Bloomberg: Lawsuits Between Institutions Might Get More Traction on Securitization Scam


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EDITOR’S NOTE: If you look at the Landmark case from Kansas and several other rulings which corroborate and apply the arguments often advanced unsuccessfully by individual homeowners, you will see a pattern: where it is institution vs. institution, the arguments were taken more seriously and the law is applied as intended. I have often stated that the interests of the investors and the interests of the homeowners are actually aligned fairly closely because they were both cheated by the same scheme using the same tools of appraisal fraud, ratings fraud and violation of the standards of the industry applied to under writing home loans, as well as recording statutes.

If investors are not willing to actually join with homeowners, then homeowners have the opportunity to ride the coat tails of the investors as they pursue claims that are extremely close, on the facts and on the law, to the defenses and claims of homeowners. The investors are virtually all financial institutions, representing the interests of pensioners and other third party beneficiaries who thought their retirement and benefits were safe.

At the bottom of the article note the asst-backed pool that is the subject of litigation in each case. Then note the allegations made with respect to each one. If you are fighting or intending to fight foreclosure or looking to modify your loan you will find that they are alleging many of the same facts that you wish to allege in your lawsuit or defense. Follow these cases closely and report back here.

Banks May Fight Banks Over Mortgage Suits

By Thom Weidlich – Sep 9, 2011 9:01 PM MT

JPMorgan Chase & Co. signage is displayed at a bank branch in New York. Photographer: Robert Caplin/Bloomberg

Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and other banks may pay more to resolve claims over their alleged roles in the collapse of a $2.3 trillion mortgage- backed securities market if sophisticated investors are allowed to sue as a group along with less savvy ones.

Class-action status allows investors to pool financial and legal resources, giving them greater leverage to win larger settlements or verdicts. The banks, however, have a court ruling on their side that may help fend off such blockbuster cases. It says class status is barred because some investors are too sophisticated — in fact, because some of them are other banks, including JPMorgan.

“It is possible to be both an alleged perpetrator and victim at the same time,” said Jacob S. Frenkel, a former U.S. Securities and Exchange Commission lawyer now in private practice in Potomac, Maryland. “It’s unprecedented that you have the most sophisticated institutions as victims, to be in a position where their losses are so great that they have sued.”

The ruling by U.S. District Judge Harold Baer Jr. in Manhattan, favoring defendants Royal Bank of Scotland Group Plc (RBS) and Ally Financial Inc., held that investors may not sue as a class in part because some of them are being sued over the same claims. Last month, that ruling was countered by two judges in Baer’s courthouse, both of whom ruled that investors in home- loan backed securities may sue as a class.

Housing Bubble

Pools of home loans securitized into bonds were a central part of the housing bubble that, once burst, helped push the U.S. into the biggest recession since the 1930s. Investors have filed class-action, or group, lawsuits against at least 16 private issuers of securities backed by mortgages.

Mortgage-bond deals now involved in the class-action suits originally held $204.6 billion of loans, an amount that’s fallen to $89 billion amid defaults, borrower refinancing and home sales, according to data compiled by Bloomberg and a list of transactions provided by New York-based law firm Grais & Ellsworth LLP. Realized losses so far total $26.6 billion, with an additional $33.8 billion of remaining loans at least 30 days delinquent.

“Class certification raises the stakes tremendously,” said Alan White, a law professor at Valparaiso University in Indiana. “The damages are going be greater in a class action than a series of individual cases.”

The investors accuse the defendant financial companies of lying about the quality of the home loans underlying the securities they back, which have deteriorated in value. The defendant banks argued the housing collapse, rather than any misrepresentation on their part, caused investor losses.

Shrunk to $1.21 Trillion

From its $2.3 trillion peak in 2007, the market for mortgage-backed securities has shrunk to $1.21 trillion as of June 30, according to the Federal Reserve.

The class actions involve some of the same securities over which the Federal Housing Finance Agency sued Bank of America, New York-based Citigroup Inc. and 15 other financial institutions on Sept. 2. Those complaints were filed on behalf of Fannie Mae and Freddie Mac, the mortgage-finance companies under government conservatorship. The securities at issue in those cases total $196 billion.

Ruled for Investors

On Aug. 22, U.S. District Judge Jed Rakoff in Manhattan issued an opinion explaining why he had earlier ruled that investors, including Mississippi’s public pension system, may sue Charlotte, North Carolina-based Bank of America’s Merrill Lynch unit as a group in a unified lawsuit.

