortgage Loans (x) in the applicable
    Prepayment Period and (y) in the aggregate since the Cut-off Date, stating
    separately the amount of Special Hazard Losses, Fraud Losses and
    Bankruptcy Losses and the aggregate amount of such Realized Losses, and
    the remaining Special Hazard Loss Amount, Fraud Loss Amount and Bankruptcy
    Loss Amount;

    (viii) the amount of the Master Servicing Fees, Servicing Fees and
    Trustee Fee paid during the Due Period to which such distribution relates;

    (ix) for each Mortgage Pool and in the aggregate, the number and
    aggregate Scheduled Principal Balance of Mortgage Loans, as reported to
    the Trustee by the Master Servicer, (a) remaining outstanding (b)
    delinquent one month, (c) delinquent two months, (d) delinquent three or
    more months, and (e) as to which foreclosure proceedings have been
    commenced as of the close of business on the last Business Day of the
    calendar month immediately preceding the month in which such Distribution
    Date occurs;

    (x) the aggregate principal balance of all REO Properties as of the
    close of business on the last Business Day of the calendar month
    immediately preceding the month in which such Distribution Date occurs;

    (xi) with respect to substitution of Mortgage Loans in the preceding
    calendar month, the aggregate Scheduled Principal Balance of all such
    Deleted Mortgage Loans, and of all Qualifying Substitute Mortgage Loans;

    Trustee will make such report and additional loan level information (and, at its option, any additional files provided by the Master Servicer containnig the same information in an alternate format) available eachmonth to Certificateholders and the Rating Agencies via the Trustee’s internet website.

    The Trustee’ s internet website shall initially be located at
    http://www.sf.citidirect.com 212-657-7781

    Mortgage Loan information prepared and determined by the Trustee based soley on Mortgage loan data provided to Trustee by Master Servicer…

    In preparing or furnishing the Mortgage Loan data to the Trustee, the Master
    Servicer shall be entitled to rely conclusively on the accuracy of the
    information or data regarding the Mortgage Loans and the related REO Property
    that has been provided to the Master Servicer by each Servicer, and the Master
    Servicer shall not be obligated to verify, recompute, reconcile or recalculate
    any such information or data.

  8. funny, just last week got another promo piece from JPM chase – get $100 for opening a checking account.

    there’s your 2 bil profit.

    But, then again, when you open up a checking account with Chase and get your 100 bucks, why they charge a 10 dollar monthly fee so in 10 months they get their money back plus whatever else you deposited. HaHaHa

  9. MortgageIT Securities Corp
    33 Maiden Lane
    New York, New York 10038
    6189 Asset-Backed Securities (ABSs)

    “as Depositor” – Structured Asset Mortgage Investments II Inc.

    Issue and See Mortgage Pass-Through Certificates

    Servicer make case advances with respect to delinquent payments of scheduled interest an dprincipal on the mortgage loans for which it acts as Servicer.

    Servicer ‘reasonably’ beleives such cach advances can be repaid from future payments on the related mortgage loans.

    If the related servicer fails to make any required advances, the master servicer may be obligated to do so as described in prospectus supplement. Cash advances intended to maintain a regular flow of scheduled interest and principal payments on the certificates and are not intended to guarantee or insurance against losses.

    TERMINATION:
    Depositor, or desigee may purchase all of the mortgage loans, together with any properties in respect thereof acquired on behalf of the TRUST and thereby effect termination and early retirement of the Certificates, after the sechedule principal balance of the mortgage loans (and properties acquired in respect thereof) remaining in the trust has been reduced to less than 10% of the scheduled principal balance of the mortgage loans as of _________, ________.

    See Pooling & Servicing Agreement – Termination

  10. Why did JPM t erminate in New York State:
    JP Morgan Securities, Inc.
    245 Park Ave NY NY 10167
    formerly Bear, Stearns & Co. Inc.
    Formed 9/3/1985 Terminated 9/1/2010

    Why did JPM leave Bear Stearns Mortgage Securities, Inc. dba Structured Asset Mortgage Investments, Inc. Active?

    6/5/1998 renamed to Structured Asset Mortgage Investments, Inc.Why did JPM leave active
    what is Bear Stearns Mortgage Securities, inc.
    Foreign busines corp formed 12/31/991,
    Jeffrey Mayer – Chairmain/CEO
    383 Madison Ave, NY NY 10179
    Jurisdiction Deleware
    Be an Active Corporation? County: New York

    In NYS there are 151 Bear and Bear, entities in NYS.

    STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.
    33 Madison Ave, NY NY 10179-0024
    Chairmain/CEO
    Jeffrey Louis Verschleiser
    Active since 9/16/2003
    Jurisdiction Delaware

    STRUCTURED ASSET MORTGAGE INVESTMENTS II INC.

    Corporation’s registered agent in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle

    Definitions:
    (i) “person” means any individual, proprietorship, trust, estate, partnership, joint venture, association, company, corporation, limited liability company or other entity,
    (ii) “affiliate” means any person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the person specified and
    (iii) “control,” including the terms “controlling,” “controlled by” and “under common control with,” means the direct or indirect possession of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of at least 10% of the voting securities, by contract or otherwise.
    Corporation shall at all times have at least one
    (1)Independent Director

    “Independent Director” means a director”

    (i) who is not a current or former director, officer, partner, member,
    shareholder, employee, creditor or customer of the Corporation
    or of any affiliate of the Corporation, and is not a spouse,
    parent, brother, sister, child, aunt, uncle or cousin of any
    such person, and

    (ii) who has not received, and was not a director, officer, partner, member, shareholder or employee of any person that has received, any fees or other income other than fees for serving as such Independent Director from any
    affiliate of the Corporation within the five (5) years
    immediately preceding, or any year during, such director’s
    incumbency as an Independent Director.

    However, an Independent Director may serve, or may have served previously, with compensation therefor in such a capacity for any other special
    purpose entity formed by any affiliate of the Corporation.

    No resignation or removal of an Independent Director shall be
    effective until a successor Independent Director has been
    elected to replace such Independent Director.

    The Corporation has been formed for the sole
    purpose of conducting the following activities:

    (a) Acquiring as purchaser and/or by contribution to the capital
    of the Corporation, or otherwise owning, holding,
    transferring, assigning, selling, contributing to capital,
    pledging and otherwise dealing with

    (i) mortgage notes and
    similar such instruments, related real property, mortgages,
    deeds of trust and other related agreements, documents, books
    and records,

    (ii) related rights to payment, whether
    constituting cash, account, chattel paper, instrument, general
    intangible or otherwise, and any other related assets,
    property and rights, including without limitation security
    interests,

    (iii) related collection, deposit, custodial, trust
    and other accounts, lock boxes and post office boxes and any
    amounts and other items from time to time on deposit therein,

    (iv) real property and any improvements thereon and personal
    property acquired by foreclosure, deed-in-lieu thereof or
    otherwise in respect of any of the foregoing,

    (v)certificates, notes, bonds or other securities, instruments
    and documents evidencing ownership interests in or obligations
    secured by all or any of the foregoing,

    (vi) financing arrangements and

    (vii) proceeds and other payments and
    distributions of any kind of, on or in respect of any of the
    foregoing;

    (b) Entering into financing arrangements of all types with respect
    to the assets described in foregoing paragraph

    (a) including without limitation borrowing on a secured or unsecured basis
    and entering into repurchase agreements, directly or
    indirectly through corporations, partnerships, limited
    liability companies, business trusts, common law trusts and
    other special purpose entities established for such purposes,
    and in connection therewith issuing notes, bonds and other
    evidences of indebtedness and granting security interests in
    assets pledged to secure such indebtedness.

    (c) Authorizing, issuing, selling and delivering, directly or
    indirectly through corporations, partnerships, limited
    liability companies, business trusts, common law trusts or
    other special purpose entities established solely for such
    purpose, certificates, notes, bonds and other securities,
    instruments and documents evidencing ownership interests in or
    obligations secured by all or any portion of the assets

    described in foregoing paragraph (a), and in connection
    therewith entering into servicing, insurance, credit
    enhancement, reimbursement and other agreements related
    thereto; and

    (d) Taking any action necessary or reasonable to enable the
    Corporation to engage in any lawful act or activity and to
    exercise any powers permitted to corporations organized under
    the laws of the State of Delaware that are related or
    incidental to and necessary, convenient or advisable to
    accomplish any of the foregoing.

  11. […] jpm-makes-2-billion-while-investors-lose-500-million EDITOR’S NOTE: If the press can ask the questions leading right up to the top of the […]

  12. dahotruth. Regarding Joseph Goebel you can manipulate the truth for so long. It is very energy consuming and the Truth or the Laws of Nature will always prevail. Just like Gravity You can manipulate gravity for so long but eventually you will fall down.

  13. All you have to do is prove that the chain of tile was broken the rest is nonesense bullsh@t.

    A good Bankster is a Jailed Bankster.

    We live in a land of laws we are not animals.

