COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE


EDITOR’S COMMENT: DICK DURBIN said it when the democratically controlled senate and house refused to even inquire about the real nature of the securitization illusion — “The Banks own the place.” He was of course referring to the incredible amount of influence of the banking lobby fueled by hundreds of millions of dollars in campaign cash and other benefits. Now SISA — Stated Income, Stated Assets — has acquired new meaning, this time for the banks, who are using it as fraudulently as the mortgage brokers who “corrected” homeowner applications for loans to reflect the amount of income and assets needed to justify the underwriting of the loan. Now it means to justify the stock prices, management jobs, and business viability of broken banks.

And with nearly 1 million homes “owned” by the banks, the housing market looks weaker indefinitely. How could these prices and the prospect of lower prices be possible? It’s easy. The whole thing is based upon a false premise that nobody wants to face — the banks do NOT own those properties. They are legally owned by the homeowners who were the subject of false and fabricated foreclosures initiated by non-creditors with no skin in the game except the desire to get a “free house.” They never loaned the money, they never bought the “loans,” the loans were defective from the start, and they never had the right to purchase those homes with a non-cash (credit) bid at auction because the auction was fraudulently obtained and the credit bid was devoid of any reality.


Ask any real estate professional and they won’t be able to come up with a fundamental reason why the housing market went down this far nor why the prospects for the housing market are still lower. Ask them or any economist, and the answer slowly emerges by process of elimination — there is no fundamental reason for this situation because it isn’t real. You want the economy to recover? Remove the illusion of securitization of loans, unless they are proven under existing laws and existing rules of evidence, and then the unthinkable happens — the wealth that was stolen from the American middle class turns out not to have been stolen after all — the victim is simply giving up what was stolen because the victim is convinced the scam was real.

Let’s see what happens as the Title Companies start to tackle this issue because they have potential liability in the trillions, which is money they don’t have. The simplest way out for them is to state that there is no claim against the title policy because the loss never occurred. If the homeowner still owns the house then who is to be paid. If the “lender” at closing (pretender lender” never loaned any money, there is no loss. If any other named payee on the insurance policy lost no money, then the title policy does not come into play.

If you want a stimulus to the economy, the just tell the truth. The mortgages are fatally defective, they were never transferred, they were never intended to be transferred, and borrowers’ undocumented obligations have long since been extinguished by the feeding frenzy on Wall Street from the money advanced by investors and paid by borrowers, federal bailouts, insurance, credit default swaps, guarantees and settlements. Check it out yourself. This sounds crazy because it is — it is crazy-making by the world’s largest financial institutions (on paper) when in fact they are not large and not even viable if their auditors would just do their job and tell the truth.

How far will this go, dragging housing prices and the the prospects of recovery down with them? It looks like the answer is it will go as far as we let them.

May 22, 2011

As Lenders Hold Homes in Foreclosure, Sales Are Hurt


EL MIRAGE, Ariz. — The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.

All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.

Five years after the housing market started teetering, economists now worry that the rise in lender-owned homes could create another vicious circle, in which the growing inventory of distressed property further depresses home values and leads to even more distressed sales. With the spring home-selling season under way, real estate prices have been declining across the country in recent months.

“It remains a heavy weight on the banking system,” said Mark Zandi, the chief economist of Moody’s Analytics. “Housing prices are falling, and they are going to fall some more.”

Over all, economists project that it would take about three years for lenders to sell their backlog of foreclosed homes. As a result, home values nationally could fall 5 percent by the end of 2011, according to Moody’s, and rise only modestly over the following year. Regions that were hardest hit by the housing collapse and recession could take even longer to recover — dealing yet another blow to a still-struggling economy.

Although sales have picked up a bit in the last few weeks, banks and other lenders remain overwhelmed by the wave of foreclosures. In Atlanta, lenders are repossessing eight homes for each distressed home they sell, according to March data from RealtyTrac. In Minneapolis, they are bringing in at least six foreclosed homes for each they sell, and in once-hot markets like Chicago and Miami, the ratio still hovers close to two to one.

