politics | Livinglies's Weblog

Beware of Financial Rescue Scams Including Modifications

Posted on August 17, 2020 by Neil Garfield

The offer of modification is actually inviting you to formally join the securitization process without getting paid for it.

I write often about the illegality of the Wall Street schemes that have defrauded investors and homeowners out of their money and investments. But there is also another aspect to this.

The coming Tidal Wave of evictions and foreclosures is going to produce a tidal wave of scams that deprive homeowners and tenants of what little income or assets they have left.

Some of the scams are very close to legitimate business propositions. There is nothing wrong with a risk sharing agreement in which an investor gives consideration to the homeowner in exchange for petitioner patient in the title will proceeds arising from the sale or refinancing from the house. And the consideration could be funding the defense of the property – or even making an offer to pay off the balance as demanded, provided the claimant show proof of payment which in turn would show proof of ownership of the underlying debt.

There are plenty of legitimate business propositions that could be profitable and successful for both the homeowner and the investor/rescuer. In some of them, homeowners might be required to pay rent to the investor. There is nothing illegal about that.

But mostly, homeowners are going to be approached by disreputable people who are simply out to make a buck and neither intend any beneficial outcome for the homeowner nor do they have any credentials, training or education which they could employ for the benefit of the homeowner.

As I have previously written on these pages, the form in which the scams are presented varies because, like the banks, they use labels to hide what they are really doing. But the substance is always the same.

Since the goal is money, and they probably know they need to hit and run, they going to demand money in one form or another to be transferred from the homeowner to the “rescuer” sooner rather than later.

In addition, they may ask for quitclaim deed, the execution of which is detrimental to the interests of the homeowner. By the execution of a quitclaim deed, the homeowner might lose standing to challenge the investment banks when they seek to administer, collect or enforce the homeowner transaction that gave rise to the appearance of a “loan” transaction.

So if someone asked for money or deed upfront, the proposal is probably part of a scam. An excellent way of determining whether the proposal is part of the scam is to simply read and hear what they are promising. In order to close the deal scam artist will promise things or results that will never be delivered.

Any qualified professional will tell you that when you are entering into a dispute, if anyone promises or guarantees a specific result, they are lying to you. So if someone guarantees you a result, the proposal is probably part of a scam.

In addition remember that if it seems too good to be true, then it is not true and it is not good. Scammers will tell you what you want to hear and you will want to believe it because it is what you want to hear.

So as a yardstick to measure such proposals consider this blog. I will tell you that current law forbids enforcement of your debt, note or mortgage. But I also tell you that (a) in order to defend you must enter the process of litigation and administrative contests and (b) the odds are stacked against you because judges have it in their mind they are saving the financial system form collapse. While I say that a majority of the people who follow my advice win their cases or achieve a successful result, that also means that in a substantial minority of cases, people lose and are forced to leave their homes after spending money on the defense. I can guarantee that current law means that homeowners SHOULD win but I can’t guarantee that they WILL win.

MODIFICATION IS A SCAM

Lastly, one of the scams that will be proposed to you is an offer of modification from what appears to be the “servicer” of your “loan”. In most cases this is offering you ice in the winter. You should consult an accountant or other financial expert to determine the value of the offer of modification. But more than that you need to realize that the offer of modification is actually inviting you to formally join the securitization process.

Modifications actually formalize the illegal practices conducted by the investment banks. Since they have retired the actual loan accounts, there are no actual creditors who can legally make a claim.

The banks have been getting away with designating parties to act as though they were creditors even though they are not. They know this is a very weak spot in their strategy. So they offer agreements that are entitled “modifications” which do virtually nothing to change the terms and conditions of the loan, although some incentives might be offered to reduce the homeowner to sign the agreement.

The real purpose of the agreement is to get the homeowner to agree that the use of the designee, like the company pretending to be the “servicer”, is perfectly acceptable to the homeowner. In so doing, the homeowner has essentially waived all potential defenses that could arise under the Uniform Commercial Code or under common law. The requirement that claimant must have financial injury in order to bring a claim will also have been waived unintentionally by the homeowner, who will then be sued or coerced into making payments that are not due. This also sets the stage for the declaration of default by a non-creditor which can then be enforced by the contract of “modification”.

It is obvious that the proposal for modification is coming from someone who has no authority or powers to propose or enter into any agreement that affects your homeowner transaction (“loan”) in any way. Yet for purely practical reasons it may well be in your interest to agree. Depending upon your financial circumstances and your appetite for risk you might want the entire ordeal to simply end and modification might be an effective way out of it.

But remember though you do have some bargaining control that is not apparent. And although the agreement is not actually a legally binding instrument for a variety of reasons it no doubt will be treated as binding by the courts and will be codified into legitimacy by the coming resets of state legislatures.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.*

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Filed under: CORRUPTION, Fabrication of documents, foreclosure, investment banking, jurisdiction, legal standing, politics, Presumptions, prima facie case, securities fraud, Servicer, sham transactions | 5 Comments »

The Best Article Yet on Illegal and Immoral Practices by Investment Banks Making False Claims About “Securitization of Debt” by Francesca Mari on Aaron Glantz Book “Homewreckers”

Posted on June 8, 2020 by Neil Garfield

Francesca Mari in the JUNE 11, 2020 ISSUE of The New York Review of Books, has written a truly excellent piece on a book called “Homewreckers” by Aaron Glantz.

If you ever had any doubt about whether homeowners have the moral high ground and whether the investment bankers have no moral or legal grounds for what they did, you should read the article and buy the book. ( I get nothing from sales of the book and I have not met either author — although I will contact them for interviews on my show).

The only point that I think both Mari and Glantz miss is that the loans were never securitized. Securitization is the process of selling assets in pieces to multiple investors. No residential loan to my knowledge has ever been sold to investors even on paper much less in reality.

Let me put it this way: there has never been a transaction in which investors buying certificates, investment banks or anyone else paid value in exchange for ownership of any debt, note or mortgage. They paid value but not for the loan. And they received the benefit of their bargain.

At the end of the day there is nobody who has paid value in exchange for a conveyance of ownership of the debt, note or mortgage. Claims of ownership of the debt, note or mortgage are all false even though they are documented. Documents are not transactions. They are evidence of transactions. And if there was no such transaction then the documents are false.

And that is why all of the documents in foreclosures are false, fabricated, forged, backdated and robosigned. The documents are false but they are presumptively valid if they conform to statutory requirements. The point missed by most homeowners, lawyers and judges is that just because they are presumed valid doesn’t mean they cannot be tested and rebutted.

Filed under: CORRUPTION, discovery, Discovery -Subpoena, Eviction, evidence, Fabrication of documents, foreclosure, foreclosure defenses, forensic investigation, forgery, investment banking, Investor, jurisdiction, legal standing, Motions, originator, Pleading, politics, Presumptions, Servicer, TRUST BENEFICIARIES | 3 Comments »

No the Mortgages Are Not Securities, But the “Certificates” Do Not Qualify for Exemption As “Mortgaged Backed”

Posted on June 12, 2019 by Neil Garfield

For those straining to find a way to categorize mortgage loans as securities I offer this based upon my licensing, training and experience as a Wall Street Broker and Investment Banker and as an attorney who has practiced law, including securities law for over 42 years.

You are climbing the right tree but you are on the wrong branch, in my opinion. Despite possible legal and logical arguments for your point of view there is no way any court is going to take the common mortgage loan and say it is a security, and therefore was subject to regulation, registration, disclosure and sales restrictions. And the secondary market does not rise to the level of a free exchange. While loans appear to be traded under the guise of securitization they are not actually traded.

BUT

I like your reasoning when applied to (a) certificates issued by investment banks in which the investment bank makes promises to pay a passive income stream and (b) derivative and hedge contracts issued on the basis of deriving their value from the certificates.

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The specific challenge I think should be on the status of the certificates or “bonds” issued by the investment banks. If securitization in theory were a reality then under the 1998 exemption they would not be treated as securities and could not be regulated.

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That would mean that the fictitious name used by the investment bank was a real entity, an existing Trust (or special purpose vehicle) (a) organized and existing under the laws of some jurisdiction and (b) the trust actually acquired loans through (i) purchase for value or (ii) through conveyance from a trustor/settlor who owned the loans, debts, notes and mortgages.

*

But that isn’t what happened in practice. The entire business plan of the investment banks who participated in this scheme was predicated on their ability to sell the loans multiple times in multiple ways to multiple layers and classes of investors, thus creating profits far in excess of the amount of the loan.

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Right now each of those sales is considered a separate private contract that is (a) separate and apart from the loan agreement and (b) not subject to securities regulation due to exemption under the 1998 law that does not allow securities regulation of mortgage-backed instruments.

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So the goal should be to show that

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(a) the securitization scheme was entirely based on the loan agreement under the single transaction and step transaction doctrines and therefore was not separate from the loan transactions

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(b) the certificates or bonds were not mortgage-backed because the holders have no right, title or interest to the loan agreements, debts, notes or mortgages and

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(c) the derivative and hedge contracts deriving their value from the certificates were securities based upon the certificates (“bonds”) that are more in the nature of warrants and options on the value of the certificates rather than any direct interest in the debt, note or mortgage of any borrower.

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Hence both the certificates and hedge contracts and all other derivatives of the certificates would be subject to regulation as securities. Based upon information I have that is very suggestive although not conclusive, it appears that the Internal Revenue Service has already arrived at the conclusion that the certificates are not mortgage-backed and the trusts are not viable entities because in order to have a valid trust it must have assets and active affairs. It must also have identifiable beneficiaries, a trustor etc.

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None of those elements are present or even alleged or asserted by the lawyers for the foreclosure mills. The only “beneficiary” is the investment bank, not the certificate holders who all expressly or impliedly disclaim any right, title or interest in the loans, debts, notes or mortgages and have no right to enforce. This has already been decided in tax court. The owners of certificates are not the holders of secured debt.

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There is no “res” or “thing” that is entrusted to the named Trustee of the so-called REMIC Trust for the benefit of identifiable beneficiaries. There is no settlor who conveyed loans to the Trustee to hold in trust for identifiable beneficiary except that as a catch-all the investment bank is named as beneficiary of any title to anything that might be attributed to the trust, if only the trust existed.

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Attacking this from the top down is the job of regulators who refuse to do so. But the attack can occur from the bottom up in courts. As shown above, in any case where a trust is referenced in a foreclosure there is no legal standing. That is there is no existing entity that owns the debt. The investment bank funded the origination or acquisition of the loan but contemporaneously sold off the value of the debt, the risk of loss, the cash flow and other attributes of the loan.

*

The notes had to be destroyed and a new culture based upon images had to be put in place even if it violated law. The problem with the courts is not that they don;t get it; I think a lot of judges get it but don’t like the outcome of applying the law as it currently exists. So they wink and nod at fabricated notes, assignments and endorsements.

