Short Sale No Protection Against Bank

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Editor’s Comment:

As if on queue this story appears. I have been warning buyers of short sales that they face strong headwinds in maintaining ownership of the house, keeping possession, and the general fact that buying a short sale probably is buying into litigation now or later.

This guy is a true innocent buyer without any real notice of the problems he was buying into. His realtor obviously didn’t tell him because the realtor’s compensation is based upon the sale closing. The title agent didn’t tell him for the same reason. And the bank selected as the ” designated hitter” to receive money and execute papers showing the old mortgage was satisfied and the foreclosure was over probably didn’t even know who to call or why because, like the originator at the original closing on the loan, was just a fee for service “satisfied” instead of a fee for service originator.

So the designated forecloser keeps proceeding — and in this case apparently foreclosed on the house without the new short sale buyer knowing a thing about it, evicted the tenants, which now included the shortsale buyer, and then broke in, removed all the personal belongings leaving this guy with a lawsuit for trespass and the loss of his furniture and personal belongings.

This will continue until we accept and act upon the fact that the foreclosures and the would-be originators of foreclosures have no right to even be at the table — same as when the old old loan was created.

KC Man Sues Bank Over Foreclosure Error

Claim: JPMorgan Chase Changed Locks, Seized New Owner’s Property

KANSAS CITY, Mo. — A Kansas City man is taking on banking giant JPMorgan Chase, accusing the company of something that he said would have landed anyone else in handcuffs.

Allan Danforth bought a house in a short sale in fall 2010. JPMorgan Chase held the previous owner’s mortgage. Danforth said two months later, without notice, the bank changed the locks and hauled away $25,000 worth of furniture, appliances and family heirlooms.

“I had to bust in through the basement window here,” Danforth said, pointing to the house that he was forced to break into more than 18 months ago.

He said JPMorgan Chase’s contractor, Safeguard Properties, ignored “No Trespassing” signs on the garage, changed the locks on his home and cleaned it out two months after he paid cash for the property.

“It was basically stuff that was 150 years of family history,” Danforth said. “I feel violated and I felt like the house wasn’t even safe to go into for a while.”

Danforth said Safeguard Properties could find his family heirlooms. He said JPMorgan Chase just gave him a runaround.

“They’re the big bank and they don’t care,” he said.

“It’s a wrong built upon wrongs,” said attorney Tony Stein.

He said it’s a wrongful foreclosure.

“We fully intend to go into court and have a Jackson County jury try to decide the eventual outcome of this case in the only language JPMorgan Chase understands,” Stein said. “The language of money.”

In his lawsuit, Stein accuses JPMorgan Chase of theft, trespassing and reckless indifference.

Jackson County court records show that on Sept. 9, the previous homeowners transferred the house to Danforth. The bank signed off 12 days later.

“For the very company to release their deed of trust and thereby release all their rights against this property, and then two months later, send in a company to clean this thing out? You’ll have to ask them why they’d do something like that,” Stein said. “It defies logic.”

Danforth and his attorney said the bank has ignored their letters. When KMBC investigated the case, a spokeswoman for JPMorgan Chase had a response.

“We made a paperwork mistake when the property was sold, which resulted in our service partner changing the locks and winterizing the property to ensure its security,” the statement said.

The company did not comment how it plans to settle the dispute.

“I’m not the first one. I will not be the last, unfortunately,” Danforth said.

He said he has installed a security system in case of another “paperwork mistake.”

“If it were you or I doing it, we’d be sitting in jail right now,” Danforth said. “Why isn’t JPMorgan in jail?”

Safeguard Properties deferred comment to the bank.

Danforth’s lawsuit is before the Jackson County Court and claims actual damages in excess of $25,000. Under law, Stein said members of Danforth’s family could be entitled to recover as much as $1.5 million in punitive damages.

Danforth’s copies of important documents were inside the house and were taken by Safeguard Properties. Experts said in case of a fire or burglary, it’s a good idea to have copies of important documents in a digital form or a safety deposit box.


44 Responses

  1. E.Tolle majority foreclosures as conducted ‘in secret’ as DEBT SETTLEMENT
    Investor contacts they will pay using any form they want 100% due.
    Look back at what was filed in court and what you are not copies on and look closely at documents filed where dates are changed and and more egregious acts not discussed in the public domain.

    ‘Anybank NA’ is not a bank its an investor under contract in which Servicer acts as broker/affiliate during debt settlement represents the investor who is the BUYER/SELLER in a debt settlement.
    Investor acquired rights to mortgage through servicer ‘notes’ not loans; and if you stop advancing cash used to hedge credit risk of REMIC merely a group of like kind ‘notes’ the REMIC becomes the SELLER and its Exchange Agent acquries the ‘Assignment’ which is an insurance endorsement already created and approved and affixed to the Promissory Note that allows like-kind exchange.

    Mine for exaple, First America dba CORELOGIC partner with Norwest Mortgage, INc. dba Wells Fargo Bank NA Servicer during default conveys ‘Assignment’ through OREXCO ….

  2. Keeping thinking in terms of “Brick and motar’ and you’ll never understand how both you and the economy harmed through exchange secondary market Promissory note in exchange for Mortgage or Deed of Trust ‘Investment’ note not a loan.

    Is the reason its such a ‘secret’ that the supply chain and pipeline are the Independent business investors as attorneys and paralegals who will keep taking your money as long as there are consumers who are ‘stupid people who sign stupid contracts’

    Through subscription services for members and non-members
    FIS & Edgar (multiple service marks and trade marks – goods and services mandatorily must be in electronic book entry storage are allowed to create instruments, documents, agreements, goods and services virtually placed into public domain for consumer consumption daily through exchange …secondary market

    Through Associations such as:
    FEA MEMBER
    ‘FEDERAL OF EXCHANGE ACCOMODATORS

    ‘SELLERS’ DEFAULT INSURANCE’ mandatory sold to consumers as Mortgage Insurance concelament ‘contracts’ instruments virtually created ….process on desktop of agents, input of variables, selection of options, inclusionary and exclusionary language, creates Promissory Note with Agreement# affixed creates note not loan -Lender unaware of agreement and consumer unaware of concealment cash advanced is investment an alternative investment for alternative asset ….

    REMIC a collection of like kind Notes are not LOANS!
    Through contracts, options, Investors as ‘BUYERS/SELLERS’
    and ….private investor and public REMIC investor Underwriters Structured Settlement Fund…insurance pyramid $1 Billion Dollars per REMIC where REMIC is INVESTOR ‘Seller’ and INVESTOR Buyer in agreement if consumer defaults stops advancing cash that Exchange Agent will find more suitable they call us BORROWER …and acquire endorsement policy from First American in NJ for Assignment of Mortgage document creating in public domain notice of debt for failure to advance cash for investment.

    Appears based upon my research ‘First American …dba CORELOGIC strategic partnership Norwest Mortgage, Inc. acquired Note for INVESTOR Aurora Loan Services; DBNTC Indenture Trustee acquired for SASCO and Aurora became custodian of NOTES Sold to REMIC …REMIC ‘Seller’ of Notes in event of default uses OREXCO based upon SELLERS’ Default Insurance attached to Note …

    OREXCO
    – YOUR NATIONAL 1031 EXCHANGE SOLUTION 8/15/2002
    “PAGE 72 OF 73′ OF ‘ALL’ OREXCO sm documents filed with USPTO Governmental Approved Monopolies

    “UNFORTUNATELY, THERE IS NOT FEDERAL REQULATION OF THE QUALIFIED INTERMEDIARY INDUSTRY. AND, BECAUSE IT IS FAIRLY EASY TO BECOME A QUALIFIED INTERMEDIARY — ITS IS IMPERATIVE THAT YOU PLACE YOUR EXCHANGE FUNDS WITH A QUALIFIED INTERMEDIARY THAT CAN PROTECT YORU ASSETS. YOUR FIRST AND LAST CONCERN IN THE EXCHANGE TRANSACTION SHOULD BE SECURITY AND INTEGRITY.”

    “AT OREXCO YOUR EXCHANGE PROCEEDS ARE BACKED BY OLD REPUBLIC NATIONAL TITLE INSURANCE CO, A WHOLLY OWNED SUBSIDIARY OF OLD REPUBLIC INTERNATIONAL CORP -MULTI-LINE INSURNACE CO.”

    “OUR NATIONAL STAFF CONSISTS OF ATTORNEYS”

    “AND, WHERE NECESSARY, WE PROVIDE YOU WITH ACCURATE EXCHANGE DOCUMENTS WITHIN HOURS.”

    ANYTHING ‘EXCHANGED’ IS AUTOMATICALLY IN SECONDARY MARKET…

    COMMONWEALTH OF VIRGINA
    CHARTER PROVIDES ‘RESIDENTS’
    PRODUCERS & COMPANIES
    Associations, Purchase Groups, Reciprocal Exchanges …
    Interexchanges,

    utilization goods and services placed into public domain for consumer consumption

    –Subscriptions … processes, service marks, trade marks, …
    e.g. desk top underwriting, patent process approved US Governmental monopolized process

    allows electronic book entry of variables and data accessed to create virtual ‘instruments’ and documents to be filed and recorded in both public and private exchanges -Secondary Market

    an Unregulated Market
    one that allows indivdiual notes to be purchased by INVESTORS and sold to INVESTORS who collect like-kind products for exchange
    inside a REMIC which holds in trust like-kind property as allowed under

    Goods and/or Services
    Serving As a Qualified Intermediary For Internal Revenue Code Section 1031 Tax-Deferred Exchanges of Real and Personal Property

    OREXCO sm LIVE
    Clase 036
    Facilitating IRC Section 1031 tax-deferred exchange of real and personal property for others.
    S/N 78154810
    Pillsbury Winthrop LLP
    415-983-1761
    Attorney Dockent 064801-029-4105/RLK/MTR/SLT
    Attorney: Michelle T. Rutledge
    Other appointed attorneyes:
    Richard L. Kirkpatrick, Cydney A. Tune, Laura C. Gustafson, Robert B. Burlingame, Benita M. Das, Michelle T. Rutledge, and all members of Pillsbury Winthrop LLP, and all other attorney’s associated with that firm.

    Applicant is using or is using through a related company the mark in commerce on or in connection with the below-identified goods/services. (15 U.S.C. Section 1051 (a), as amended.)

    SERVING AS A QUALIFIED INTERMEDIARY FOR INTERNAL REVENUE CODE SECTION 1031 TAX-DEFERRED EXCHANGES OF REAL AND PERSONAL PROPERTY.
    FIRST USE: 20020814
    Registration Date September 9, 2003
    Attorney of Record Cydney A. Tune
    Owner (REGISTRANT) Old Republic Exchange Facilitator Company CORPORATION CALIFORNIA 650 California St., 26th Floor San Francisco CALIFORNIA 94108
    S/N 78154810 Registration 2761816
    OREXCO sm Check Status:TARR LIVE

    EQUITY PRESERVATION sm
    Goods & Services:
    IC 036. US 100 101 102.
    User: alueders * S/N 76226378 4/19/03
    SERVING AS a qualified intermediary for tax deferred exchanges of real estate. First Use: 19800400. First Use In Commerce: 19920900
    Seiral Number 76226378; Filing Date 3/19/2001, Registration 2565226
    Service Mark
    Owner Name and Address:
    (REGISTRANT)
    Equity Preservation Inc.,
    Corporation California,
    1641 North First St
    Suite 100
    San Jose California 95112
    Attorney of Record: Sarah Barone Schwartz

    REVERSE EXCHANGE CORP (sm)
    GOODS AND SERVICES
    IC 036. US 100 101 102
    *User: alueders * S/N 76150729 4/19/03
    SERVING AS AN ACCOMODATOR AND FACILITATOR IN CONNECTION WITH TAX DEFERRED EXCHANGES FOR REAL PROPERTY PURSUANT TO IRS CODE 1031.
    FIRST USE 20001002.
    FILING DATE 10/23/2000
    S/N 76150729
    REG# 2552193
    REG DATE: 3/26/2002
    OWNER NAME AND ADDRESS:
    (REGISTRANT)
    REVERSE EXCHANGE CORPORATION
    CORPORATION CALIFORNIA
    11500 X OLYMPIC BOULEVARD
    SUITE 425
    LOS ANGELES CA 90064
    SERVICE MARK
    ATTORNEY OF RECORD: LINDA MONROE

    OREXCO sm
    s/n 78154810
    INTERNATIONAL Class Code 036
    US Class Codes 100, 101, 102
    Insurance; financial affairs; monetary affairs; real estate affairs
    Status: Section 8 and 15-accepted and acknowledged
    SERVING AS A QUALIFIED INTERMEDIARY FOR INTERNAL REVENUE CODE SECTION 1031 TAX-DEFERRED EXCHANGES OF REAL AND PERSONAL PROPERTY.
    Attorney Robert B. Burlingame
    Pillsbury Winthrop LLP
    P.O. Box 7880
    San Francisco CA 94120-7880
    415-983-6318
    Submit 12/8/2004
    Laura C. Gustafson Attorney
    April L. Rademacher, Examining Attorney
    Registered 9/9/2003

    COMMISSIONER FOR TRADEMARKS
    2900 CRYSTAL DR
    ARLINGTON VA 22202-3513
    april l. rademacher 8/15/2002
    Amendment and Response to Office Action No.1
    AMENDMENT OF RECITATION OF SERVICES
    In response to the examiner’s determiantion that the recitation of services is unaccepable as indefinite, the Applicant requests that the recitation of services in International Class 036 be amended to read as follows:

    SERVING AS A QUALIFIED INTERMEDIARY FOR INTERNAL REVENUE CODE SECTION 1031 TAX-DEFERRED EXCHANGES OF REAL AND PERSONAL PROPERTY.
    REESE A. PECOT
    RICHARD L. KIRPATRICK
    PILLSBURY WINTHROP LLP
    50 FREMONT ST
    PO BOX 7880
    SAN FRANCISCO CA 94120-7880
    415-983-1789
    SFTRADEMARKS@PILLSBURYWINTHROP.COM

    QUESTION:

    Old Republic Exchange Facilitator Company™
    Old Republic Exchange Company
    560 California St., 26th Floor
    San Francisco, Ca 94108
    OREXCO logo are service marks of Old Republic Exchange Facilitator Company in the United States and its affiliates … Governing Law State of California and that venue shall be in the Northern District of California,… affilaites, officers, employees, agents, subsidiaries, and other partners,
    …sell or acquire another business, or are acquired by another business, in which case such information may be one of the business assets transferred.Copyright © 1998-2012 Old Republic Exchange Facilitator Company

    Investors sale of note with SELLERS’ DEFAULT INSURANCE Contract acquired during origination purchase of a Note….

    Mortgage or Deed of Trust – Investment – #Affixed
    Sales Contract (Promissory Note) exchange ….

    PSA requires ‘Seller’s Default Policy’ …

    REMIC ‘like-kind product exchange’ … OREXCO for example, ….

    and Broker subscription service with eLynx and LSI and ….

    CorrespondentMichelle T. Rutledge, Pillsbury Winthrop LLP, Calendar/Docketing Department
    P.O. Box 7,
    San Francisco CA 94120-7880
    Class 36: Financial and Estate Agency Services
    LSI trade marks, services marks, patents, ….
    over cloud faciliate creating falsified documents, instruments, virtual goods and services, unfair seizure, idependent third parties through purchase groups, associations, subscription services, e.g., ALLREGS, MERS, ServiceLink, FSI, Edgar’s many, ….

    LSI LENDER’S SERVICE, INC
    IC 036. US 101 102. G & S:
    real estate appraisal, title insurance agency, and real estate closing services.
    FIRST USE: 19930625
    Owner (REGISTRANT)
    Prudential Insurance Company of America, The CORPORATION NEW JERSEY 751 Broad Street, 14 Plaza Newark NEW JERSEY 07102
    (LAST LISTED OWNER)
    LSI TITLE COMPANY CORPORATION CALIFORNIA
    601 RIVERSIDE AVENUE
    12TH FLOOR
    JACKSONVILLE FLORIDA 32204
    Assignment Recorded ASSIGNMENT RECORDED
    Attorney of Record JOHN B. GREENBERG
    SERVICE MARK

    DEED TITLE
    IC 042. US 100 101. G & S: Real estate title searching services and computer services, namely, real estate title searching services via a global computer network. FIRST USE: 19940430
    (REGISTRANT)
    LENDER’S SERVICE, INC.
    CORPORATION DELAWARE
    700 CHERRINGTON PARKWAY
    CORAOPOLIS PENNSYLVANIA 15108
    (LAST LISTED OWNER)
    LSI TITLE COMPANY
    CORPORATION CALIFORNIA
    601 RIVERSIDE AVENUE
    12TH FLOOR
    JACKSONVILLE FLORIDA 32204

    LENDER’S SERVICE, INC.
    C 036. US 100 101 102. G & S: real estate appraisal, title insurance agency and real estate closing services.
    FIRST USE: 19930430
    Filing Date August 29, 1995
    Registration Date December 31, 1996
    Owner (REGISTRANT)
    Prudential Insurance Company of America, The
    CORPORATION NEW JERSEY
    Law Dept.,
    14 Plaza,
    751 Broad St.
    Newark NEW JERSEY 071023777

    (LAST LISTED OWNER)
    LSI TITLE COMPANY
    CORPORATION CALIFORNIA
    601 RIVERSIDE AVENUE
    12TH FLOOR
    JACKSONVILLE FLORIDA 32204

    LSI ‘COULD ALSO’ INCORPORATE …
    LSI LINKS
    IC 042. US 100 101. G & S:
    providing information in the field of technology by means of a global communications network.
    FIRST USE: 19960619
    Filing Date July 26, 1996
    Registration Date February 10, 1998
    Owner (REGISTRANT)
    LSI Logic Corporation
    CORPORATION DELAWARE
    1551 McCarthy Boulevard
    Milpitas CALIFORNIA 95035
    Attorney of Record Sally M. Abel

    12 CFR – Title 12—Banks and Banking

    12 CFR 34 – REAL ESTATE LENDING AND APPRAISALS

    12 CFR 341 – REGISTRATION OF SECURITIES TRANSFER AGENTS

    12 CFR 560 – LENDING AND INVESTMENT

    12 CFR 591 – PREEMPTION OF STATE DUE-ON-SALE LAWS

    24 CFR – Title 24—Housing and Urban Development

    24 CFR 291 – DISPOSITION OF HUD-ACQUIRED SINGLE FAMILY PROPERTY

    Section was enacted as part of the Thrift Institutions Restructuring Act and also as part of the Garn-St Germain Depository Institutions Act of 1982, and not as part of the National Housing Act which comprises this chapter.

    Amendments

    1983—Subsec. (d). Pub. L. 98–181substituted “With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender” for “A lender”.

    12 USC § 1701j–3 – Preemption of due-on-sale prohibitions

    a) Definitions
    For the purpose of this section—

    (1)the term “due-on-sale clause” means a contract provision which authorizes a lender, at its option, to declare due and payable sums secured by the lender’s security instrument if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender’s prior written consent;

    (2)the term “lender” means a person or government agency making a real property loan or any assignee or transferee, in whole or in part, of such a person or agency;

    (3)the term “real property loan” means a loan, mortgage, advance, or credit sale secured by a lien on real property, the stock allocated to a dwelling unit in a cooperative housing corporation, or a residential manufactured home, whether real or personal property; and

    (4)the term “residential manufactured home” means a manufactured home as defined in section 5402(6) of title 42 which is used as a residence; and

    (5)the term “State” means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, American Samoa, and the Trust Territory of the Pacific Islands.

    (b) Loan contract and terms governing execution or enforcement of due-on-sale options and rights and remedies of lenders and borrowers; assumptions of loan rates
    (1)Notwithstanding any provision of the constitution or laws (including the judicial decisions) of any State to the contrary, a lender may, subject to subsection (c) of this section, enter into or enforce a contract containing a due-on-sale clause with respect to a real property loan.

    (2)Except as otherwise provided in subsection (d) of this section, the exercise by the lender of its option pursuant to such a clause shall be exclusively governed by the terms of the loan contract, and all rights and remedies of the lender and the borrower shall be fixed and governed by the contract.

    (3)In the exercise of its option under a due-on-sale clause, a lender is encouraged to permit an assumption of a real property loan at the existing contract rate or at a rate which is at or below the average between the contract and market rates, and nothing in this section shall be interpreted to prohibit any such assumption.

    (c) State prohibitions applicable for prescribed period; subsection (b) provisions applicable upon expiration of such period; loans subject to State and Federal regulation or subsection (b) provisions when authorized by State laws or Federal regulations
    (1)In the case of a contract involving a real property loan which was made or assumed, including a transfer of the liened property subject to the real property loan, during the period beginning on the date a State adopted a constitutional provision or statute prohibiting the exercise of due-on-sale clauses, or the date on which the highest court of such State has rendered a decision (or if the highest court has not so decided, the date on which the next highest appellate court has rendered a decision resulting in a final judgment if such decision applies State-wide) prohibiting such exercise, and ending on October 15, 1982, the provisions of subsection (b) of this section shall apply only in the case of a transfer which occurs on or after the expiration of 3 years after October 15, 1982, except that—
    (A)a State, by a State law enacted by the State legislature prior to the close of such 3-year period, with respect to real property loans originated in the State by lenders other than national banks, Federal savings and loan associations, Federal savings banks, and Federal credit unions, may otherwise regulate such contracts, in which case subsection (b) of this section shall apply only if such State law so provides; and

    (B)the Comptroller of the Currency with respect to real property loans originated by national banks or the National Credit Union Administration Board with respect to real property loans originated by Federal credit unions may, by regulation prescribed prior to the close of such period, otherwise regulate such contracts, in which case subsection (b) of this section shall apply only if such regulation so provides.

    (2)
    (A)For any contract to which subsection (b) of this section does not apply pursuant to this subsection, a lender may require any successor or transferee of the borrower to meet customary credit standards applied to loans secured by similar property, and the lender may declare the loan due and payable pursuant to the terms of the contract upon transfer to any successor or transferee of the borrower who fails to meet such customary credit standards.

    (B)A lender may not exercise its option pursuant to a due-on-sale clause in the case of a transfer of a real property loan which is subject to this subsection where the transfer occurred prior to October 15, 1982.

    (C)This subsection does not apply to a loan which was originated by a Federal savings and loan association or Federal savings bank.

    (d) Exemption of specified transfers or dispositions
    With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—

    (1)the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property;

    (2)the creation of a purchase money security interest for household appliances;

    (3)a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;

    (4)the granting of a leasehold interest of three years or less not containing an option to purchase;

    (5)a transfer to a relative resulting from the death of a borrower;

    (6)a transfer where the spouse or children of the borrower become an owner of the property;

    (7)a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;

    (8)a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or

    (9)any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.

    (e) Rules, regulations, and interpretations; future income bearing loans subject to due-on-sale options
    (1)The Federal Home Loan Bank Board, in consultation with the Comptroller of the Currency and the National Credit Union Administration Board, is authorized to issue rules and regulations and to publish interpretations governing the implementation of this section.

    (2)Notwithstanding the provisions of subsection (d) of this section, the rules and regulations prescribed under this section may permit a lender to exercise its option pursuant to a due-on-sale clause with respect to a real property loan and any related agreement pursuant to which a borrower obtains the right to receive future income.

    (f) Effective date for enforcement of Corporation-owned loans with due-on-sale options
    The Federal Home Loan Mortgage Corporation (hereinafter referred to as the “Corporation”) shall not, prior to July 1, 1983, implement the change in its policy announced on July 2, 1982, with respect to enforcement of due-on-sale clauses in real property loans which are owned in whole or in part by the Corporation.

    (g) Balloon payments
    Federal Home Loan Bank Board regulations restricting the use of a balloon payment shall not apply to a loan, mortgage, advance, or credit sale to which this section applies.

    H.R.1278
    Latest Title: Financial Institutions Reform, Recovery, and Enforcement Act of 1989
    Sponsor: Rep Gonzalez, Henry B. [TX-20] (by request) (introduced 3/6/1989) Cosponsors (31)
    Related Bills: H.RES.173, H.RES.222, H.J.RES.390, H.R.898, S.413, S.774
    Latest Major Action: 8/9/1989 Became Public Law No: 101-73.

    Amendments For H.R.1278
    1. H.AMDT.57 to H.R.1278 Amendments en bloc required uniform personnel policies for federal agencies covered by the bill; gave the Farm Credit Administration the authority to adopt the same hiring, pay, and benefit practices as federal bank regulatory agencies; made a technical correction in a provision relating to Federal Deposit Insurance Corporation hearing procedures; struck the bill’s moratorium on the FDIC’s issuing the “pass through” insurance on bank deposits by pension plans and required a study of the issue; and indexed the $300 million annual contribution the 12 Federal Home Loan Banks must make to defer the interest costs on Resolution Fund Corporation bonds to either inflation or the growth in bank earnings (whichever is less), but capped the total required contribution at $600 million a year.
    Sponsor: Rep Gonzalez, Henry B. [TX-20] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Gonzalez amendments (A001) as modified Agreed to by voice vote.

    4. H.AMDT.60 to H.R.1278 Amendment required the Department of Justice to establish two temporary regional offices of the Criminal Division Fraud Section; one in Los Angeles, California and the other in Dallas, Texas.
    Sponsor: Rep Barnard, Doug, Jr. [GA-10] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Barnard amendment (A004) Agreed to by voice vote

    6. H.AMDT.62 to H.R.1278 Amendment provided for the Resolution Funding Corporation (REFCORP) to be an on-budget government corporation allowed to borrow directly from the Treasury in order to raise funds for dealing with insolvent thrifts. It exempted its borrowing from Gramm-Rudman deficit reduction provisions of law.
    Sponsor: Rep Rostenkowski, Dan [IL-8] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Rostenkowski amendment (A006) Agreed to by recorded vote: 280 – 146

    8. H.AMDT.64 to H.R.1278 Amendment limited the ability of the Resolution Trust Corporation (RTC) to issue unsecured obligations by requiring the RTC to budget such obligations against cash received from the Resolution Fund Corporation (REFCORP). Total RTC unsecured debt and REFCORP obligations were limited to $50 billion.
    Sponsor: Rep Gonzalez, Henry B. [TX-20] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Gonzalez amendment (A008) Agreed to by voice vote.

    9. H.AMDT.65 to H.R.1278 Amendment required federal regulatory agencies to disclose the ratings and evaluations given banks and thrifts under the Community Reinvestment Act. It also required mortgage lenders to disclose the number of mortgage applications they receive grouped according to race, income and gender, and the number of applications approved by the same categories.
    Sponsor: Rep Kennedy, Joseph P., II [MA-8] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Kennedy amendment (A009) Agreed to by recorded vote: 214 – 200 (Roll no. 91).

    10. H.AMDT.66 to H.R.1278 Amendment prohibited federally insured thrift institutions from investing in high risk, high-yield “junk bonds”. Institutions holding such bonds would be required to divest themselves of such bonds within two years.
    Sponsor: Rep Dorgan, Byron L. [ND] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Dorgan (ND) amendment (A010) Agreed to by recorded vote: 303 – 114 (Roll no. 92).

    12. H.AMDT.68 to H.R.1278 Amendment deleted provisions of the bill that provided an exemption for the Frost National Bank of San Antonio, Texas, from liability banks and thrifts have to the FDIC for any losses incurred by the federal deposit insurance funds because of assistance provided to an affiliated institution.
    Sponsor: Rep Gonzalez, Henry B. [TX-20] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Gonzalez amendment (A012) Agreed to by voice vote.

    13. H.AMDT.69 to H.R.1278 Amendment provided the National Credit Union Administration (NCUA) the same regulatory authority granted to the Federal Deposit Insurance Corporation in certain areas.
    Sponsor: Rep Hoagland, Peter [NE-2] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Hoagland amendment (A013) Agreed to by voice vote.

    14. H.AMDT.70 to H.R.1278 Amendments to provide for determination and imposition of restrictions which apply to holding companies involved in activities constituting serious risk to subsidiary savings associations, and to provide for laying out the conditions under which conversion transactions may be approved during a moratorium period.
    Sponsor: Rep Gonzalez, Henry B. [TX-20] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Gonzalez amendments (A014) Agreed to by voice vote.

  3. What about my question(s), tnharry?

  4. Birth Certificate Bonds: http://www.viewzone.com/collateralx.html

  5. ‘Keeping thinking in terms of “Brick and motar’ and you’ll never understand how economy and you are harmed; how independent business investors as attorneys and paralegals will keep taking your money as long as ‘stupid people sign stupid contracts’

    Real Example:
    Promissory notes are Sales Contracts in Exchange for Deed

    Association:
    FEA MEMBER
    ‘FEDERAL OF EXCHANGE ACCOMODATORS

    My ‘SELLERS’ DEFAULT INSURANCE’
    Required by REMIC collection of Notes are not LOANS!
    Through contracts, options, Investors ‘BUYERS/SELLERS’
    and ….

    OREXCO
    – YOUR NATIONAL 1031 EXCHANGE SOLUTION 8/15/2002
    “PAGE 72 OF 73′ OF ‘ALL’ OREXCO sm documents filed with USPTO Governmental Approved Monopolies

    “UNFORTUNATELY, THERE IS NOT FEDERAL REQULATION OF THE QUALIFIED INTERMEDIARY INDUSTRY. AND, BECAUSE IT IS FAIRLY EASY TO BECOME A QUALIFIED INTERMEDIARY — ITS IS IMPERATIVE THAT YOU PLACE YOUR EXCHANGE FUNDS WITH A QUALIFIED INTERMEDIARY THAT CAN PROTECT YORU ASSETS. YOUR FIRST AND LAST CONCERN IN THE EXCHANGE TRANSACTION SHOULD BE SECURITY AND INTEGRITY.”

    “AT OREXCO YOUR EXCHANGE PROCEEDS ARE BACKED BY OLD REPUBLIC NATIONAL TITLE INSURANCE CO, A WHOLLY OWNED SUBSIDIARY OF OLD REPUBLIC INTERNATIONAL CORP -MULTI-LINE INSURNACE CO.”

    “OUR NATIONAL STAFF CONSISTS OF ATTORNEYS”

    “AND, WHERE NECESSARY, WE PROVIDE YOU WITH ACCURATE EXCHANGE DOCUMENTS WITHIN HOURS.”

    ANYTHING ‘EXCHANGED’ IS AUTOMATICALLY IN SECONDARY MARKET…

    COMMONWEALTH OF VIRGINA
    CHARTER PROVIDES ‘RESIDENTS’
    PRODUCERS & COMPANIES
    Associations, Purchase Groups, Reciprocal Exchanges …
    Interexchanges,

    utilization goods and services placed into public domain for consumer consumption

    –Subscriptions … processes, service marks, trade marks, …
    e.g. desk top underwriting, patent process approved US Governmental monopolized process

    allows electronic book entry of variables and data accessed to create virtual ‘instruments’ and documents to be filed and recorded in both public and private exchanges -Secondary Market

    an Unregulated Market
    one that allows indivdiual notes to be purchased by INVESTORS and sold to INVESTORS who collect like-kind products for exchange
    inside a REMIC which holds in trust like-kind property as allowed under

    Goods and/or Services
    Serving As a Qualified Intermediary For Internal Revenue Code Section 1031 Tax-Deferred Exchanges of Real and Personal Property

    OREXCO sm LIVE
    Clase 036
    Facilitating IRC Section 1031 tax-deferred exchange of real and personal property for others.
    S/N 78154810
    Pillsbury Winthrop LLP
    415-983-1761
    Attorney Dockent 064801-029-4105/RLK/MTR/SLT
    Attorney: Michelle T. Rutledge mrutledge@pillsburywinthrop.com
    Other appointed attorneyes:
    Richard L. Kirkpatrick, Cydney A. Tune, Laura C. Gustafson, Robert B. Burlingame, Benita M. Das, Michelle T. Rutledge, and all members of Pillsbury Winthrop LLP, and all other attorney’s associated with that firm.

    Applicant is using or is using through a related company the mark in commerce on or in connection with the below-identified goods/services. (15 U.S.C. Section 1051 (a), as amended.)

    SERVING AS A QUALIFIED INTERMEDIARY FOR INTERNAL REVENUE CODE SECTION 1031 TAX-DEFERRED EXCHANGES OF REAL AND PERSONAL PROPERTY.
    FIRST USE: 20020814
    Registration Date September 9, 2003
    Attorney of Record Cydney A. Tune
    Owner (REGISTRANT) Old Republic Exchange Facilitator Company CORPORATION CALIFORNIA 650 California St., 26th Floor San Francisco CALIFORNIA 94108
    S/N 78154810 Registration 2761816
    OREXCO sm Check Status:TARR LIVE

    EQUITY PRESERVATION sm
    Goods & Services:
    IC 036. US 100 101 102.
    User: alueders * S/N 76226378 4/19/03
    SERVING AS a qualified intermediary for tax deferred exchanges of real estate. First Use: 19800400. First Use In Commerce: 19920900
    Seiral Number 76226378; Filing Date 3/19/2001, Registration 2565226
    Service Mark
    Owner Name and Address:
    (REGISTRANT)
    Equity Preservation Inc.,
    Corporation California,
    1641 North First St
    Suite 100
    San Jose California 95112
    Attorney of Record: Sarah Barone Schwartz

    REVERSE EXCHANGE CORP (sm)
    GOODS AND SERVICES
    IC 036. US 100 101 102
    *User: alueders * S/N 76150729 4/19/03
    SERVING AS AN ACCOMODATOR AND FACILITATOR IN CONNECTION WITH TAX DEFERRED EXCHANGES FOR REAL PROPERTY PURSUANT TO IRS CODE 1031.
    FIRST USE 20001002.
    FILING DATE 10/23/2000
    S/N 76150729
    REG# 2552193
    REG DATE: 3/26/2002
    OWNER NAME AND ADDRESS:
    (REGISTRANT)
    REVERSE EXCHANGE CORPORATION
    CORPORATION CALIFORNIA
    11500 X OLYMPIC BOULEVARD
    SUITE 425
    LOS ANGELES CA 90064
    SERVICE MARK
    ATTORNEY OF RECORD: LINDA MONROE

    OREXCO sm
    s/n 78154810
    INTERNATIONAL Class Code 036
    US Class Codes 100, 101, 102
    Insurance; financial affairs; monetary affairs; real estate affairs
    Status: Section 8 and 15-accepted and acknowledged
    SERVING AS A QUALIFIED INTERMEDIARY FOR INTERNAL REVENUE CODE SECTION 1031 TAX-DEFERRED EXCHANGES OF REAL AND PERSONAL PROPERTY.
    Attorney Robert B. Burlingame
    Pillsbury Winthrop LLP
    P.O. Box 7880
    San Francisco CA 94120-7880
    415-983-6318
    sftrademarks@pillsburywinthrop.com
    Submit 12/8/2004
    Laura C. Gustafson Attorney
    April L. Rademacher, Examining Attorney
    Registered 9/9/2003

    COMMISSIONER FOR TRADEMARKS
    2900 CRYSTAL DR
    ARLINGTON VA 22202-3513
    april l. rademacher 8/15/2002
    Amendment and Response to Office Action No.1
    AMENDMENT OF RECITATION OF SERVICES
    In response to the examiner’s determiantion that the recitation of services is unaccepable as indefinite, the Applicant requests that the recitation of services in International Class 036 be amended to read as follows:

    SERVING AS A QUALIFIED INTERMEDIARY FOR INTERNAL REVENUE CODE SECTION 1031 TAX-DEFERRED EXCHANGES OF REAL AND PERSONAL PROPERTY.
    REESE A. PECOT
    RICHARD L. KIRPATRICK
    PILLSBURY WINTHROP LLP
    50 FREMONT ST
    PO BOX 7880
    SAN FRANCISCO CA 94120-7880
    415-983-1789
    SFTRADEMARKS@PILLSBURYWINTHROP.COM

    QUESTION:

    Old Republic Exchange Facilitator Company™
    Old Republic Exchange Company
    560 California St., 26th Floor
    San Francisco, Ca 94108
    OREXCO logo are service marks of Old Republic Exchange Facilitator Company in the United States and its affiliates … Governing Law State of California and that venue shall be in the Northern District of California,… affilaites, officers, employees, agents, subsidiaries, and other partners,
    …sell or acquire another business, or are acquired by another business, in which case such information may be one of the business assets transferred.Copyright © 1998-2012 Old Republic Exchange Facilitator Company

    Investors sale of note with SELLERS’ DEFAULT INSURANCE Contract acquired during origination purchase of a Note….

    Mortgage or Deed of Trust – Investment – #Affixed
    Sales Contract (Promissory Note) exchange ….

    PSA requires ‘Seller’s Default Policy’ …

    REMIC ‘like-kind product exchange’ … OREXCO for example, ….

    and Broker subscription service with eLynx and LSI and ….

    CorrespondentMichelle T. Rutledge, Pillsbury Winthrop LLP, Calendar/Docketing Department
    P.O. Box 7,
    San Francisco CA 94120-7880
    Class 36: Financial and Estate Agency Services
    LSI trade marks, services marks, patents, ….
    over cloud faciliate creating falsified documents, instruments, virtual goods and services, unfair seizure, idependent third parties through purchase groups, associations, subscription services, e.g., ALLREGS, MERS, ServiceLink, FSI, Edgar’s many, ….

    LSI LENDER’S SERVICE, INC
    IC 036. US 101 102. G & S:
    real estate appraisal, title insurance agency, and real estate closing services.
    FIRST USE: 19930625
    Owner (REGISTRANT)
    Prudential Insurance Company of America, The CORPORATION NEW JERSEY 751 Broad Street, 14 Plaza Newark NEW JERSEY 07102
    (LAST LISTED OWNER)
    LSI TITLE COMPANY CORPORATION CALIFORNIA
    601 RIVERSIDE AVENUE
    12TH FLOOR
    JACKSONVILLE FLORIDA 32204
    Assignment Recorded ASSIGNMENT RECORDED
    Attorney of Record JOHN B. GREENBERG
    SERVICE MARK

    DEED TITLE
    IC 042. US 100 101. G & S: Real estate title searching services and computer services, namely, real estate title searching services via a global computer network. FIRST USE: 19940430
    (REGISTRANT)
    LENDER’S SERVICE, INC.
    CORPORATION DELAWARE
    700 CHERRINGTON PARKWAY
    CORAOPOLIS PENNSYLVANIA 15108
    (LAST LISTED OWNER)
    LSI TITLE COMPANY
    CORPORATION CALIFORNIA
    601 RIVERSIDE AVENUE
    12TH FLOOR
    JACKSONVILLE FLORIDA 32204

    LENDER’S SERVICE, INC.
    C 036. US 100 101 102. G & S: real estate appraisal, title insurance agency and real estate closing services.
    FIRST USE: 19930430
    Filing Date August 29, 1995
    Registration Date December 31, 1996
    Owner (REGISTRANT)
    Prudential Insurance Company of America, The
    CORPORATION NEW JERSEY
    Law Dept.,
    14 Plaza,
    751 Broad St.
    Newark NEW JERSEY 071023777

    (LAST LISTED OWNER)
    LSI TITLE COMPANY
    CORPORATION CALIFORNIA
    601 RIVERSIDE AVENUE
    12TH FLOOR
    JACKSONVILLE FLORIDA 32204

    LSI ‘COULD ALSO’ INCORPORATE …
    LSI LINKS
    IC 042. US 100 101. G & S:
    providing information in the field of technology by means of a global communications network.
    FIRST USE: 19960619
    Filing Date July 26, 1996
    Registration Date February 10, 1998
    Owner (REGISTRANT)
    LSI Logic Corporation
    CORPORATION DELAWARE
    1551 McCarthy Boulevard
    Milpitas CALIFORNIA 95035
    Attorney of Record Sally M. Abel

    12 CFR – Title 12—Banks and Banking

    12 CFR 34 – REAL ESTATE LENDING AND APPRAISALS

    12 CFR 341 – REGISTRATION OF SECURITIES TRANSFER AGENTS

    12 CFR 560 – LENDING AND INVESTMENT

    12 CFR 591 – PREEMPTION OF STATE DUE-ON-SALE LAWS

    24 CFR – Title 24—Housing and Urban Development

    24 CFR 291 – DISPOSITION OF HUD-ACQUIRED SINGLE FAMILY PROPERTY

    Section was enacted as part of the Thrift Institutions Restructuring Act and also as part of the Garn-St Germain Depository Institutions Act of 1982, and not as part of the National Housing Act which comprises this chapter.

    Amendments

    1983—Subsec. (d). Pub. L. 98–181substituted “With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender” for “A lender”.

    12 USC § 1701j–3 – Preemption of due-on-sale prohibitions

    a) Definitions
    For the purpose of this section—

    (1)the term “due-on-sale clause” means a contract provision which authorizes a lender, at its option, to declare due and payable sums secured by the lender’s security instrument if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender’s prior written consent;

    (2)the term “lender” means a person or government agency making a real property loan or any assignee or transferee, in whole or in part, of such a person or agency;

    (3)the term “real property loan” means a loan, mortgage, advance, or credit sale secured by a lien on real property, the stock allocated to a dwelling unit in a cooperative housing corporation, or a residential manufactured home, whether real or personal property; and

    (4)the term “residential manufactured home” means a manufactured home as defined in section 5402(6) of title 42 which is used as a residence; and

    (5)the term “State” means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, American Samoa, and the Trust Territory of the Pacific Islands.

    (b) Loan contract and terms governing execution or enforcement of due-on-sale options and rights and remedies of lenders and borrowers; assumptions of loan rates
    (1)Notwithstanding any provision of the constitution or laws (including the judicial decisions) of any State to the contrary, a lender may, subject to subsection (c) of this section, enter into or enforce a contract containing a due-on-sale clause with respect to a real property loan.

    (2)Except as otherwise provided in subsection (d) of this section, the exercise by the lender of its option pursuant to such a clause shall be exclusively governed by the terms of the loan contract, and all rights and remedies of the lender and the borrower shall be fixed and governed by the contract.

    (3)In the exercise of its option under a due-on-sale clause, a lender is encouraged to permit an assumption of a real property loan at the existing contract rate or at a rate which is at or below the average between the contract and market rates, and nothing in this section shall be interpreted to prohibit any such assumption.

    (c) State prohibitions applicable for prescribed period; subsection (b) provisions applicable upon expiration of such period; loans subject to State and Federal regulation or subsection (b) provisions when authorized by State laws or Federal regulations
    (1)In the case of a contract involving a real property loan which was made or assumed, including a transfer of the liened property subject to the real property loan, during the period beginning on the date a State adopted a constitutional provision or statute prohibiting the exercise of due-on-sale clauses, or the date on which the highest court of such State has rendered a decision (or if the highest court has not so decided, the date on which the next highest appellate court has rendered a decision resulting in a final judgment if such decision applies State-wide) prohibiting such exercise, and ending on October 15, 1982, the provisions of subsection (b) of this section shall apply only in the case of a transfer which occurs on or after the expiration of 3 years after October 15, 1982, except that—
    (A)a State, by a State law enacted by the State legislature prior to the close of such 3-year period, with respect to real property loans originated in the State by lenders other than national banks, Federal savings and loan associations, Federal savings banks, and Federal credit unions, may otherwise regulate such contracts, in which case subsection (b) of this section shall apply only if such State law so provides; and

    (B)the Comptroller of the Currency with respect to real property loans originated by national banks or the National Credit Union Administration Board with respect to real property loans originated by Federal credit unions may, by regulation prescribed prior to the close of such period, otherwise regulate such contracts, in which case subsection (b) of this section shall apply only if such regulation so provides.

    (2)
    (A)For any contract to which subsection (b) of this section does not apply pursuant to this subsection, a lender may require any successor or transferee of the borrower to meet customary credit standards applied to loans secured by similar property, and the lender may declare the loan due and payable pursuant to the terms of the contract upon transfer to any successor or transferee of the borrower who fails to meet such customary credit standards.

    (B)A lender may not exercise its option pursuant to a due-on-sale clause in the case of a transfer of a real property loan which is subject to this subsection where the transfer occurred prior to October 15, 1982.

    (C)This subsection does not apply to a loan which was originated by a Federal savings and loan association or Federal savings bank.

    (d) Exemption of specified transfers or dispositions
    With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—

    (1)the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property;

    (2)the creation of a purchase money security interest for household appliances;

    (3)a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;

    (4)the granting of a leasehold interest of three years or less not containing an option to purchase;

    (5)a transfer to a relative resulting from the death of a borrower;

    (6)a transfer where the spouse or children of the borrower become an owner of the property;

    (7)a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;

    (8)a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or

    (9)any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.

    (e) Rules, regulations, and interpretations; future income bearing loans subject to due-on-sale options
    (1)The Federal Home Loan Bank Board, in consultation with the Comptroller of the Currency and the National Credit Union Administration Board, is authorized to issue rules and regulations and to publish interpretations governing the implementation of this section.

    (2)Notwithstanding the provisions of subsection (d) of this section, the rules and regulations prescribed under this section may permit a lender to exercise its option pursuant to a due-on-sale clause with respect to a real property loan and any related agreement pursuant to which a borrower obtains the right to receive future income.

    (f) Effective date for enforcement of Corporation-owned loans with due-on-sale options
    The Federal Home Loan Mortgage Corporation (hereinafter referred to as the “Corporation”) shall not, prior to July 1, 1983, implement the change in its policy announced on July 2, 1982, with respect to enforcement of due-on-sale clauses in real property loans which are owned in whole or in part by the Corporation.

    (g) Balloon payments
    Federal Home Loan Bank Board regulations restricting the use of a balloon payment shall not apply to a loan, mortgage, advance, or credit sale to which this section applies.

    H.R.1278
    Latest Title: Financial Institutions Reform, Recovery, and Enforcement Act of 1989
    Sponsor: Rep Gonzalez, Henry B. [TX-20] (by request) (introduced 3/6/1989) Cosponsors (31)
    Related Bills: H.RES.173, H.RES.222, H.J.RES.390, H.R.898, S.413, S.774
    Latest Major Action: 8/9/1989 Became Public Law No: 101-73.

    Amendments For H.R.1278
    1. H.AMDT.57 to H.R.1278 Amendments en bloc required uniform personnel policies for federal agencies covered by the bill; gave the Farm Credit Administration the authority to adopt the same hiring, pay, and benefit practices as federal bank regulatory agencies; made a technical correction in a provision relating to Federal Deposit Insurance Corporation hearing procedures; struck the bill’s moratorium on the FDIC’s issuing the “pass through” insurance on bank deposits by pension plans and required a study of the issue; and indexed the $300 million annual contribution the 12 Federal Home Loan Banks must make to defer the interest costs on Resolution Fund Corporation bonds to either inflation or the growth in bank earnings (whichever is less), but capped the total required contribution at $600 million a year.
    Sponsor: Rep Gonzalez, Henry B. [TX-20] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Gonzalez amendments (A001) as modified Agreed to by voice vote.

    4. H.AMDT.60 to H.R.1278 Amendment required the Department of Justice to establish two temporary regional offices of the Criminal Division Fraud Section; one in Los Angeles, California and the other in Dallas, Texas.
    Sponsor: Rep Barnard, Doug, Jr. [GA-10] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Barnard amendment (A004) Agreed to by voice vote

    6. H.AMDT.62 to H.R.1278 Amendment provided for the Resolution Funding Corporation (REFCORP) to be an on-budget government corporation allowed to borrow directly from the Treasury in order to raise funds for dealing with insolvent thrifts. It exempted its borrowing from Gramm-Rudman deficit reduction provisions of law.
    Sponsor: Rep Rostenkowski, Dan [IL-8] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Rostenkowski amendment (A006) Agreed to by recorded vote: 280 – 146

    8. H.AMDT.64 to H.R.1278 Amendment limited the ability of the Resolution Trust Corporation (RTC) to issue unsecured obligations by requiring the RTC to budget such obligations against cash received from the Resolution Fund Corporation (REFCORP). Total RTC unsecured debt and REFCORP obligations were limited to $50 billion.
    Sponsor: Rep Gonzalez, Henry B. [TX-20] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Gonzalez amendment (A008) Agreed to by voice vote.

    9. H.AMDT.65 to H.R.1278 Amendment required federal regulatory agencies to disclose the ratings and evaluations given banks and thrifts under the Community Reinvestment Act. It also required mortgage lenders to disclose the number of mortgage applications they receive grouped according to race, income and gender, and the number of applications approved by the same categories.
    Sponsor: Rep Kennedy, Joseph P., II [MA-8] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Kennedy amendment (A009) Agreed to by recorded vote: 214 – 200 (Roll no. 91).

    10. H.AMDT.66 to H.R.1278 Amendment prohibited federally insured thrift institutions from investing in high risk, high-yield “junk bonds”. Institutions holding such bonds would be required to divest themselves of such bonds within two years.
    Sponsor: Rep Dorgan, Byron L. [ND] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Dorgan (ND) amendment (A010) Agreed to by recorded vote: 303 – 114 (Roll no. 92).

    12. H.AMDT.68 to H.R.1278 Amendment deleted provisions of the bill that provided an exemption for the Frost National Bank of San Antonio, Texas, from liability banks and thrifts have to the FDIC for any losses incurred by the federal deposit insurance funds because of assistance provided to an affiliated institution.
    Sponsor: Rep Gonzalez, Henry B. [TX-20] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Gonzalez amendment (A012) Agreed to by voice vote.

    13. H.AMDT.69 to H.R.1278 Amendment provided the National Credit Union Administration (NCUA) the same regulatory authority granted to the Federal Deposit Insurance Corporation in certain areas.
    Sponsor: Rep Hoagland, Peter [NE-2] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Hoagland amendment (A013) Agreed to by voice vote.

    14. H.AMDT.70 to H.R.1278 Amendments to provide for determination and imposition of restrictions which apply to holding companies involved in activities constituting serious risk to subsidiary savings associations, and to provide for laying out the conditions under which conversion transactions may be approved during a moratorium period.
    Sponsor: Rep Gonzalez, Henry B. [TX-20] (introduced 6/15/1989) Cosponsors (None)
    Latest Major Action: 6/15/1989 House amendment agreed to. Status: On agreeing to the Gonzalez amendments (A014) Agreed to by voice vote.

  6. sorry…”curiosity”.

  7. “…it was not a “Loan”, but rather the receptacle for an Asset-Backed Investment Security…”
    —and no “loans” actually went INTO the MBS’…

    Humor me for a second, tnharry—if those facts are true—even you would have to admit that the foreclosures (subprime) were illegal…right?

    Out of curiousity, just what is YOUR definition of a ponzi?

  8. …were sold short upon birth with your U.S. Birth-Certificate Bondshttp://www.viewzone.com/collateralx.html

  9. @tnharry,

    Not that I particularly enjoy ganging up on anyone but…

    Here is what makes you a big part of the problem and not at all part of the solution: you conveniently hide behind laws, definitions and legal concept when it is about foreclosing on someone who had the misfortune of losing his job and not being able to pay his mortgage any longer.

    BUT you do it on behalf of entities who don’t give a damn, a shit or a hoot about those same laws they have trashed, circumvented, ignored, trampeled, etc. We, the victims, look at you and think: “Hmmm… How come he is ready to brandish the laws all the time while haqving no qualms representing those same entities? Either law is a religion, a way of life, something to respect or it isn’t.”

    Inother words so long as you go AFTER the little guy instead of the big bank, you are the enemy. Plus, that back-and-forth you do all the time is very, very bad for the psyche. It can lead to schizophrenia. Seriously!

    Tn, a good attorney is an attorney who is on OUR side. On the side of the law. Not on the side of the circumvention. I think it is fair to say that all the other ones, we’re all kinda waiting to see them hang.

  10. @ tnharry wrote: “….there’s a significant difference between the meaning of the words “illegal” and “invalid”

    AND

    “….i (of course) wouldn’t agree that the process of foreclosure is criminal.”

    Let’s play a little game tnharry. Let’s pick someone at random here who’s in foreclosure. How’s about….oh let’s see….uhm….how’s about…. ME! Oh….pick me!

    Now you send Neil or Enraged or whomever (sure hope I got that whom usage right enraged) a crisp $100 bill. I’ll do the same. I’ll then send you the assignments of mortgage on file in my case. If in fact you AND the holder of our folding green admit that a criminal act has taken place, you can keep my $100 fiat and buy yourself a subscription to “How To Handle Yourself In Prison, A Primer”. I’ll even send along a pamphlet that might come in handy entitled “Post Securitization Hobbies For Ex-Attorneys In the Slammer, Volume 12 – Macramé Shanks”.

    Put your current convictions where your mouth is, prior to your coming other conviction.

    How’s about it?

  11. In case you’ve missed it, note that (finally!) bank CEOs are starting to be sued PERSONALLY. Keep in mind that Director and Officers insurance does NOT cover for wanton conduct, fraud or intentional acts. What that means is that CEOs will have to start paying their defense out of their own pocket.

    Another way of redistributing wealth…

    http://www.managementtoday.co.uk/news/1132581/jpmorgans-ceo-sued-2bn-trading-loss/

    JPMorgan’s CEO sued over $2bn trading loss
    By Michael Northcott Thursday, 17 May 2012

    America’s largest bank just can’t shake the attention from the international business community: their shareholders are suing.
    Tagged by:Jamie Dimon,FBI,Banking,Finance,Reputation,JPMorgan,Leadership,Shareholders
    Further Reading
    Oops! JPMorgan reveals $2bn mistake
    A bad week for Jamie Dimon just got worse: JPMorgan’s CEO is being sued personally, alongside a separate suit against the bank itself, because of the massive $2bn (£1.26bn) trading loss that was made under his watch.

  12. @tnharry

    “usually there is an institution that does have standing to enforce its security interest.”

    So why didn’t they foreclose in the first place?

  13. @tnharry,

    “i know we’re talking about houses and people’s homes for 10,20, or more years, but do you have the same outrage over auto repossessions or suits to collect credit cards, etc?”

    I have to interject… Weren’t you the one who lectured me specifically on the fact that real estate and private properties were two completely different animals and that the laws and procedures governing one weren’t the same as those governing the other?

    That aside and Carie’s failure to completely grasp the separation between legal and moral arguments notwithstanding (and no one can fault her: if she had had any interest in putting herself through law school, I’m confident she would have), defaulted car or credit card debts have never, to my knowledge, brought an entire country to its knees.

    Carie’s gripe, and ours by the way, is that the separation between real and individual property laws and regulations has been permanently blurred by the securitization or lack thereof and by banks’ handling of foreclosures. What was a solid system has been completely destroyed as a result and none of us (you included) knows his butt from his elboy any longer. We’ve been put through so much contorsion that we’re all fit to join Barnum by now.

    I get the sneaky feeling that you don’t have kids…

  14. Accidentally Released – and Incredibly Embarrassing – Documents Show How Goldman et al Engaged in ‘Naked Short Selling’ – 2012-05-16 22:52:40-04

    MATT TAIBBI- It doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public. The lawyers for Goldman and Bank […]
    More at
    http://stopforeclosurefraud.com/2012/05/16/accidentally-released-and-incredibly-embarrassing-documents-show-how-goldman-et-al-engaged-in-naked-short-selling/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ForeclosureFraudByDinsfla+%28FORECLOSURE+FRAUD+%7C+by+DinSFLA%29

  15. @carie – #1 all mortgages aren’t securitized, #2 nabdulla’s post is long on opinion and short on court orders/decisions, #3 there’s a significant difference between the meaning of the words “illegal” and “invalid”

    even Neil agrees that you might win and still lose. yes, you may convince a Judge that Bank Z lacks standing to foreclose. but Bank A as the original “lender” on the note and deed of trust may pass the test and foreclose a few months later. it’s really just that carnival game where you keep knocking down ducks until that last duck can’t be knocked down. usually there is an institution that does have standing to enforce its security interest.

    i know we’re talking about houses and people’s homes for 10,20, or more years, but do you have the same outrage over auto repossessions or suits to collect credit cards, etc?

  16. @tnharry

    After reading what nabdulla posted below—how in God’s name can you say the foreclosures are legal? You can’t.

  17. I just found my niche: manufacturing those little orange suits. I mean, honestly, we can’t have those made in China, right? It’s an American affait from A to Z! And it looks more and more as though we’re going to need a lot (and I mean: A LOT) of them very soon…

    Carie, you got a sewing maching? Wana get into business with me?
    Wana get into God’s business?

    http://www.rollingstone.com/politics/blogs/taibblog/accidentally-released-and-incredibly-embarrassing-documents-show-how-goldman-et-al-engaged-in-naked-short-selling-20120515

    Accidentally Released – and Incredibly Embarrassing – Documents Show How Goldman et al Engaged in ‘Naked Short Selling’POSTED: May 15, 5:39 PM ET

    Comment161
    AP Photo/Douglas C. PizacIt doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public.

    The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time – primarily with the retail giant Overstock.com, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.

    Last week, in response to an Overstock.com motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed.

    I contacted Morgan Lewis, the firm that represents Goldman in this matter, earlier today, but they haven’t commented as of yet. I wonder if the poor lawyer who FUBARred this thing has already had his organs harvested; his panic is almost palpable in the air. It is both terrible and hilarious to contemplate. The bank has spent a fortune in legal fees trying to keep this material out of the public eye, and here one of their own lawyers goes and dumps it out on the street.

    The lawsuit between Overstock and the banks concerned a phenomenon called naked short-selling, a kind of high-finance counterfeiting that, especially prior to the introduction of new regulations in 2008, short-sellers could use to artificially depress the value of the stocks they’ve bet against. The subject of naked short-selling is a) highly technical, and b) very controversial on Wall Street, with many pundits in the financial press for years treating the phenomenon as the stuff of myths and conspiracy theories.

    Now, however, through the magic of this unredacted document, the public will be able to see for itself what the banks’ attitudes are not just toward the “mythical” practice of naked short selling (hint: they volubly confess to the activity, in writing), but toward regulations and laws in general.

    “Fuck the compliance area – procedures, schmecedures,” chirps Peter Melz, former president of Merrill Lynch Professional Clearing Corp. (a.k.a. Merrill Pro), when a subordinate worries about the company failing to comply with the rules governing short sales.

    We also find out here how Wall Street professionals manipulated public opinion by buying off and/or intimidating experts in their respective fields. In one email made public in this document, a lobbyist for SIFMA, the Securities Industry and Financial Markets Association, tells a Goldman executive how to engage an expert who otherwise would go work for “our more powerful enemies,” i.e. would work with Overstock on the company’s lawsuit.

    “He should be someone we can work with, especially if he sees that cooperation results in resources, both data and funding,” the lobbyist writes, “while resistance results in isolation.”

    There are even more troubling passages, some of which should raise a few eyebrows, in light of former Goldman executive Greg Smith’s recent public resignation, in which he complained that the firm routinely screwed its own clients and denigrated them (by calling them “Muppets,” among other things).

    Here, the plaintiff’s motion refers to an “exhibit 96,” which refers to “an email from [Goldman executive] John Masterson that sends nonpublic data concerning customer short positions in Overstock and four other hard-to-borrow stocks to Maverick Capital, a large hedge fund that sells stocks short.”

    Was Goldman really disclosing “nonpublic data concerning customer short positions” to its big hedge fund clients? That would be something its smaller, “Muppet” customers would probably want to hear about.

    When I contacted Goldman and asked if it was true that Masterson had shared nonpublic customer information with a big hedge fund client, their spokesperson Michael Duvally offered this explanation:

    Among other services it provides, Securities Lending at Goldman provides market color information to clients regarding various activity in the securities lending marketplace on a security specific or sector specific basis. In accordance with the group’s guidelines concerning the provision of market color, Mr. Masterson provided a client with certain aggregate information regarding short balances in certain securities. The information did not contain reference to any particular clients’ short positions.

    You can draw your own conclusions from that answer, but it’s safe to say we’d like to hear more about these practices.

    Anyway, the document is full of other interesting disclosures. Among the more compelling is the specter of executives from numerous companies admitting openly to engaging in naked short selling, a practice that, again, was often dismissed as mythical or unimportant.

    A quick primer on what naked short selling is. First of all, short selling, which is a completely legal and often beneficial activity, is when an investor bets that the value of a stock will decline. You do this by first borrowing and then selling the stock at its current price; then, after the price drops, you go out, buy the same number of shares at the reduced price, and return the shares to your original lender. You then earn a profit on the difference between the original price and the new, lower price.

    What matters here is the technical issue of how you borrow the stock. Typically, if you’re a hedge fund and you want to short a company, you go to some big-shot investment bank like Goldman or Morgan Stanley and place the order. They then go out into the world, find the shares of the stock you want to short, borrow them for you, then physically settle the trade later.

    But sometimes it’s not easy to find those shares to borrow. Sometimes the shares are controlled by investors who might have no interest in lending them out. Sometimes there’s such scarcity of borrowable shares that banks/brokers like Goldman have to pay a fee just to borrow the stock.

    These hard-to-borrow stocks, stocks that cost money to borrow, are called negative rebate stocks. In some cases, these negative rebate stocks cost so much just to borrow that a short-seller would need to see a real price drop of 35 percent in the stock just to break even. So how do you short a stock when you can’t find shares to borrow? Well, one solution is, you don’t even bother to borrow them. And then, when the trade is done, you don’t bother to deliver them. You just do the trade anyway without physically locating the stock.

    Thus in this document we have another former Merrill Pro president, Thomas Tranfaglia, saying in a 2005 email: “We are NOT borrowing negatives… I have made that clear from the beginning. Why would we want to borrow them? We want to fail them.”

    Trafaglia, in other words, didn’t want to bother paying the high cost of borrowing “negative rebate” stocks. Instead, he preferred to just sell stock he didn’t actually possess. That is what is meant by, “We want to fail them.” Trafaglia was talking about creating “fails” or “failed trades,” which is what happens when you don’t actually locate and borrow the stock within the time the law allows for trades to be settled.

    If this sounds complicated, just focus on this: naked short selling, in essence, is selling stock you do not have. If you don’t have to actually locate and borrow stock before you short it, you’re creating an artificial supply of stock shares.

    In this case, that resulted in absurdities like the following disclosure in this document, in which a Goldman executive admits in a 2006 email that just a little bit too much trading in Overstock was going on: “Two months ago 107% of the floating was short!”

    In other words, 107% of all Overstock shares available for trade were short – a physical impossibility, unless someone was somehow creating artificial supply in the stock.

    Goldman clearly knew there was a discrepancy between what it was telling regulators, and what it was actually doing. “We have to be careful not to link locates to fails [because] we have told the regulators we can’t,” one executive is quoted as saying, in the document.

    One of the companies Goldman used to facilitate these trades was called SBA Trading, whose chief, Scott Arenstein, was fined $3.6 million in 2007 by the former American Stock Exchange for naked short selling.

    The process of how banks circumvented federal clearing regulations is highly technical and incredibly difficult to follow. These companies were using obscure loopholes in regulations that allowed them to short companies by trading in shadows, or echoes, of real shares in their stock. They manipulated rules to avoid having to disclose these “failed” trades to regulators.

    The import of this is that it made it cheaper and easier to bet down the value of a stock, while simultaneously devaluing the same stock by adding fake supply. This makes it easier to make money by destroying value, and is another example of how the over-financialization of the economy makes real, job-creating growth more difficult.

    In any case, this document all by itself shows numerous executives from companies like Goldman Sachs Execution and Clearing (GSEC) and Merrill Pro talking about a conscious strategy of “failing” trades – in other words, not bothering to locate, borrow, and deliver stock within the time alotted for legal settlement. For instance, in one email, GSEC tells a client, Wolverine Trading, “We will let you fail.”

    More damning is an email from a Goldman, Sachs hedge fund client, who remarked that when wanting to “short an impossible name and fully expecting not to receive it” he would then be “shocked to learn that [Goldman’s representative] could get it for us.”

    Meaning: when an experienced hedge funder wanted to trade a very hard-to-find stock, he was continually surprised to find that Goldman, magically, could locate the stock. Obviously, it is not hard to locate a stock if you’re just saying you located it, without really doing it.

    As a hilarious side-note: when I contacted Goldman about this story, they couldn’t resist using their usual P.R. playbook. In this case, Goldman hastened to point out that Overstock lost this lawsuit (it was dismissed because of a jurisdictional issue), and then had this to say about Overstock:

    Overstock pursued the lawsuit as part of its longstanding self-described “Jihad” designed to distract attention from its own failure to meet its projected growth and profitability goals and the resulting sharp drop in its stock price during the 2005-2006 period.

    Good old Goldman — they can’t answer any criticism without describing their critics as losers, conspiracy theorists, or, most frequently, both. Incidentally, Overstock rebounded from the 2005-2006 short attack to become a profitable company again, during the same period when Goldman was needing hundreds of billions of dollars in emergency Fed lending and federal bailouts to stave off extinction.

    Anyway, this galactic screwup by usually-slick banker lawyers gives us a rare peek into the internal mindset of these companies, and their attitude toward regulations, the markets, even their own clients. The fact that they wanted to keep all of this information sealed is not surprising, since it’s incredibly embarrassing stuff, if you understand the context.

    More to come: until then, here’s the motion, and pay particular attention to pages 14-19.

    UPDATE: Well, I guess I shouldn’t feel too badly for the lawyer who stepped on this land mine. For Morgan Lewis counsel Joe Floren, karma, it seems, really is a bitch.

    Read more: http://www.rollingstone.com/politics/blogs/taibblog/accidentally-released-and-incredibly-embarrassing-documents-show-how-goldman-et-al-engaged-in-naked-short-selling-20120515#ixzz1v8cplBSp

  18. @Nancy: just a reminder: LSI you mentioned is same as LPS & DOCX, mostly run under umbrella of LPS the nationwide robo-signing network of Fidelity Title. criminal charges against LPS execs are increasingly nationwide by AG’s who haven’t been bought yet…

  19. Coincidence? The guy if Greek!!! What were the odds?

    http://www.businessweek.com/articles/2012-05-16/the-hubris-of-jamie-dimon

    “Dimon, 56, is a third-generation denizen of Wall Street. As recounted in Last Man Standing, a 2009 biography by journalist Duff McDonald, the family legacy began when Dimon’s paternal grandfather, a busboy in his native Greece, was fired and took a job at the Bank of Athens. He immigrated to the U.S. and became a successful stockbroker, as was his son. Dimon grew up in Queens and later, as the family fortune swelled, on New York’s Park Avenue. After Harvard Business School, he hitched his wagon to Sandy Weill, the deal maker extraordinaire. In 1998, Weill and Dimon pulled off the historic merger of Travelers Group and Citicorp—historic because it needed spinoffs to comply with the Glass-Steagall Act of 1933, which separated commercial banking from investment banking and insurance. Congress obligingly repealed Glass-Steagall…”

  20. Music to my ears. I’ve been aiting for that for soooooo long! Y’all have a great day!

    http://www.nakedcapitalism.com/2012/05/michael-crimmins-why-the-cops-should-be-knocking-on-jamie-dimons-door-soon.html

    Thursday, May 17, 2012
    Michael Crimmins: Why the Cops Should be Knocking on Jamie Dimon’s Door Soon

    By Michael Crimmins, who has worked on risk management and Sarbanes Oxley compliance for major banks

    The scandal surrounding JP Morgan’s losses in its Chief Investment Office is not going away, and for good reason. Its trading book continues to lose money at an astounding rate. The most recent report estimates that the losses have increased by at least 50% more than the bank’s original loss estimates. The total damage is anyone’s guess at this point.

    This fiasco is beginning to look a lot like accounting control fraud. The Justice Department and the FBI have begun criminal probes. The SEC is also investigating. So far, the objectives of these investigations are under wraps, but if I were an SEC or DOJ enforcement official I’d be laser-focused on bringing a Sarbanes-Oxley case against Jamie Dimon.

    Sarbanes-Oxley emerged out of the Enron frauds. This law requires the CEO to certify that internal controls are operating effectively to give comfort to readers of the financial statements that the disclosures contained in the reporting are reliable. There are civil penalties for filing a false certification and criminal penalties, including jail time, for false filings found to be fraudulent. So far none of the obvious candidates like Dick Fuld at Lehman or Jon Corzine at MF Global have been prosecuted under the law.

    Jamie Dimon looks like a very attractive candidate to investigate for SOX violations.

    For starters, Dimon’s description of what happened rings SOX alarm bells:

    First of all, there was one warning signal — if you look back from today, there were other red flags. That particular red flag — you know, we made a mistake, we got very defensive and people started justifying everything we did. You know, the benefit in life is to say, ‘Maybe you made a mistake, let’s dig deep.’ And the mistake had been brewing for a while, so it wasn’t just any one thing.

    – Meet the Press, May 13, 2012

    Warning signs and red flags were ignored. And they’ve apparently been ignored since 2007. Once again, echoing what happened at MF Global, risk managers who raised alarms about the riskiness of the positions in 2009 were replaced with more cooperative risk managers:

    Several bankers said that risk controls were not sufficiently strengthened by Doug Braunstein, who took over as chief financial officer in 2010, another reason the bolder trades continued.

    This indicates the firm was aware of deficiencies in the controls if other executives knew Braunstein had a mandate to improve them. These concerns are probably documented in the meeting minutes of the management committees responsible for risk, financial reporting and SOX compliance. It shouldn’t be difficult for the SEC to review these sources to determine who knew what and when about the state of the internal control environment.

    JPM has issued quite a few financial statements since 2007 and 2009. If the controls and riskiness of the trades were as alarming and deficient as the managers indicate, then the reliability of the financial statements for the last 5 years are questionable. For a portfolio of this size and importance it’s inconceivable that the controls and risk issues were not reported up the management chain.

    More damning is Dimon’s tacit admission that the controls designed to protect the firm from these sorts of blowups were ineffective, due to lack of intervention. Ignoring internal controls, or red flags as Dimon characterizes them, is a failure in the control environment. The failure to disclose inoperative key controls in the CEO certification is a violation the law.

    That’s the big picture case. Recent reporting about the trade itself point to other areas that should be investigated for Sox violations.

    When is a Hedge not a Hedge?

    It appears that the JPM portfolio ‘hedge’ isn’t a hedge at all, at least according to current accounting standards. As Dina Dublon, CFO of JP Morgan Chase from 1998 to 2004, explained:

    Dublon also pointed out that JP Morgan’s $200 billion mistake was not an accounting loss. “There is a difference between accounting and economic valuations,” she said. “You have a mark-to-market hedge against an accrual exposure that is not being marked to market. So you can have a gain or loss on the hedge, but you will not recognize the change in value of the loan portfolio, which is on an accrual accounting basis.

    Translating this into non accountant language, JPM had a portfolio of assets which are available for sale. The change in the value of those securities is tracked, but since they aren’t considered to be trading assets, the change in value doesn’t hit the bottom line until they are sold. By contrast, positions held in trading books are “marked to market,” meaning they are revalued as market prices change and the resulting gains or losses are reported on an ongoing basis.

    JPM reported that this portfolio contains significant unrealized gains. Indeed, it realized some of those gains to offset the losses on the portfolio ‘hedge’.

    To hedge this portfolio JPM bought and sold credit default swaps. This portfolio ‘hedge’ is accounted for on a mark to market basis. This is odd since a true hedge should get the same accounting treatment as the asset it’s hedging. This indicates that the ‘hedge’ failed the hedge effectiveness test required by the accounting rules that would qualify it for hedge accounting treatment. More precisely the correlation between the hedge and the underlying isn’t strong enough to qualify it as a hedge.

    Further confirmation that the ‘hedge’ wasn’t technically a hedge comes from Jamie Dimon himself.

    In hindsight, the new strategy was flawed, complex, poorly reviewed, poorly executed and poorly monitored. The portfolio has proven to be riskier, more volatile and less effective an economic hedge than we thought.

    As Dublon explained above, “There is a difference between accounting and economic valuations.” Dimon takes care to refer to the ‘economic hedge’, which is a term of art. It has no significance for financial disclosure purposes. It means whatever the user wants it to mean. If Dimon has not been vigilant in using the phrase ‘economic hedge’ in his disclosures and public comments about this portfolio then he’s made some false disclosures.

    An “economic hedge’ is not a ‘hedge’ for financial disclosure purposes. ‘Economic hedge’ is a meaningless phrase. The abbreviated term ‘hedge’ when used to describe the trading portfolio embedded in the CIO book is a false characterization of the portfolio. He should not be permitted to describe this as a hedge in any of his comments about this book. At a minimum, he should be called on it every time he utters the phrase.

    If It’s Not a Hedge Then What is It?

    To recap, JPM owns a portfolio of securities it is ‘economically hedging” with a portfolio of credit default swaps. The purpose of a hedge is to reduce the risk of adverse price moves on the underlying portfolio.
    The CDS portfolio consists of CDS purchased and CDS sold.

    CDS purchased for the portfolio may have been put on as a hedge against the “available for sale” portfolio. But the CDS sold as a hedge doesn’t seem to make any sense. Selling CDS is equivalent to increasing the exposure to the underlying credits. The CDS sold don’t seem to have a risk mitigating role as part of a hedge, but to date JPM hasn’t provided the information to evaluate the overall portfolio.

    It’s possible JPM was funding the CDS purchases by selling longer dated CDS and justifying the inclusion of the CDS sales as funding of the hedging purchases, but that would seem to be pretty expansive definition of a hedge. Perhaps ‘economic hedging’ as JPM defines it includes the funding sources of the combined ‘economic hedge’. That seems ridiculous but the term is open to any interpretation.

    Since the combined CDS portfolio is accounted for on a mark to market basis, the position may not have raised any red flags with readers of the financial statements as long as it was in the money. That appears to have been the case for an extended period, as evidenced by the enormous pay packages (over $100 million for the chief trader, the infamous Whale, if reports are to be believed) for the CIO desk. You don’t pay that kind of money to hedgers.

    But the position has cratered this year and JPM was forced to disclose the losses on the CDS portfolio. To offset those losses JPM sold off some of its AFS portfolio. We’re still waiting for a precise definition of economic hedge from JPM.

    This characterization raises additional alarms, since it appears that JPM effectively viewed the AFS/CDS portfolio combination as a net trading position. Normally, you wouldn’t sell your AFS portfolio (or enjoy the beneficial accounting treatment) unless there was an extraordinary exogenous event that caused you to liquidate the portfolio. Trading losses on a portfolio jointly managed as part of the AFS portfolio wouldn’t qualify.

    This raises the question of whether JPM has correctly classified the available for sale assets since they acquired them. That’s a serious issue. If JPM misclassified a $200B position for years, it should be investigated for a host of regulatory violations and fraud.

    For all intents and purposes the hedge portfolio is a separate trading book, and the financial reporting reflects that fact. There should be no way JPM should be able to spin this as a hedge of anything and deny the proprietary trading characterization the accounting treatment signifies.

    What’s up With the Value at Risk?

    Another area the SEC needs to investigate is the curious restatement of the VaR, which is a measure of risk used in disclosures to investors and regulatory reviews.

    As discussed above, the risk exposure of the marked to market positions (the hedge porfolio) must be disclosed in the financial statements. JPM recently replaced the VaR model for this portfolio. It appears that the new model significantly understated the risk exposure and the bank has hastily reverted to an “older” model. One benefit of a reduced risk exposure is a reduction in capital held against the portfolio. Under the new model JPM would only have been required to hold half as much capital on the portfolio, than it did under the original model

    It is extremely unusual that a risk model for such a critical portfolio isn’t exhaustively vetted both internally and by the regulators before it was permitted to be installed. There was clearly a breakdown in the controls around that model replacement. This breakdown resulted in a significant and material underreporting of risk in the initial 1Q 2012 SEC reporting. The restatement validates that a material breakdown in internal controls existed before the model was implemented.

    It also raises other questions. Blaming models for management failures has become a fairly standard first response during the financial crisis. When HSBC took their first big hit on their securitization business in the 2007 (for fiscal year 2006), and shut down their US securitization business, they attributed the losses to the discovery that their credit risk models were flawed. I have no doubt this was true, but the discovery of the flawed model also coincided with the beginning of the collapse of the RMBS market.

    The revelation by JPM in the days immediately following the reports of the Whale’s trade, that the new VAR model seriously underestimated the riskiness of the portfolio, is more significant to a SOX investigation around adequacy of controls than an investigation into the adequacy of the model itself for risk management purposes.

    This sort of “whoops our models understated risk” is a convenient way to shift blame off management to “model error” for a decision to take on additional risk. Given that easy profits in banking are vanishing, which are we to believe: that JPM, heretofore seen as a leader in the CDS marker, suddenly became grossly incompetent? Or did they decide to take on more risk and implement models that would mask from regulators and the public the scale of the wagers they were taking?

    It also raises concerns about other models use for these portfolios. Many of the underlying assets in the portfolio are illiquid and complex securities. The models used for pricing these instruments and reporting valuations deserve additional scrutiny at this point as well.

    It doesn’t look like JP Morgan made a bunch of egregious mistakes. It looks like they broke the law, at least the Sarbanes-Oxley law.

  21. Research reveals the public short-sales are the same -sales contract’ in exchange for DEED.

    Any ‘Promissory Note’ is a Sales Contract – in exchange for a DEED are allowed to bring cash to ‘REMIC’ a collection of Notes sold to INVESTORS – – as BUYERS are in agreement with SELLERS in event of default -alternative investments’ options will be ‘settled’ using the ‘Mortgage Electronic Registration Systems, Inc’ as BORROWER, and find a more suitable BORROWER.

    Other databases exist outside of MERS.

    BUYERS/SELLERS bring cash to ‘Investment Banks’ is the goal and REMIC’s organized by Sale of Notes to INVESTORS is a governmental approved monopolized process in secondary market exchange.

    Short sales are the debt settlements in court. The new ‘quick’ way to get cash flowing for Notes sold to INVESTORS to hedge the credit risk is to allow consumers’ purchase DEED which was always clouded – nothings changed – but now you should know better.

    Goal get consumers ‘cash’ BUYERS/SELLERS in agreement consumer may advance cash in form of ‘real estate receivables’ which are notes (not loans) where ‘Due Upon Sale Clause’ removed from instrument during ‘Title Commitment’ in which ‘Title Agent’ ‘Agency’ member of association, purchase group’ through which goods and services and processes -approved governmental approved monopolies operate inside secondary market – an unregulated market – where anyone can exchange and transfer Sales Contract in Exchange for Deed; Congress provides civil rememdy – there is no law in secondary market against misrepresentation by independent third parties who are not required to disclose by exceptions of HUD/RESPA ….

    Since 1994, eLynx has provided the financial services industry with the best, most innovative, on-demand, Web-based services for secure, paperless, document collaboration and distribution. Today, 25 of the top 50 banks in the United States rely on eLynx for electronic document collaboration and distribution to both consumers and processors.

    Associations, Purchase Groups, Brokers … goods and services include CTSLink sm;

    another one you’ll find on documents, instruments, includes LSI/REO Lender;

    eLynx sm –technology, our customers capture and maintain data electronically throughout a loan lifecycle – automating paper-intensive processes, improving workflow, reducing costs, and ensuring compliance with industry regulations. eLynx serves over 4,000 clients of all sizes worldwide, including 25 of the top 50 US Banks and has processed more than 50 million loans. More than 4 million users utilize eLynx’s enterprise document output solutions.

    This experience, coupled with an on-demand platform and a broad suite of service offerings, makes eLynx an ideal partner for lenders looking to gain and maintain a competitive edge. eLynx can provide proven solutions that will help you differentiate yourselves in the market, optimize your efficiency, and maximize your profits.

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    Owner (APPLICANT) EDI-USA. INC. CORPORATION DELAWARE One Landmark Square, Suite 300 Stamford. CONNECTICUT 06901

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    Filing Date May 19, 2006

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    Attorney of Record Thomas W. Humphrey

    TOTALEPAPER sm LIVE
    Goods and Services IC 038. US 100 101 104. G & S: Communication services, namely, electronic transmission of data and documents among users of computers; On-line document delivery via a global computer network. FIRST USE: 20071206
    Owner (REGISTRANT) eLynx, Ltd. LIMITED LIABILITY COMPANY OHIO 7470 East Kemper Road, Suite 200 Cincinnati OHIO 45249
    Attorney of Record Thomas W. Humphrey

    HUD1CHECK sm LIVE
    Goods and Services IC 038. US 100 101 104. G & S: Communication services, namely, electronic transmission of data and documents among users of computers; On-line document delivery via a global computer network. FIRST USE: 20070211.
    Owner (REGISTRANT) eLynx, Ltd. LIMITED LIABILITY COMPANY OHIO 7870 East Kemper Road, Suite 200 Cincinnati OHIO 45249
    Attorney of Record Thomas W. Humphrey

    ENTER THE WORLD OF E sm LIVE
    Goods and Services IC 038. US 100 101 104. G & S: Electronic transmission of data and documents via the worldwide web. FIRST USE: 20071101. FIRST USE IN COMMERCE: 20071101
    Owner (REGISTRANT) eLynx, Ltd. LIMITED LIABILITY COMPANY OHIO 7870 East Kemper Road Suite 200 Cincinnati OHIO 45249
    Attorney of Record Clement H. Luken, Jr.

    TOTAL FULFILLMENT
    Goods and Services IC 038. US 100 101 104. G & S: Electronic transmission of data and documents via the worldwide web. FIRST USE: 20070101
    Owner (REGISTRANT) eLynx, Ltd. LIMITED LIABILITY COMPANY OHIO Suite 200 7870 East Kemper Road Cincinnati OHIO 45249
    Attorney of Record Clement H. Luken, Jr.

    EXPEDITE
    Goods and Services IC 038. US 100 101 104. G & S: Secure electronic transmission of data and documents via the worldwide web, having a function to provide electronic access control to the data and documents. FIRST USE: 20071101. FIRST USE IN COMMERCE: 20071101
    IC 039. US 100 105. G & S: Logistics services, namely, secure delivery of documents containing data. FIRST USE: 20071101. FIRST USE IN COMMERCE: 20071101

    IC 040. US 100 103 106. G & S: Secure printing of documents containing data. FIRST USE: 20071101
    Owner (REGISTRANT) eLynx, Ltd. LIMITED LIABILITY COMPANY OHIO Suite 200 7870 East Kemper Road Cincinnati OHIO 45249
    Attorney of Record Clement H. Luken, Jr.

    E
    Goods and Services IC 038. US 100 101 104. G & S: Electronic transmission of data and documents via the worldwide web. FIRST USE: 20110301. FIRST USE IN COMMERCE: 20110301
    IC 039. US 100 105. G & S: Document delivery, and not relating to vehicle rental services or vehicle rental reservation services. FIRST USE: 20110301. FIRST USE IN COMMERCE: 20110301

    IC 040. US 100 103 106. G & S: Digital on-demand printing of documents. FIRST USE: 20110301
    Owner (REGISTRANT) eLynx, Ltd. LIMITED LIABILITY COMPANY OHIO Suite 200 7870 East Kemper Road Cincinnati OHIO 45249
    Attorney of Record Clement H. Luken, Jr.

    SOFT PAPER (sm) application abandoned
    Goods and Services (ABANDONED) IC 038. US 100 101 104. G & S: Electronic transmission of data and documents via the World Wide Web
    Owner (APPLICANT) eLynx, Ltd LIMITED LIABILITY COMPANY OHIO 7870 East Kemper Road, Suite 200 Cincinnati OHIO 45249
    Attorney of Record Thomas W. Humphrey
    Filing Date June 23, 2005
    ABANDONED … hmmm…. 12/7/2007
    DOCX took care of ‘soft paper’?

    ENTER THE WORLD OF E sm LIVE
    Goods and Services IC 038. US 100 101 104. G & S: Electronic transmission of data and documents via the worldwide web. FIRST USE: 20071101
    Filing Date May 19, 2006
    Owner (REGISTRANT) eLynx, Ltd. LIMITED LIABILITY COMPANY OHIO 7870 East Kemper Road Suite 200 Cincinnati OHIO 45249
    Attorney of Record Clement H. Luken, Jr.

    One that may or may not be related: to equipment leasing through LaSalles which incorporates datat processing equipment, namely desktop computer, notebook personal computer, handheld personal and microprocessor based devices, ‘as related to animals’ – manmals are animals….

    STOCKADE tm LIVE
    Goods and Services IC 009. US 021 023 026 036 038. G & S: electronic reading, tracking, scanning and signaling devices, namely magnetic stripe readers, barcode readers, laser scanners, RFID readers, GPS tracking system, digital thermometers, non-contact temperature measuring devices; internal and external animal identification devices namely microchips, transponders, tags, implants and boluses; apparatus for weighing animals, namely scales; infra-red, laser and ultrasound apparatus, namely line scanners, 3D laser digitizers, sonar transducers, imaging cameras, thermal imaging and surface measurement devices for use in measuring size of animals; microchip identification systems, comprised of injectable implant, implant applicator, reader devices, buffers, adaptors, host computer, tracking database; computer software for use in database management of animals; computer programs for use in testing electronic devices, communication, capturing real-time data direct from electronic devices, transferring stored data from electronic devices to database application, automated importing of data including carcass data, automated exporting of data to external databases, data warehousing, database synchronization and replication, animal procurement management, tracking animal costing, forecasting animal profitability, animal disease diagnosis and management; data processing equipment, namely desktop personal computer, notebook personal computer, handheld personal computer and microprocessor based devices; and computer hardware namely computer peripherals, electronic identification systems, namely electronic identification systems for animals comprised of components of listed above; data collection, monitoring and management systems, comprised of components of listed above
    Owner (REGISTRANT) eLynx Pty Ltd CORPORATION AUSTRALIA 70 West Street Toowoomba, Queensland 4350 AUSTRALIA
    Attorney of Record Duane M. Byers
    Filing Date January 24, 2002
    Application s/n 76362359 Filing Date 1/24/2002 – Registration 6/10/2003; Attorney of Record: Duane M. Byers
    ‘Trademark’ ‘Dead’ 1/16/2010

  22. @tolle – you in your prom dress and me in my orange jumpsuit – we’ll be the belles of the ball for sure

    @guest – i (of course) wouldn’t agree that the process of foreclosure is criminal. it’s really the enforcement of the power of sale provisions in the contracts signed between the parties. if you didn’t want that possibility, you should have kept shopping for a different loan/contract. contract provisions are negotiated in commercial deals all the time, but not so often in residential. as to whether the act of foreclosure has been perpetrated by criminals, that may be a different story altogether. it would appear the jury’s still out on that literally and figuratively

  23. @ The “Grasshoppers”….short trip down the rabbit hole to get the newbies to the battle started 🙂

    http://universallegalnetwork.com/illegalities-of-securitization-trusts/

    “The “Lender” named in the Note and Deed of Trust or Mortgage (e.g. Washington Mutual, Indymac, Countrywide, etc) did not fund the transaction, and therefore was not really the “Lender” at all. They acted only as a “Nominal Lender”, named in the Note only to facilitate the creation of a Deed of Trust or Mortgage to secure the Note as an alleged “Loan”, when it was not a “Loan”, but rather the receptacle for an Asset-Backed Investment Security. Frank J. Fabozzi and Vinod Kothari, in their book “Introduction to Securitization” state on page 5 “The asset securitization process transforms a pool of assets into one or more securities that are referred to as Asset-Backed Securities.”
    The ramifications of this process are that there was no “loan” funded by the “Nominal Lender”. In fact, it can be alleged in court that the “Nominal Lender” was paid in full, plus a commission. Also, the Deed of Trust or Mortgage can’t secure an Asset-Backed Investment Security or a Financial Asset directly purchased by a Trust (Security), and the Homeowner was tricked into thinking he was a “Borrower” of a “Loan”, when he was actually a Seller of a Note to a Securitization Trust or SPV. The Trust or SPV had no right to a Deed of Trust or Mortgage to a purchased Note that was not evidence of a debt or obligation – it can’t be a Secured Transaction covered under UCC 9,when it’s an Investment Security covered under UCC 8. The “Nominal Lender” shouldn’t be able to foreclose on an asset in an Investment Security with an invalid Deed of Trust or Mortgage, fraudulently procured under the guise of a “Loan”, when it wasn’t a Loan, but rather the “Purchase of a Note” into an Asset-Backed Investment Security, and the “nominal Lender” was paid in full, plus a commission for something it did not fund.
    Can a “nominal Lender” that didn’t fund the transaction, but rather fraudulently allowed its name to be put on a Note and Deed of Trust or Mortgage to trick a Homeowner into signing a Deed of Trust or Mortgage to secure an Investment Security, assign a Beneficial Right it never had to another Beneficiary?
    ….Credit Enhancement is used to sweeten securitization trusts. Trusts containing Sub-Prime Notes usually have Pool Insurance to cover Defaults and foreclosure. If enough Notes go into Default and Foreclosure, the Insurance pays off the Investors. The Servicer usually continues to foreclose, even though the investors were paid off.”

  24. Right Neil. This criminal practice of foreclosures dates back at least 3000 years according to this 1400 year old history: http://quran.com/2/82-88

  25. @ tnharry…. “we’ll never be best friends”….

    Now you tell me! Just what am I supposed to do with this prom dress?

  26. […] Filed under: foreclosure Tagged: Allan Danforth, foreclosure, foreclosure fraud, Jackson County, JP Morgan Chase, KMBC, Lender Liability, punitive damages, realtor, Safeguard Properties, service originator, short-sale, theft by bank, title agent, Tony Stein Livinglies’s Weblog […]

  27. It’s gona blow… It has to.

    http://www.nakedcapitalism.com/2012/05/so-much-for-schneiderman-being-tough-on-wall-street.html

    Wednesday, May 16, 2012
    So Much for Schneiderman Being Tough on Wall Street

    As regular readers no doubt recall, Eric Schneiderman abandoned the dissident state attorney general effort to get a better mortgage settlement, assuring the Administration a win on this sellout to the banks. The bright shiny prize Schneiderman got in return for his betrayal was serving as one of five co-chairmen on a Federal mortgage task force, which appears to have gotten close to nada in resources beyond the staff in various Federal agencies who were already working on mortgage investigations. And given that were are now close to a full five years past the origination of toxic subprime deals, those existing investigations don’t exactly look to have been pursued with much in the way of vigor.

    We’ve criticized the Schneiderman sell out, yet the PR push to position him as the True Hero of What Passes for the left continues apace, including some ham-handed efforts like the American Prospect’s “The Man the Banks Fear Most“.

    Schneiderman today proved the skeptics to be correct (hat tip reader Peter). From a writeup in the New York Law Journal of a presentation Schneiderman made on white collar crime. It seems Schneiderman is in favor of it:

    Noting his role as co-chair of President Barack Obama’s mortgage-fraud task force, he said that he was “very pro-Wall Street” and had represented some financial services firms in private practice.

    He said that the majority of people working in the financial industry are honest, but added that the “ability to tell people that and not have people scoff has been damaged” by ongoing scandals.

    This telling admission of the truth comes as polls in swing states show that ordinary citizens aren’t fooled about Obama’s sell out on the mortgage front and to big banks. From CFS:

    ….majorites of independent likely voters in three swing states (Nevada, Arizona, and North Carolina) and near-majorities in two others (Pennsylvania and Florida) say they disapproved of Barack Obama’s handling of the housing crisis, and majorities in each state say the Administration is not doing enough to police Wall Street banksi in the housing market.

    Strong majorities of likely voters in each state polled – Nevada, Florida, Arizona, North Carolina, and Pennsylvania – also say the economic crisis was caused partly by criminal actions of Wall Street executives.

    It is going to be instructive to see whether token gestures by the Administration on the financial front between now and the election will be enough to fool voters who have suffered serious economic setbacks.

  28. Ben Hallman

    ben.hallman@huffingtonpost.com
    GET UPDATES FROM Ben:
    Like 184 D.M. Levine

    JPMorgan Trading Loss: 3 Shareholder Suits Filed Alleging CEO Jamie Dimon Misrepresented Risk To Investors

    Posted: 05/16/2012 10:12 am Updated: 05/16/2012 2:38 pm

    Chase Trading Loss, Business News That didn’t take long. Less than a week after JPMorgan Chase disclosed massive trading losses, investors who own bank stock have filed three different lawsuits alleging that bank officers failed to disclose information about the bad trade, which led to a sharp decline in the share price.

    The shareholder suits, filed in U.S. District Court in Manhattan this week, claim that the bank misled investors ahead of its surprise announcement last Thursday that it lost $2 billion.

    “The suits are going to pile up and pile up fast,” said Dennis Kelleher, CEO of Better Markets, a nonprofit focused on financial reform. “It’s no surprise that there are lawsuits, and there are going to be many more because in April, the CFO and CEO said that there was no risk. A ‘tempest in a teapot’ is what Jamie Dimon said.”

    Kelleher added, “And then a month later he said, ‘Oops, the teapot blew up and it’s going to cost you all a lot of money and we don’t know what we’re doing.”

    The first case to hit the dockets was a class action brought on Monday by Robbins Geller Rudman & Dowd, a well-known San Diego-based plaintiffs law firm, on behalf of investors who purchased JPMorgan stock between April 13 and May 11 of this year. The lawsuit alleges that JPMorgan CEO James Dimon and former Chief Investment Officer Ina R. Drew, along with others, “deceived the investing public regarding JPMorgan’s business, operations and management.”

    Drew, who oversaw the division responsible for the massive losses, stepped down as Chief Investment Officer earlier this week. In a shareholders’ meeting on Tuesday morning, Dimon sounded a note of contrition, as he had when news of the losses first broke last week. “This should never have happened,” Dimon said. “I can’t justify it and unfortunately these mistakes were self-inflicted.”

    The first lawsuit further alleges that Dimon and the others included misleading information about the bank’s finances in company reports and press releases.

    “Because of their possession of such information, the individual defendants knew or recklessly disregarded that the adverse facts specified herein had not been disclosed to, and were being concealed from, the investing public,” the suit says.

    Calls to lawyers for the plaintiff were not immediately returned. JPMorgan declined to comment on Wednesday.

    The Wall Street Journal and Reuters reported on two other shareholder suits that were filed late Tuesday.

    “What the Company did not reveal was that those losses were the result of a marked shift in the company’s allowable risk model, undisclosed to investors, and the similarly clandestine conversion of a unit within the company that was touted as providing a conservative risk-reduction function into a risky, short-term trading enterprise that exposed the company to large losses instead,” said one of the complaints.

    After losing about 11 percent in the two trading days after the news of the loss broke, the stock rebounded more than 1 percent on Tuesday. That same day the FBI announced that it had opened an inquiry into the trading loss.

    The central question in these cases and in the investigations begun by the FBI, SEC and Federal Reserve appear to be: Did the bank and its officers directly mislead the public and investors about the risks being taken by its chief investment office?

    “What did [Dimon] know and when did he learn of the problems that caused the firm to become sufficiently concerned to begin unwinding its positions?” asked James Cox, a corporate and securities law professor at Duke University. “Was Dimon then just managing the press or managing the markets to aid in unwinding those transactions?”

    The shareholders’ suit brought on Monday by Robbins Geller points to excerpts of a transcript from a JPMorgan investor conference call with analysts and investors that took place in April. On the call, Dimon was asked about news reports that the CIO office was engaged in risky bets on credit derivatives. He downplayed the risks the London office was taking: “It’s a complete tempest in a teapot. Every bank has a major portfolio; in those portfolios you make investments that you think are wise to offset your exposures.”

    Dimon has since apologized for the losses.

    The plaintiffs seek unspecified monetary damages and a jury trial.

    Emily Peck contributed reporting to this article

  29. Please sign the petition Elizabeth Warren has to reinstate Glass-Steagall. Click on the link and sign. Then, pass it on to everyone you know. Even those who don’t have a clue.

    http://act.boldprogressives.org/sign/sign_glasssteagall/?rd=1&source=e1-wallstreet-fin&t=2&referring_akid=7785.119776.yrLHml

  30. Abigail said to read and pass on. I read. Hated every minute of it too. When I read something like that, i can feel rage coming up. Not a pleasant feeling.

    Sometimes, I just wish I was dumb. Dumb and content. I have a friend like that. Not a care in the world. Happy as a lark. And nothing bad ever happens to her. I need to stick around her more, I guess.

    http://abigailcfield.com/

    Jamie Dimon’s Hedge FundBy Abigail Caplovitz Field | May 16, 2012

    ShareJamie Dimon, John Stumpf, and to a lesser extent, Vikram Pandit and Bryan Moynihan, are running massive hedge funds. They’re placing enormous, incredibly risky bets. “Hot money” investors are giving them the cash to gamble because they all understand that you and me will make good on any losses, since we’ve started guarantying the banks-turned-hedge-funds as “Too big to fail.”

    The money flowing to these gamblers-in-chief is growing by double digit percentages, and includes so much borrowed money the “leverage” may be six times what Lehman Brothers was doing when it flamed out. As long as this situation continues, a new financial crisis is inevitable, and the risks of it grow faster every day. There’s only one solution: cut these gamblers off from public support. The market will do the rest.

    We cut them off by reinstating Glass-Steagall, a depression era law that kept the bankers in check for decades, until their Clinton-era lobbying prowess repealed it. Senate Candidate Elizabeth Warren has a petition going to do just that. Please sign it.

    “Deposits”, the Word that’s Hiding the Hedge Funds

    The information on the bailed out bankers’ hedge funds I just summarized comes from this incredibly important Bloomberg interview of Amar Bhide. (H/T to Yves Smith at Naked Capitalism.) Bhide is a professor at Tufts University who knows a lot about the financial services industry, as the excerpts I discuss below make clear. In a little more than four minutes, Bhide detailed how and why JPM “is a systemically important, structurally defective bank. As are all the other megabanks.”

    Crucially, Bhide debunks the bailed-out-banker PR spin that his Bloomberg TV interviewers parrot, and he schools them in other ways too. If enough people are clued in to what is really going on, we will break up the banks and restore Glass-Steagall. But there’s no chance of that so long as major media embraces the bankers’ key word for their hedge fund money: “deposits”.

    Hedge Fund Money is the “Surplus Deposits”

    The media keep talking about the money JPMorgan lost as “surplus deposits” or “excess deposits“. You know what deposits are, right? It’s your money at the bank, and mine. And the business’s down the street; even big businesses. It’s the cash we all give the banks for safe keeping.

    But that’s not what Ina Drew was “investing.” She playing hedge fund, speculating with hot international money.

    Here’s Bhide’s first attempt to get Media Guy and Media Gal (his Bloomberg interviewers) to understand:

    There’s this amazing narrative I keep hearing. The investment office exists to quote unquote “invest surplus deposits.” It isn’t the case that the surplus deposits walk in through the door. JP Morgan goes out and solicits these deposits in hot markets in order to invest them, in order to speculate with them.

    Later in the interview, Bhide twice has to revisit the point because the interviewers have bought into the imagery of the bankers’ word “deposits.”

    Media Guy:

    But let’s explore a little bit what the bank does. We’re taking in deposits, we’re in a deleveraging economy, loan growth is anemic, what do you do with these deposits?…

    See his subconscious bias in action? “Taking in deposits.” That’s “what the bank does” all right, the retail bank branch. The Chase that you and I might use. But the hedge fund branch, the “Chief Investment Office”, doesn’t “take in deposits.”

    Bhide responds:

    I think you have the chain possibly a little bit off. The deposits aren’t deposits put into the bank by individuals or even commercial deposits. These aren’t IBM’s deposits. These are deposits that JPM proactively goes out and solicits from hot money markets. If it didn’t solicit these deposits it would not have them to invest with.

    But Media Guy isn’t ready to listen yet. Watch how he recites some data and then pronounces bank talking points, including the taking in deposits line.

    Media Guy:

    Well, I don’t know, the data suggest a couple of things. On the first hand, on a one-year basis JPM’s deposits on hand has grown by 13%. Wells Fargo’s have increased 11%. Citigroup 5%, Bank of America 2%. All of these banks are fighting for the same deposits. Either JPMorgan is doing something uniquely well, or, people think it’s a safer bank and Wells Fargo is a safer bank to put their money with. That’s a choice.

    See how his words still evoke you and me? Notice too the “fortress balance sheet” meme in “safer bank”. Media Gal piles on that one: “Or they think Jamie Dimon’s is the risk manager.”

    Bhide tries again:

    Again, the word deposits is so misleading. This is hot international money. Hot international money going wherever it sees too big to fail institutions, so they’re ‘depositing’ this money, more or less, with the US Government.

    To recap: Jamie Dimon and his bailed out counterparts are soliciting money, money that is looking for a hedge fund to gamble with. Dimon’s sales pitch has two parts: 1) I won’t lose your money, because I’m the greatest risk manager ever was (very Barnum of him) and 2) I can’t lose your money, because I can stick my hand into Uncle Sam’s pocket if I really need to, as deep into his pocket as I want.

    The Bankers Are Going All In With Our Money

    The hundreds of billions in play right now are real money. But the numbers are system threatening when you consider the “leverage.” Just like we shouldn’t call the solicited hot international money “deposits”, we should say “cash advance to gamble with” instead of “leverage.” Because that’s what “leverage” is in the hot money, hedge fund context.

    Bhide:

    Leverage upon leverage. The ‘deposits’ are leveraged 10 to 1. And the investor gets quote unquote “invested” by the investment office for possibly another 10 to 1. Possibly 20 to 1. So the activities of the investment office are a levered fund, probably levered 200 to 1. Levered on the backs of guarantees by you and me. And this is an enormous threat to the public good.

    Let’s be clear why: enormous bets can lose and that’s bad enough when we taxpayers stand behind them. But hugely levered bets not can not only lose, they increase the losses by an order of magnitude or two, and can bring a daisy chain of other institutions into play–the money was borrowed from somebody, right? And don’t kid yourself about how big the risks are that these funds are taking. As Bhide says:

    What scares me is not the $2 billion that JPMorgan lost. It’s the record $19 billion profits that JP Morgan made. How on earth do they make a $19 billion profit quote unquote “putting customers first” in an economy that’s supposedly slowing down and their customers are flat on their backs?

    By placing really big, highly leveraged, very risky bets. That’s how.

    The Mythology of Risk Management

    Bhide makes one other extremely important point: the idea that these bailed out bankers are managing their hedge funds’ risks is complete b.s.; it’s fundamentally an impossibility.

    Here’s his first try to get Media Guy and Gal to understand:

    [Dimon’s] managing an organization of over 200,000 people scattered all over the world. In dozens and dozens of businesses. This is not a …Berkshire Hathaway who is on top of the specific trades that he’s doing. How could he possibly know?

    Media Gal: “It’s his job to know.”

    Bhide: “Well it’s a job that no human being can do.”

    But the obviousness of what Bhide’s saying doesn’t sink in, so later on he tries again.

    Media Gal: “Do you think the risk managers understand the type of products these traders are trafficking in?”

    Bhide:

    Well it’s one thing to understand the type of product generically, it’s another to know every single trade. The people running these very large organizations who are taking these very large audacious risks ought to be on top of every single trade. I know successful hedge fund managers, they make a fortune, it’s a well made fortune.

    Media Guy:

    So you’re saying if the CEO…cannot have enough visibility into these individual positions and understand the risks they present there’s no way that his or her institution should even be dabbling in this stuff.

    Bhide: “Absolutely. I mean I have nothing against these individual instruments per se…”

    Media Gal: “So you’re saying the derivatives products, it’s not them. It’s the way they’re being managed?”

    Bhide: “I’m saying they don’t belong in JPMorgan, they do not belong in a large commercial bank, period.”

    Media Gal: “Then where do they belong?”

    Bhide: “In a specialized hedge fund!”

    So there it is. Jamie Dimon and his peers are running massive hedge funds that are getting more massive (remember, Dimon’s grew by 13% last year alone), taking enormous, highly leveraged risks they cannot manage, secure in the knowledge that the American taxpayer is guaranteeing their bets.

    We are accelerating toward our next, and larger, financial crisis. Time to bring back Glass-Steagall. Sign the petition, please. And watch the Bloomberg interview of Amar Bhide. And pass them both on

  31. @ All….

    Yeasterday, Neil said, “remember that the Truth In Lending Law states unequivocally that the undisclosed profits and compensation of ANYONE involved in the origination of the loan must be paid, with interest to the borrower.”

    Where can I find this at??

  32. Foreclosures in Arizona 533,855
    Foreclosures in US 11,489,461 & more on the horizon.
    Underwater over 12 million US homes & more on the horizon .
    Percent of Arizona home owners underwater – 55%
    Jobs lost in Arizona 480,725
    Jobs lost in US 12,198,023

    Do not pay for the Wall Street and Banksters crime
    Go Green Clean up congress, Jail the Banksters

  33. Foreclosures in Arizona 533,855
    Foreclosures in US 11,489,461 & more on the horizon.
    Underwater over 12 million US homes & more on the horizon .
    Jobs lost in Arizona 480,725
    Jobs lost in US 12,198,023

    JAIL the BANKERs – Remove DeMarco!

  34. @Carie,

    Reading that article (thank you for posting it) gives me the willies.

    We haven’t even started to clean up the existing mess and we are already creating a new one. Even though it doesn’t say anything, it is safe to assume that the players are still the same: FHA only “backs” the loan. (Tax payers’ money, once again.) Nothing new there. FHA doesn’t actually lend the money. In other words, some financial outfit has to still be involved. We haven’t even started to look into re-regularizing the financial sector and we know, from the past week, that banks continue with the same hanky panky.

    Oops! I forget all about Costco and Walmart… The more, the merrier.

    Secondly, it says nothing about the title; nor does it say anywhere whether FHA guarantees that said title is clean and no bank will attempt foreclosure at a later date because… well… MERS is still alive and kicking and we know what that means. Not enough information to jump up and down with joy, on the contrary. If it’s a new program, I bet we’ll soon hear about Danforth cases all across the country and FHA (us) being sued left and right by homeowners (us) while footing FHA’s legal bills. It kinda stinks but I don’t quite know of what. Complete incompetence? Stupidity? Absolute dishonesty on the part of our government? Whose bright idea is that? Jamie boy? That wouldn’t surprise me.

    My thought (you asked): it is worth just about as much as the AG settlement and it is simply a political move during an election year. As attractive as it may look, I wouldn’t touch it with a 20 foot pole… Government MUST get out of the mortgage business and financial institutions MUST be regulated, short of which we’re opening a new and improved can of worms. Half-ass is only going to compound the existing problems. We’ve already seen what half-ass has accomp0lised thus far.

    Final thought: without a moratorium on foreclosures, it is tantamount to kicking the can yet further down the road.

    Call me cynical. Please, do call me cynical: I learned it from Toile.

  35. i get it – we’ll never be best friends, in fact I’m certain you wouldn’t pee on me if i was on fire, but that entire comment lacked a responsive statement to my point to you. if you state that nemo dat applies to a short sale, then you are in essence stating that the borrower/owner lacks title to the property. and there’s simply no way that you really believe that. you just can’t and maintain that the borrower/owner has standing to complain about any of these issues.

  36. Tnharry, it’s a pig no matter how much makeup you put on it. Now I know that you work at a small bank that only does portfolio loans to 1st cousins, who, having lived in Tennessee myself once, I can say with assurance that the same goes for wedding vows…but that’s a different story.

    The truth of the matter is that the farther the banks get from these crimes, through short sales or what have you, the more the criminality is laundered. It’s actually more like a crime scene that gets disturbed as time goes by. Statutes of limitations and greasy palmed politicians are a bankster’s best friends.

    The beef I have with tnharry is how unapologetic he is to the crime of the century. I happen to believe the opposite of you, that the banks should be having to prove their case before a tribunal, instead of your slant of the borrower needing to learn rules of procedure.

  37. @e tolle – explain to me exactly why “Nemo dat” SHOULD apply to short sales? in a short sale, the title is passed from the borrower/owner to the new buyer. the bank is not involved in the transfer of title. if you argue that “nemo dat” applies to a short sale, then you’re arguing that the borrower/owner lacks clear title in the first place. and if the borrower/owner lacks clear title, then they have no real claim or standing to contest foreclosure. i understand that you argue with every word out of my mouth on general principle, but this takes circular logic to an extreme.

    i’ve already ordered my jumpsuit. it has french cuffs

  38. @ carie, the banks are “buying” the foreclosures at auction with zero-skin credit bids. They then turn around and sell them to the FHA within days of the auction, that’d be you and me in disguise. Then the FHA mortgages them to us again, which completes the rinse, wash, repeat cycle until the banks are allowed to take them again due to the economy they crashed.

    Speaking of laundering, “nemo dat shouldn’t apply to short sales” oh tnharry, do you never tire of pushing the paper cut edge of the law envelope? Watch out for a few thousand cuts coming to a bank near you before long. All Ponzi schemes fail, and their schemers froghop into the white school bus. I’ll wave to you as you whack at kudzu on the side of the road in your cute little orange jumpsuit.

  39. Check the dates on the cleanout order. The cleanout guy was so backlogged he didn’t get there til long after the closing and forgot to validate. The broker should have exercised foresight, that’s what he is paid for.

  40. The cleanout order was backlogged (or mislaid) and not reverified when it finally became current (or found). A little foresight/hindsight would have prevented this but I doubt that the bank placed the cleanout order after signing off. Where is the date checking here that good reporting demands?

  41. @marilyn – nemo dat shouldn’t apply to short sales

  42. anyone wanting to buy a foreclosure or a short sale better learn the Nemo Dat rule:

    If you don’t own it you can’t sell it.

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