Before the housing implosion, the inflow and outflow figures were typically one-to-one.

The reasons for the backlog include inadequate staffs and delays imposed by the lenders because of investigations into foreclosure practices. The pileup could lead to $40 billion in additional losses for banks and other lenders as they sell houses at steep discounts over the next two years, according to Trepp, a real estate research firm.

“These shops are under siege; it’s just a tsunami of stuff coming in,” said Taj Bindra, who oversaw Washington Mutual’s servicing unit from 2004 to 2006 and now advises financial institutions on risk management. “Lenders have a strong incentive to clear out inventory in a controlled and timely manner, but if you had problems on the front end of the foreclosure process, it should be no surprise you are having problems on the back end.”

A drive through the sprawling subdivisions outside Phoenix shows the ravages of the real estate collapse. Here in this working-class neighborhood of El Mirage, northwest of Phoenix, rows of small stucco homes sprouted up during the boom. Now block after block is pockmarked by properties with overgrown shrubs, weeds and foreclosure notices tacked to the doors. About 116 lender-owned homes are on the market or under contract in El Mirage, according to local real estate listings.

But that’s just a small fraction of what is to come. An additional 491 houses are either sitting in the lenders’ inventory or are in the foreclosure process. On average, homes in El Mirage sell for $65,300, down 75 percent from the height of the boom in July 2006, according to the Cromford Report, a Phoenix-area real estate data provider. Real estate agents and market analysts say those ultra-cheap prices have recently started attracting first-time buyers as well as investors looking for several properties at once.

Lenders have also been more willing to let distressed borrowers sidestep foreclosure by selling homes for a loss. That has accelerated the pace of sales in the area and even caused prices to slowly rise in the last two months, but realty agents worry about all the distressed homes that are coming down the pike.

“My biggest fear right now is that the supply has been artificially restricted,” said Jayson Meyerovitz, a local broker. “They can’t just sit there forever. If so many houses hit the market, what is going to happen then?”

The major lenders say they are not deliberately holding back any foreclosed homes. They say that a long sales process can stigmatize a property and ratchet up maintenance and other costs. But they also do not want to unload properties in a fire sale.

“If we are out there undercutting prices, we are contributing to the downward spiral in market values,” said Eric Will, who oversees distressed home sales for Freddie Mac. “We want to make sure we are helping stabilize communities.”

The biggest reason for the backlog is that it takes longer to sell foreclosed homes, currently an average of 176 days — and that’s after the 400 days it takes for lenders to foreclose. After drawing government scrutiny over improper foreclosures practices last fall, many big lenders have slowed their operations in order to check the paperwork, and in two dozen or so states they halted them for months.

Conscious of their image, many lenders have recently started telling real estate agents to be more lenient to renters who happen to live in a foreclosed home and give them extra time to move out before changing the locks.

“Wells Fargo has sent me back knocking on doors two or three times, offering to give renters money if they cooperate with us,” said Claude A. Worrell, a longtime real estate agent from Minneapolis who specializes in selling bank-owned property. “It’s a lot different than it used to be.”

Realty agents and buyers say the lenders are simply overwhelmed. Just as lenders were ill-prepared to handle the flood of foreclosures, they do not have the staff and infrastructure to manage and sell this much property.

Most of the major lenders outsourced almost every part of the process, be it sales or repairs. Some agents complain that lender-owned home listings are routinely out of date, that properties are overpriced by as much as 10 percent, and that lenders take days or longer to accept an offer.

The silver lining for home lenders, however, is that the number of new foreclosures and recent borrowers falling behind on their payments by three months or longer is shrinking.

“If they are able to manage through the next 12 to 18 months,” said Mr. Zandi, the Moody’s Analytics economist, “they will be in really good shape.”

22 Responses

  1. To Rickincolorad,

    Ms Riley keeps delaying her deposition…still hasn’t happened.

  2. Carie

    Whoever owns collections rights — which they purchased DIRT CHEAP — makes a bundle on the foreclosure.