But those same judges, when confronted with unexplained deficiencies are forced to rule in favor of borrowers. And they do. This would best be done in mass joinder, class action or some other vehicle where resources could be pooled, but the procedural deck is stacked against such efforts.

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Filed under: boarding process, burden of pleading, BURDEN OF PROOF, CORRUPTION, discovery, Discovery -Subpoena, evidence, expert witness, Fabrication of documents, foreclosure, forensic investigation, forgery, investment banking, Investor, jurisdiction, legal standing, politics, prima facie case, securities fraud, Servicer, sham transactions, standing, TILA rescission, TRUST BENEFICIARIES | 8 Comments »

Ocwen Admission Confounds Judges and Experts

Posted on January 17, 2018 by Neil Garfield

This is a blatant attempt at deception — a deceit without which none of the Trusts would be recognized as legal entities much less the owner of loans. Ocwen is admitting that there is no single owner of the loan it is allegedly “servicing.” “There is no single owner of the account, but rather the account is one of many in a securitized investment trust.”

For the uninitiated, this statement might suffice or at least be threatening enough as a challenge to their experience and intelligence to direct them away from the central false assertion that the trusts own any loan. They don’t.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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Hat Tip Bill Paatalo

see Ocwen Responsive Letter – CFPB – 11-03-2017

In this real live case, Ocwen is fulfilling its job that includes obfuscation as one of its paramount duties. After first “answering” the CFPB requests with obfuscation it then states “The ownership status of the account is based upon our review of our records as of the date of this letter.” It doesn’t say that the information is correct or even believed to be correct. It doesn’t say they performed due diligence to determine whether a true chain of ownership exists, combing the various records of “predecessors.”

Nor is there a statement that Ocwen is authorized to service the account. It simply says that it IS servicing the account. And of course then they do not assert the basis of their authority since they never asserted their authority. It is implied. It is assumed. In court, it might well be presumed by the court, the foreclosure mill attorney and even by the borrower and the borrower’s attorney. This is one of the errors that snatches defeat from the jaws of victory. An attack on what is missing instead of trying to dodge what is there would result in far more victories for homeowners.

The attorney’s client is Ocwen. Ocwen is impliedly asserting authority to service but can’t show it. In one recent case of mine, they came in with a Power of Attorney signed by someone who purportedly executed the instrument on behalf of Chase. The problem was that Chase was never mentioned before in any pleading, documents or testimony. The POA was false.

Back to ownership: “there is no single owner” implies that there are many owners. There are several problems with that assertion or implication that involve outright lying. Ocwen is saying that the loan is in a securitized investment trust which certainly would imply that the loan is not in transit nor is it owned by more than one trust.

Further if the reference (omitted) is to investors, that too is a lie in most cases. The certificate indenture usually contains the express statement that the holder of the certificate receives no right, title or interest to the debt, note or mortgage in “underlying” loans (which have never been acquired by the trust anyway).

So what are we left with? No single owner which means that the securitized investment trust doesn’t own it because that is one single entity. Multiple owners does not refer to investors because the express provisions on their certificates say they have no ownership of the debt, note or mortgage in the alleged loan.

The counterintuitive answer is that the bank’s are saying there is no owner. But there is an owner. It is a group of investors whose money was used to fund or acquire the loan. This was not done through any trust, as they intended and as was required by the “securitization” documents. If that was the case then the trust would have been named as lender or as holder in due course. That never happened.

But the holders of worthless securities can claim an equitable interest in the loan and perhaps even the collateral. In order to establish that interest the investors must go to a court of competent jurisdiction. But in order to do that the investors must know about the specific loan transaction(s), which they don’t. The fact that they don’t know about it and can’t exercise their rights does not mean that legally, anyone can intervene and assert ownership rights.

Ten years ago I said get rid of the current servicers and stick a government agency in as intermediary so that investors, as real parties in interest and borrowers as real parties in interest could do what the lending industry normally does best — work this out so that nobody loses everything and nobody gets a windfall. This could have all been over years ago and the impact on the economy would have been a powerful stimulus leaving no inherent weakness in our economy or our currency.

Unfortunately the courts strayed from making legal decisions and instead made a political decision to save the banking industry at the expense of homeowners.

Filed under: boarding process, burden of persuasion, BURDEN OF PROOF, CASES, CORRUPTION, discovery, evidence, expert witness, foreclosure, foreclosure mill, legal standing, MBS TRUSTEE, MODIFICATION, Mortgage, politics, Servicer, Trail Objections | Tagged: Ocwen, ownership of loan | 12 Comments »

George W. Mantor Runs for Public Office on “No More Dirty Deeds”

Posted on February 25, 2014 by Neil Garfield

Mantor for Assessor/Recorder/Clerk of San Diego County

Editor’s note: I don’t actually know Mantor so I cannot endorse him personally — but I DO endorse the idea of people running for office on actual issues instead of buzz words and media bullets.

Mantor is aiming straight for his issue by running for the Recorder’s Position. I think his aim is right and he seems to get the nub of some very important issues in the piece I received from him. I’d be interested in feedback on this campaign and if it is favorable, I might give a little juice to his campaign on the blog and my radio show.

His concern is my concern: that within a few years, we will all discover that most of us have defective title, even if we didn’t know there was a loan subject to claims of securitization in our title chain. This is not a phenomenon that affects one transaction at a time. It affects every transaction that took place after the last valid loan closing on every property. It doesn’t matter if it was subject to judicial or non-judicial sale because real property is not to be settled by damages but rather by actual title.

Many investors are buying up property believing they have eliminated the risk of loss by purchasing property either at or after the auction sale of the property. They might not be correct in that assumption. It depends upon the depth and breadth of the fraud. Right now, it seems very deep and very wide.

Here is one quote from Mantor that got my attention:

Despite the fact that everyone knows, despite the fact that they signed consent decrees promising not to steal homes, they go right on doing it.

Where is law enforcement, the Attorneys General, the regulators? They all know but they only prosecute the least significant offenders.

Foreclosures spiked 57% in California last month. How many of those were illegal? Most, if not all.

An audit of San Francisco County revealed one or more irregularities in 99% of the subject loans. In 84% of the loans, there appear to be one or more clear violations of law.

Fortune examined the foreclosures filed in two New York counties (Westchester and the Bronx) between 2006 and 2010. There were130 cases where the Bank of New York was foreclosing on behalf of a Countrywide mortgage-backed security. In 104 of those cases, the loan was originally made by Countrywide; the other 26 were made by other banks and sold to Countrywide for securitization.

None of the 104 Countrywide loans were endorsed by Countrywide – they included only the original borrower’s signature. Two-thirds of the loans made by other banks also lacked bank endorsements. The other third were endorsed either directly on the note or on an allonge, or a rider, accompanying the note.

No_More_Dirty_Deeds

Filed under: AMGAR, CORRUPTION, escrow agent, evidence, expert witness, Fannie MAe, foreclosure, foreclosure defenses, foreclosure mill, GARFIELD KELLEY AND WHITE, GTC | Honor, investment banking, Investor, MBS TRUSTEE, MODIFICATION, Mortgage, Motions, Neil Garfield Show, originator, Pleading, politics, securities fraud, Servicer, Title, TRUST BENEFICIARIES, trustee | Tagged: CALIFORNIA, corruption of title, DEED OF TRUST, foreclosure, foreclosure auction rigging, George W. Mantor, investors, Mortgage, note, POLITICS, Wall Street Corruption | 115 Comments »

JPM Could Lose Its Charter for Criminal Responsibility in Madoff PONZI Scheme

Posted on October 25, 2013 by Neil Garfield

From http://www.seekingalpha.com —
JPM’s Madoff entanglement could prompt review of bank charter
The Office of the Comptroller of the Currency (OCC) has reportedly told the office of U.S. Attorney Preet Bharara that a criminal money laundering conviction of JPMorgan (JPM) for turning a blind eye to Bernie Madoff’s Ponzi scheme could trigger a review of the bank’s charter.

Editor’s Note: practically every day we hear of new gross violations of law and intentional misconduct by the large banks who squandered their brand recognition on absurd situations. I have always said that it was impossible for Madoff to have stolen $60 Billion without the knowledge and complicity of the major firms on Wall Street. The revelations of the Madoff theft of money from investors was quickly cast as the largest fraud in history. But it wasn’t. The largest fraud can be counted in the tens of trillions of dollars by all the key players on Wall Street in the PONZI scheme that is falsely called securitization of debt — the proof of which can easily be seen at ground level as investors and borrowers alike are settling claims or winning key verdicts.

The Madoff affair actually provided cover for the Wall Street banks and helped steer the narrative to supposedly reckless and irresponsible behavior when in fact management was deceiving, stealing and profiting from a PONZI scheme that depended upon (a) the sale of mortgage bonds and (b) the sale of mortgage products. Once investors stopped buying bonds and homeowners stopped buying loan products the scheme collapsed and banks had the temerity to say they had lost vast sums of money — a claim that is clearly untrue. They received a bailout for those losses in the form of TARP and other programs from the U.S. treasury, the Federal reserve and other sources, when it was investors, insurers, borrowers, taxpayers, guarantors and other parties who were taking losses having given tens of trillions of dollars to the Wall Street banks in money and property.

Now the chickens are coming home to roost. And the cries of well-known analysts that the banks are being treated unfairly is losing credibility by the hour. The banks are finally losing the narrative and the association of politicians with them is proving more costly than the benefit of taking money from the bank lobbyists to protect the banks from prosecution arising out of behavior that would land any ordinary mortal in jail for a long time.

Lawyers defending foreclosure cases should take note and use this information pointing out what the court already knows: that there was fraud at the top in the selling of worthless mortgage bonds deriving their value from defective mortgages, there was fraud in the robo-signing, LPS fabrication of documents, the intentional destruction of cash equivalent promissory notes that we now know were defective, in the words of the investors, insurers, government guarantee agencies, insurers and rating agencies.

PRACTICE NOTE: It should be noted and stated openly that any pleading, affidavit or testimony from those banks is inherently untrustworthy and should be subject to intense scrutiny. The remedy of forfeiture in Foreclosures is extreme according to the public policy of every state and should be strictly construed against the party seeking that remedy. Every legislature has put that statement in its laws. Instead, the narrative has been that deadbeat borrowers were clogging the system with bogus defenses.

It never occurred to the courts, the lawyers and even the borrowers that the courts were clogged with bogus claims of ownership, bogus accounting for receipts and disbursements, the existence of co-obligors when the note payable was converted to a bogus bond payable, and wrongful Foreclosures that the banks and the regulators know were wrongful, obtained settlements, consent orders and more promises from people whose business model is all about lying, manipulation of markets and theft.

Filed under: CORRUPTION, evidence, Fannie MAe, foreclosure, foreclosure mill, GARFIELD GWALTNEY KELLEY AND WHITE, investment banking, Investor, MODIFICATION, Mortgage, Motions, Pleading, politics, securities fraud, Servicer, STATUTES, trustee | Tagged: JPM, Madoff, Ponzi scheme, trustworthiness of affidavits, trustworthiness of business records, trustworthiness of testimony, Wall Street | 124 Comments »

Attorney Mark Stopa Shows Guts Confronting Appellate Court Bias

Posted on October 4, 2013 by Neil Garfield

I have just received a copy of a daring and tempestuous motion for rehearing en banc filed by the winner of the appeal. The homeowner won because of precedent, law and common sense; but the court didn’t like their own decision and certified an absurd question to the Florida Supreme Court. The question was whether the Plaintiff in a foreclosure case needs to have standing at the commencement of the action. Whether it is jurisdictional or not (I think it is clearly jurisdictional) Stopa is both right on the law and right on his challenge to the Court on the grounds of BIAS.

The concurring opinion of the court actually says that the court is ruling for the homeowner because it must — but asserts that it is leading to a result that fails to expedite cases where the outcome of the inevitable foreclosure is never in doubt. In other words, the appellate court has officially taken the position that we know before we look at a foreclosure case that the bank should win and the homeowner should lose. The entire court should be recused for bias that they have put in writing. What homeowner can bring an action or defend an action where the outcome desired by the courts in that district have already decided that homeowners are deadbeats and their defenses are quite literally a waste of time? Under the rules, the Court should not hear the the motion for rehearing en banc, should vacate that part of the decision that sets up the rube certified question, and the justices who participated must be recused from hearing further appeals on foreclosure cases.

Lest their be any mistake, and without any attempt to step on the toes of Stopa’s courageous brief on an appeal he already won, I wish to piggy back on his brief and expand certain points. The problem here might be the subject of a federal due process action against the state. Judges who have already decided foreclosure or mortgage litigation cases before they even see them are not fit to hear them. It IS that simple.

The question here was stated as the issue of standing at the commencement of the lawsuit. Does the bank need to have a claim before it files it? The question is so absurd that it is difficult to address without a joke. But this is not funny. The courts have rapidly evolved into a position that expedited decisions are better than fair decisions. There is NOTHING in the law that supports that position and thousands of cases that say the opposite is true under our system of law. Any judge who leans the other way should be recused or taken off the bench entirely.

In lay terms, the Appellate Court’s certified question would allow anyone who thinks they might have a claim in the future to file the lawsuit now. And the Court believes this will relieve the clogged court calendars. If this matter is taken seriously and the Supreme Court accepts the certified question for serious review it will merely by acceptance be making a statement that makes it possible for all kinds of claims that anticipate an injury.

It is bad enough that judges appear to be ignoring the requirement that there must be an allegation that a loan was made by the originating party and that the Plaintiff actually bought the loan. This was an obvious requirement that was consistently required in pleading until the courts were clogged with mortgage litigation, at which point the court system tilted far past due process and said that if the borrower stopped paying there were no conditions under which the borrower could win the case.

It is bad enough that Judges appear to be ignoring the requirement that the allegation that the Plaintiff will suffer financial damage unless relief is granted. This was an obvious requirement that was consistently required in pleading until the mortgage meltdown.

Why is this important? Because the facts will show that lenders consistently violated basic and advanced protections that have been federal and State law for decades. These violations more often than not produced an unenforceable loan — as pointed out in law suits by federal and state regulators, and as pointed out by the lawsuits of investors who were real lenders who are screwed each time the court enters foreclosure judgment in favor of the bank instead of the investor lenders.

It is not the fault of borrowers that this mess was created. It is the fault of Wall Street Bankers who were working a scheme to defraud investors by diverting the real transaction and making it appear that the banks were principals in the loan transaction when in fact they were never real parties in interest. Nobody would seriously argue that this eliminates the debt. But why are we enforcing that debt with completely defective mortgage instruments in a process that confirms the fraud and ratifies it to the damage of investors who put up the money in the first place? The courts have made a choice that is unavailable in our system of law.

This is also judicial laziness. If these justices want to weigh in on the mortgage mess, then they should have the facts and not the stories put forward by Wall Street that have been proven to be pure fiction, fabrication, lies and perjury. That the Court ignores what is plainly documented in hundreds of thousands of defective mortgage transactions and the behavior of banks that resulted in “strangers to the transaction” being awarded title to property — that presents sufficient grounds to challenge any court in the system on grounds of bias and due process. If ever we had a mass hysteria for prejudging cases, this is it.

Filed under: CORRUPTION, Eviction, foreclosure, foreclosure mill, investment banking, Investor, MODIFICATION, Mortgage, Motions, Pleading, politics, securities fraud, Servicer | Tagged: bias, Mark Stopa, motion for rehearing en banc, recusal, removal of judge, standing | 26 Comments »

LAST CHANCE FOR JUSTICE

Posted on August 19, 2013 by Neil Garfield

“We are still in the death grip of the banks as they attempt to portray themselves as the bulwarks of society even as they continue to rob us of homes, lives, jobs and vitally needed capital which is being channeled into natural resources so that when we commence the gargantuan task of repairing our infrastructure we can no longer afford it and must borrow the money from the thieves who created the gaping hole in our economy threatening the soul of our democracy.” Neil Garfield, livinglies.me

We all know that dozens of people rose to power in Europe and Asia in the 1930’s and 1940’s who turned the world on its head and were responsible for the extermination of tens of millions of people. World War II still haunts us as it projected us into an arms race in which we were the first and only country to kill all the people who lived in two cities in Japan. The losses on both sides of the war were horrendous.
Some of us remember the revelations in 1982 that the United States actively recruited unrepentant Nazi officers and scientists for intelligence and technological advantages in the coming showdown with what was known as the Soviet Union. Amongst the things done for the worst war criminals was safe passage (no prosecution for war crimes) and even new identities created by the United States Department of Justice. Policy was created that diverted richly deserved consequences into rich rewards for knowledge. With WWII in the rear view mirror policy-makers decided to look ahead and prepare for new challenges.

Some of us remember the savings and loans scandals where banks nearly destroyed everything in the U.S. marketplace in the 1970’s and 1980’s. Law enforcement went into high gear, investigated, and pieced together the methods and complex transactions meant to hide the guilt of the main perpetrators in and out of government and the business world. More than 800 people went to jail. Of course, none of the banks had achieved the size that now exists in our financial marketplace.

Increasing the mass of individual financial institutions produced a corresponding capacity for destruction that eclipsed anything imagined by anyone outside of Wall Street. The exponentially increasing threat was ignored as the knowledge of Einstein’s famous equation faded into obscurity. The possibilities for mass destruction of our societies was increasing exponentially as the mass of giant financial service companies grew and the accountability dropped off when they were allowed to incorporate and even sell their shares publicly, replacing a system, hundreds of years old in which partners were ultimately liable for losses they created.

The next generation of world dominators would be able to bring the world to its knees without firing a shot or gassing anyone. Institutions grew as malignancies on steroids and created the illusion of contributing half our gross domestic product while real work, real production and real inventions were constrained to function in a marketplace that had been reduced by 1/3 of its capacity — leaving the banks in control of $7 trillion per year in what was counted as gross domestic product. Our primary output by far was trading paper based upon dubious and fictitious underlying transactions; if those transactions had existed, the share of GDP attributed to financial services would have remained at a constant 16%. Instead it grew to half of GDP. The “paradox” of financial services becoming increasingly powerful and generating more revenues than any other sector while the rest of the economy was stagnating was noted by many, but nothing was done. The truth of this “paradox” is that it was a lie — a grand illusion created by the greatest salesmen on Wall Street.

So even minimum wage lost 1/3 of its value adjusted for inflation while salaries, profits and bonuses were conferred upon people deemed as financial geniuses as a natural consequence of believing the myths promulgated by Wall Street with its control over all forms of information, including information from the government.

But calling out Wall Street would mean admitting that the United States had made a wrong turn with horrendous results. No longer the supreme leader in education, medical care, crime, safety, happiness and most of all prospects for social and economic mobility, the United States had become supreme only through its military strength and the appearance of strength in the world of high finance, its currency being the world’s reserve despite the reality of the ailing economy and widening inequality of wealth and opportunity — the attributes of a banana republic.

All of us remember the great crash of 2008-2009. It was as close as could be imagined to a world wide nuclear attack, resulting in the apparent collapse of economies, tens of millions of people being reduced to poverty, tossed out of their homes, sleeping in cars, divorces, murder, riots, suicide and the loss of millions of jobs on a rising scale (over 700,000 per month when Obama took office) that did not stop rising until 2010 and which has yet to be corrected to figures that economists say would mean that our economy is functioning at proper levels. Month after month more than 700,000 people lost their jobs instead of a net gain of 300,000 jobs. It was a reversal of 1 million jobs per month that could clean out the country and every myth about us in less than a year.

The cause lay with misbehavior of the banks — again. This time the destruction was so wide and so deep that all conditions necessary for the collapse of our society and our government were present. Policy makers, law enforcement and regulators decided that it was better to maintain the illusion of business as usual in a last ditch effort to maintain the fabric of our society even if it meant that guilty people would go free and even be rewarded. It was a decision that was probably correct at the time given the available information, but it was a policy based upon an inaccurate description of the disaster written and produced by the banks themselves. Once the true information was discovered the government made another wrong turn — staying the course when the threat of collapse was over. In a sense it was worse than giving Nazi war criminals asylum because at the time they were protected by the Department of Justice their crimes were complete and there existed little opportunity for them to repeat those crimes. It could be fairly stated that they posed no existing threat to safety of the country. Not so for the banks.

Now as all the theft, deceit and arrogance are revealed, the original premise of the DOJ in granting the immunity from prosecution was based upon fraudulent information from the very people to whom they were granting safe passage. We have lost 5 million homes in foreclosure from their past crimes, but we remain in the midst of the commission of crimes — another 5 million illegal, wrongful foreclosures is continuing to wind its way through the courts.

Not one person has been prosecuted, not one statement has been made acknowledging the crimes, the continuing deceit in sworn filings with regulators, and the continuing drain on the economy and our ability to finance and capitalize on innovation to replace the lost productivity in real goods and services.

We are still in the death grip of the banks as they attempt to portray themselves as the bulwarks of society even as they continue to rob us of homes, lives, jobs and vitally needed capital which is being channeled into natural resources so that when we commence the gargantuan task of repairing our infrastructure we can no longer afford it and must borrow the money from the thieves who created the gaping hole in our economy threatening the soul of our democracy. If the crimes were in the rear view mirror one could argue that the policy makers could make decisions to protect our future. But the crimes are not just in the rear view mirror. More crimes lie ahead with the theft of an equal number of millions of homes based on false and wrongful foreclosures deriving their legitimacy from an illusion of debt — an illusion so artfully created that most people still believe the debts exist. Without a very sophisticated knowledge of exotic finance it seems inconceivable that a homeowner could receive the benefits of a loan and at the same time or shortly thereafter have the debt extinguished by third parties who were paid richly for doing so.

Job creation would be unleashed if we had the courage to stop the continuing fraud. It is time for the government to step forward and call them out, stop the virtual genocide and let the chips fall where they might when the paper giants collapse. It’s complicated, but that is your job. Few people lack the understanding that the bankers behind this mess belong in jail. This includes regulators, law enforcement and even judges. but the “secret” tacit message is not to mess with the status quo until we are sure it won’t topple our whole society and economy.

The time is now. If we leave the bankers alone they are highly likely to cause another crash in both financial instruments and economically by hoarding natural resources until the prices are intolerably high and we all end up pleading for payment terms on basic raw materials for the rebuilding of infrastructure. If we leave them alone another 20 million people will be displaced as more than 5 million foreclosures get processed in the next 3-4 years. If we leave them alone, we are allowing a clear and present danger to the future of our society and the prospects for safety and world peace. Don’t blame Wall Street — they are just doing what they were sent to do — make money. You don’t hold the soldier responsible for firing a bullet when he was ordered to do so. But you do blame the policy makers that him or her there. And you stop them when the policy is threatening another crash.

Stop them now, jail the ones who can be prosecuted, and take apart the large banks. IMF economists and central bankers around the world are looking on in horror at the new order of things hoping that when the United States has exhausted all other options, they will finally do the right thing. (see Winston Churchill quote to that effect).

But forget not that the ultimate power of government is in the hands of the people at large and that the regulators and law enforcement and judges are working for us, on our nickle. Action like Occupy Wall Street is required and you can see the growing nature of that movement in a sweep that is entirely missed by those who arrogantly pull the levers of power now. OWS despite criticism is proving the point — it isn’t new leaders that will get us out of this — it is the withdrawal of consent of the governed one by one without political affiliation or worshiping sound sound biting, hate mongering politicians.

People have asked me why I have not until now endorsed the OWS movement. The reason was that I wanted to give them time to see if they could actually accomplish the counter-intuitive result of exercising power without direct involvement in a corrupt political process. They have proven the point and they are likely to be a major force undermining the demagogues and greedy bankers and businesses who care more about their bottom line than their society that gives them the opportunity to earn that bottom line.

New Fraud Evidence Shows Trillions Of Dollars In Mortgages Have No Owner
http://thinkprogress.org/economy/2013/08/13/2460891/new-fraud-evidence-shows-trillions-of-dollars-in-mortgages-have-no-owner/

Filed under: bubble, CORRUPTION, Eviction, evidence, foreclosure, foreclosure mill, GARFIELD GWALTNEY KELLEY AND WHITE, GTC | Honor, investment banking, Investor, MODIFICATION, Mortgage, Motions, Occupy Movement, Pleading, politics, securities fraud, Servicer, Student Loans, trustee | Tagged: fraud, fraudulent foreclosures, Occupy wall Street, owners of mortgages | 22 Comments »

ELIZABETH WARREN AND JOHN MCCAIN TEAM UP TO REIGN IN BANKS

Posted on July 12, 2013 by Neil Garfield

Go to http://www.msnbc.com. CONTACT YOUR SENATORS AND CONGRESSMEN AND WOMEN. LET THEM KNOW THEY ALREADY HAVE YOUR SUPPORT FOR THIS LAW AND THAT THEY DON’T NEED TO SELL THEMSELVES TO GET SUPPORT FROM THEIR CONSTITUENCY.

MSNBC had a segment today in which they interviewed Elizabeth Warren about a new set of laws reinstating the old style of Chinese walls. There are probably similar interviews on other channels with Senator Warren or Senator McCain and others. Just go to your favorite news channel and look it up. Their approach has bi partisan support because of its simplicity and its history. Historically it is merely a tune-up of the old laws to include definitions of new financial products that did not exist and were not adequately considered in the 1930’s when EVERYONE AGREED THE RESTRICTIONS WERE NEEDED.

Bottom Line: RETURN TO THE BORING BANK SAFETY WITHOUT BOOMS AND BUSTS FROM 1930’s into the 1990’s: leading republicans and democrats are stepping out of gridlock into agreement. They want to stop Wall Street from access to checking and savings accounts for use in high risk investment banking because that is what brought us to the brink and some say brought us Into the abyss. And it would stop commercial banks that are depository institutions for your checking and savings accounts from using your money on deposit in ways where there is a substantial risk of loss that would require FDIC ((taxpayer) intervention.

Banking should be boring. In the years when restrictions were in place we only had one serious breach of banking practices — the S&L Scandal in the 1980’s. But it didn’t threaten the viability of our entire economy and more than 800 people were serving prison terms when the dust cleared. Of course Bankers saw prison terms as an invasion of their business practices and regulation as unnecessary.

But the simple reason for bipartisan support is that the public is enraged that the mega banks (too big to fail) have GROWN 30% SINCE THE 2007-2008 while the people on Main Street are losing jobs, homes, businesses, families (divorce), thus stifling an already grievously injured economy because credit and cash are now scarce — unless you are a mega bank that made hundreds of billions or even trillions of dollars because they were able to create an illusion (securitization) and at the same time, knowing it was an illusion, they bet heavily using extreme leverage on the illusion being popped.

They made it so complex as to be intimidating to even bank regulators. So no wonder borrowers could not realize or even contemplate that their mortgage was not a perfected lien, so they admitted it. Foreclosure defense attorneys made the same mistake and added to it by admitting the default without knowing who had paid what money that should have been allocated to the loan receivable account of the borrower that was supposedly converted for a note receivable from the borrower to a bond receivable from an asset pool that supposedly owned the note receivable account.

The complexity made it challenging to enforce regulations and laws. The complexity was hidden behind curtains for reasons of “privacy”. The real reason is that as long as bankers know they are acting behind a curtain, they are subject to moral hazard. In this case it erupted into the largest PONZI scheme in human history.

And the proof of that just beginning to come out in the courts as judges are confronted with an absurd position — where the banks “foreclosing” on homes and businesses want delays and the borrower wants to move the case alone; and where those same banks want a resolution (FORECLOSURE OR BUST) that ALWAYS yields the least possible mitigation damages, the least coverage for the alleged loss on the note because they would be liable for all the money they made on the bond. Just yesterday I was in Court asking for expedited discovery and the Judge’s demeanor changed visibly when the Plaintiff seeking Foreclosure refused to agree to such terms. The Judge wanted to know why the defendant borrower wanted to speed the case up while the Plaintiff bank wanted to slow it down.

And because of all the multiple sales, the insurance funds, the proceeds of credit default swaps, because the initial money funding mortgages came from depositors (“investors”), and all the money from the Federal Reserve who is still paying off these bond receivables 100 cents to the dollar — all that money amounting to far more than the loans to borrowers — because it related to the bond receivable, the banks think they can withhold allocation of that money to the receivable until after foreclosure and avoid refunding all the excess payments to the borrower the investor and everyone else who paid money in this scheme. And the system is letting them because it is difficult to distinguish between the note receivable and the bond receivable and the asset pool that issued the bond to the actual lender/depositor.

Senators Warren and McCain and others want to put an end to even the illusion that such an argument would even be entertained. Support them now if not for yourselves then for your children and grandchildren.

Filed under: bubble, CDO, community banks, currency, Eviction, expert witness, Fannie MAe, foreclosure, GTC | Honor, investment banking, Investor, MODIFICATION, Mortgage, Occupy Movement, politics, securities fraud | Tagged: Bank of America, Citi, Elizabeth Warren, Glass Steagel, John McCain, JPM CHASE, too big to fail, Wells Fargo | 52 Comments »

Another Small Fry Thrown Under the Bus

Posted on September 19, 2012 by Neil Garfield

Another Small Fry Thrown Under the Bus

Editor’s Comment:

It is a familiar playbook in drug enforcement, police corruption, and now corruption arising out of the millions of faked, fraudulent Foreclosures — find a guy low down in the chain and throw him under the bus. This guy was making millions on False Inspections. But the government is complicit in an active way in public settlements like the Missouri settlement announced yesterday when they forgive and condone the continuing fraud arising from those who made False Appraisal Reports, false loan documents, false loan assignments, false Notices of Default, false monthly statements on loans that were paid in full several times over.

And the system will continue until we, the people stop it. We are divided politically by concept, polarized by slogans when we agree on virtually all of the details that our current elected officials refuse to acknowledge. It is destroying the social and business fabric of our country. But as long as politicians can be bought without going to prison, the Banks will get to keep both the money advanced by investors for loans and the homes foreclosed after the loan balance had been
Paid in full.

As long as we focus on our differences — even where there are none — they keep us from discovering our similarities and the pension funds, savings and 401k funds, the city, county and state operating funds will be cut slashing budgets in a country that can afford it except that we let the banks hold the purse-strings of power. It is too late to assess blame individually. It is time for a clean sweep.

Florida Man Pleads Guilty to Fabricating Thousands of Foreclosure Inspection Reports, Faces Up to 20 Years in Prison
http://4closurefraud.org/2012/09/19/florida-man-pleads-guilty-to-fabricating-thousands-of-foreclosure-inspection-reports-faces-up-to-20-years-in-prison/

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Filed under: bubble, CASES, CORRUPTION, Eviction, foreclosure, foreclosure mill, foreign relations, GTC | Honor, Investor, MODIFICATION, Mortgage, politics, Servicer | Tagged: False appraisals, false defaults, false documents, false end of month statements, false inspections, false loans | 9 Comments »

What happened to Joe Nocera?

Posted on February 18, 2012 by Neil Garfield

Sometimes you just have to wonder. Nocera has been an excellent, even if somewhat reluctant investigative reporter who brought almost as much daylight as Gretchen Morgenstern. Like others reporting on the mortgage mess, he has not yet attempted to quantify or even describe the financial damages to investors and homeowners, much less the total financial damage to our society. The amount of damage, as anyone knows, is hidden behind layers of denial and attempts to distance the banks from their own behaviour.

Which is why I don’t understand Nocera in his article “3 Cheers for the settlement.” if we know anything, it is that at least $17 TRILLION has been spent, that we know of, repairing the damages caused by these banks. So why is Nocera saying that prosecuting the banks for intentionally causing these damages to all of us would not be productive? Who got to him? And why is 1 cent on the dollar a good deal?

Why does Nocera assume that it will take years to prosecute? We already half the evidence we need. why does Nocera assume that the threat that the banks to stop negotiating would be a bad thing? Why does he assume it is anything other than a bluff?

And why does Nocera now write that the settlement represents more monetary relief to homeowners than they could ever hope to get in court? Really? When did Nocera quantify the damages? in which article? if he doesn’t know, why pretend that he does know (and we know he Lacks the information to compare the value of a settlement that has not been finalised with the $17 Trillion we already know about).

Or is this another swipe at borrowers — echoing the latest lines from the bankers’ playbook that these were innocent victimless crimes? Explain to our audience how falsely inflating the property value, false statements in the mortgage documents, false statements in the mortgage bond documents causes trillions in damage without victims. please ! Explain how collecting multiple times on the same debt creates no victims. explain why homeowners should lose title and possession to a house in which they poured their heart and soul — even after they paid the illegal debt multiple times with their tax dollars, their pensions, and their credit reputations.

Filed under: bubble, CORRUPTION, currency, Eviction, evidence, expert witness, foreclosure, GTC | Honor, investment banking, Investor, MODIFICATION, Mortgage, Pleading, politics, securities fraud, Servicer, STATUTES | Tagged: false declarations, measure of damages, multiple-state, Nocera, Robo-Signing, settlement | 152 Comments »

Bank of New York Slammed for Misrepresenting Standing

Posted on July 6, 2010 by Neil Garfield

6.29.10Bank-of-New-York-v-Michael-Raftogainis[1]

Judge Todd also stated that additional discovery is to be produced when the foreclosure involves a securitization, lost note claims, or a holder in due course challenge (which may arise in the context of the purported assignment of a toxic loan to a securitized trust prior to the trustee of that trust instituting a foreclosure action, as well as any predatory loan claims against the original lender). Judge Todd recognized that there are dozens of legal issues and inquiries where a foreclosure involves a securitization, and that a borrower has both the right to know who owns the mortgage loan and whether a foreclosing party has the legal right to foreclose.

WHY TITLE AND SECURITIZATION REPORT IS SO IMPORTANT FOR FORECLOSURE DEFENSE

Posted on July 6, 2010 by Foreclosureblues

Editor’s Note….This case and outcome in favor of the homeowner was a direct result of obtaining an accurate title and securitization report from a qualified expert that contradicted the “alleged” evidence of the foreclosing plaintiff and provided substance that enabled the judge to rule in favor of the homeowner.

http://foreclosureblues.wordpress.com/

NEW JERSEY TRIAL COURT JUDGE ISSUES 53-PAGE OPINION DISMISSING FORECLOSURE COMPLAINT OF BANK OF NEW YORK AS SECURITIZED TRUSTEE: OPINION COULD PAVE THE WAY FOR AMENDMENTS TO NEW JERSEY RULES OF PROCEDURE REQUIRING FORECLOSURE COMPLAINTS TO BE CERTIFIED AND FOR FORECLOSING PARTIES TO PRODUCE SECURITIZATION DISCOVERY IN ORDER TO BE ABLE TO PURSUE FORECLOSURE

Today, July 06, 2010, 30 minutes ago

Jeff Barnes Esq.

July 6, 2010

In an extremely well-reasoned and detailed written opinion, New Jersey trial court Judge William C. Todd has issued a 53-page (yes, fifty-three page) Order dismissing a foreclosure action filed by Bank of New York as Trustee for Home Mortgage Investment Trust 2004-4 Mortgage-Backed Notes Series 2004-4, Docket No. F-7356-09, Atlantic County, New Jersey. The matter was decided on June 29, 2010 and the formal opinion was approved for publication this week after the matter was tried at the end of June, 2010.

The opinion sets forth an incredible analysis of a host of issues involving foreclosure in securitization contexts and highlights why a foreclosing plaintiff must comply with its obligations to prove standing in order to be able to pursue a foreclosure action. While we do not summarize the entire holding here, we do want to point out some of the significant findings.

The court found that there was no meaningful attempt by Bank of New York (hereafter “BONY”) to comply with applicable New Jersey procedural rules requiring a recitation of all assigments in the chain of title. BONY simple alleged that it had acquired possession of the note prior to the litigation being filed. However, the evidence at trial failed to establish this allegation, with the Court noting that there were missing documents incident to the securitization of the loan including the mortgage loan schedule that should have been attached to the mortgage loan purchase agreement. The Court also found that the “MERS assignment was potentially misleading”.

The Court found that there was a failure of proof as to BONY’s legal standing, warranting dismissal of the action and conditioning any refiling on a certification that the plaintiff is in possession of the original note at the time of filing. This is in line with the recent action of the Supreme Court of Florida which, as of February 11, 2010 by Administrative Order, requires all residential mortgage foreclosure complaints to be verified. It is no secret that Florida trial courts have and continue to dismiss foreclosure actions which do not comply with the verification requirement. It is hoped that the courts of New Jersey will adopt Judge Todd’s well-reasoned analysis and dismiss foreclosure complaints which do not comply with the New Jersey procedural rules requiring proof of legal standing to foreclose at inception and time of filing a Complaint for foreclosure.

Judge Todd also stated that additional discovery is to be produced when the foreclosure involves a securitization, lost note claims, or a holder in due course challenge (which may arise in the context of the purported assignment of a toxic loan to a securitized trust prior to the trustee of that trust instituting a foreclosure action, as well as any predatory loan claims against the original lender). Judge Todd recognized that there are dozens of legal issues and inquiries where a foreclosure involves a securitization, and that a borrower has both the right to know who owns the mortgage loan and whether a foreclosing party has the legal right to foreclose.

This incredibly significant decision will hopefully become the law in the state of New Jersey, and it is hoped that the Rules Committee for the New Jersey courts will soon adopt court rules requiring that all residential foreclosure complaints filed in New Jersey be accompanied by the filing of an appropriate Certification, and further requiring that all securitization discovery be produced in all foreclosure cases involving a securitized loan. We applaud and salute Judge Todd for his amazing effort to not only streamline foreclosure litigation in New Jersey, but also insuring that borrowers’ legal rights are protected as well.

Jeff Barnes, Esq., http://www.ForeclosureDefenseNationwide.com

Filed under: bubble, CASES, CORRUPTION, Eviction, evidence, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motions, politics, securities fraud, STATUTES, trustee | Tagged: Bank of New York Mellon, Home Mortgage Investment Trust, New Jersey, securitization report, title report, William C. Todd | 16 Comments »

Ratings Arbitrage a/k/a Fraud

Posted on May 13, 2010 by Neil Garfield

Investment banks bundled mortgage loans into securities and then often rebundled those securities one or two more times. Those securities were given high ratings and sold to investors, who have since lost billions of dollars on them.

Editor’s Note: The significance of this report cannot be overstated. Not only did the investment bankers LOOK for and CREATE loans guaranteed to fail, which they did, they sold them in increasingly complex packages more than once. So for example if the yield spread profit or premium was $100,000 on a given loan, that wasn’t enough for the investment bankers. Without loaning or investing any additional money they sold the same loans, or at least parts of those loans, to additional investors one, two three times or more. In the additional sales, there was no cost so whatever they received was entirely profit. I would call that a yield spread profit or premium, and certainly undisclosed. If the principal of the loan was $300,000 and they resold it three times, then the investment bank received $900,000 from those additional sales, in addition to the initial $100,000 yield spread profit on sale of the loan to the “trust” or special purpose vehicle.

So the investment bank kept $1 million dollars in fees, profits or compensation on a $300,000 loan. Anyone who has seen “The Producers” knows that if this “show” succeeds, i.e., if most of the loans perform as scheduled and borrowers are making their payments, then the investment bank has a problem — receiving a total of $1.3 million on a $300,000 loan. But if the loans fails, then nobody asks for an accounting. As long as it is in foreclosure, no accounting is required except for when the property is sold (see other blog posts on bid rigging at the courthouse steps documented by Charles Koppa).

If they modify the loan or approve the short sale then an accounting is required. That is a bad thing for the investment bank. But if they don’t modify any loans and don’t approve any short-sales, then questions are going to be asked which will be difficult to answer.

You make plans and then life happens, my wife says. All these brilliant schemes were fraudulent and probably criminal. All such schemes eventually get the spotlight on them. Now, with criminal investigations ongoing in a dozen states and the federal government, the accounting and the questions are coming anyway—despite the efforts of the titans of the universe to avoid that result.

All those Judges that sarcastically threw homeowners out of court questioning the veracity of accusations against pretender lenders, can get out the salt and pepper as they eat their words.

“Why are they not in jail if they did these things” asked practically everyone on both sides of the issue. The answer is simply that criminal investigations do not take place overnight, they move slowly and if the prosecutor has any intention of winning a conviction he must have sufficient evidence to prove criminal acts beyond a reasonable doubt.

But remember the threshold for most civil litigation is merely a preponderance of the evidence, which means if you think there is more than a 50-50 probability the party did something, the prima facie case is satisfied and damages or injunction are stated in a final judgment. Some causes of action, like fraud, frequently require clear and convincing evidence, which is more than 50-50 and less than beyond a reaonsable doubt.

From the NY Times: ————————

The New York attorney general has started an investigation of eight banks to determine whether they provided misleading information to rating agencies in order to inflate the grades of certain mortgage securities, according to two people with knowledge of the investigation.

by LOUISE STORY

Andrew Cuomo, the attorney general of New York, sent subpoenas to eight Wall Street banks late Wednesday.

The investigation parallels federal inquiries into the business practices of a broad range of financial companies in the years before the collapse of the housing market.

Where those investigations have focused on interactions between the banks and their clients who bought mortgage securities, this one expands the scope of scrutiny to the interplay between banks and the agencies that rate their securities.

The agencies themselves have been widely criticized for overstating the quality of many mortgage securities that ended up losing money once the housing market collapsed. The inquiry by the attorney general of New York, Andrew M. Cuomo, suggests that he thinks the agencies may have been duped by one or more of the targets of his investigation.

Those targets are Goldman Sachs, Morgan Stanley, UBS, Citigroup, Credit Suisse, Deutsche Bank, Crédit Agricole and Merrill Lynch, which is now owned by Bank of America.

The companies that rated the mortgage deals are Standard & Poor’s, Fitch Ratings and Moody’s Investors Service. Investors used their ratings to decide whether to buy mortgage securities.

Mr. Cuomo’s investigation follows an article in The New York Times that described some of the techniques bankers used to get more positive evaluations from the rating agencies.

Mr. Cuomo is also interested in the revolving door of employees of the rating agencies who were hired by bank mortgage desks to help create mortgage deals that got better ratings than they deserved, said the people with knowledge of the investigation, who were not authorized to discuss it publicly.

Contacted after subpoenas were issued by Mr. Cuomo’s office late Wednesday night notifying the banks of his investigation, spokespeople for Morgan Stanley, Credit Suisse and Deutsche Bank declined to comment. Other banks did not immediately respond to requests for comment.

In response to questions for the Times article in April, a Goldman Sachs spokesman, Samuel Robinson, said: “Any suggestion that Goldman Sachs improperly influenced rating agencies is without foundation. We relied on the independence of the ratings agencies’ processes and the ratings they assigned.”

Goldman, which is already under investigation by federal prosecutors, has been defending itself against civil fraud accusations made in a complaint last month by the Securities and Exchange Commission. The deal at the heart of that complaint — called Abacus 2007-AC1 — was devised in part by a former Fitch Ratings employee named Shin Yukawa, whom Goldman recruited in 2005.

At the height of the mortgage boom, companies like Goldman offered million-dollar pay packages to workers like Mr. Yukawa who had been working at much lower pay at the rating agencies, according to several former workers at the agencies.

Around the same time that Mr. Yukawa left Fitch, three other analysts in his unit also joined financial companies like Deutsche Bank.

In some cases, once these workers were at the banks, they had dealings with their former colleagues at the agencies. In the fall of 2007, when banks were hard-pressed to get mortgage deals done, the Fitch analyst on a Goldman deal was a friend of Mr. Yukawa, according to two people with knowledge of the situation.

Mr. Yukawa did not respond to requests for comment.

Wall Street played a crucial role in the mortgage market’s path to collapse. Investment banks bundled mortgage loans into securities and then often rebundled those securities one or two more times. Those securities were given high ratings and sold to investors, who have since lost billions of dollars on them.

Banks were put on notice last summer that investigators of all sorts were looking into their mortgage operations, when requests for information were sent out to all of the big Wall Street firms. The topics of interest included the way mortgage securities were created, marketed and rated and some banks’ own trading against the mortgage market.

The S.E.C.’s civil case against Goldman is the most prominent action so far. But other actions could be taken by the Justice Department, the F.B.I. or the Financial Crisis Inquiry Commission — all of which are looking into the financial crisis. Criminal cases carry a higher burden of proof than civil cases. Under a New York state law, Mr. Cuomo can bring a criminal or civil case.

His office scrutinized the rating agencies back in 2008, just as the financial crisis was beginning. In a settlement, the agencies agreed to demand more information on mortgage bonds from banks.

Mr. Cuomo was also concerned about the agencies’ fee arrangements, which allowed banks to shop their deals among the agencies for the best rating. To end that inquiry, the agencies agreed to change their models so they would be paid for any work they did for banks, even if those banks did not select them to rate a given deal.

Mr. Cuomo’s current focus is on information the investment banks provided to the rating agencies and whether the bankers knew the ratings were overly positive, the people who know of the investigation said.

A Senate subcommittee found last month that Wall Street workers had been intimately involved in the rating process. In one series of e-mail messages the committee released, for instance, a Goldman worker tried to persuade Standard & Poor’s to allow Goldman to handle a deal in a way that the analyst found questionable.

The S.& P. employee, Chris Meyer, expressed his frustration in an e-mail message to a colleague in which he wrote, “I can’t tell you how upset I have been in reviewing these trades.”

“They’ve done something like 15 of these trades, all without a hitch. You can understand why they’d be upset,” Mr. Meyer added, “to have me come along and say they will need to make fundamental adjustments to the program.”

At Goldman, there was even a phrase for the way bankers put together mortgage securities. The practice was known as “ratings arbitrage,” according to former workers. The idea was to find ways to put the very worst bonds into a deal for a given rating. The cheaper the bonds, the greater the profit to the bank.

The rating agencies may have facilitated the banks’ actions by publishing their rating models on their corporate Web sites. The agencies argued that being open about their models offered transparency to investors.

But several former agency workers said the practice put too much power in the bankers’ hands. “The models were posted for bankers who develop C.D.O.’s to be able to reverse engineer C.D.O.’s to a certain rating,” one former rating agency employee said in an interview, referring to collateralized debt obligations.

A central concern of investors in these securities was the diversification of the deals’ loans. If a C.D.O. was based on mostly similar bonds — like those holding mortgages from one region — investors would view it as riskier than an instrument made up of more diversified assets. Mr. Cuomo’s office plans to investigate whether the bankers accurately portrayed the diversification of the mortgage loans to the rating agencies.

Gretchen Morgenson contributed reporting

Filed under: bubble, CDO, CORRUPTION, Eviction, expert witness, Fannie MAe, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, politics, securities fraud, Securitization Survey, Servicer, STATUTES, trustee, workshop | Tagged: accounting, Bank of America, BofA, bundled, BURDEN OF PROOF, Charles Koppa, Citigroup Inc, Countrywide Home Loans, damages, Deutsche Bank AG, Fitch ratings, Goldman Sachs, GRETCHEN MORGENSON, guaranteed to fail, injunction, JP Morgan Chase, Louise Story, Merrill Lynch, modifications, Moody's Investor Service, prima facie case, rebundled, securitization, short sales, Standard & Poor's, Substitute Trustee, The New York Times, yield spread premium | 11 Comments »

Top New York Judge Urges Greater Legal Rights for the Poor

Posted on May 5, 2010 by Neil Garfield

Editor’s Note: Judge Lippman is certainly onto something here. There is no doubt that the poor get the short end of the stick when it comes to legal matters. Whether this will have any effect on foreclosures is a question that cannot be answered as yet. With more people moving into the poverty level due to declining real wages and joblessness, it would certainly be a step in the right direction to provide legal assistance to people when it comes to having a roof over their head.

With foreclosures the problem is getting an attorney who understands that most mortgages these days are securitized and that this has important ramifications for defense of foreclosures and evictions. it is entirely possible that the wrong party is acting against the tenant or owner or that the mortgage has been paid in whole or in part through various credit enhancement instruments that protect the creditor (the one who actually advanced the money) from loss.

April Charney is leading the way for Legal Aid and other organizations to provide competent help for indigent or financially challenged persons in the cross hairs of some pretender lender. There is no way for her to do it alone. Inch by inch we seem to be crawling away from this mess. But progress is slow and might be illusory. Recent events in Europe show that these manipulations of exotic financial instruments are wreaking havoc on everyone.

The real answer is to bust the Oligarchy of banking interests who have literally cornered the market on money itself. That takes a lot of will power, a lot of people demonstrating their willingness to engage the banks, and a lot of politicians who need to be coerced into blocking the financial sector from meddling in our lives.

May 3, 2010

Top New York Judge Urges Greater Legal Rights for the Poor

By WILLIAM GLABERSON

New York’s chief judge called on Monday for a new guarantee of a lawyer for poor people in civil cases, like suits over eviction and other disputes where basic needs are at stake, pushing the state to the forefront of a national effort to expand the right to representation for the indigent.

In a speech in Albany, the chief judge, Jonathan Lippman, said his proposal, the first such plan by a top court official in New York, reflected a commitment by the state’s courts “to bring us closer to the ideal of equal access to civil justice” that he described as one of the foundations of the legal system.

“I am not talking about a single initiative, pilot project or temporary program,” Judge Lippman said, “but what I believe must be a comprehensive, multifaceted, systemic approach to providing counsel to the indigent in civil cases.”

There was no price tag on the proposal, which could cost many millions of dollars. But Judge Lippman sought to avoid having it fall victim to the politics of the recession by announcing that he would hold hearings before pushing a detailed plan forward next year.

The government has been required to provide lawyers for people facing jail because of criminal charges since a landmark ruling by the United States Supreme Court in 1963, Gideon v. Wainwright.

But that protection has never included civil cases. Lawyers for the poor argue that it should because civil courts are where people who cannot afford lawyers often face the loss of the necessities of life in lopsided legal battles. Opponents say more government-paid lawyers for the poor will paralyze the courts with needless disputes.

Some Democratic legislators said they were interested in Judge Lippman’s idea. In a statement, Speaker Sheldon Silver said the Assembly had been a strong supporter of civil legal services for nearly 20 years.

Austin Shafran, a spokesman for the State Senate Democratic leader, John L. Sampson, said the senator had always supported programs that provided lawyers for indigent New Yorkers and was looking carefully at what Judge Lippman had put forward.

Judge Lippman, a longtime court administrator, has set an unabashedly liberal course as chief judge, a position he assumed last year after he was nominated by Gov. David A. Paterson. In addition to a seat on the highest court in New York, the chief judge also has a broad role as the top administrative official of the state’s sprawling court system.

The speech may well give Judge Lippman national prominence in efforts in recent years by lawyers for the poor, consumer advocates and some legislators around the country to expand the right to a lawyer. California passed a law in 2009 intended to expand legal counsel in civil cases.

There have been local bills elsewhere, including in New York City, and lawsuits in several states arguing that the protections of the legal system are often meaningless to people too poor to hire lawyers. In 2006, the American Bar Association said there should be a right to a lawyer in civil cases where basic human needs were at stake, like those dealing with shelter, sustenance, safety, health or child custody.

Advocates for the right to a lawyer in civil cases — some of them call it a “civil Gideon” right, referring to the 1963 ruling for criminal cases — said Monday that Judge Lippman’s speech was one of the most notable steps in their efforts.

“It is a very important statement, both in New York and nationally, about the need for access to justice. I don’t know that any stronger voice has come forward,” said Donald Saunders, a vice president of the National Legal Aid and Defender Association, the largest national group of lawyers for the poor.

In his speech, Judge Lippman said the recession had swelled the ranks of New Yorkers who could not afford lawyers facing civil legal problems to more than two million a year.

Judge Lippman said he would hold hearings beginning this fall in every part of the state to assess the extent and nature of the unmet need for civil legal representation. He said the hearings would end with recommendations to the Legislature of the kinds of civil cases in which legal representation should be required and what financing would meet those needs.

Legal Aid and other providers of civil legal representation to poor people in New York State operate on about $200 million a year, officials say, a combination of federal, state, local and privately raised money. Those organizations said that they were unable to meet the needs but that the extent of the shortfall was not known.

Steven Banks, the attorney in chief of the Legal Aid Society in the city, called it “a huge step” for the leader of the court system to endorse the idea that poor people had a right to a lawyer, whether they found themselves in criminal or civil court.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, expert witness, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, investment banking, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, Obama, politics, securities fraud, Securitization Survey, Servicer, STATUTES, workshop | Tagged: April Charney, CALIFORNIA, Eviction, Gideon v. Wainwright, indigent, JOBLESSNESS, Jonathan Lippman, Legal Aid Society, legal representation, National Legal Aid and Defender Association, New York, oligarchy, Steven Banks, wages, WILLIAM GLABERSON | Leave a comment »

Shareholders Sue Goldman, Blankfein Confirming Trusts Do NOT Own the Loans

Posted on April 27, 2010 by Neil Garfield

Leo II
bgitt47@verizon.net

2010/04/25 at 12:26 am

Editor’s Note: I believe Leo is right. These suits allege that the SPV do not own the loan portfolios. They also allege directly that the Trust Assets included insurance — payments from credit default swaps.

Two revealing lawsuits filed against Goldman-Sachs that I believe further support arguments that most, if not all Subprime securitized Notes that went into default should be considered as satisfied by virtue of default and the ensuing payment to holders of the Credit Default Swaps (Puts) created for each such Note.

And then there’s the issue of TARP funds, ($10 billion of which went to Goldman-Sachs alone), which, along with the CDO payments should have been utilized to compensate the investors who purchased the Notes

All of which, taken as a whole, lends support to the assertion that the Notes are Satisfied..

All that remans is for the Courts to order firms like Goldman-Sachs to distribute the money to the investors, declare satisfaction of the underlying Notes and Order the quiting of the titles securing said Notes.

Agree? Disagree?

http://solari.com/blog/articles/2010/Goldman-Rosinek_v_Blankfein.pdf

http://solari.com/blog/articles/2010/Goldman-Spiegel_v_Blankfein.pdf

Filed under: CASES, CDO, CORRUPTION, Eviction, expert witness, Fannie MAe, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, politics, securities fraud, Securitization Survey, Servicer, STATUTES, trustee, workshop | Tagged: Blankfein, credit default swaps, Goldman, insurance, Leo II, Shareholders, SPV, TRUSTS | 11 Comments »

Foreclosure Prevention 1.1

Posted on April 22, 2010 by Neil Garfield

Nobody ever thought that returning a lady’s purse to her after a purse snatcher ran away with it was a gift. So why is anyone contesting returning the purse to homeowners who had their lives snatched from them?

The baby steps of the Obama administration are frustrating. Larry Summers, Tim Geithner and those who walk with Wall Street are using ideology and assumptions instead of reality and facts.

First they started with the idea of modifications. That would do it. Just change the terms a little, have the homeowner release rights and defenses to what was a completely fraudulent and deceptive loan transaction (and a violation of securities regulations) and the foreclosure mess would end. No, it doesn’t work that way.

The reality is that these homeowners are being drained every day and displaced from their lives and homes by the consequences of a scheme that depended upon fooling people into signing mortgages under the false assumption that the appraisal had been verified and that the loan product was viable. All sorts of tricks were used to make borrowers think that an underwriting process was under way when in fact, it was only a checklist, they were even doing title checks (using credit reports instead), and the viability of the loan was antithetical to their goals, to wit: to have the loans fail, collect on the insurance and get the house too without ever reporting a loss.

Then it went to modification through interest rate reduction and adding the unpaid monthly payments to the end of the mortgage. Brilliant idea. The experts decided that an interest rate reduction was the equivalent of a principal reduction and that everything would even out over time.

Adding ANYTHING to principal due on the note only put these people further under water and reduced any incentive they had to maintain their payments or the property. Reducing the interest was only the equivalent of principal reduction when you looked at the monthly payments; the homeowner was still buried forever, without hope of recovery, under a mountain of debt based upon a false value associated with the property and a false rating of the loan product.

Adding insult to injury, the Obama administration gave $10 billion to servicing companies to do modifications — not even realizing that servicers have no authority to modify and might not even have the authority to service. Anyone who received such a modification (a) got a temporary modification called a “trial” (b) ended up back in foreclosure anyway (c) was used once again for unworthy unauthorized companies to collect even more illegal fees and (d) was part of a gift to servicers who were getting a house on which they had invested nothing, while the real source of funds was already paid in whole or in part by insurance, credit default swaps or federal bailout.

Now the Obama administration is “encouraging” modifications with reductions in principal of perhaps 30%. But the industry is pushing back because they don’t want to report the loss that would appear on their books now, if a modification occurred, when they could delay reporting the “loss” indefinitely by continuing the foreclosure process. The “loss” is fictitious and the push-back is an illusion. There is no loss from non-performance of these mortgages on the part of lending banks because they never lent any money other than the money of investors who purchased mortgage-backed bonds.

You want to stop the foreclosures. It really is very simple. Stop lying to the American people whether it is intentional or not. Admit that the homes they bought were not worth the amount set forth in the appraisal and not worth what the “lender” (who was no lender) “verified.” Through criminal, civil and/or administrative proceedings, get the facts and change the deals like any other fraud case. Nobody ever thought that returning a lady’s purse to her after a purse snatcher ran away with it was a gift. So why is anyone contesting returning the purse to homeowners who had their lives snatched from them?

Filed under: bubble, CDO, community banks, CORRUPTION, credit unions, currency, education, Eviction, expert witness, Fannie MAe, foreclosure, foreclosure mill, foreign relations, Forensic Analysis Workshop, GTC | Honor, HERS, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, Obama, politics, securities fraud, Securitization Survey, Servicer, taxes, workshop | Tagged: Appraisal, credit default swaps, false assumption, false rating, false value, Federal Bailout, foreclosure, homeowners, illegal fees, insurance, interest rate reduction, Larry Summers, loan product was viable, modification, Obama administration, principal reduction, release, servicers, temporary modification called a "trial", Tim Geithner | 9 Comments »

Tax Apocalypse for States and Federal Government Can be Reversed: Show Me the Money!

Posted on March 31, 2010 by Neil Garfield

SEE states-look-beyond-borders-to-collect-owed-taxes

states-ignore-obvious-remedy-to-fiscal-meltdown

tax-impact-of-principal-reduction

accounting-for-damages-madoff-ruling-may-affect-homeowner-claims

taxing-wall-street-down-to-size-litigation-guidelines

taking-aim-at-bonuses-based-on-23-7-trillion-in-taxpayer-gifts

payback-timemany-see-the-vat-option-as-a-cure-for-deficits

As we have repeatedly stated on this blog, the trigger for the huge deficits was the housing nightmare conjured up for us by Wall Street. Banks made trillions of dollars in profits that were never taxed. The tax laws are already in place. Everyone is paying taxes, why are they not paying taxes? If they did, a substantial portion of the deficits would vanish. Each day we let the bankers control our state executives and legislators, we fall deeper and deeper in debt, we lose more social services and it endangers our ability to maintain strong military and law enforcement.

The argument that these unregulated transactions are somehow exempt from state taxation is bogus. There is also the prospect of collecting huge damage awards similar to the tobacco litigation. I’ve done my part, contacting the State Treasurers and Legislators all over the country, it is time for you to do the same. It’s time for you to look up your governor, State Treasurer, Commissioner of Banking, Commissioner of Insurance, State Commerce Commission, Secretary of State and write tot hem demanding that they pursue registration fees, taxes, fines, and penalties from the parties who say they conducted “out-of-state” transactions relating to real property within our borders. If that doesn’t work, march in the streets.

The tax, fee, penalty and other revenue due from Wall Street is easily collectible against their alleged “holding” of mortgages in each state. One fell swoop: collect the revenue, stabilize the state budget, renew social services, revitalize community banks within the state, settle the foreclosure mess, stabilize the housing market and return homeowners to something close to the position they were in before they were defrauded by fraud, predatory lending and illegal practices securitizing loans that were too bad to ever succeed, even if the homeowner could afford the house.

Filed under: bubble, Bush, CDO, community banks, CORRUPTION, credit unions, currency, Eviction, expert witness, Fannie MAe, foreclosure, Forensic Analysis Workshop, GTC | Honor, HERS, inflation, interest rates, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, Obama, politics, securities fraud, Securitization Survey, Servicer, taxes, workshop | Tagged: "out-of-state" transactions, damage awards, fines, penalties, predatory lending, real property, registration fees, revenue due from Wall Street, securitizing loans, state taxation, Tax Apocalypse, tax laws, taxes | 8 Comments »

States Look Beyond Borders to Collect Owed Taxes

Posted on March 25, 2010 by Neil Garfield

as more states catch on and start investing in more payroll auditors and data mining tools to get money back, the end result may be an arms race until every state comes out more or less evenly.

Editor’s Note: There is no better place to start than the trillions in profits from securitized mortgages and the millions of off-record transfers and transactions based upon “interests” in real property located within each state. But who has the courage to take on Wall Street?

see states-ignore-obvious-remedy-to-fiscal-meltdown

March 21, 2010, NY Times

States Look Beyond Borders to Collect Owed Taxes

By CATHERINE RAMPELL

When Josh Beckett pitches for the Red Sox at Yankee Stadium, New York collects income tax on the portion of his salary that he earned in New York State.

But what about a Boston Scientific sales representative who comes to New York to pitch medical products to a new client? New York has decided it wants a slice of that paycheck, too.

Anyone who crosses a state border for work — to make a sales call, say, or meet with a client or do a road show on Wall Street — probably owes income taxes in that state.

If you live in Boston but spend one out of 250 workdays this year in New York, you owe New York income taxes on 1/250th of your salary. And vice versa if you are a New Yorker visiting Boston — or Anywheresville, for that matter — for business.

Such laws have been on the books for decades, and they vary by state. But it is only recently, accountants and tax lawyers say, that many states appear to have picked up enforcement, expanding it beyond the wealthiest celebrities and athletes.

“The states are all hungry for revenue,” said Alan Clavette, an accountant in Newtown, Conn. “We are certainly seeing states like New York and Connecticut looking more and more for executives and everyday taxpayers who may be spending time across the border.”

The states, for their part, say better techniques for tracking tax deadbeats, not pressure to fill their budget holes, have prompted them to become more vigorous at enforcing the provision.

“We are just trying to make sure our tax laws are complied with,” said Richard D. Nicholson, commissioner of the Connecticut Department of Revenue Services. “That’s not driven by a need for revenue. If we’re doing more, it’s because of advances in technology. We can do analysis we could never do before with just paper.”

Once upon a time, state tax officials relied on the sports pages and celebrity magazines to see when well-known higher-earners came to town for work. (Yes, even the taxman reads Us Weekly.) For everyone else, it was largely a “don’t ask, don’t tell” world, says James W. Wetzler, the former tax commissioner for New York State, because it was not cost-effective for states to monitor every bricklayer and lawyer crossing a border.

“We tried to preserve a reasonable balance,” said Mr. Wetzler, now a director at the firm Deloitte Tax. “We wanted to avoid imposing onerous burdens on people just for us to collect small amounts of revenue.”

But now states have greater access to data warehouses that help them better track taxes owed. Real estate transactions, federal data from the Internal Revenue Service, commercial license plates, traffic tickets, bids for government construction projects — all this information, newly digitized and dumped into a computer system, can help states find tax scofflaws.

“We’re sort of getting into ‘1984’ land here,” said Kenneth T. Zemsky, an accountant and partner at Ernst & Young. “A lot of the reason they went after athletes and entertainers is that they couldn’t find the other people. Now they’re able to get those people, too.”

Still, perhaps the best enforcement mechanism may be requiring companies to withhold additional taxes from their employees’ paychecks. State auditors may not be able to monitor every border-crossing, but with corporate payroll managers as their enforcers, they don’t need to.

“Our employees call me the ‘Tax Nazi,’ ” says Dee Nelson, the corporate payroll manager at the Koniag Development Corporation, a government contractor that works on military projects. “They get really angry at me when we withhold their pay if they do a project in Utah or wherever. And I have to explain this is the law, not me just trying to be a bully.”

Ms. Nelson’s employer is based in Anchorage, but at any given time its employees are generally working in five states with five different withholding requirements. She estimates that the administrative work required for managing multistate employees adds about 10 percent to the cost of each project.

Many Fortune 500 companies contacted for this article privately acknowledged having been slightly less vigilant than Ms. Nelson about tracking the minute-by-minute movements of their thousands of employees in the past. But these companies also say that they have been subjected to payroll audits more frequently in the last few years and that tax officials have requested travel logs for highly paid employees during these audits.

In some cases auditors check to see if, say, an employee who was reimbursed for airfare to California also had California income taxes withheld from his paycheck. If not, the company can be fined.

Finding out that you owe income taxes across the border can raise your overall tax bill, if your home state has a low tax rate (or no income tax rate at all, as in a handful of states). But your tax bill may not rise by much, since most states allow you to deduct income taxes paid to another state.

The bigger burden associated with distributing your taxes to more state governments is the administrative effort it requires, for both employee and employer. Many states require filing a return for a single day’s work. For peripatetic workers like salesmen or consultants, filing a pile of additional state tax returns can become prohibitively expensive, not to mention frustrating.

“There’s 50 states out there and 50 different laws,” said Nola Wills, senior vice president and chief compliance officer at Harbor America, a financial services company near Houston. “It’s difficult for a small business to have all the information and resources to know that. In most cases their C.P.A. doesn’t know that, either.”

So long as there is still a great deal of ignorance about these laws, the states with the most aggressive tax compliance teams have the most to gain. They can siphon off more revenue from their neighboring states than the other way around, all without fear of retaliation from anyone who has the power to vote them out of office.

But as more states catch on and start investing in more payroll auditors and data mining tools to get money back, the end result may be an arms race until every state comes out more or less evenly.

“If everybody goes after everybody, nobody wins,” said Arthur R. Rosen, a New York tax lawyer and partner at McDermott Will & Emery. “In this interstate war of ‘you tax my rich guy and I tax your rich guy,’ it’s just a wash, a preposterous flurry of tax returns.”

In the meantime, states may have a new prominent target.

Last year President Obama visited at least 30 states. But, like other presidents before him, he plans to file in just one: his home state, Illinois, according to a White House official.

State tax auditors, start your engines.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, Forensic Analysis Workshop, GTC | Honor, Investor, Mortgage, Motion Practice and Discovery, politics, securities fraud, Securitization Survey, taxes, workshop | Tagged: CATHERINE RAMPELL, Ny Times, profits from derivatives, securitized mortgages, state borders, state deficits, state tax auditors, state taxes, tax collection | 3 Comments »

States Ignore Obvious Remedy to Fiscal Meltdown

Posted on March 23, 2010 by Neil Garfield

without raising taxes one cent, many states could recover much or all of their deficit and perhaps some states could be looking at a surplus.

The money is sitting on Wall Street waiting to be claimed through existing tax laws, regulatory fees, and even damage claims much like the Tobacco litigation.

Editor’s Note: Bob Herbert of the New York Times correctly depicts the tragedy of the cuts to education, health care for children, and other essential services that we expect from government. And any economist would agree with him that budget cuts are the last thing a state or any government ought to do in a recession. But his story, and that of dozens of other reporters and opinion writers misses the simple fact that this crash, which is depression (not a recession) for many states need not be so painful.

The money is sitting on Wall Street waiting to be claimed through existing tax laws, regulatory fees, and even damage claims much like the Tobacco litigation. As I have repeatedly stated to Arizona’s Republican State Treasurer Dean Martin and Andre Cherney, the Democrat who wants to replace him, along with legislative committees and other government departments of many states, including Florida, they are owed taxes, fees, penalties and damages from the investment bankers who brought us the great financial meltdown.

It’s really simple, but the bank lobby is so strong and the misconceptions are so great, that they just don’t want to get it. In the securitization of mortgages, there were numerous transfers on and off record (mostly off-record).

Each of those transfers resulted in fees or profits made by the parties involved. All of that was ordinary income, taxable transfers, subject to recording and registration fees,and regulation by state agencies with whom the parties never bothered to register.

Each transaction that should have been recorded would produce revenue for counties in their recording offices if they simply enforced it. Each profit or fee earned was related to a transfer of real property interests in the state that were NOT subject to any exemption. The income tax applies. Arizona calculated what the income would be if they enforced tax collection against these fees and came up with $3 billion. I think it is three times that, but even accepting their estimate, that would completely eliminate their deficit and allow them to continue covering the 47,000 children they just cut from health care.

So without raising taxes one cent, many states could recover much or all of their deficit and perhaps some states could be looking at a surplus.

There are many ways to actually collect this money as I have explained to legislators, agency heads and aides. The ONLY reason communities are closing down police and fire departments, closing schools and cutting medical care for children is because the people in power are too beholden to the banking lobby and too fearful of angering the real powers on both the national and state levels — Wall Street.

March 20, 2010

Op-Ed Columnist, NY Times

A Ruinous Meltdown

By BOB HERBERT

A story that is not getting nearly enough attention is the ruinous fiscal meltdown occurring in state after state, all across the country.

Taxes are being raised. Draconian cuts in services are being made. Public employees are being fired. The tissue-thin national economic recovery is being undermined. And in many cases, the most vulnerable populations — the sick, the elderly, the young and the poor — are getting badly hurt.

Arizona, struggling with a projected $2.6 billion budget shortfall, took the drastic step of scrapping its Children’s Health Insurance Program. That left nearly 47,000 low-income children with no coverage at all. Gov. Jan Brewer is also calling for an increase in the sales tax. She said, “Arizona is navigating its way through the largest state budget deficit in its long history.”

In New Jersey, the newly elected governor, Chris Christie, has proposed a series of budget cuts that, among other things, would result in public schools receiving $820 million less in state aid than they had received in the prior school year. Some well-off districts would have their direct school aid cut off altogether. Poorer districts that rely almost entirely on state aid would absorb the biggest losses in terms of dollars. They’re bracing for a terrible hit.

For all the happy talk about “no child left behind,” the truth is that in Arizona and New Jersey and dozens of other states trying to cope with the fiscal disaster brought on by the Great Recession, millions of children are being left far behind, and many millions of adults as well.

“We’ve talked in the past about revenue declines in a recession,” said Jon Shure of the Center on Budget and Policy Priorities, “but I think you have to call this one a revenue collapse. In proportional terms, there has never been a drop in state revenues like we’re seeing now since people started to keep track of state revenues. We’re in unchartered territory when it comes to the magnitude of the impact.”

Massachusetts, which has made a series of painful cuts over the past two years, is gearing up for more. Michael Widmer, president of the Massachusetts Taxpayers Foundation, told The Boston Globe: “There’s no end to the bad news here. The state fiscal situation is already so dire that any additional bad news is magnified.”

California has cut billions of dollars from its education system, including its renowned network of public colleges and universities. Many thousands of teachers have been let go. Budget officials travel the state with a glazed look in their eyes, having tried everything they can think of to balance the state budget. And still the deficits persist.

In the first two months of this year, state and local governments across the U.S. cut 45,000 jobs. Additional layoffs are expected as states move ahead with their budgets for fiscal 2011. Increasingly these budgets, instead of helping people, are hurting them, undermining the quality of their lives, depriving them of educational opportunities, preventing them from accessing desperately needed medical care, and so on.

The federal government has tried to help, but much more assistance is needed.

These are especially tough times for young people. “What we’re seeing now in Arizona and potentially in New Jersey and other states spells long-term trouble for the nation’s children,” said Dr. Irwin Redlener, a pediatrician who is president of the Children’s Health Fund in New York and a professor at Columbia University’s Mailman School of Public Health.

“We’re looking at all these cuts in human services — in health care, in education, in after-school programs, in juvenile justice. This all points to a very grim future for these children who seem to be taking the brunt of this financial crisis.”

Dr. Redlener issued a warning nearly a year ago about the “frightening” toll the recession was taking on children. He told me last April, “We are seeing the emergence of what amounts to a ‘recession generation.’ ”

The impact of the recession on everyone, of whatever age, is only made worse when states trying to balance their budgets focus too intently on cutting services as opposed to a mix of service cuts and revenue-raising measures.

As Mr. Shure of the Center on Budget noted, “The cruel irony is that in a recession like this, the people’s needs go up at the same time that the states’ ability to meet those needs goes down.”

Budget cuts also tend to weaken rather than strengthen a state’s economy, especially when they entail furloughs or layoffs. Government spending stimulates an economy in recession. And wise spending is an investment in everyone’s quality of life.

All states have been rocked by the Great Recession. And most have tried to cope with a reasonable mix of budget cuts and tax increases, or other revenue-raising measures. Those that rely too heavily on cuts are making guaranteed investments in human misery.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, expert witness, foreclosure, GTC | Honor, Investor, Mortgage, politics, securities fraud, taxes | Tagged: Andre Cherney, ARIZONA, Bob Herbert, CALIFORNIA, Center on Budget and Policy Priorities, Children's Health Insurance Program, CHIP, Chris Chistie, Dean Martin, Florida, income tax, infrastructure, Jan Brewer, Job Shure, New Jersey, Ny Times, Recording fees, State Budget Deficits, taxes, Treasurer, Wall Street | 5 Comments »

Man Sends Message to Banks-Bulldozes $350k House

Posted on February 21, 2010 by Neil Garfield

Sending Banks a Message – Cincinnati OH – Click Here to View Video

“The average homeowner that can’t afford an attorney or can fight as long as we have, they don’t stand a chance,” he said. Hoskins said he’d gotten a $170,000 offer from someone to pay off the house, but the bank refused, saying they could get more from selling it in foreclosure.

Hoskins told News 5’s Courtis Fuller that he issued the bank an ultimatum. “I’ll tear it down before I let you take it,” Hoskins told them. And that’s exactly what Hoskins did.

Editors Note – The borrower actually had equity in his home. The house was apparently worth $350k in today’s market and the bank was only owed about $170k.

Filed under: bubble, community banks, CORRUPTION, Eviction, Fannie MAe, foreclosure, inflation, interest rates, Investor, MODIFICATION, Mortgage, politics, Servicer | 12 Comments »

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GET FREE HELP: Just click here and submit the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.

I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER. ========================

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Let us help you prepare for deposition or trial: 202-838-6345

Get a consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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The New York attorney general has started an investigation of eight banks to determine whether they provided misleading information to rating agencies in order to inflate the grades of certain mortgage securities, according to two people with knowledge of the investigation.

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Top New York Judge Urges Greater Legal Rights for the Poor

By WILLIAM GLABERSON

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SEE states-look-beyond-borders-to-collect-owed-taxes

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States Look Beyond Borders to Collect Owed Taxes

By CATHERINE RAMPELL

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A Ruinous Meltdown

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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