  14. Follow the yellow brick road…… somewhere over the rainbow……

    http://www.kitco.com/charts/techcharts_gold.html

    http://www.kitco.com/charts/techcharts_silver.html

    If you have not read Web of Debt, I highly recommend you do, I got a copy at my local library to read:

    http://sjlendman.blogspot.com/2009/05/reviewing-ellen-browns-web-of-debt-part.html

  15. Dahotruth, you did not get back to me re AHMSI??

    Burmese8@yahoo.com

  16. This is an interesting article. Read the comments

    http://www.latimes.com/business/la-fi-lazarus-20110412,0,1228879.column?track=rss

  17. SIVs were risky investments that included much arbitrage and SPVs in portfolio.

    Surprised AFTRA and other pension funds even invested in SIVs.

  18. Joseph Goebbels, Hitler’s propaganda minister said:
    “If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

  19. I haven’t seen this posted here yet.

    American Home Mortgage Servicing Inc. responds to 60 Minutes.

    http://stopforeclosurefraud.com/2011/04/07/highlights-from-an-ahmsi-letter-to-60-minutes/

  20. Right on about the fear factor, cubed2k. That’s why they threw Mr. Engle in jail–to scare all of us. Like you, I didn’t understand our system of debt slavery until about 5 years ago. But I definitely get it now!

  21. and of course, you must realize, that because 80% of the people are good, they just can’t believe somebody would do evil, if doesn’t compute and it is the hardest thing to confront and believe – nobody would do such a thing as fraud? I don’t believe it, there are laws, how can this be, I must be wrong?

  22. fraudfigther, and of course you have to realize that only about 2% of the people are really evil, and about 20% are connected to those evil people, and realize, and look over your life, that 80% of the people are white hats that just want to live a good life and do no harm to others. Unfortunately it is the few that create harm to the bulk of people, that means people in power positions. Oh we can make mistakes on voting because the evil speak with fork tongues.

  23. fraudfighter,

    we are doing it as we speak on this forum. It is best word of mouth, via your friends and family, showing good easy print outs of data you have found. Word of mouth is better than commercials. Friends believe friends and their stories. I have really not paid my credit cards in two years, same for my wife, we are talking about 120k of debt. We have nothing to lose, as we have lost it all. But, we are doing right good now. And we have not paid one dime to the system, and that includes lawyers, as we are self educated at this point in time. And I have no fight with a lawyer, but of course, like anything nowadays, you got to figure out who are the white hats and black hats, it has been going on forever right, anyways. Trust in the system doesn’t mean anything, the system, yah right. .

  24. cubed2k

    Those ideas are good and is what gives power to the people. The only power we have. Can we not take all business away from the Big Bullies and go to neighborhood credit unions. Can we name who to buy gas from and where to shop. How about insurance companies? Title companies. Cash only, no credit cards. Maybe we could even start a new monetary system (barter or credit as we swap services).
    There is some things we can do if enough of us can be informed.
    Any more ideas on how to do this on a big scale?

  25. so stay away from the banks.

    so, have you:

    moved your money from the big banks to a local credit union where there are no high CEO salaries?

    default on your credit cards if you are bankrupt protected, ie you have nothing to lose or just file bankrupcy and get it over with, or who cares like me?

    if in the stock market and made gains from the low of a few years back, sold your stock or shares in mutual fund or 401k to lock in gains? be your adviser here.

    saved your money?

    if not bankruptcy proctected, paid off your god dam credit cards and stupid car loans?

    Pay cash for everything?

    Bought some silver or gold?

  26. You gotta see this

    http://theforeclosuredetonator.wordpress.com/

  27. jeepers, holy one hundred years later Batman:

    from below posted article

    Manipulating markets is commonplace and as old as investing. Only the tools are more sophisticated and amounts involved greater. In her book, “Morgan: American Financier,” Jean Strouse explained his role in the Panic of 1907, the result of stock market and real estate speculation that caused a market crash, bank runs, and hysteria. To restore confidence, JP Morgan and the Treasury Secretary organized a group of financiers to transfer funds to troubled banks and buy stocks. At the time, rumors were rampant that they orchestrated the panic for speculative profits and their main goals:

  28. from the link I provided below:

    Fitts explains that much more than market manipulation goes on. She describes a “financial coup d’etat, including fraudulent housing (and other bubbles), pump and dump schemes, naked short selling, precious metals price suppression, and active intervention in the markets by the government and central bank” along with insiders. It’s a government-business partnership for enormous profits through “legislation, contracts, regulation (or lack of it), financing, (and) subsidies.” More still overall by rigging the game for the powerful, while at the same time harming the public so cleverly that few understand what’s happening.

  29. It has been going on for a long time.

    http://sjlendman.blogspot.com/2009/05/manipulation-how-markets-really-work.html

    I wonder how many people used their 401k’s, borrowed from family and friends, etc to
    A) pay their credit cards when things went bad for themselves by job lose or the economy in general
    B) to make payments on their house when things went bad for themselves?

    I know of one, me, before I knew anything related to the banks, mortgages, credit cards, ABS, MBS. I’ve been in debt all my working life to these god damn banks or other financial inst. Never again. I’m 50 and never really knew how money came in existance and how it is manipulated, I had no clue, just trust in the banks and US Gov, Federal Reserve. Oh my lord, what a racket. Unbelievable.

    And they want to keep you in fear, don’t walk away, don’t default, don’t file bankrupcy, ohhhh you’re bad. Commercials on TV, IS the IRS knocking on your door, behind in tax payments, fear, fear, fear. Every year I owe money to the IRS, every year I go on a payment plan, every year never a problem, I called them, never a problem. I swear to god all these horror stories are put out just to keep people in fear. What a bunch of horseshit. Well, you ain’t got my house yet, and you keep calling me to collect on my credit card debt, 2 years now default, and lets see there had been a change of collectors of 3 each for each of the 4 credit cards. Call all you want, send me letters all you want, I’ll never respond to reaffirm your make believe debt that was written off, and it don’t bother me. I think it’s rather humorous nowadays.

    I’m gonna start a collection company and buy the unpaid default debt of Europeans, China people’s, Japan peoples, Australia people’s, India people’s, and I’m gonna collect on their debt. Every joint that has a Central Bank, it’s all the same crap. Who wants to join me?

  30. Cramer — PLEASE!!! The guy is really — MAD DOG.

    INVESTORS??? Investors are stealing your homes!!!

    Sorry Neil — that is is what is going on. They purchase loans dirt cheap — put you in default — refuse modification — then foreclose for a profit.

    AND ALL — deregulated — no one knows your name.

    Government — answer — well, if I were an investor — I would not want my name out there!!!
    And, that is exactly what they have done.

    This is now an extremely serious problem — and no one here to argue it.

    Investors are NOT homeowners friends.

  31. I think we all see that certain members of the media and so-called academics are in on the flim flam. They are all telling us that the house is really black when, in fact, it is really read. Very sociopathic. Burmese8@yahoo.com

  32. Your editorial note above made me think of another cause of action. We couldn’t get a modification, however, we were approved for a refinance that only stopped the bleeding of our savings a little longer wherein a modification would have made it possible to regroup. We were charged $10,000 in points and fees alone at a rate we could have gotten outside cheaper. BofA filled out the application, determined the value of our home without an apprasial and inflated the value, inflated our incomes even with the tax returns provided to them and approved us with an 45% front and 85% back ratio. Of course, doomed to fail. Our reason for taking it…to buy time and figure out a plan B. BofA also said that we could continue to re-apply for a mod. We gave up on that one.
    If they, in fact, did receive funds based on the failure that they themselves set up, would that not be a separate cause of action? Just a thought.

  33. I found this today from 2/06/07:

    Cramer: Countrywide Still Looks Like a Buy

    The conundrum of Countrywide (CFC_) going up even as another subprime dealer, Mortgage Lenders Network, goes under, may be answered by a simple tenet: The weak hands are going under, leaving the biggest and best to triumph.

    When I pulled up with Angelo Mozilo, the man who built Countrywide — the man who is Countrywide, some would say — we joked about how strong Countrywide’s business is because it has always “modeled” the bad loans better than anyone. One of the mistakes made by the analyst community is believing that any loans that go under could be death to a lender. In truth, the good ones model what will happen under a lot of scenarios, and it is pretty clear that Countrywide has the best models. Always has.

    When the company’s stock got bid up on takeover rumors, despite insider selling, I expected it to come right back down.

    It didn’t because what’s really happening is the long-awaited shakeout. There have been too many crummy players in this business. You are seeing the small ones go under — and some larger private ones, too. What you aren’t seeing is the pullback in the major brokerages’ business that is emblematic of a recognition that the margins got too bad in the subprimers that they bought to get the flow for mortgage back. You heard this if you listened closely on all the big brokers’ conference calls.
    If the brokers are pulling back and the smaller independents are going belly up, that leaves Countrywide to reap the benefits of the inevitable expansion in margin that comes from the end of the price wars for subprime.

    That’s why it is going up. That’s why it will continue to go up. That’s why Countrywide is still a buy, despite the problems in housing and the headlines about how bad this business is.

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