    Profit – greed- profit –greed.

  3. And what the hell do they do with the house when they “acquire” it—illegally????
    MORE FRAUD!!!!!!!!!!!!

  4. Duh, they get the house 4 cheaper if they drive the market value down. Plus deficiancy judgements ensuring their grip on borrowers.


  6. Rickincolorad,
    I too would like to know about any deposition involving Cynthia Riley. I believe that Cynthia Riley is actually a WAMU/Chase employee in Jacksonville, Florida, attempting to obfuscate her name by styling herself as “Cindy Riley.” It further turns out that Mrs Riley together with her husband Michael are the “purchasers” of hundreds of properties obtained from WaMu via Chase (obvious authority problems).
    I also believe that WAMU lost its “Federal Association” standing in August 2007, and assuming the stamp was placed on the Note after that, the stamp is a forgery … Big problems for JP Morgan Chase.
    All this raises serious questions as to the authenticity of these Indorsements.

  7. Can anyone tell me if ” Cynthia Riley” was deposed as of yet.??? I was told she was found hiding in Florida and naturally being protected by the banksters and their hired guns.

    Last I heard it was supposed to happen sometime at the end of April…or early May.

    Please help… She ” stamped” my….supposed Note.


    Rick L.

  8. From the article:

    “Wells Fargo has sent me back knocking on doors two or three times, offering to give renters money if they cooperate with us,” said Claude A. Worrell.

    Hey, why stop the bribes now? Fraud and bribes make the world go ’round…especially in the mortgage industry…

  9. Let’s get real here. First, the banks wrote more loans than they can hold. There is no magic wand to undo that mess lest Congress raises their ratio limits or regulates a special derivatives statute that allows banks to “receive”, reconstruct and hold fallen loans as the trusts explode; Second, they are in such financial turmoil and on the brink of collapse that they figure if they “own” a lot of American properties the government will continue to rescue them and won’t let them be taken over by the foreign interests that they are heavily indebted to for selling these ‘shitty deals’; Third, REOs are the new “gold standard”… banks have moved the “toxic asset” (boy, is that an oxymoron?!) out of the liability column and in to “Assets” – ignoring the taxes, homeowner fees, maintenance, etc. making their quarterly reports look like profits – because you don’t see the actually unpaid expenses of their REOs. But the investor market isn’t buying all of that and it isn’t coming back – see BAC stock today??? Down again 11.47… 3 months straight tanking.

    SOLUTION: What we need to do is convince the states that they need to take over the loans written from 2003-2008 as part of the AG Settlement PLUS cash to help the state set up a housing agency and reconstruct the loans with the borrowers at current market value and 2% for 30 years in lieu of litigation. The banksters have been paid. If the investors can prove that they haven’t been paid by the banks, insurance or TARP then the states can negotiate a reconstructed deal with them. The states recover (from their bad securities investments) and new revenue; the borrowers get to keep their home and are compensated by the reconstruction of their loan in lieu of litigation; and investors have an avenue much cleaner than through the banks, if applicable.

    If the banks can’t survive without these deceptively mortgaged properties – too damn bad. Somebody will buy them (the banks) – or like Lehman, IndyMac and the rest… dust to dust. Long live Credit Unions!


    Have been saying — “You ain’t seen nothing yet!!!”

    Piece by piece — bit by bit — COMING.

  11. tnharry ,

    The FRAUD is so thick here in Florida that almost every bank owner property is being sold with a “special warranty deed” and for cash only… Neil was right on the mark.

  12. @tnharry: I suggest you read John Gault’s blog, Source of Title. They are concerned with title issues, as is NAILTA. As a matter of fact, there are some quite spirited discussions/articles on how they feel about MERS and clouded titles. Are you a bankster or a bankster’s astroturfer, tnharry, just wondering.

  13. carie,


  14. tnharry,

    quote — “What the readers of this site accept to be common knowledge about the state of the mortgage and banking industries is not reflected in land records, which is the only thing that matters.”