A week earlier, U.S. District Judge Paul A. Crotty in the same court similarly held that investors including the New Jersey Carpenters Health Fund may also collectively pursue their claims against Credit Suisse Group AG (CSGN)’s DLJ Mortgage Capital.

Rakoff and Crotty weren’t swayed by bank arguments that securities buyers couldn’t band together because they were sophisticated investors who knew about deteriorating home- lending practices before the meltdown. The plaintiffs knew that in part because some of them are also being sued over the same claims, the defendant banks argued.

The inability to sue as a group would mean many investors won’t pursue their claims, plaintiffs’ lawyers said.

“Getting a class certified in a case like this, in any case, is an important part of the litigation,” said Gerald Silk, a partner at Bernstein Litowitz Berger & Grossmann LLP in New York representing investors suing Merrill Lynch.

Three Funds

The three funds seeking to represent the class against Detroit-based Ally bought a total of $1.79 million of the $3.7 billion in securities issued, they wrote in court papers. The case has so far cost more than $3.5 million to litigate and may run to three times that if it goes to trial, showing the need for class-action treatment, they wrote.

The securities lost as much as 99 percent of their value soon after they were issued, the investors wrote.

Baer’s ruling in favor of defendant banks, if upheld, “could result in dozens of securities class actions erroneously being denied certification,” the investors wrote in their appeal in the Ally case. The litigation “would likely be terminated without class certification.”

Class certification has also been a point of contention in cases filed New York and Seattle over securities issued by IndyMac Bancorp Inc. (IDMCQ) and Washington Mutual Inc., now part of New York-based JPMorgan.

Pension System

Investors including Mississippi’s pension system who are suing Goldman Sachs Group Inc. are scheduled to file their motion for class certification in November.

“They’re the kinds of cases that have been brought for decades as class actions,” Silk said. “It’s our view that they’re ideally suited for class-action treatment.”

One bank, Wells Fargo & Co. (WFC), agreed to settle litigation against it for $125 million two weeks before a scheduled class- certification hearing in July. The case concerns $27.3 billion of certificates sold by the San Francisco-based bank.

“The proposed settlement agreement is a negotiated resolution as to all named defendants and is intended to avoid the distraction and expense of litigation,” Ancel Martinez, a spokesman for Wells Fargo, said at the time.

Baer, in his Jan. 18 decision, said investors couldn’t sue as a group because they had different knowledge levels of the alleged loosening of mortgage-underwriting standards that led to the home-loan defaults, and ultimately the decline in the value of the securities.

Different Times

The investors also bought the securities at different times, in some cases when more information was surfacing about underwriting standards being ignored, the judge wrote.

“Many putative class members are sophisticated investors with significant experience in asset-backed securities markets,” he wrote. New York-based BlackRock Inc. (BLK) and Fortress Investment Group LLC (FIG) and Old Greenwich, Connecticut-based Ellington Management Group LLC “each tout their expertise in mortgage-backed securities,” the judge wrote.

In its case, Merrill Lynch called Fannie Mae, the Washington mortgage-finance company, the biggest class member and a “quintessential housing-market insider,” according to Rakoff, citing redacted portions of Merrill Lynch’s court papers. Fannie Mae bought about $5 billion of the $16.5 billion of certificates in the case, according to Rakoff’s ruling. Fannie Mae may seek to opt out of the class now that FHFA sued Merrill Lynch individually on its behalf.

Amy Bonitatibus, a Fannie Mae spokeswoman, declined to comment on the litigation.

Financial Advisers

The investors said there’s no evidence they or their financial advisers knew about specific prospectus misstatements by the defendants, especially over the particular mortgage originators’ home-lending standards, before they bought the securities.

“The way we understand the law is that the investors had to know about the scheme or the misstatements in the prospectus, and not that they were just generally sophisticated about mortgage-backed securities,” said Joel P. Laitman, a New York- based lawyer at Cohen Milstein Sellers & Toll PLLC, which sued on behalf of investors in the RBS, Credit Suisse and Ally Financial cases.

Pholida Phengsomphone, a spokeswoman for Edinburgh-based RBS, and Lawrence Grayson, a spokesman for Bank of America, declined to comment.

Risk Awareness

“We are encouraged by Judge Baer’s analysis,” said James Olecki, a spokesman for Ally. “It recognizes the legal significance of the extent of knowledge that individual investors may have had as to the risks relating to the investment.”

In the case against Credit Suisse’s DLJ Mortgage unit, which involves $2.39 billion of securities, Crotty said the defendants produced no evidence that the more than 330 investors knew about specific misstatements in the offering documents.

Steven Vames, a spokesman for Zurich-based Credit Suisse, declined to comment on the case.

Some of the defendant banks noted that potential members of the class are other financial firms that are themselves being sued over mortgage-backed securities.

Having individual banks on both sides of these cases is “slightly unusual” and shows “the multi-headed hydras these investment banks have become,” said James D. Cox, a securities- law professor at Duke Law School in Durham, North Carolina. “But they do have these Chinese walls, to make sure the underwriting people are not talking to the investment advisers.”

New York-based JPMorgan, a potential plaintiff and class member in the lawsuit against RBS over $3.45 billion in securities, is being sued in federal court in Brooklyn, New York, over mortgage-backed securities it sold. JPMorgan “is alleged to have had knowledge regarding” disintegrating underwriting standards, Baer wrote.

Investment Funds

The bank’s role in underwriting some securities doesn’t mean its affiliated investment funds knew about misrepresentations in the prospectus for completely different securities, the plaintiff investors wrote in their appeal in the RBS case. RBS is Britain’s biggest government-owned lender.

“These were not the firms that underwrote the offering,” Laitman said. “They bought like everybody else.”

In the Merrill Lynch case, Rakoff agreed with the investors.

“Although defendants note that some members of the class, including Morgan Stanley (MS) Co., have been sued in connection with their own MBS offerings, this is irrelevant to the offerings at issue in this case,” he wrote.

Motions to Dismiss

The parties in the cases against JPMorgan and New York- based Morgan Stanley await decisions on the banks’ motions to dismiss. The federal appeals court in Manhattan hasn’t said yet whether it would accept Merrill Lynch’s appeal of Rakoff’s decision certifying the class of investors.

The cases are New Jersey Carpenters Health Fund v. Residential Capital LLC, 08-08781, New Jersey Carpenters Vacation Fund v. The Royal Bank of Scotland Group Plc., 08- 05093, Public Employees’ Retirement System of Mississippi v. Merrill Lynch & Co., 08-010841, New Jersey Carpenters Health Fund v. DLJ Mortgage Capital Inc., 08-05653, Public Employees’ Retirement System of Mississippi v. Goldman Sachs Group Inc. (GS), 09-01110, In re Morgan Stanley Pass-Through Certificates Litigation, 09-02137, and In re IndyMac Mortgage-Backed Securities Litigation, 09-04583, U.S. District Court, Southern District of New York (Manhattan); Plumbers’ & Pipefitters’ Local #562 Supplemental Plan & Trust v. J.P. Morgan Acceptance Corp., 08-01713, U.S. District Court, Eastern District of New York (Brooklyn); In re Wells Fargo Mortgage-Backed Certificates Litigation, 09-01376, U.S. District Court, Northern District of California (San Jose); and In re Washington Mutual Mortgage- Backed Securities Litigation, 09-cv-00037, U.S. District Court, Western District of Washington (Seattle).

To contact the reporter on this story: Thom Weidlich in federal court in Brooklyn, New York, at

To contact the editor responsible for this story: Michael Hytha at

32 Responses

  1. Just the beginning;
    Late today Sept 15 to memorialize Lehman I guess, NYT online says several central banks are bailing out failing European [read French] banks by advancing dollar loans for 3 months—-and guess which central bank is at the top of the list –yep Federal Reserve.

    “The E.C.B. said it was acting in cooperation with the Federal Reserve of the United States, the Bank of England, the Bank of Japan and the Swiss National Bank.”

    Which would you suppose has access to the most dollars?

    They will not say how much we are on the hook for. Maybe in 2015 they will tell us how many trillion went out the door–or maybe we can tell by the rise in gold. Two banks already hit the line for half a billion dollars–surprise. Like they say in the old western films when they open the chow lines “Come and get it boys”. Why is it so hard for these people to tell us what they have agreed to? in Europe they gave all the countries and peoples full disclosure of the backup line amounts they want to give away to Greece etc. Of course come to think of it–thats why about half the people in Northern Europe are threatening to toss out their govts. But in our case ignorance is bliss.

    And lets not ignore the lamest duck in Europe the soon to be former head of ECB Trichet, who loudly proclaims–loudly is the only way he does anthing–
    “Jean-Claude Trichet, the president of the E.C.B., said the move “is a clear illustration of our very close cooperation at the global level.” Noting that the collapse of Lehman three years ago could have provoked a depression, Mr. Trichet said, “We still have a long way to go to move beyond this crisis.”

    Jeez —if you were one of us who lost our jobs—whose relatives had lost theirs—who lost our homes and had to sell everything we owned to move into tiny apts—-in the rustbelt—-lost our retirement savings–i guess it just seems like a long continuous depression. I guess from a bankers’ perspective it only takes a few good months of pumped profits to declare record bonuses to make a depression into a double dip.

    But I saw that yacht makers profits were way up–so its all a matter of perspective. As Marie Antoinette another famous Frechie said;
    “If they have no bread–then let them eat cake”


  3. Want to talk about Ponzi schemes?
    Iceland’s bank balance sheet debt hit almost 6 times the nation’s GDP in 2008.
    Wisely Iceland’s government refused to backstop this bank debt—used to make loans outside Iceland. In so doing the nation earned the enmity of the Euro-sectors banks which had persuaded the little Icelandic banks to perch out on that long limb. People still eat in Iceland and do not suffer the increasing austerity pain felt by others with less courage to “just say no.”
    In Ireland bank balance sheets hit 421% of the nation’s GDP. There, in contrast to brave Iceland, the little Irish banks that borrowed and made international loans were backstopped by the alleged corrupt Irish government. That is the government assumed the mountains of international debt and hat in hand sought bail outs from European central banks—in exchange for burdening the unknowing citizens with huge debts far into the future. The Anglo Irish Bank hidden loans controversy (also known as the circular transactions controversy) began in the Republic of Ireland in December 2008 when the chairman of Anglo Irish Bank, Ireland’s third largest bank, admitted he had hidden a total of €87 million in loans from the bank. The official story is that these huge amounts compared to GDP were used to finance homes in Ireland—like the US. However, the hidden loan controversy suggests other possibilities. The citizens are paying a high price for the existence of too big to fail banks.
    In Greece, the corrupt government directly incurred massive debts equal to at least 157% of GDP. The current EU offer is intended to reduce Greece’s debt burden, the highest in Europe.
    The corrupt Greek government officials needed help because the EU rules did not allow such high levels of debt among Euro currency members. To keep within the monetary union guidelines, the government of Greece had misreported the country’s official economic statistics. In the beginning of 2010, it was discovered that Greece had paid Goldman Sachs and other banks hundreds of millions of dollars in fees since 2001 for arranging transactions that hid the actual level of borrowing.
    Similarly, The Financial Crisis of 2008 is still affecting the Portuguese economy severely, causing a wide range of domestic problems specifically related to the levels of public deficit in the economy, as well as the excessive debt levels, soaring up to at least 223% of Portugal’s GDP. The exact causes of Portugal’s debt excess are foggy—but in US terms might be simply described as “highway robbery.” In Wiki-ese, “Portuguese Republic governments have encouraged over expenditure and investment bubbles through unclear public-private partnerships. This has funded numerous ineffective and unnecessary external consultancy and advising committees and firms, allowed considerable slippage in state-managed public works, inflated top management and head officers’ bonuses and wages, causing a persistent and lasting recruitment policy that has boosted the number of redundant public servants. The economy has also been damaged by risky credit, public debt creation and mismanaged European structural and cohesion funds.” Sounds like corruption to me—or the case of the disappearing dollars. The people are suffering to cover these thefts like the Irish and Greeks.
    Today’s Financial Times, September 14, 2011, Page 11, “Taming the banks: long overdue or utter folly” by John Kay states that the liabilities of British banks exceed 6 trillion pounds [$7 trillion?] of which only about 3% is loaned to ordinary Brit businesses—infrastructure employers—and about 1 trillion to consumers including mortgages. This debt exceeds 4 times Brit GDP. There is a fuss going on now as to whether the citizenry should guarantee just the 1.2 trillion—or the whole 6 trillion. The Vickers report suggests ring-fencing the domestic deposits and loans—so the people of the country will not follow the citizens of Ireland, Greece and Portugal down the tubes when the “too big to fail” international lenders/speculators fail.
    In the US, the Vickers ring fence concept was called the Volker rule. Volker had tried to force the separation of the investment banking division of the too big to fails from the real lending activities. The investment bank guys are the high return guys that place bets on commodities, short stocks and bonds—call them the Casino divisions. The US decided we should stand behind the casino betting –even if it is morally wrong to stand behind a guy trying to keep a roof over his family’s heads. Why ask why? Well we can all bet that somehow corruption and economic trouble will leapfrog communist china—I guess because…. I don’t know… its communist? And communists are not supposed to be as corrupt as capitalists which seemingly are expected to be corrupt and forgiven as being driven by the unseen hand? Wrong. China is as bad if not worse and will probably indeed “bury us” with the last domino.
    China apparently is straddling a time-bomb too. Moody’s said it discovered more potential loans after it found discrepancies in figures given to it by Chinese authorities. China’s central bank alone holds an estimated $1.16 trillion in debt, and the government has already increased credit in the system to a reported 200% of GDP.
    I do not know folks—-seems like with all this spillage everywhere—there oughtta be enough room to give a break to some underwater US workers…… but then we can’t afford to send bankers to the casinos everyday with trillion dollar stop-losses and save a million homeowners both.!!!!

    Read more:

  4. Looks like you’re having better luck than I am ANONYMOUS (the original). My posts were completely removed. It was an article, including the links about perjury in civil courts never being prosecuted because civil judges don’t have jurisdiction to prosecute crimes. If further suggested DAs don’t prosecute perjury in civil litigation either. My feeling is that if the article was true, it would explain why pretender lenders & their attys have no reservation about committing blatent perjury in court….they know there’s no repercussions….

    Oh well ANONYMOUS, good luck with laying claim to your name my friend..but most of all…Thank You for your any other name, your contributions remain the same…Very Much Appreciated!!

  5. ANONYMOUS, on September 13, 2011 at 5:55 pm said:

    Does not matter whether mortgage or DOT — claims are based upon securitization — and THAT is the problem.
    As to subprime — nothing more than collection rights were securitized. Remember, securitization is simply a method of pass-through of CURRENT cash flows. Anything with a cash flow can be securitized. The problem is — that securitization is meaningless as to the creditor. Security investors — and trustees — in any capacity — are NEVER the lender/creditor.
    The fraud lies in the securitization fraud “process” — and the means by which the “loan” was procured. The “loan” — in subprime — was never a “loan” at all — at least NOT a secured loan — by mortgage or DOT. .Thus, dischargeable by BK.
    That is the issue.

  6. @anon – your quote “just frustration that promoting your own agenda (and profit) — misleads homeowners”

    there are a lot of agendas being promoted here and a lot of different theories, many of which are VERY wrong and pose a real threat to misleading homeowners coming here to find help. i’ve requested several times from Neil a more open and accessible forum for exchange of forms and ideas.

    just because you don’t like my background or my point of view doesn’t make it wrong or misleading. i would think that the ability to pick the brain of someone actually involved in foreclosure from the other side would be a great opportunity. instead you prefer to use me as your daily whipping post

  7. Make It Happen,

    Not sure what happened. But, someone else is coming in with my name — (real original) — ANONYMOUS. Because I have been here — forever — this is confusing to long time readers.

    Thus, not sure what is happening with blog “interjection.”

  8. Did you post several links? Sometimes that slows things up…

  9. WOW!!! We keep asking when banksters and attorneys will go to jail for what could be the most historic PONZI SCHEME known to mankind? Is it because they know something most homeowners & investors don’t? Well the article I just read has shaken me to my core!!! Will someone PLEASE confirm that this is article is NOT TRUE? Check it out and let me know your thoughts..

    Perjury is not enforced in Civil Court –

    Judge’s Letter –

  10. Why are my posts awaiting moderation?

  11. WOW!!! We keep asking when banksters and attorneys will go to jail for what could be the most historic PONZI SCHEME known to mankind? Is it because they know something most homeowners & investors don’t? Well the article I just read has shaken me to my core!!! Will someone PLEASE confirm that this is article is NOT TRUE? Check it out and let me know your thoughts..

    Perjury is not enforced in Civil Court –

    Judge’s Letter –

  12. this week is memorable for two things. Sunday 9/11 marked the much noted 10th anniversary of the collapse of the twin towers with the help of the now dead Bin laden and diminsished network he represented.
    That event resulted in the deaths of thousands and the beginning of sweeping changes to the free US society and the incurrence of several trillions of defense and security dollars over the ensuing decade–with no apparent end in sight. However, the rationale for continuence of this struggle against the deceased Bin Laden seems to have more to do with defense contractors and election politics than real world threats.

    But more ominously and less well-noted, this week is the 3rd anniversary of the filing of the Chapter 11 bankruptcy of Lehman Bros.–9/15. That has lead inexorably to the meltdown not of two towers but of the economic well-being of both the United States and Western Europe. In this latter scenario hundreds of millions of lives and tens of trillions of dollars, Euros, etc. This Post-site is replete with descriptions of the various forms of havoc wrought on the US and its citizens. I will not recount them. I will note that in stark contrast to the piles of deceased followers of Bin Laden, the persons that are directly responsible for this greater harm continue in large part to walk the streets, ride in lomos and corp jets and amass wealth.

    The damage continues to snowball—a large snowball rolling down a very steep hill picking up speed and mass as it heads for the rest of the economic system.

    Today the Financial Times discloses what most of us aready suspected—the Obama Fall 2011 re-election campaign promises likely will not address the thorny issue of mortgage principal writedowns as a “bridge too far.” The article notes as well that mass refis are likely too expensive. Thus the brief financial market-propping political speach of last Friday is unlikely to change the outlook or expectation that those millions in distress who are attepting to keep the over-priced roofs of their homes over the heads of their children, the retirees who lost their life savings post Legman—those will continue to be ignored but for the ocassional election sound-bite.

    On the anniversary of the Lehman debacle–nicely timed–more proposals are due on the mechansims for wholesale sale of the REO inventory built up by servicers–and banks. The servicers and property preservers want the fees that will be generated by the turnover of the vacant REO. I fully expect these groups to seek govt funding for supposed refurbishment of part of this inventory –the part that they intentionally gutted in expectation of this torrent of federal dollars. They will wrap this assault on the treasury as a jobs-related bill necessity. It does not matter that they created the vacancies and in many cases actually caused the destruction while pursuing casualty insurance and other insurance claims. Double recovery is no stranger here.

    Although this aspect is eggregious–unjust and probably illegal if the facts be known and provable–and the program so provides [ie no unjust enrichment by ones own actions], the greater problem actually stems from the weakness of the banks institutionally.

    They need to convert REO into capital ASAP–before the wave of European sovereign debt writedowns hits their books. That wave is building. It is spreading and growing strength.

    Yesterday, September 12, 2011, at page 20 in the article entitled “European banks hit by dollar loan costs” the FT notes,
    “Strategists estimateEuropean banks face a $500bn funding gap-the sum needed to repay loans and obligations in the coming months. The extra cost could mean bankruptcy for some institutions, strategists warn.”

    There are 2 takeaways from this article which points to problems with French banks in particular. The incremental cost that the article refers to directly is the increased cost of paying out appreciated dollars when the majority of the banks’ receivables are in depreciated Euros. There has been about a 7% decline in the value of the Euro vs the dollar because….well—the Euro may not survive the year as a living currency–sort of like having receivables in Confederate currency while owing debts denominated in Yankee dollars.

    So some more banks need injections–nothing new there. Except the magnitude and the fact the issues are now dragging France into the default jungle. After all, who will the French banks run to?

    And that is the crux of the matter and the point that should raise the hackles of Americans from well-off small business owners now targeted for tax increases to the disaffected legions of our fellow foreclosure victims. Note that the payoffs are in US dollars. $500 bn.

    Just the next year.!

    Where does one go to get $$$$ US?

    So through the backdoor so to speak, this article reveals that the European banking system is desperate need of our greenbacks—and the only thing they have to swap is the increasingly worthless Euro—So I smell a bailout of epic proportions by the US treasury /Fed Reserve of the entire EU financial system–estimated to the tune of $500 bn THIS NEXT YEAR ALONE.

    We the taxpayers–or users of US currency–in either or both those categories are going to have to lay-out at least —at least—$500 bn to support the top heavy Eu bank system. The very same FT today notes that spendthrift Tim Geithner is hot-footing it to Europe this weekend to attend their emergency [weekly now] banking meetings. Now you know why.

    The question in my mind is why should the US step in to prevent the failure of French banks? Would the world really be different if Lehman had not failed–but had kept on paying bonuses and dividends like its brethern with borrowed TARP money? Would not the balance sheets of the bunch have been just as crappy? was not Lehman just the canary in the coal mine that fell off its perch 1st?

    Why is the supposed populist Obama administration so much more generous with bankers of any nationality, than with its own people?
    Why is a frenchman’s chateau more important to save that a million middle-class homes here?

    Jamie Dimon whines that the too big to fail US banks will be at a competitive disadvantage if other too big to fail foreign banks are allowed to maintain lower loss reserves. That the costs to US borrowers would be higher? I guess that means our credit card rates would go from 24% to 25% ? ??

    So then why would our dollars be used to prop up any of those foreign competitors?

    And why not chop up the TOO BIG banks generally if they create systemic risk? Surely not because they are so deserving of public respect–surely not because they are so much more helpful to individuals and small business than the local and regional banks that FDIC is feeding to them weekly.

    If this is not halted immediately the US will be gutted for decades to come by inflation not seen since Jimmie Carter–and who will buy any kind of house with an ARM with a base rate of 18%?

    The increase in rates that is inevitable when $ printing presses run will exert awful downward pressure on home values–and be further ecaebated by the impending loss of deductions for real estate taxes and home interest expense.

    Is there no end–the Tea Party fiscal conservatism –no matter how badly portayed is better than a 15% inflation rate and 20% interst rate far into the future. I lived through this once–but I was young and had time to recover–i cannot tolerate this as an aged baby boomer with expectation of retirement. And neither can anyone else. There are not that many job openings anymore for WalMart greeters.

  13. tnharry

    Okay — but, you do “help” others — for profit — and, at the same time — help “investors.” I have no problem with this — except if you are not identifying the investor/creditor in the process– there can be no valid help.

    Maybe you can answer this —- Why does the investor/creditor choose to be undisclosed??? What is their reason for this??? .

    What is the purpose for secrecy??? Your answer to that question would be helpful.


  14. @anon – i don’t promote my agenda here at all. and i’ve helped several people without profit, thank you very much.

  15. tnharry

    Not misplaced anger — just frustration that promoting your own agenda (and profit) — misleads homeowners. I have not questioned clarification of cites — just question your application.

    Enough is enough — no more feeding the pockets. .

  16. two different ways of citing to the same thing. but the __ USC ___ version is the proper one for use

  17. …but you are right about the citation…I was looking at an older book…why would they change that?

  18. pardon me, i wasn’t aware it came from a handbook. by all means, full speed ahead.

    i’m serious about the recording though. check local laws before doing it

  19. Give me a break, tn—I got it from a consumer “handbook”…do you really think I’m an idiot? Go crawl back under your rock…I mean that in a nice way…

  20. and check your own states, but the notice in the letter is not sufficient to record telephone conversations. you may be violating wiretapping statutes in your state

  21. @anon – oh please, you have so much misplaced anger. i’ve given plenty of useful advice here and privately. get off your high horse. the proper citation for FDCPA is 15 USCA 1692.

  22. tnharry

    You do not know the code sections. You are fighting to fraudulently take homes. It is simply wrong that you are utilizing this blog to promote your own fraudulent agenda.

    But — we are onto it — and you.

  23. @carie – you should probably stop giving advice that includes the claim that it’s worked in the past. that borders on unauthorized practice of law. and, it’s simply wrong. you’re suggesting things that are factually correct and the code sections are off.


    All these legal shenanigans are BS. Just treat it like the unsecured debt that it is.

  25. @HMan:

    “. ..You should be preparing to demonstrat­e that the loan was not validly conveyed to any Trust (which they were not). Do this by requesting the Mortgage Schedule which should accompany the Mortgage Loan Purchase Agreement (MLPA) — and the MLPA cannot be an “intent” to sell — it must be validly executed and notarized (we know about those notaries). And, importantl­y, if MLPA and Mortgage Schedule can be proven, servicer must prove that all default payments have been paid to the trust on borrower’s behalf. If not, loan has been removed from the Trust with collection rights sold/swapp­ed to a Third Party…
    …They have NO RIGHT to foreclose on unsecured debt—I believe they are in DIRECT violation of FDCPA by even threatening to foreclose—send letters to ALL addresses—certified—and to any fax numbers you have. State TILA, RESPA, and FDCPA laws…
    Let them know in no uncertain terms that you are on to their lies and fraud.
    I am NOT an attorney, (just a broke consumer—thanks to the FRAUD), but I have had some success with this letter:
    (sample cease and desist letter):




    Re: servicer/bank name & account number)

    Dear _______________,


    You are hereby notified under provisions of Public Laws 109-351— FDCPA–Fair Debt Collections Practices Act—that your services are no longer desired.

    1) You and your organization must CEASE AND DESIST all attempts to collect the above debt. Failure to comply with this law will result in my immediately filing a complaint with the federal trade Commission and this State’s Attorney Generals office. I will pursue all criminal and civil claims against you and your company.

    2) I am disputing the validity of this debt under the terms of the FDCPA, section 809, a-c.

    3) I am also quite concerned regarding the “threat” of “foreclosure” that you have been sending in writing to me—which is in direct violation of FDCPA, section 807.

    4) Let this letter also serve as your warning that I may utilize telephone recording devices in order to document any telephone conversations that we may have in the future.

    5) Furthermore, if any negative information is placed on my credit reports by your agency after receipt of this notice, this will cause me to file suit against you and your organization, both personally and corporately, to seek any and all legal remedies available to me by law.

    In conclusion, since it is my policy to neither recognize nor deal with collection agencies, I intend to settle this account with the ORIGINAL CREDITOR…which YOU are NOT.

    Have a nice day.


  26. TMT,


  27. Adam Levitin testifying before the Senate Banking Committee on Tuesday about the role of the government guarantee in housing finance (a/k/a wtf do we do with Fannie and Freddie).

  28. One last thing. I orginally had 3 loans from the same “lender” that was put into the same trust. 2 out of the 3 properties have already been forclosed by Robosigners (but that’s another story.)

    Anyway, might that have any bearing on the outcome? I found all 3 of my loans listed in the same trust and I think this would be of some value but I’m not sure? 3 titles to 3 seperate properties.

    MERS transfering title out of the name of a Defunct mortgage lender not out of the name of the trust.

    Thanks again for your help

  29. Thanks for your response. I did send some underwriting violations and Tila violations in my QWR and DVR. I was sent a partial accounting from Aurora for the last 3 years. The loan was orginated 5 years ago, so I believe it’s incomplete.

    I got a letter from an attorney representing Aurora stating the statute didn’t require Aurora to answer any questions about the underwriting and they deny any wrong doing.

    The letter also did state my Trust was RALI 2006 Q09. They also claim my original lender is the lender on my DOT that has been out of business since 2007. However, I think he was just paid a commission. I

    The letter I received states that if I don’t dispute the debt it will be assumed to be true within 30 days.

    Now, I’m in the process of writting another dispute.

  30. @Hman – Nancy’s given you some good advice to start with. Use the RESPA and QWR actions and contest standing. In direct response to your question though, the bank lawsuit is irrelevant to your issues and you can’t just “piggyback” onto it to prevent foreclosure. You need your own. You may be able to ultimately use some of what happens in the bank suit to help your own, but they will be separate matters entirely. Writing the trustee won’t help stop a sale, nor is the statement that they can’t foreclose because of the bank suit accurate. It sounds like they haven’t started anything yet, but go ahead and be getting your documentation ready for when they do.

  31. HMan
    Ally is GMAC
    Ally Financial is Gmac Financial
    WHen a company name changes that does not mean the former company dies.
    The former company’s agreements, contracts, mortgages, registration statements, may live on.

    Auroroa Loan Services Inc. as a Mortgage Servicer CONDUIT

    What you need in foreclosure defense is evidence the party does not have standing and is not the note holder in due course, and claim all of the due process protections allowed under law Consumer protection, HOPA, TILA, RESPA, … need a litigator, the law is your due process to be safe in life and property and safe from unlawful seizure .

  32. I have a couple questions I”m hoping someone can answer. I read a post last week here regarding FHFA suing 17 banks. One of the banks being sued is Ally f/k/a GMAC.

    The FHFA’s complaint alleges that the securitizations were misrepresented and some of the figures were inaccurate. My loan is in one of the securitizations referenced in the complaint.

    Can I use this to stop my foreclosure? Should I write the trustee putting them on notice that there is pending litigation and they can’t foreclose because of the law suit? I am about 6 months behind but to date there has been no substitute trustee, assignment of mortgage, or trustee sale scheduled. I live in AZ.

    I’m not sure if this even matters because the FHFA is suing as an investor and I’m a borrower. However, this article makes me feel as though I maybe able to do something.

    I appreciated your advice. I’m not sure where to go from here.

    FYI – I’ve already written a QWR and received a partial response from
    Aurora. Most of the question they did not answer. I did not mention this FHFA case because it happened after I sent my QWR and DVR.

    Thanks again

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