    NO – Mr. harry — NOT the only thing that matters — if those land records are fraudulent — which they are.

  15. I liked Neil’s comment about “corrected” application. I do basic loan package reviews for attorneys to see if I find any irregulatities. About 30% of the time I find an application, signed at closing, that does not even closely resemble the income figures for the borrower.

    I generally am able to obtain the borrower’s original application. I then compare it to the “falsified” application that the borrower was tricked into signing at closing thinking it was a copy of their original nicely typed. The falsified application usually has higher income numbers.

    Last week I encountered an application that was BLANK for the employment section and the income section. The only asset listed was the house at the appraised value set by the appraiser for purposes of that loan.

    I find this shocking. I am quite certain the borrower did not go to the broker and say “I have no job and I have no income”. I know there are NINJA loans, but doesn’t the lender at least need an application with some information filled out?

    I thought that the NINA and NINJA loans meant that the job, the income and the assets were not VERIFIED, not that they did not exist!

    Are lenders not required to uphold some type of underwriting standard?

    Any comments on what motivates the lender to change the application would be appreciated. Also, do you think it is unlawful to submit a false application at a loan closing and “trick” the borrower into signing it?


  16. @tnharry:

    BSE, on May 23, 2011 at 12:42 pm said:

    There are two different transactions with different parties which where never disclosed.
    Someone used the borrower’s signature to commit fraud. The note is null and void.

  17. Once again Neil editorializes on a topic that the quoted story isn’t even based upon….

    These homes are in fact being sold. Recent statistics say that 40% of the sales are bank-owned properties. As the article says, they are trying to sell off in a controlled manner to prevent the type of crash that we would find with almost a million “fire sale” priced homes flooding the market. It’s actually a positive article I think.

    And there’s nothing about the title insurance issue contained therein. Contrary to what’s being preached here and swallowed hook, line, and sinker – a foreclosed house has a clear title. Unless there is some litigation or additional lien filed of record, title is completely clear after foreclosure. What the readers of this site accept to be common knowledge about the state of the mortgage and banking industries is not reflected in land records, which is the only thing that matters.

  18. You guys see the news? Federal False Claims Act Violations: This is Huge !

  19. Yet there is a puzzling aspect to this story: if these foreclosed properties are not salable due to wrongful practices leading to titles that cannot be insured, then who are the buyers? A foreclosed house is essentially radioactive: if you buy it, you probably cannot sell it later, as nobody wants a house with defects in the title. So, either there are really stupid buyers out there, or really stupid people working at the title companies, or some other explanation is coming into play.

    My conclusion is different. I think housing prices are going back to some “natural level” where the speculation level is removed. A “natural level” would be the cost of replacing the house (the construction cost) plus some small amount for the land lot, say $5,000 or $10,000. Anything above that represents some artificial component that is essentially speculative.

    The reason I suggest prices head back to their equivalent of replacement costs is that the natural ability of the US population to increase is not there. The “fecundity rate” of the population is below the rate needed to sustain itself, and what has stopped a population crash is immigration. In effect, all housing demand is the result of migration. Against the day that migrants are barred (already partly in place) and existing migrants are deported (a possibility), then housing prices will collapse and new stock will not be built except on whim by the wealthy. These factors seem not to be considered in the above analysis.

  20. GROUND ZERO is Foreclosure in Equity. This is what the mortgage servicers and pretend lenders depend on to get your Home back from you. No trial – No jury – Just summary justice. Don’t let them! We’ve been screaming for months now – BRING YOUR CASE TO A JURY – a Jury of your underwater in equity peers – a Jury – who after hearing the facts will might be inclined to send a message to the corruption of the banks who robbed us out of our life savings. File a compulsory counterclaim with a demand for Jury trial. No summary judgments can proceed until the Counterclaim is heard. This is the law upheld in Florida for the past 40 years. For the trial courts who still wants to try your foreclosure in equity? Pay the $395 and have the DCA’s reverse and remand – they will.

Contribute to the discussion!

%d bloggers like this: