Oops — Goldman Sachs Lets the Cat Out of the Bag — Naked Trades on Thin Air

For further information please call 954-495-9867 or 520-405-1688

General Information Only. Get a lawyer.


see http://www.bloomberg.com/news/articles/2015-11-09/u-s-probes-treasuries-niche-that-some-investors-claim-is-rigged

Traders at global banks colluded to artificially inflate the price of instruments that allow them to sell U.S. debt before they own it, and then bought the debt at auctions for an artificially suppressed price, unfairly profiting at investors’ expense, according to several lawsuits filed against the banks beginning in July. The banks haven’t responded to those allegations in court.

“Vapor Money” is what the banks are saying about the defenses to foreclosure actions. As usual they are accusing us of doing what they are doing. Their argument is that if we can’t prove the chain of money, then we are dealing in hypothetical or theory; obviously a fool’s errand by their accounts. What difference does it make where the money came from on a loan as long as the money landed on the closing table? The first answer is how is a court to know one way or the other without the facts? And how is the Court to get the facts unless it permits the use of discovery to get the information from the only place it can be retrieved — the players in the securitization fail market.

I have been writing for years about the lack of any entity that could be legally identified as a creditor and therefore that the foreclosures were wrongful, illegal and are the root cause of our stumbling economy. Through the use of “naked” trades in which the appearance of a (nonexistent) trade is created the banks have created a “currency” market that is some twenty times the size of the actual fiat currency from all the countries in the world. Goldman just tried to sneak in a “disclosure” on the currency markets and they have effectively admitted that they are creating those trades out of thin air.They are attempting to sneak into the regulatory process to preserve the “shadow banking system” and exercising powers that only the Federal government should be exercising.

Doesn’t make any difference? Ask the treasury department whose unissued debt instruments are being used to create the appearance of profits for the banks; the existence of these vapor instruments traded on the anticipated issuance of US Treasury instruments is not only improper and illegal but actually effects the value of the instruments themselves when they are issued and sold. Does it matter where the money comes from and from whom the money is taken? Yes.

And that is exactly what happened with most of the “mortgage loans” during the mortgage meltdown era which is now ramping up again with such idiotic things as new securitizations of nonperforming loans. Think about that.

Just as a trade on an unissued treasury bill is a trade on nothing, so too is the trading before a “Loan” is issued. All those trades are based upon illusion, smoke and mirrors. The commercial paper market is supposed to take care of things like that. So too are the ratings and the insurance agencies. And the legal system is also supposed to be the legal bastion to combat over-reaching by the banks who have virtually unchecked powers to create anything they want — including “loans” they design for failure, bet on the failure and then sell the loans multiple times. So yes it does matter where the money came from and under what pretenses the money was secured.

Legally it is important because of basic contract law — offer, acceptance and consideration BOTH WAYS in a two party contract. Otherwise it is not a contract that can be enforced. It might be a contract, but it cannot be enforced — a distinction that nearly all judges miss. If the signature on the contract was procured by false pretenses then it isn’t even a contract. And since public policy requires disclosures of who is the actual creditor giving the “loan”,  the writing of the name of an originator who is merely a paid servant of unknown principals creates neither a contract nor any other type of enforceable agreement or instrument. Enforcement is patently against the public policy contained in the law of the land — the Federal Truth in Lending Act.

State laws concerning property and recording also prohibit such actions. If the transaction relied upon by the person requesting recording is nonexistent (they didn’t give the loan) then the instrument should not have been released from the closing table, much less recorded. So there is no valid recorded instrument upon which one could seek foreclosure. And the reason is simple: the entire reason for the recording statutes is provide certainty in the real estate market. If the truth is that we don’t know who the lender is then we cannot be sure, without litigation, who to pay when we wish to satisfy such a loan nor can we be certain of who has the right to collect payments or enforce the loan. Judges who are so set on not giving homeowners a “free house” are sacrificing the entire marketplace to accomplish their sense of morality.

And speaking of the “closing table” it is just plain wrong to say that the loan contract, even if it was real, was consummated the moment the “borrower” signed the papers. The funding is not received by the closing agent until hours, days, weeks, or even months after the alleged closing. So there is no “closing table.” It is now custom and practice in the industry to allow for post-closing underwriting, which is to say that there is no closing, according to the banks, until they fund the loan; So the money DOES  matter to the banks when it comes to the creation of the loan contract. Why wouldn’t it mean anything when they seek to terminate the loan contract through foreclosure?

The vapor is not in our theories of foreclosure defense. The vapor is in the pre-closing trading that eventually produces money that goes to pay the borrower, a former “lender”, a seller etc. At some point in the food processor that chews up the paper (lost notes etc) and title chains and money chains before “closing” and before “foreclosure” money ends up on the table. All of it was done, as with the rigged treasury debt market, BEFORE the investor gave its investment money to the selling brokers, and BEFORE the borrower signed, sometimes BEFORE the borrower actually signs the loan application and WITHOUT disclosures that would have sent the bankers to jail. —

Imagine a disclosure like this: “Borrower acknowledges that the party described on the note as ‘Lender’ is not the lender. The actual party whose money is being used to fund the transaction is unknown and shall never be known.”

Or imagine a disclosure like this: “Investor acknowledges that he is purchasing the certificates of an entity that does not exist, where the proceeds will not be paid to that entity. The underwriter and related entities will use such proceeds as they see fit within their sole discretion and shall not report nor respond to requests for reports on the use of proceeds.”

QUESTION TO THE SEC: If the certificates were not mortgage backed, why do they qualify for deregulation for REMICs? Why have you not investigated the fact that the Trusts received no money, assets, business, payments, or even a bank account?

Deutsch and other Banks Under Investigation by DOJ for Filing False Documents

see https://findsenlaw.wordpress.com/2015/02/04/department-of-justice-investigates-deutsche-bank-for-false-documents-presented-to-court-in-bankruptcy-foreclosure-case/

Beth Findsen, Esq. in Scottsdale, Az posted an article on her blog back in February revealing that after 10 years+ the Department of Justice is finally examining the validity of the papers filed by the banks in support of purported foreclosures on behalf of ghosts. Beth is a realist as well as an idealist. And her skills as an attorney are second to none.

While the DOJ is always slow, they frequently get to the bottom of things when they put their minds to it. The prosecution of individuals working for the Banks may just be around the corner. Apparently there has been a serious on-going investigation since 2014. If an indictment follows, it will shake the entire foreclosure process to its core. If there is a settlement, then it will probably stay business as usual.

This is not the first case where a US Trustee in Bankruptcy has questioned the authenticity and validity of documents supplied by the banks. But it seems to be a more serious issue now as they continue to piece together whether the claims filed by banks as Trustees, servicers or agents are real. If they are not they are committing fraud on US Bankruptcy court which is a federal crime for which plenty of people have gone to jail.

The importance in bankruptcy cannot be overstated. The size of the bankruptcy estate is affected. On the asset side you have the house and its fair market value at the time of filing or the time of appraisal. On the liability side you have a party who claims to be a creditor but isn’t a creditor. Then you have John Does whose money was used without their knowledge in connection with the origination or acquisition of the alleged loan. And finally you have a prospective liability that either is secured or is not secured. This could affect everything from motions to lift stay to adversary actions.

Interesting parts of the article include

Although the investigation involves the case of only one homeowner in Connecticut, a court document filed on Jan. 26 by the United States Trustee’s Office said it wants to elicit information about Deutsche Bank’s practices in general in foreclosure cases.

In recent months, the office has stepped up efforts around the United States to block banks and law firms from using false or fabricated documents in home foreclosure actions. The effort follows disclosures in October 2010 of large-scale “robo-signing”, the mass signing of foreclosure affidavits containing “facts” that had never been checked, and wide production of false mortgage assignments.

The Jan. 26 court motion stated that “The United States Trustee has reviewed the documents filed by Deutsche in this case and has concerns about the integrity of those documents and the process utilized by Deutsche in” filing to foreclose.”

From Reuters:

April Charney, a Florida legal aid attorney who represents homeowners in foreclosure cases and who is an expert on mortgage securitizations, said that aside from possible sanctions against Deutsche Bank in this foreclosure case, the results could have significant effect on Deutsche Bank’s practices in general, and on its ability to foreclose on large numbers of homeowners in default.

Lawyers for homeowners in foreclosure have alleged similar practices by Deutsche Bank in cases around the country.

Chase Admits Violations of Consent Order

For further information please call 954-495-9867 or 520-405-1688


see http://dtc-systems.net/2015/03/jpmorgan-chase-admits-failure-comply-april-13-2011-independent-foreclosure-review-consent-order/#more-2157

see also 27_page_settlement2

We already knew that the servicers, banks and trustees were violating the settlements and consent orders that were entered against them for filing fraudulent papers in fraudulent foreclosures. Now the question is what to do about it.

With respect to the 2011 consent orders Chase admitted the wrongdoing and the settlement was supposed to compensate and give notice to borrowers who had been defrauded.

In the proposed settlement, Chase acknowledges that it filed in bankruptcy courts around the country more than 50,000 payment change notices that were improperly signed, under penalty of perjury, by persons who had not reviewed the accuracy of the notices.  More than 25,000 notices were signed in the names of former employees or of employees who had nothing to do with reviewing the accuracy of the filings.  The rest of the notices were signed by individuals employed by a third party vendor on matters unrelated to checking the accuracy of the filings.

The first question that SHOULD come to mind is WHY a multi trillion dollar bank would need or want to engage in such practices? After all they were committing perjury by their own admission. The second question is why borrowers who were hurt by this behavior have not used the admissions to win their foreclosure cases? And the third question is what is the effect of these admissions?

The answer lies in the lies. The plain truth is, based upon my direct knowledge in several cases, that Chase did not own the loans, the Trusts therefore could not have purchased the loans and that not only Chase was lying but so was US Bank when it was named in foreclosure actions as Trustee for a Trust that plainly did not purchase the loans nor was any of the paperwork showing a transfer authentic. The underlying transaction simply isn’t there and Chase (and other banks) successfully hoodwinked courts into applying legal presumptions that were plainly contrary to the facts.

I think the admission could be used as an argument that the banks are not entitled to the legal presumptions that normally apply because of the wrongful behavior that they have admitted. If they want to show that the Trust bought the loan then they must prove it and not just produce a self-serving piece of paper that says it happened. we know it didn’t happen. Why should the burden of proof fall on a homeowner with limited resources?

The bank, with virtually unlimited resources and exclusive access to all the information, should be able to show the transaction date, amount and proof of payment (wire transfer receipt, wire transfer instructions, canceled check etc.) for the loans that were allegedly acquired and/or conveyed by the assignor and the assignee. With obviously unclean hands, the banks should not be rewarded for their subterfuge. The bank should not be allowed to claim any presumptions, legal or otherwise, that are normally applied to documents or commercial paper. If they really have a case, let them prove it — or at least respond to discovery without objection on various spurious grounds.

When I represented banks if someone had said that we didn’t own the loan or never funded the loan I would have stopped them dead with proof of the actual movement of money and that would have ended the discussion. Instead we are splitting hairs in court with the banks saying they don’t want to produce actual proof. All they need, according to them, is some self-serving piece of fabricated paper with a forged signature containing perjurious statements and the court is bound to accept such paper and apply legal presumptions that what is written on the paper is true. They have the temerity to argue that when we all know that the paper is inherently untrustworthy and not credible, given their admissions and continuous behavior.

I think discovery directed at compliance with the settlements and consent orders ought to be pressed against the banks, on the grounds that they could not have fulfilled all conditions precedent because among the conditions precedent are the requirements set forth in the settlements and consent orders. At trial I think the argument should be made, using the settlements and consent orders as exhibits, with Judicial notice, that the banks are not entitled to the presumptions and that they must prove every fact they would otherwise have the court “presume” or “assume.”

Comments invited

see also Katie Porter on servicing

Ocwen Settlement with NY AG Could Spell Doom for Servicers

For further information please call 954-495-9867 or 520-405-1688


The new settlement with New York’s Department of Financial Services calls for resignation of the Chairman (Erbey), payment of a $100 million fine, Payment of $50 million in restitution to borrowers who were wrongfully foreclosed, and a set of rules requiring Ocwen to help borrowers avoid foreclosure. Schneiderman, Attorney General, was prosecuting the case aggressively. This will add to the growing list of questions from judges over rotating servicers and trustees, servicing practices, robo-signing, forgery, fabrication of documents and the refusal of the foreclosing party to simply show the funding for the loan and the consideration paid for the acquisition of the loan.

Why is this important: it reflects an administrative finding that Ocwen has been wrongfully foreclosing on people from 2009 to the present. And it directs money and other assistance to homeowners who find themselves tangled in the complex web of deceit that we call securitization (Adam Levitin calls it “securitization fail” because the loans never actually made it into the trust — because the proceeds of sale of mortgage bonds were never given to the trust by the investment bank who sold them).

The fine is a fraction of what it should be and the amount set aside for victims of wrongful foreclosure is pathetic. And it basically leaves the completed foreclosures to stand even though it is obvious that Ocwen was following the directive “We are in the business of foreclosure, not modification). And while the settlement requires Ocwen to provide the complete loan file on request it fails to state what happens if they don’t and perhaps more importantly it fails to give details of what must be in that loan file even though they are widely known. Specifically, the completed loan file would show wire transfer receipts and wire transfer instructions from a party who was acting as a conduit for the investor money — a party unrelated to the REMIC Trust and not tied to the investors by contract.

Another key provision requires Ocwen to provide a detailed explanation of why and how a request for workout or modification was denied.

But remember this is one state. If all 50 states demanded the same results, based upon the New York findings there could be a global fine of $5 Billion and restitution ($2.5 Billion) for U.S. homeowners who are victims of wrongful foreclosure in the amount of $2.5 billion. And if you add the other servicers who have been doing exactly the same thing as Ocwen, the amounts increase geometrically.

A key provision of the settlement is continued monitoring. So if there is an issue with a foreclosure of a mortgage serviced by Ocwen, a complaint to the office of the attorney general or the office of the New York Department of Financial Services will help — perhaps even if you are not a resident of the state of New York.

One obvious concession to the banks is the reference to the onboarding process. In allowing Ocwen to purchase servicing rights (MSR) the reference is vague as to defining “onboarding.” This phrase is often being used in Court to avoid producing real records and real testimony from real companies who were real servicers. Judges, seeing only what is in front of them, are forced to rule that the records of the new “servicer” are business records within the exception provided under the hearsay rule in most states.

PRACTICE POINTER FOR LAWYERS: If you fail to argue that the business record must contain entries made at or near the time of the transaction, you will most likely end up with records from a “new” party who is not a servicer but whose records contain the alleged records of other servicers. I don’t see how the onboarding process could ever be accepted in lieu of records and testimony from companies who actually did servicing of the account — i.e., receipt of payments from the borrower and remittance to the creditors.

Here are some salient quotes from the article:

ATLANTA, Dec. 22, 2014 (GLOBE NEWSWIRE) — Ocwen Financial Corporation (OCN) (“Ocwen”) today announced that it has reached a comprehensive settlement with the New York Department of Financial Services (“DFS”) related to the agency’s recent investigation.

“We are pleased to have reached a comprehensive settlement with the DFS and will act promptly to comply with the terms,” said CEO Ronald Faris. “We believe this agreement is in the best interests of our shareholders, employees, borrowers and mortgage investors. We will continue to cooperate with the DFS in the implementation of the terms of this settlement which we believe will allow Ocwen to continue to focus on what we do best — helping homeowners.”

Under the terms of the settlement, Ocwen will pay a civil monetary penalty of $100 million to the DFS by December 31, 2014, which will be used by the State of New York for housing, foreclosure relief and community redevelopment programs. The Company will also pay $50 million as restitution to current and former New York borrowers who had foreclosure actions filed against them by Ocwen between January 2009 and December 19, 2014. As previously communicated in the third quarter of 2014, Ocwen recorded a charge of $100 million to increase its legal reserves in anticipation of a potential settlement with the DFS. Ocwen will record an additional $50 million charge in its fourth quarter 2014 financial statements to reflect the final settlement amount.

…. founder William C. Erbey will step down from his position as Executive Chairman of Ocwen, effective January 16, 2015. Barry Wish, a current director of Ocwen, will assume the role of Non-Executive Chairman on that date.

Ocwen has also agreed to non-monetary provisions relating to New York borrower assistance measures, a monitor-led oversight of Ocwen’s operations, interactions with related parties and certain corporate governance measures. MSR acquisitions will be subject to Ocwen meeting specified benchmarks as well as DFS approval.

A summary of the settlement terms is below.

Settlement Summary of Monetary Provisions

  • Ocwen will pay a civil monetary penalty of $100 million to the DFS by December 31, 2014, which will be used by the State of New York for housing, foreclosure relief and community redevelopment programs.
  • Ocwen will also pay $50 million as restitution to current and former New York borrowers in the form of $10,000 to each borrower whose home was foreclosed upon by Ocwen between January 2009 and December 19, 2014, with the balance distributed equally among borrowers who had foreclosure actions filed, but not completed, by Ocwen between January 2009 and December 19, 2014.

Settlement Summary of Non-Monetary Provisions

Borrower Assistance

Beginning 60 days after December 19, 2014, and for two years, Ocwen will:

  • Provide upon request by a New York borrower a complete loan file at no cost to the borrower;
  • Provide every New York borrower who is denied a loan modification, short sale or deed-in-lieu of foreclosure with a detailed explanation of how this determination was reached;
  • Provide one free credit report per year, at Ocwen’s expense, to any New York borrower on request if Ocwen made a negative report to any credit agency from January 1, 2010, and Ocwen will make staff available for borrowers to inquire about their credit reporting, dedicating resources necessary to investigate such inquiries and correct any errors.

Operations Monitor

  • The DFS will appoint an independent Operations Monitor to review and assess the adequacy and effectiveness of Ocwen’s operations. The Operations Monitor’s term will extend for two years from its engagement, and the DFS may extend the engagement another 12 months at its sole discretion.
  • The Operations Monitor will recommend and oversee implementation of corrections and establish progress benchmarks when it identifies weaknesses.
  • The Operations Monitor will report periodically on its findings and progress. The currently existing monitor will remain in place for at least three months and then for a short transitional period to facilitate an effective transition to the Operations Monitor.

Related Companies

  • The Operations Monitor will review and approve Ocwen’s benchmark pricing and performance studies semi-annually with respect to all fees or expenses charged to New York borrowers by any related party.
  • Ocwen will not share any common officers or employees with any related party and will not share risk, internal audit or vendor oversight functions with any related party.
  • Any Ocwen employee, officer or director owning more than $200,000 equity ownership in any related party will be recused from negotiating or voting to approve a transaction with the related party in which the employee, officer or director has such equity ownership, or any transaction that indirectly benefits such related party, if the transaction involves $120,000 or more in revenue or expense.

Corporate Governance

  • Ocwen will add two independent directors who will be appointed after consultation with the Monitor and who will not own equity in any related party.
  • As of January 16, 2015, Bill Erbey will step down as an officer and director of Ocwen, as well as from the boards of Ocwen’s related companies.
  • The Operations Monitor will review Ocwen’s current committees of the Board of Directors and will consult with the Board relating to the committees. This will include determining which decisions should be committed to independent directors’ oversight, such as approval of transactions with related parties, transactions to acquire mortgage servicing rights, sub-servicing rights or otherwise to increase the number of serviced loans and new relationships with third-party vendors.
  • The Board will work closely with the Operations Monitor to identify operations issues and ensure that they are addressed. The Board will consult with the Operations Monitor to determine whether any member of senior management should be terminated or whether additional officers should be retained to achieve the goals of complying with this Consent Order.

MSR Purchases

  • Ocwen may acquire MSRs upon (a) meeting benchmarks specified by the Operations Monitor relating to Ocwen’s onboarding process for newly acquired MSRs and its ability to adequately service newly acquired MSRs and its existing loan portfolio, and (b) the DFS’s approval, not to be unreasonably withheld.
  • These benchmarks will address the compliance plan, a plan to resolve record-keeping and borrower communication issues, the reasonableness of fees and expenses in the servicing operations, development of risk controls for the onboarding process and development of a written onboarding plan assessing potential risks and deficiencies in the onboarding process.

Fla. Supreme Court Amends Rules For Foreclosure

For further information please call 954-495-9867 or 520-405-1688


see 2014-sc13-2384

It would seem that the Florida Supreme Court has been listening and watching very closely. The new rules corroborate many things stated in this blog. Still to come are ruling or rules dealing with discovery in support of the homeowner’s defenses. This is effective for cases filed on or after July 1, 2013.

“After considering the proposed amendments and reviewing the relevant legislation, we amend the Florida Rules of Civil Procedure and forms as reflected in the appendix to this opinion. New language is indicated by underscoring; deletions are indicated by struck-through type. The amendments shall take effect immediately upon the release of this opinion. Because the amendments were not published for comment prior to adoption, interested persons shall have sixty days from the date of this opinion in which to file comments with the Court.2


(a) [No change]

(b) Claims for Relief. A pleading which sets forth a claim for relief, whether an original claim, counterclaim, crossclaim, or third-party claim must state a cause of action and shall contain (1) a short and plain statement of the grounds upon which the court’s jurisdiction depends, unless the court already has jurisdiction and the claim needs no new grounds ofjurisdiction to support it, (2) a short and plain statement of the ultimate facts showing that the pleader is entitled to relief, and (3) a demand for judgment for the relief to which the pleader deems himself or herself entitled. Relief in the alternative or of several different types may be demanded. Every complaint shall be considered to pray for general relief.

When filing an action for foreclosure of a mortgage on residential real property the complaint shall be verified. When verification of a document is required, the document filed shall include an oath, affirmation, or the following statement:

“Under penalty of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.”

(c) – (h) [No change]

Committee Notes        1971 Amendment. Subdivision (h) is added to cover a situation usually arising in divorce judgment modifications, supplemental declaratory relief actions, or trust supervision. When any subsequent proceeding results in a pleading in the strict technical sense under rule 1.100(a), response by opposing parties will follow in the same course as though the new pleading were the initial pleading in the action. The time for answering and authority for defenses under rule 1.140 will apply. The last sentence exempts post judgment motions under rules 1.480(c), 1.530, and 1.540, and similar proceedings from its purview.

2014 Amendment. The last two paragraphs of rule 1.110(b) regarding pleading requirements for certain mortgage foreclosure actions were deleted and incorporated in new rule 1.115.

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(a) Claim for Relief. A claim for relief that seeks to foreclose a mortgage or other lien on residential real property, including individual units of condominiums and cooperatives designed principally for occupation by one to four families which secures a promissory note, must: (1) contain affirmative allegations expressly made by the claimant at the time the proceeding is commenced that the claimant is the holder of the original note secured by the mortgage; or (2) allege with specificity the factual basis by which the claimant is a person entitled to enforce the note under section 673.3011, Florida Statutes.

(b) Delegated Claim for Relief. If a claimant has been delegated the authority to institute a mortgage foreclosure action on behalf of the person entitled to enforce the note, the claim for relief shall describe the authority of the claimant and identify with specificity the document that grants the claimant the authority to act on behalf of the person entitled to enforce the note. The term “original note” or “original promissory note” means the signed or executed promissory note rather than a copy of it. The term includes any renewal, replacement, consolidation, or amended and restated note or instrument given in renewal, replacement, or substitution for a previous promissory note. The term also includes a transferrable record, as defined by the Uniform Electronic Transaction Act in section 668.50(16), Florida Statutes.

(c) Possession of Original Promissory Note. If the claimant is in possession of the original promissory note, the claimant must file under penalty of perjury a certification contemporaneously with the filing of the claim for relief for foreclosure that the claimant is in possession of the original promissory note. The certification must set forth the location of the note, the name and title of the individual giving the certification, the name of the person who personally verified such possession, and the time and date on which the possession was verified. Correct copies of the note and all allonges to the note must be attached to the certification. The original note and the allonges must be filed with the court before the entry of any judgment of foreclosure or judgment on the note.

(d) Lost, Destroyed, or Stolen Instrument. If the claimant seeks to enforce a lost, destroyed, or stolen instrument, an affidavit executed under penalty of perjury must be attached to the claim for relief. The affidavit must: (1) detail a clear chain of all endorsements, transfers, or assignments of the promissory note that is the subject of the action; (2) set forth facts showing that the claimant is entitled to enforce a lost, destroyed, or stolen instrument pursuant to section

Page 6

673.3091, Florida Statutes; and (3) include as exhibits to the affidavit such copies of the note and the allonges to the note, audit reports showing receipt of the original note, or other evidence of the acquisition, ownership, and possession of the note as may be available to the claimant. Adequate protection as required under section 673.3091(2), Florida Statutes, shall be provided before the entry of final judgment.

(e) Verification. When filing an action for foreclosure on a mortgage for residential real property the claim for relief shall be verified by the claimant seeking to foreclose the mortgage. When verification of a document is required, the document filed shall include an oath, affirmation, or the following statement:

“Under penalties of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.”

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(When location of original note known)COMPLAINT        Plaintiff, A. B., sues defendant, C. D., and alleges:

1. This is an action to foreclose a mortgage on real property in ……………. County, Florida.

2. On …..(date)….., defendant executed and delivered a promissory note and a mortgage securing payment of the note to …..(plaintiff or plaintiff’s predecessor….. The mortgage was recorded on…..(date)….., in Official Records Book ………. at page ………. of the public records of ……………… County, Florida, and mortgaged the property described in the mortgage then owned by and in possession of the mortgagor, a copy of the mortgage containing a copy of and the note being attached.

3. Plaintiff owns and holds the note and mortgage. (Select a, b, or c)

(a) Plaintiff is the holder of the original note secured by the mortgage. (b) Plaintiff is a person entitled to enforce the note under applicable law because …..(allege specific facts)…..

(c) Plaintiff has been delegated the authority to institute a mortgage foreclosure action on behalf of the person entitled to enforce the note. The document(s) that grant(s) plaintiff the authority to act on behalf of the person entitled to enforce the note is/are as follows ……………….

4. The property is now owned by defendant who holds possession.

5. Defendant has defaulted under the note and mortgage by failing to pay the payment due …..(date)….., and all subsequent payments …..(allege other defaults as applicable)…….

6. Plaintiff declares the full amount payable under the note and mortgage to be due.

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7. Defendant owes plaintiff $………. that is due on principal on the note and mortgage, interest from …..(date)….., and title search expense for ascertaining necessary parties to this action.

8. Plaintiff is obligated to pay plaintiff’s attorneys a reasonable fee for their services. Plaintiff is entitled to recover its attorneys’ fees under …..(allege statutory and/or contractual bases, as applicable)……

WHEREFORE, plaintiff demands judgment foreclosing the mortgage, for costs (and, when applicable, for attorneys’ fees), and, if the proceeds of the sale are insufficient to pay plaintiff’s claim, a deficiency judgment.

NOTE: An action for foreclosure of a mortgage on residential real property must contain an oath, affirmation, or the following statement as required by rule 1.115(e).

VERIFICATION        Under penalty of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.

Executed on this …..(date)…..

[Person Signing Verification]


1. That plaintiff is in possession of the original promissory note upon which this action is brought.

2. The location of the original promissory note is: …..(location)…..

3. The name and title of the person giving the certification is: …..(name and title)

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4. The name of the person who personally verified such possession is: …..(name)…..

5. The time and date on which possession was verified were: …..(time and date)

6. Correct copies of the note (and, if applicable, all endorsements, transfers, allonges, or assignments of the note) are attached to this certification.

7. I give this statement based on my personal knowledge.

Under penalties of perjury, I declare that I have read the foregoing Certification of Possession of Original Note and that the facts stated in it are true.

Executed on …..(date)…..

[Person Signing Certification]

NOTE: This form is for installment payments with acceleration. It omits allegations about junior encumbrances, unpaid taxes, unpaid insurance premiums, other nonmonetary defaults, and for a receiver. They must be added when proper appropriate. Copies A copy of the note and mortgage must be attached. This form may require modification. This form is designed to incorporate the pleading requirements of section 702.015, Florida Statutes (2013) and rule 1.115. It is also designed to conform to section 673.3011, Florida Statutes (2013), except that part of section 673.3011, Florida Statutes, which defines a person entitled to enforce an instrument under section 673.3091, Florida Statutes. See form 1.944(b). Pursuant to section 702.015, Florida Statutes (2013), a certification of possession of the original promissory note must be filed contemporaneously with the Complaint (form 1.944(a)) or, in the event that the plaintiff seeks to enforce a lost, destroyed, or stolen instrument, an affidavit setting forth the facts required by law must be attached to the complaint (form 1.944(b)).

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(When location of original note unknown)COMPLAINT        Plaintiff, ABC, sues defendant, XYZ, and states:

1. This is an action to foreclose a mortgage on real property in ………. County, Florida.

2. On …..(date)…… defendant executed and delivered a promissory note and a mortgage securing the payment of said note to …..(plaintiff or plaintiff’s predecessor)….. The mortgage was recorded on ……(date)….. in Official Records Book …… at page ….. of the public records of ………. County, Florida, and mortgaged the property described therein which was then owned by and in possession of the mortgagor. A copy of the mortgage and note are attached to the affidavit which is attached hereto as Composite Exhibit “1”; the contents of the affidavit are specifically incorporated by reference.

3. Plaintiff is not in possession of the note but is entitled to enforce it.

4. (select a, b, c, or d) Plaintiff cannot reasonably obtain possession of the note because

(a) the note was destroyed.

(b) the note is lost.

(c) the note is in the wrongful possession of an unknown person.

(d) the note is in the wrongful possession of a person that cannot be found or is not amenable to service of process.

5. (select a, b, c, or d)

(a) At the time the original note was lost, plaintiff was the holder of the original note secured by the mortgage.

(b) At the time the original note was lost, plaintiff was a person entitled to enforce the note under applicable law because …..(allege specific facts)…..

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(c) Plaintiff has directly or indirectly acquired ownership of the note from a person who was entitled to enforce the note when loss of possession occurred as follows: …..(allege facts as to transfer of ownership)…..

(d) Plaintiff has been delegated the authority to institute a mortgage foreclosure action on behalf of the person entitled to enforce the note, and the document(s) that grant(s) plaintiff the authority to act on behalf of the person entitled to enforce the note is/are as follows ………………………..(attach documents if not already attached).

6. Plaintiff did not transfer the note or lose possession of it as the result of a lawful seizure.

7. The property is now owned by defendant who holds possession.

8. Defendant has defaulted under the note and mortgage by failing to pay the payment(s) due …..(date(s))….. , and all subsequent payments …..(identify other defaults as applicable)…..

9. Plaintiff declares the full amount payable under the note and mortgage to be due.

10. Defendant owes plaintiff $………. that is due on principal on the note and mortgage, interest from …..(date)….. , and title search expense for ascertaining necessary parties to this action.

11. Plaintiff is obligated to pay its attorneys a reasonable fee for their services. Plaintiff is entitled to recover its attorneys’ fees for prosecuting this claim pursuant to …..(identify statutory and/or contractual bases, as applicable)…..

WHEREFORE, Plaintiff demands judgment foreclosing the mortgage, for costs (and, where applicable, for attorneys’ fees), and if the proceeds of the sale are insufficient to pay plaintiff’s claim, a deficiency judgment.

NOTE: An action for foreclosure of a mortgage on residential real property must contain an oath, affirmation, or the following statement as required by rule 1.115(e).


Under penalty of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.

Executed on …..(date)…..

(Person Signing Verification)

COUNTY OF ………………..

BEFORE ME, the undersigned authority, personally appeared …..(name)….., who, after being first duly sworn, deposes and states, under penalty of perjury:

1. I am the plaintiff (or plaintiff’s ……….) (identify relationship to plaintiff).

2. I am executing this affidavit in support of plaintiff’s Complaint against defendant and I have personal knowledge of the matters set forth herein.

3. On …..(date)….. , the public records reflect that defendant executed and delivered a mortgage securing the payment of the note to …..(plaintiff/plaintiff’s predecessor)…… The mortgage was recorded on …..(date)….. , in Official Records Book ………. at page ………. of the public records of ………. County, Florida, and mortgaged the property described therein, which was then owned by and in possession of the mortgagor, a copy of the mortgage and the note being attached.

4. (select a, b, c, or d) Plaintiff cannot reasonably obtain possession of the note because

(a) the note was destroyed.

(b) the note is lost.

(c) the note is in the wrongful possession of an unknown person.

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(d) the note is in the wrongful possession of a person who cannot be found or is not amenable to service of process.

5. (select a, b, c, or d)

(a) At the time the original note was lost, plaintiff was the holder of the original note secured by the mortgage.

(b) At the time the original note was lost, plaintiff was a person entitled to enforce the note under applicable law because …..(allege specific facts)…..

(c) Since the note was lost, plaintiff has directly or indirectly acquired ownership of the note from a person who was entitled to enforce the note when loss of possession occurred as follows: …..(allege facts regarding transfer of ownership)…..

(d) Plaintiff has been delegated the authority to institute a mortgage foreclosure action on behalf of the person entitled to enforce the note, and the document(s) that grant(s) plaintiff the authority to act on behalf of the person entitled to enforce the note is/are as follows …………………………(attach copy of document(s) or relevant portion(s) of the document(s)).

6. Below is the clear chain of the endorsements, transfers, allonges or assignments of the note and all documents that evidence same as are available to Plaintiff: …..(identify in chronological order all endorsements, transfers, assignments of, allonges to, the note or other evidence of the acquisition, ownership and possession of the note)….. Correct copies of the foregoing documents are attached to this affidavit.

7. Plaintiff did not transfer the note or lose possession of it as the result of a lawful seizure.



[typed or printed name of affiant]

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BEFORE ME, the undersigned authority appeared …..(name of affiant)….. who ….. is personally known to me or ….. produced identification …..and acknowledged that he/she executed the foregoing instrument for the purposes expressed therein and who did take an oath.

WITNESS my hand and seal in the State and County aforesaid, this …..(date)……

NOTARY PUBLIC, State of Florida

Print Name: …………………………

Commission Expires: ……………..

Committee Note        2014 Adoption. This form is for installment payments with acceleration. It omits allegations about junior encumbrances, unpaid taxes, unpaid insurance premiums, other nonmonetary defaults, and for a receiver. Allegations must be added when appropriate. This form may require modification. This form is designed to incorporate the pleading requirements of section 702.015, Florida Statutes (2013), and rule 1.115. It is also designed to comply with section 673.3091, Florida Statutes (2013). Adequate protection as required by sections 702.11 (2013) and 673.3091(2), Florida Statutes (2013), must be provided before the entry of final judgment.

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PLAINTIFF’S MOTION FOR ORDER TO SHOW CAUSEFOR ENTRY OF FINAL JUDGMENT OF FORECLOSURE        1. Plaintiff is a lienholder of real property located at …..(address)…… or is a ….. Condominium Association/Cooperative Association/Homeowner’s Association……

2. The plaintiff has filed a verified complaint in conformity with applicable law, which is attached.

3. The plaintiff requests this court issue an order requiring defendant(s) to appear before the court to show cause why a final judgment of foreclosure should not be entered against defendant(s).

4. The date of the hearing may not occur sooner than the later of 20 days after service of the order to show cause or 45 days after service of the initial complaint.

ORCOMMENT: Use the following when service is by publication:

4. When service is obtained by publication, the date for the hearing may not be set sooner than 30 days after the first publication.

5. The accompanying proposed order to show cause affords defendant(s) all the rights and obligations as contemplated by applicable law.

6. Upon the entry of the order to show cause, plaintiff shall serve a copy of the executed order to show cause for entry of final judgment as required by law.

7. This is not a residential property for which a homestead exemption for taxation was granted according to the rolls of the latest assessment by the County Property Appraiser.

Plaintiff requests the court review this complaint and grant this motion for order to show cause for entry of final judgment of foreclosure, and grant such further relief as may be awarded at law or in equity.

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Certificate of Service

Committee Note

2014 Adoption. This form is designed to comply with section 702.10, Florida Statutes (2013).

Page 17


ORDER TO SHOW CAUSE        THIS CAUSE has come before the court on ….. plaintiff’s/lien holder’s….. motion for order to show cause for entry of final judgment of mortgage foreclosure and the court having reviewed the motion and the verified complaint, and being otherwise fully advised in the circumstances, finds and it is


1. The defendant(s) shall appear at a hearing on foreclosure on …..(date)….. at ……(time)….. before the undersigned judge, in the …..(county)….. Courthouse at …..(address)…… to show cause why the attached final judgment of foreclosure should not be entered against the defendant(s) in this cause. This hearing referred to in this order is a “show cause hearing.”

2. This ORDER TO SHOW CAUSE shall be served on the defendant(s) in accordance with the Florida Rules of Civil Procedure and applicable law as follows:

a. If the defendant(s) has/have been served under Chapter 48, Florida Statutes, with the verified complaint and original process has already been effectuated, service of this order may be made in the manner provided in the Florida Rules of Civil Procedure; or, if the other party is the plaintiff in the action, service of the order to show cause on that party may be made in the manner provided in the Florida Rules of Civil Procedure.

b. If the defendant(s) has/have not been served under Chapter 48, Florida Statutes, with the verified complaint and original process, the order to show cause, together with the summons and a copy of the verified complaint, shall be served on the party in the same manner as provided by law for original process.

3. The filing of defenses by a motion or verified answer at or before the show cause hearing constitutes cause for which the court may not enter the attached final judgment.

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4. Defendant(s) has/have the right to file affidavits or other papers at the time of the show cause hearing and may appear at the hearing personally or by an attorney.

5. If defendant(s) file(s) motions, they may be considered at the time of the show cause hearing.

6. Defendant(s)’ failure to appear either in person or by an attorney at the show cause hearing or to file defenses by motion or by a verified or sworn answer, affidavits, or other papers which raise a genuine issue of material fact which would preclude entry of summary judgment or which would otherwise constitute a legal defense to foreclosure, after being served as provided by law with the order to show cause, will be deemed presumptively a waiver of the right to a hearing. In such case, the court may enter a final judgment of foreclosure ordering the clerk of the court to conduct a foreclosure sale. An order requiring defendant(s) to vacate the premises may also be entered.

7. If the mortgage provides for reasonable attorneys’ fees and the requested fee does not exceed 3% of the principal amount owed at the time the complaint is filed, the court may not need to hold a hearing to adjudge the requested fee to be reasonable.

8. Any final judgment of foreclosure entered under section 702.10(1) Florida Statutes, shall be only for in rem relief; however, entry of such final judgment of foreclosure shall not preclude entry of an in personam money damages judgment or deficiency judgment where otherwise allowed by law.

9. A copy of the proposed final judgment is attached and will be entered by the court if defendant(s) waive(s) the right to be heard at the show cause hearing.

10. The court finds that this is not a residential property for which a homestead exemption for taxation was granted according to the rolls of the latest assessment by the county property appraiser.

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DONE AND ORDERED at …..(county)…..Florida …..(date)……


Copies to:

Committee Note        2014 Adoption. This form is designed to comply with section 702.10(1), Florida Statutes (2013).

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FINAL JUDGMENT        This action was tried before the court. On the evidence presented


1. Amounts Due. Plaintiff, …..(name and address)……, is due

Az Federal Judge Strikes at Heart of Nonjudicial Foreclosure, Denies OneWest Motion to Dismiss

For further information or assistance, please call 954-495-9867 or 520-405-1688


See OWB CASE Buffington v USBank_MTD Denied incl FDCPA 28USDC AZ


A Federal Judge upheld a Complaint against OneWest on all counts except fraud. Actually the Judge was doing the homeowner a favor because the burden of proof on fraud is clear and convincing evidence whereas the burden of proof for the rest of the causes of action is only a preponderance (50% + 1) of the evidence. If it is more likely than not that the homeowner is right on the multi-count complaint that has now survived dismissal, the homeowner wins and the damages goes to the jury to jury to decide how much that should be. TRESPASS might also require a higher burden of proof. During the litigation, the homeowner will be able to inquire and potentially receive the necessary facts to support a fraud claim as well.

This is a dramatic reversal — lawsuits just like this one were previously dismissed in Az Federal Court. One of them was dismissed after 14 months of non-action by the court.



COUNT 3 UPHELD FOR FALSE DOCUMENTS — Plaintiffs suffered false foreclosure recordings on their real property title record, additional damage to their credit reputation, and false late fees and penalties, as well as attorney fees and costs.

COUNT 4 UPHELD FOR PAYMENT/DISCHARGE/ SATISFACTION — based upon receipt of FDIC loss share payments that were intentionally withheld and therefore causing a misrepresentation to borrower as to the the existence of a default or the actual amount of the balance due to the actual creditor.






What is Evidence or Proof of the Existence of the REAL Loan?

For additional information or assistance please call 954-495-9867 or 520-405-1688.


It is a complicated answer. The following is NOT a comprehensive answer which would the length of a treatise.

see also Fla 4th DCA Beauchamp v Bank of New York Mellon, J Shahood reversed — Beauchamp v BONY-Mellon

The Beauchamp case brings to the forefront the issue of redemptive rights which has long been ignored. In short the 4th DCA decided that the redemptive rights are important. They decided that evidence of actual losses or damages must be established without relying on inadmissible hearsay. This is where the rubber meets the road. In order to do so the Plaintiff foreclosing party is open in discovery at the very least to showing actual proof of payment and proof of loss of the actual owner of the debt and/or holder in due course. Presumptions won’t do them any good unless the homeowner’s attorney fails to object.

Thus the real transaction with real money, in a real purchase of the loan must be established by the foreclosing party. That is part of their prima facie case. And these are liquidated contract damages — not subject to anything other than mathematical calculation of net loss. I doubt if the appellate court meant to empower the judge to “estimate” or enter a finding that is “good enough.” The homeowner, like the AMGAR program, has every right to pay off the net debt once it is established and thus prevent the sale of the home. In turn the homeowner is entitled to the recovery of the original note and mortgage or deed of trust.

Be careful because it is evidently a normal practice, contrary to current case law, for the foreclosing party in non judicial states to publish and record a self serving statement of standing in the form of a substitution of trustee. That substitution of trustee must be nullified or else the rest of the theories advanced by the homeowner might be deemed irrelevant.

The interesting thing on remand is what happens when the foreclosing party cannot show proof of payment (proof of actual transaction ) and tries to get the judge to assume that the loss is the amount on the note. If that were the case the 4th DCA would not have remanded for further proceedings to determine damages so that the borrower’s redemption rights could be established. Without a completely transparent introduction of testimony and BEST evidence of original transaction documents, there is no proof of damages and the foreclosure judgment must be vacated.

In loan transactions there usually is no actual written contract that says the creditor will loan money and the debtor will pay it back. So common law and statutory law must make certain assumptions about the loan contract — which still must exist in order for the note or mortgage to be enforced. This is till basic contract law — the elements of which are offer, acceptance and consideration each to the other. The stumbling block for most judges is that the presence of money at the table is automatically construed as consideration for the contract that is sought to be enforced.

In olden times there was no problem in using this heuristic approach to loan contracts, because nobody thought of some third party funding the loan WITHOUT a note and mortgage made out in favor of the actual creditor. But Wall Street found a way to do it and conceal it.

The actual debt — i.e., the duty to pay — arises by operation of law when the debtor receives the money. It is presumed to be a loan and not a gift. The paperwork is intended to provide disclosures and terms and evidence upon which both parties can rely. In this context before Wall Street saw the vulnerability, there was no problem in using the words “debt”, “note”, “mortgage” and “loan” interchangeably — because they all essentially meant the same thing.

The genius of the Wall Street scheme is that their lawyers saw the possibilities in this informal system. The borrower could not claim lack of consideration when he received the money and thus the debt was presumed. And with enough layers of deception, non-disclosure and outright lies, neither the borrower nor even the closing agent actually realized that the money was coming from Party A but the paperwork was directed to Party B. Nobody realized that there was a debt created by operation of law PLUS another debt that might be presumed by virtue of signing a note and mortgage. Obviously the borrower was kept in the dark that for every $1 of “loan” he was exposing himself to $2 in liability.

If the creditor named as payee and mortgagee was not the source of the funds then there is no underlying debt. The rules of evidence are designed to help the court get tot eh truth of the matter asserted. The truth is that the holder of the paper is NOT the party who was the creditor at “closing.” The closing was fictitious. It really is that simple. And it is the reason for the snowstorm of fabricated, forged and robosigned documents to cover up the essential fact that there is not one shred of consideration in the origination or transfer of many loans.

Each assignment, endorsement, power of attorney or other document purporting to transfer control or ownership over the loan documents is corroboration of the lack of consideration. Working backwards from the Trust or whoever is claiming the right to enforce, you will see that they are alleging “holder” status but they fail to identify and prove their right to enforce on behalf of the holder in due course or owner of the debt (i.e., the creditor).

Close examination of the PSA shows that they never planned to have the Trust actually acquire the loans — because of the lack of any language showing how payment is being made to acquire the loans within the cutoff period. THAT was the point. By doing that the broker dealers were able to divert the proceeds of sale of Mortgage Backed Securities to their own use. And when you look at their pleading they never state they are a holder in due course. Why not? If they did, there would be no allowable defenses from the borrower. But if they alleged that they would need to come forward with evidence that the Trust purchased the debt for value, in good faith and without knowledge of the borrower’s defenses — elements present in every PSA but never named as “holder in due course.”

Since the good faith and lack of knowledge of borrower’s defenses is probably not in hot dispute, that leaves only one element — payment. The logical question is why would the assignor or endorser transfer a valuable debt without payment? The only reasonable conclusion is that there is no underlying debt — there is paper but the power of that paper is at very best highly speculative. “Underlying debt” means that the alleged borrower does not owe any money to the party named as payee on the note.
Traveling down the line, seeking for evidence of payment, you don’t find it. Even the originator does not get “paid” for the loan but assigns or endorses the paperwork anyway. No reasonable business explanation can be found for this free transfer of the paper except that the participants knew full well that the paper was worthless. And THAT in turn is presumptive proof that there was a lack of consideration for the paperwork — meaning that the debt was owed to an outside party who was never in privity with the “originator.”
If someone has possession of a note, it is an original and it complies with local statutes as to form and content, the note is accepted as evidence of the debt, and the terms of repayment. The person who signed the note is at risk of a judgment against him only if he defaults or the note falls into the hands of a holder indue course. Of course if the note IS evidence of a loan that WAS funded by the named payee, that is a different story. But looking a little further up the line, you will eventually find that one or more alleged transfers of the paperwork did not involve payment. And the reason is the same as the above. In the end, the money came from illegal diversion of investor funds that were intended to be deposited with a REMIC Trust.

If the signer of the note denies that the transaction was complete — i.e., there was no consideration and therefore there is no enforceable contract, then the burden switches back to the “holder” of the note to step into the shoes of the original lender to prove that the loan actually occurred, the original lender was the creditor and the signer was the debtor.

Hoping Canadians are Stupid, Stewart Title Skips Warranties of Title


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


I’ve been telling Canadians that there is considerable doubt as to whether the investment properties they are buying in the context of foreclosure are going to work out for them because of title defects. Some of them are listening and most see the deals as too good to be true. They are right — it is too good to be true, which means it isn’t true that the prices and title are just find, eh?

Here is the new disclaimer (see below). If you can find anything that protects anyone other than the title company then you are able to drill down further than we can. This disclaimer shows what we have been saying — the very use of the term “virtual” title tells us that there is no basis upon which the title agent or carrier will be held accountable or will pay anything if you buy property and take a policy from any of the major carriers.

Up until now it was standard practice in the industry that lawyers and lay people would rely upon the title report issued by the title company. Now they say it is for general information and you can’t rely on it. This means that virtually every buyer should have an attorney who is competent and has the resources to obtain and independent title report and is able to advise people holding or intending to hold title, mortgage or anything else. This gives them a license to insert or delete almost anything. The only way you can really know your chain of title is to go down to the county recorder’s office and examine the chain, one instrument at a time and to check for cross references where a parcel number or name might have been transposed.

What this also means is that anyone seeking to foreclose now must go through the same process and prove to the judge with a certified copy of the title registry that the mortgage is on there and that no satisfaction or other impediments to foreclosure are present. This is a new development and it therefore calls for new tactics and strategies.

Virtual Underwriter® is an underwriting tool. Stewart Title Guaranty Company and its affiliated underwriters (collectively “Stewart”) does not guarantee the accuracy, adequacy, or completeness of any content of Virtual Underwriter®, and you may not rely upon any such content. Only Stewart Issuing Offices may rely on Virtual Underwriter and only to issue Stewart insurance forms. Stewart makes no express or implied warranties with regard to Virtual Underwriter® and shall have no liability for any errors or omissions or for the results of the use of such material. You should not assume that Virtual Underwriter® is error-free or that it will be suitable for the particular purpose that you have in mind. Any material, forms, documents, policies, endorsements, annotations, notations, interpretations, or constructions included in Virtual Underwriter® are made available as a convenience only and should not be considered as altering or modifying the text of any matter to which they relate. Virtual Underwriter® should not be relied upon as a basis for interpreting the forms contained herein. Virtual Underwriter® is made available with the understanding that Stewart is not engaged in rendering legal, accounting, or other professional advice or services. If legal advice or services or other expert assistance is required, the services of a competent professional person should be sought. The material contained in Virtual Underwriter® is not a substitute for the advice of an attorney or other professional person. Preparation/facilitation of documents other than by an attorney may constitute the unauthorized practice of law.

see vubulletins.jsp?displaykey=BL133368894600000002


Banks Slammed for Misrepresenting Themselves as Owners of the Loan


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


2008 Legal Memo at BKR Conference

Cautions Banks and Lawyers Against Lying About Ownership

A legal compendium of cases published by the American Bankruptcy Institute establishes a pattern of conduct by Ameriquest, Wells Fargo and Chase dating back before 2008 in which these and other banks have intentionally misrepresented themselves to the court as owners of the note, entitled to foreclose and seeking to lift the automatic stay in bankruptcy court under “color of title” arguments. The link to the entire article is below.

What I see is not just wrongful conduct in court but a continuous pattern of lying, fabricating, forging and cheating that has left millions of homeowners without possession of their rightful homes. The ONLY REMEDY in my opinion is to restore these homes to the bankruptcy estate and that the debtor’s be allowed to assert claims attacking the supposed mortgage liens that were based upon false identification of the lender, false and predatory figures used in borrowing and servicing and a large shroud thrown over the entire fictitious securitization process as a place to hide an illegal scheme to issue multiple securities in which the borrower was the issuer of the promissory note under false pretenses and the REMIC was carefully constructed to issue bogus mortgage bonds.

In both cases, the issuer and the investor were dealing with participants in the securitization chain who had no intention of allowing them to keep or recover their investment. In both cases, the instrument was a security that did NOT fall under the exemptions previously used to protect the banks. The borrower as issuer was induced to enter into a securities transaction in which he purchased a loan product under the false assumption created and promoted by the Banks that the real estate market never went down and would always go up, thus allaying the borrowers’ fear that the loan was not affordable. In fact that loan was not affordable and would violate the affordability guidelines in TILA and RESPA if it was classified as a residential mortgage loan. The REMIC that issued the bonds did so without any assets, and even though the disclosure was in the prospectus buried in parts where one would not be looking for that risk, that fact alone removes the REMIC issuance as a REMIC under the Internal Revenue Code, and removes the issuance of the mortgage bond from the cover of exemption under the 1998 Act.

We have all seen Wells Fargo, BOA, Chase, US Bank, Ameriquest and others banged repeatedly fro misrepresenting themselves in court as the owner of the loan when in fact they were not the owner of the loan, never loaned the money to begin with and never purchased the loan obligation from anyone because no money exchanged hands. Even if they tried, the only party who could sell or release claims to the receivable from the “borrower” (issuer) would have been the partnership or individuals or as a group pooled their money into leaky, fictitious entities created for the express purpose of deceiving the pension funds and other investors.

The bottom line is that when it suits them (when they want the property, in addition to the unearned insurance payments, proceeds of credit default swaps and proceeds from other credit enhancements and federal bailouts) these banks assert falsely that they are the creditor, claiming the losses that trigger payments to them rather than the investor. When it does not suit them, like when they abandon the property, or are subject to imposition of fees, sanctions or fines or attorney fees, then they finally fess up and state that they are not the owner of the loan in order to avoid paying appropriate costs, fines, fees, penalties and fees.

Here are some of the notable quotes from the piece written by Catherine V Eastwood, Esq., of Partridge, Snow and Hahn, LLP. At some point the lawyers must be subjected to the same sanctions knowing in the public domain that these practices exist as a pattern of conduct. see Consumer_Sept_2008_NE08_Messing_Mortgages_Cases


Make Sure Your Pleading Contains Accurate Information Regarding The Identity Of The Real Party In Interest
[AMERIQUEST FINED $250,000, LAW FIRM FINED $25,000, WELLS FARGO FINED $250,000 FOR A TOTAL OF $525,000] On April 25, 2008, Judge Rosenthal issued an memorandum of decision regarding an order to show cause why sanctions should not be imposed in the matter of Nosek v. Ameriquest Mortgage Company, 2008 Bankr. LEXIS 1251 (Bankr. D. Mass. 2008). Ameriquest had maintained throughout a prior adversary proceeding and bankruptcy case that it was the “holder” of the note and mortgage. When the debtor filed a second adversary proceeding requesting trustee process from two Chapter 13 Trustees to collect payment on the judgment issued in the prior case, Ameriquest argued that it was merely the servicer of the loans and that it was not the owner of the funds sought to be collected. The court noted that Ameriquest and its attorneys had made misrepresentations to the court throughout the prior proceedings regarding its status as noteholder. Wells Fargo, NA as Trustee for Amresco Residential Securities Corp. Mortgage Loan Trust, Series 1998-2 was the real holder of the note. The Court issued a Notice to Show Cause why sanctions should not be imposed

Make Sure Your Pleading Contains Accurate Financial Information or Fed. R. Bankr. P. 9011 May Be Imposed: Judge Bohm asked counsel why a motion from relief from stay was being withdrawn. The lawyer’s answer resulted in the judge issuing two show cause orders in In re Parsley, 2008 Bankr. LEXIS 593 (Bankr. S.D. Texas 2008). The real answer should have been that the motion for relief was filed in error on account of an erroneous payment history. Unfortunately, counsel misrepresented to the court that it was a “good motion” and that set off an explosion, leading to evidence of other misrepresentations…. Testimony also revealed that the payment histories were prepared by paralegals and were not reviewed by any attorneys. Countrywide did not review the loan histories either. No one was catching the errors under this system. Judge Bohm wrote “what kind of culture condones its lawyers lying to the court and then retreating to the office hoping that the Court will forget about the whole matter.”

[$75,000 Sanction against Law Firm] In an earlier matter, also in the Southern District of Texas, the Court sanctioned a law firm in the amount of $75,000 for filing an objection to plan and subsequent withdrawal of the objection that was deemed to be “gibberish.”    In re Allen, 2007 Bankr. LEXIS 2063 (Bankr. S.D. Texas 2007). It was clear to the Court that the pleadings were not being reviewed by an attorney after being generated by a computer as the objection listed reasons that were completely unrelated or blatantly opposite of the contents of the Chapter 13 plan filed by the debtor.

[Chase required to pay legal fees of debtor] On April 10, 2008, Judge Morris, a bankruptcy court judge for the Southern District of New York, issued a decision in the case of In re Schuessler, 2008 Bankr. LEXIS 1000 (Bankr. S.D. NY. 2008) regarding an order to show cause why Chase Home Finance, LLC should not be sanctioned for submitting pleadings that were misleading and that had no factual support.

Standing Challenges: Make Sure The Company Bringing The Action Has The Legal Right To Do So
[RELIEF FROM STAY DENIED RETROACTIVELY ON DEBTOR’S MOTION] In re Schwartz, 366 BR 265 (Bankr. D. Mass. 2007) that parties who do not hold the note or mortgage and who do not service the mortgage do not have standing to pursue motions for relief or other actions arising out of the mortgage obligation. In Schwartz the creditor was seeking relief to pursue an eviction action following a foreclosure sale. The assignment of mortgage into the foreclosing mortgagee was executed four days after the foreclosure sale took place. The Court stated that while the term “mortgagee”, as used in M.G.L. c. 244 §1, “has been defined to include assignees of a mortgage, there is nothing to suggest that one who expects to receive the mortgage by assignment may undertake any foreclosure activity.” Id. at 269. The motion for relief was denied.
While not a bankruptcy court case, a United States District Court case worthy of inclusion in this section is In re Foreclosure Cases, 2007 WL 3232430 (N.D. Ohio 2007). The District Court issued an order covering numerous foreclosure cases that were pending in the state. The creditor was ordered by the Court to produce evidence that the named plaintiff was the holder and owner of the note and mortgage as of the date the foreclosure complaint was filed. The court dismissed the foreclosure complaints when the lenders were unable to produce the assignments.
How Many Times Can A Lender Continue a Foreclosure Sale?
In re Soderman, 2008 Bankr. LEXIS 384 (Bankr. D. Mass. 2008). In Soderman the court recited the “one-time” postponement blessing in order to seek relief from stay but that repeated continuances may be a violation of the automatic stay.    The repeated continuances will be deemed a violation of the stay if the postponements are made in order to harass the debtor, gain an advantage for the creditor or renew the financial strain that led the debtor to file for bankruptcy protection. Id.    One month after the decision in Soderman was released, Judge Hillman also ruled that repeated continuances of a foreclosure sale was a violation of the automatic stay. In re Lynn-Weaver, 2008 Bankr. LEXIS 1101 (Bankr. D. Mass 2008).
Challenging the Assessment of Mortgage Fees to a Loan and the United States Trustee’s Office’s Investigation of Countrywide Home Loans, Inc.
In an unprecedented move, Judge Agresti of the Pennsylvania Bankruptcy Court, in April 2008, approved the Justice Department’s further investigation of Countrywide due to widespread allegations that the lender is filing false or inaccurate claims, misapplying funds, assessing unreasonable fees to borrowers’ accounts or ignoring the discharge injunction and other court orders. Countrywide Homes Loans, Inc. f/k/a Countrywide Funding Corp., 2008 Bankr. LEXIS 1023 (Bankr. W.D. PA. 2008).
This matter was precipitated by a Standing Chapter 13 Trustee in Pennsylvania originally filing for sanctions against Countrywide Home Loans, Inc. due to her experience with the lender
The Pennsylvania matters have led the United States Trustee’s Office to file similar suits in Georgia1 and Ohio2 seeking to investigate the servicing practices of Countrywide. Various subpoenas have also been served by the United States Trustee’s office upon Countrywide in Florida regarding the assessment of fees on borrower’s accounts.

1 The United States Trustee’s Office filed a complaint on February 28, 2008 styled as Walton v. Countrywide Home Loans, Inc.,08-06092-mhm in the Northern District of Georgia. The related bankruptcy case is In re Atchley, 05- 79232-mhm. In Atchley, the homeowners eventually sold their home to avoid foreclosure but believe the payoff amount cited by Countrywide contained excessive fees and that Countrywide continued to accept trustee payments after the loan paid off.
2    The United States Trustee’s Office filed a complaint on February 28, 2008 styled as Fokkena v. Countrywide Homes Loans, Inc., 08-05031-mss in the Northern District of Ohio. The related bankruptcy case is In re O’Neal, 07- 51027. In O’Neal, Countrywide filed a proof of claim and objection to plan when it had already accepted a short sale on the property prior to the bankruptcy filing.

[Forensic Audits Suggested — $10,000 damages, $12,350 Legal Fees, Wells Fargo sanctioned $5000] in the matter of In re Dorothy Stewart Chase, Docket 07-11113, Chapter 13 (Bankr. E.D. LA 2008), Judge Magner issued a 49 page decision on April 10, 2008 which ordered Wells Fargo to audit every proof of claim it filed in the district since April 13, 2007 and to provide a complete loan history on every account. If the audits reveal additional concerns, the judge reserved the right to appoint experts to do forensic accountings at the expense of Wells Fargo. She also ruled that Wells Fargo was negligent in the loan servicing of Ms. Chase’s loan and assessed damages of $10,000, legal fees of $12,350 and sanctioned Wells Fargo $5,000 for filing a consent order that did not reflect the agreement of the parties and for filing erroneous proofs of claim.
[Wells sanctioned $67,202.45] The decision in Chase was on the heels of Judge Magner’s earlier decision in In re Jones, 2007 Bankr. LEXIS 2984 (Bankr. E.D. LA. 2007). In Jones, Judge Magner sanctioned Wells Fargo $67,202.45 for violating the order of confirmation and the automatic stay by improperly assessing the debtor’s loan with fees in the amount of $16,852.01 and diverting payments made by the Chapter 13 trustee and the Debtor to satisfy fees that had not been authorized by the Court. The judge stated that the Jones case would provide guidance in the post-petition administration of home mortgage loans to a degree that, until this decision issued, had been lacking in the industry.

Moynihan Must Testify in Fraud Suit Brought by Bond Insurer


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Editor’s Comment; The fact they he is being forced to testify is a major breakthrough the wall silence used by the banks and servicers. BY this article I am asking for people to review the court file, get the pleadings and memorandums and send them to me at neilFgarfield@hotmail.com. Everyone should be paying attention to this case, and everyone should be reading everything. The insurer is making the case for the borrowers at the the same time as they are making the case for recovery of money paid by them under false pretenses to the wrong parties, screwing both the investors and the borrowers.

NEW YORK | Thu Apr 12, 2012 10:00pm EDT

(Reuters) – A New York judge has ruled that Bank of America (BAC.N) CEO Brian Moynihan must testify in a lawsuit brought by bond insurer MBIA Inc.(MBI.N) which claims the bank fraudulently induced it to insure risky mortgage-backed securities.

The judge said Moynihan could provide relevant testimony in the case due to his position as CEO, former president of investment banking and the fact that he oversaw the process of integrating Countrywide into Bank of America.

Bank of America acquired mortgage lender Countrywide in July 2008. MBIA filed a Countrywide later that year. In 2009, MBIA claimed Bank of America was liable for Countrywide’s conduct.

Bank of America, the second-largest U.S. bank by assets, is fighting several legal cases following the global financial crisis and had sought to block MBIA efforts for Moynihan to give evidence.

MBIA was once the largest U.S. municipal bond insurer. It announced a restructuring in 2009 after incurring large losses insuring mortgage debt.

Bank of America had asked New York Supreme Court Justice Eileen Bransten to rule that Moynihan did not need to testify, arguing that MBIA was seeking his deposition only to harass the bank and that Moynihan had no unique knowledge about the case.

But the judge on Wednesday denied the request, according to court papers made public on Thursday.

“The knowledge Moynihan gained as part of the (Countrywide) Steering Committee is unique, and it is material and necessary to MBIA’s successor liability claim,” the judge said.

Moynihan was involved in “high-level decisions regarding the Countrywide transaction” and his testimony will not duplicate that of lower-level employees, she said.

MBIA declined to comment and Bank of America did not immediately respond to requests for comment.

The cases is MBIA Insurance Corp v. Countrywide Home Loans Inc et al, New York State Supreme Court, New York County, No. 602825/2008.

Occupy Homes Protest Forces Delay of Sheriff Sale


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Occupy Homes Protest Forces Delay of Sheriff Sale
By Ty Moore

US Bank buckles under pressure, delaying sale of veteran John Vinje’s home until May 29th

After a week of escalating pressure demanding US Bank postpone the sheriff’s sale of John and Lucinda Vinje’s home, Occupy Homes won another 11th hour victory today. John Vinje led a contingent of 50 Occupy Homes MN supporters into the Hennepin County Sheriff’s Office Civil Division where the sale was to take place at 11:00am this morning.

Speeches, chants, and song filled the marbled hallways in the ground floor of city hall. No potential buyers were seen entering the courtroom the entire time, and just after 11:30am it was announced that US Bank had delayed the sale to May 29th. Following the victory, John said: “This shows that the power is now with the people, and not with large, monolithic corporations, like US Bank.

Homeowners throughout Minnesota facing foreclosure, facing sheriff’s sales, should get together with their community and demand a postponement and renegotiation. They should get connected with Occupy Homes because we can save homes throughout the state of Minnesota when we all work together.” Today’s action followed a week of escalating pressure on US Bank, including a national call-in campaign aimed to VP Tom Joyce, and a march on US Bank CEO Richard Davis’ mansion on April 7th. Ty Moore, an organizer with Occupy Homes explained: “We’ve got the banks scrambling already, but this fight is just beginning. John’s victory, following Monique and Bobby’s victories, is sending a message. Minnesota homeowners aren’t going to leave their homes quietly and in shame anymore. It’s the banks and CEOs like Richard Davis who should be ashamed!”

Occupy Homes MN achieved national media attention after winning Bobby Hull’s foreclosed home back after US Bank bought his property at a sheriff sale, and repeatedly delaying the eviction of Monique White, who also received her original mortgage through US Bank. John and Lucinda Vinje are among a growing number of homeowners joining together through Occupy Homes to fight back against the unjust and illegal banking practices behind the foreclosure crisis. John and Lucinda Vinje bought their home in 2008, the first house either of them had ever owned. John is an Air Force veteran now working as a security guard, and Lucinda has worked a government job for ten years.

But when financial difficulties caused them to fall behind on payments by just two months, US Bank refused their request to repay their arrears in installments and immediately began foreclosure proceedings. Meanwhile, Lucinda has been forced into “medical retirement” due to a chronic condition, adding financial strain on the family. If US Bank would renegotiate their mortgage to current market value as the Vinje’s request, they could afford the payments. After six months of delays, in March US Bank offered them a measly $97 less on their monthly payments. Both John and Lucinda have worked their entire lives, but now stand to lose the only home they have ever owned.


Fraudulent Foreclosure Remedy: Return of the Home


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     “….employees and agents of a number of banks had used the system to “repeatedly” submit court documents on mortgage holders, “containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have [had]”.

Editor’s Comment: 

If you read the release below carefully you’ll discover that Morgan Stanley has literally agreed to pay any fine requested by the Federal Reserve.  The Fed has again determined that the banks are using false, faulty, fraudulent and forged documents in connection with the processing of foreclosures, modification requests and anything else related to the bogus mortgages that have long since been paid. 

I strongly urge all readers of this blog to write letters to the Federal Reserve, the OCC, OTS, Fannie Mae and Freddie Mac to stop pretending that the acceptance of fines is an adequate substitute for the return of stolen property. 

It is astonishing to me that the apathy and confusion in the media and marketplace have allowed and even promoted the concept that the theft of these homes using fraudulent documents is somehow resolved by the payment of money based on the recurring assumption that the underlying obligation is still due, that the default actually exists, and that the enforcement through foreclosure is a foregone conclusion. 

In nearly all cases the enforcement of the note and mortgage is far from a foregone conclusion.  In fact, the reason why none of these cases have actually reached trial where evidence was required to be submitted, is that the original documents signed by the borrower are fatally defective.  These defects are not merely technical. These defects reveal the fact that at the option of the securitization participants, they shifted the risk of loss from the borrower to the investor and eventually to the US taxpayer.  The right to use collateral pledged to a complete stranger to the transaction was void from the beginning, waived several times, and unenforceable since the original debt was paid off completely.

Any lawyer that goes into court without understanding these facts is going to concede issues that will doom his client to failure and loss of the home.  Any lawyer that puts these facts in issue, especially if accompanied by third party reports and services provided by this blog and many other sources, will be forcing the judge to either allow litigation to proceed into the discovery stage (at which point the case will settle), or face an appeal where there were clearly issues of fact that the judge disallowed based upon bias and prejudice. 

Homeowners should understand by now that they are not deadbeats.  They are victims of a fraudulent scheme to sell bogus securities to pension funds which in turn are now limited in their ability to pay benefits to the same victims who were depending upon that income to pay for the house they acquired in transactions that did not comply with Federal or State lending laws.  This is not a matter where the identity of the creditor and compensation to various undisclosed parties were omitted.  In this case we now know with certainty that these disclosures required under law, were actively hidden from both the borrower and the investor even after many borrowers confronted the banks and servicers with clear evidence that there were two parts to each transaction, to wit: the closing with the borrower, and the closing with the investor.  None of the foreclosures reveal the terms of repayment to the investor as per that portion of the total documentation that set forth repayment to the investor/creditor (i.e. the so-called securitization documents with which the participants in the securitization chain were in constant non-compliance). 

Special message to the borrowers:  You are not a deadbeat if you refuse to make a payment that is not due.  The securitization method used by Wall Street merely employed your signature for the purpose of making profits that actually exceeded the total amount of your mortgage.  If you want to oversimplify the matter then think of it this way: who should get the “free house”, a bank that never loaned the money and was paid many times over or a homeowner who invested their last pennies into a deal that was fraudulently presented?  If you put it another way, had you known that the appraisal was inflated and that there were at least a half-dozen levels of fees, commissions and trading profits being earned on your transaction, would you still have entered into the transaction?  More specifically, if you knew that the fees and profits generated exceeded the principal due on your mortgage, would you have entered into the transaction?  I invite you to consider the possibility that you were not a borrower incurring a legitimate debt but rather a victim in a con game that was so well played that you still believe you owe money that your own tax and pension dollars have long since paid off.  Here’s another way of thinking about it; imagine that you have been paying your “debt” from your checking account while at the same time the bank was withdrawing the same amount or more from your savings account for the same debt.  Now they wish to declare you in default because you refuse to pay from your checking account.  Your answer should not be “you’re right, I’m a deadbeat.” Your answer should be, “You’re a thief and I’m reporting you to the police.”

So now you’ve gone to the police and they’ve verified the skullduggery of the banks.  The remedy that the police are asking you to accept is that the police will receive a fine or contribution of $100 and you’re still expected to pay out of your checking account or they’ll take the house, and guess what, they’re still going to continue taking money out of your savings account.

Morgan Stanley to be fined in electronic mortgage system and foreclosure scandal

Bank criticized over Saxon unit’s automatic robo signing of foreclosures

By Leo King

The US Federal Reserve has issued a punishing court order to Morgan Stanley, as it prepares to fine the bank over the use of automated ‘robo signing’ of documents relating to foreclosures for struggling US mortgage payers. It ordered the bank to make significant process, data and systems improvements.

The issue relates to a troubled electronic mortgage registry created by a range of the largest banks, which is allegedly plagued with errors. Those that have brought claims against the banks have said access to the database was deliberately restricted by the banks, and that mortgage foreclosures were often based on incorrect data entered by the banks as they rushed to offload the loans.

The court order issued this week concerns the Saxon business, which Morgan Stanley has sold to mortgage servicing group Ocwen Financial. The Fed said Morgan Stanley retained responsibility for the impact of Saxon’s actions. Saxon had issued over 225,000 residential mortgage loans.

Robo-signing typically involves employees of mortgage servicing companies automatically signing off foreclosure papers without checking them, in the interests of fast processing the papers.

The practice was allegedly supported by the Mortgage Electronic Registration Systems (MERS), which opponents claim may have resulted in unfair foreclosures for many home buyers. The database was created in 1995 to simplify the recording of mortgage sales and to allow banks to more easily sell on loans.

According to recent complaints by New York State against a number of banks, as well as being used fraudulently, the database was also “plagued with inaccuracies and errors”. New York State Attorney General Eric Schneidermann said that employees and agents of a number of banks had used the system to “repeatedly” submit court documents on mortgage holders, “containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have [had]”.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages,” said Schneiderman in February.

“Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law.”

This week, the Federal Reserve issued its court order, known as a consent order, against Morgan Stanley. The order demands that the bank hire an independent consultant to review its foreclosures, and said the bank was required to “provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the foreclosure process”.

Should Morgan Stanley decide to re-enter the mortgage servicing business while the consent order is in effect, it will be “required to implement enhanced corporate governance, risk-management, compliance, borrower communication, servicing, and foreclosure practices” that were “comparable” to enforcement actions against other banks over the same issue.

The consent order against Morgan Stanley orders the bank to create a proper plan around acceptable usage of MERS, including strict processes around proper data entry on MERS and around the appointment of officers authorized by MERS.

Additionally, Morgan Stanley and Saxon were ordered to create a proper plan for the use of strong management information systems to inform correct decision-making around mortgages and foreclosures. The systems also needed to monitor compliance with legal requirements, ensure the accuracy of records around money owed and any foreclosure proceedings, and provide all information officers need from borrowers.

High-risk residential mortgages have remained a key focus of attention since the financial crisis, because many troubled and complex financial products were based on them.

Last year, the Federal Reserve issued a similar consent order against Goldman Sachs. The robo signing scandal has engulfed a swathe of the largest US banks, with others including Bank of America, Citi, JP Morgan and Wells Fargo also being investigated.

In the Morgan Stanley case, the Federal Reserve said that in 2009 and 2010 Saxon had begun 60,313 foreclosures on home buyers judged to be struggling to pay their mortgages. It accused the company of engaging in “a pattern of misconduct and negligence in residential mortgage loan servicing and foreclosure”.

Morgan Stanley had not commented at the time of writing, but has agreed to pay whatever fine the Fed sets.

New Foreclosures Will Set Record in 2012


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Editor’s Note: This is how they do it. First there is the slap in the face. Then you have the recriminations and apologies and “penalties” that amount to no more than rounding errors. People have become accustomed to the tragic numbers of people losing homes to a completely false and fraudulent scheme defrauding the local, state and federal government as well as the core of the middle class (eventually 12 million people will lose their homes).

Now comes the real fun for the banks. The number of foreclosures being initiated by the banks will exceed any year in history this year. It all depends upon apathy produced by the conditioning that the media and the banks have allowed to seep into the narrative of this tragedy.

There is no doubt that in 2007 if anyone was told that that by 2012 5 million people will have lost their homes and soon thereafter another 7 million people would lose their homes, the public outrage and astonishment at the gutting of our economy would have led to all the rules and enforcement that should already be put back in place (same as they were after the Great Depression caused by bank speculation). Business owners would be aghast at the demolition of their customer base and governments would brace for the worst fall in tax revenues ever experienced in American History. Most importantly, we would have done something — if we believed it.

I was a lone voice in the wilderness back then as was Roubini, Johnson and others who saw easily that the American economy was headed for banana republic status. But the stock market was at 14,000 and nobody could imagine that this “fun” would end. It wasn’t real then and it isn’t real now. There is no recovery, regardless of what the Obama administration says, which is not to say that in this election year we are throwing our support to the republican party whose policies and ideologies were largely responsible for this mess being so bad.

My message and the message that comes from other people with even greater knowledge than myself is that we are in for the real crash this year. The insane part of all this is that we now already know what was considered conspiracy theory back in 2007 — the mortgage debt was paid off by taxpayers and insurers, the mortgages are invalid and unenforceable, the mortgage bonds were sold fraudulently, the mortgage bonds were sold with false ratings of investment quality, the properties were financed with false appraisals of fair market value to support prices that were in some cases multiples of the actual value. We now know these things to be true and not just the deduction of some people studying the marketplace.

We know, because the Banks admitted it, that the foreclosures were wrongful but we are still not doing anything about it, let alone stopping the new ones.

So my question to local, state and federal governments, to businessmen who rely on consumer purchasing, to homeowners who think they are untouched by a housing crash they thought was over, is this: when will you learn? or to paraphrase Truman — how many times do you need to be hit in the head before you look up to see who is hitting you? It’s the Banks and as long as you let our government do business with these handful of banks who are essentially dictating government policy, we will be headed downward. These Banks are doing a better (more effective) job of tearing this country apart than Bin Laden ever conceived of doing.

The larger policy questions are being completely missed. The question is not higher or lower taxes or higher or lower spending. The question is whether we take back what the banks stole from us.

GARFIELD HEIGHTS, Ohio (Reuters) – Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.

But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

“We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010,” said Mark Seifert, executive director of Empowering & Strengthening Ohio’s People (ESOP), a counseling group with 10 offices in Ohio.

“Last year was an anomaly, and not in a good way,” he said.

In 2011, the “robo-signing” scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

Five major banks eventually struck that settlement with 49 U.S. states in February. Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.

Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28 percent in January.

More conclusive national data is not yet available. But watchdog group, 4closurefraud.org which helped uncover the “robo-signing” scandal, says it has turned up evidence of a large rise in new foreclosures between March 1 and 24 by three big banks in Palm Beach County in Florida, one of the states hit hardest by the housing crash

Although foreclosure starts were 50 percent or more lower than for the same period in 2010, those begun by Deutsche Bank were up 47 percent from 2011. Those of Wells Fargo’s rose 68 percent and Bank of America’s, including BAC Home Loans Servicing, jumped nearly seven-fold — 251 starts versus 37 in the same period in 2011. Bank of America said it does not comment on data provided by other sources. Wells Fargo and Deutsche Bank did not comment.

(Reporting By Nick Carey; Editing by Martin Howell and William Schomberg; Desking by Andrew Hay)

see entire article at NEW FORECLOSURES WILL SET RECORD IN 2012


Quiet Title is No Magic Bullet


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Beware of those who promise you perfect salvation, especially when they lack the garments and training of clergy. If there was a magic bullet that would end foreclosures or get all the houses back, it would already be done. Hundreds of lawyers and thousands of pro se litigants have been adding quiet title to their quiver of arrows to fire at the pretender lenders. It is true that the “free house” myth gets in the way of lawyers understanding the goals in quiet title actions and the same “free house” myth raises the hackles of most judges, but it is something I recommend you discuss with competent legal counsel and not someone who knows someone who knows someone. (especially if they are asking for money).

Quiet title is a lawsuit you need to prove. As Darrell Blomberg ably pointed out last night, there are three main categories that can give rise to a lawsuit in which you ask the Judge to quiet title: cloud on title, unmarketable title and defective title. Ken McLeod showed a knowledge of procedure and thinking about strategy and tactics can certainly give the advantage to homeowners in quiet title actions. But in all cases, the situation is taken case by case, and mere pleading and quoting some less than thrilling authority is going to narrow the focus of the order quieting title at the very least or get your case dismissed.

The major point that needs to be made here is that there is no quiet title action in which it is guaranteed that you will win and even if you did, the only thing you will have accomplished is to uncouple the mortgage (deed of trust) from the note (which is probably defective as well). In a quiet title action the most that a Judge will say that as to the people you sued, you have title free and clear of any encumbrances they might assert.  In a quiet title action, the Court will hardly, if ever, mention the status of the obligation or note.

Quiet title actions, as the name implies are all about title not liability. But in many cases, the decoupling of the security instrument from the obligation could result in the pretender lender holding an enforceable obligation because of homestead exemptions and other laws. Don’t think for a minute that Judges don’t understand that your attack on the title proffered by the pretender lender is anything less than an part of an overall plan to get rid of the liability for the loan. But without properly alleging your case and proving it with witnesses, you are just another “deadbeat” trying to get out of a “legitimate” debt.

There is some confusion out there that has led people to assert and believe that mere pleading of the requirements for quiet title will or might get you the order you are seeking. That can only happen if the other side doesn’t answer and you get a default. If they defend, then you are in for a fight. So you will need a witness or other evidence that is accepted by the court as evidence to show that the party seeking to oppose your quiet title claim has no interest in the title to the property — and that had better not be based upon the fact that the loan was paid off by bailout, insurance etc. Those factors are currently deemed irrelevant in determining title.

It is true that if the loan was paid off or waived, then you have a right to demand the satisfaction and sue for it if that is the case — bot that is not exactly the same thing as a quiet title, although it could be coupled with it.

Foreclosure Strategists: Upcoming Meetings


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Editor’s Comment: 

Tuesday April 17, 2012                                                                                                                            Guest Speaker:  Arizona Secretary of State Ken Bennett                                                         We will be discussing notarizations and all that is associated with that.  More details will follow.

Meeting: Tuesday, April 03, 2012

There is much confusion (and lots of disinformation!) about what QUIET TITLE is and what it is not.  We will closely look at what quiet title is and what you can expect from a quiet title action.  Perhaps, even more importantly, we will look at what quiet title is not and why it may not be the answer you are looking for.  It is very apparent to me that too many people are putting too much faith into a fundamentally misguided quiet title effort and they are being very disappointed with the result.

Quiet title is a tool.  It is only one tool in your arsenal.  A mechanic uses many tools to get you the result of a repaired automobile.  Would you trust and employ a mechanic that only had a hammer to work on your car?

Why are you expecting a better result in your foreclosure defenses if you are only willing to use the quiet title tool?

To supplement your efforts, I’ll be digging out my Pro Se homeowner defense Tool Kit.  We will discuss all aspects of what you need to assemble and assimilate to increase your chances of getting closer to the result you want.

This meeting will prepare you with a solid understanding of what you need to learn.

If you know someone just starting their foreclosure defense, this will be an excellent opportunity for them to get up to speed.  Please invite them.

Thank you to all attendees at last week’s meeting!

The long and short of last week’s meeting is that there is a change in the wind but the powers that be are exercising every tactic possible to deny us the benefit of those changes.

Diligent efforts on our part will keep the pressure on everybody.

We meet every week!

Every Tuesday: 7:00pm to 9:00pm. Come early for dinner and socialization. (Food service is also available during meeting.)
Macayo’s Restaurant, 602-264-6141, 4001 N Central Ave, Phoenix, AZ 85012. (east side of Central Ave just south of Indian School Rd.)
COST: $10… and whatever you want to spend on yourself for dinner, helpings are generous so bring an appetite.
Please Bring a Guest!
(NOTE: There is a $2.49 charge for the Happy Hour Buffet unless you at least order a soft drink.)


I have set up a MeetUp page. The page can be viewed at www.MeetUp.com/ForeclosureStrategists. Please get the word out and send your friends and other homeowners the link.

We’re quickly approaching 50 strategists on MeetUp!!

May your opportunities be bountiful and your possibilities unlimited.

“Emissary of Observation”

Darrell Blomberg



Impossible? Home Prices Drop Again in 16 Metro Areas


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Editor’s Comment: 

Every day, every week, every month and every day we are bombarded by conflicting news reports. If you believe the pundits, the housing recovery has already begun. Their logic and their facts are convoluted, but they are sure. And they are sure because the banks paid them to be sure and to spread disinformation such that the pubic will be lulled into apathy.

The facts are simple. Prices are at their lowest level since 2001, the bottom is continuing to fall, and the “bottom” will never be reached until we remove the downward pressure on pricing. The downward pressure comes from two sources — the enormous inventory overhanging the Market and the knowledge that even if you did buy property, there is a high probability that your title will come under attack.

The news media has been fast to report the fines and penalties against the banks for wrongful foreclosures but very slow to report or investigate what happens to those wrongful foreclosures. No fine or penalty will ever correct title deficiencies. It’s time to face up to the world of reality — title will never be cleared without the signature of the dispossessed owner on a brand new document — and this time the signature better be real.

Home prices drop in 16 metro areas: Case-Shiller

By Kerri Panchuk

Standard & Poor’s/Case-Shiller home price indices for the month of January show prices falling in most major metro areas.

The latest report shows annual price declines of 3.9% and 3.8%, respectively, for the 10- and 20-city composite indexes in the month of January.

Both composites combined fell 0.8% in January, with 16 of the 19 metropolitan statistical areas surveyed experiencing price drops over the prior month. Analysts with Econoday said “the unadjusted monthly decline of 0.8 percent is the best reading since September with the year-on-year rate, where adjustments play a much less significant role than on month-to-month rates, at minus 3.8 percent rate for the same rate as the unadjusted data.”

The only cities with price increases for the month included Miami, Phoenix and Washington D.C.

S&P says eight metro areas and both composite indexes posted new lows in January on the index chart.

Still, the 10- and 20-city composites marginally improved their annual return rates over the month of December. The Dallas, Denver, Miami, Minneapolis, New York, Phoenix, San Diego, Seattle, Tampa and Washington D.C. metros saw their annual rates improve over the month of December while price returns fell in nine other areas.

“Despite some positive economic signs, home prices continued to drop. The 10- and 20- city composites and eight cities – Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa – made new lows,” said David Blitzer, chairman of the index committee at S&P indices. “Detroit and Phoenix, two cities that have suffered massive price declines, plus Denver, saw increasing prices versus January 2011. The 10-city composite was down 3.9% and the 20-city was down 3.8% compared to January 2011.”

Atlanta continues to suffer severe price drops with its index score down 2.1% from the previous month and 19.7% over the past six months.

“It also posted the worst annual return, down 14.8%. Seven of the cities were down by 1.0% or more over the month,” S&P said. “With the new lows, both composites are now 34.4% off their relative 2006 peaks.”

Rick Sharga, executive vice president of Carrington Mortgage Holdings, summed up the report saying it “suggests that buying activity is focused on the low end of the market, especially distressed assets, which continue to drag down home prices. With several million more properties in various stages of delinquency and foreclosure, pricing will continue to suffer while

Economy Cannot Grow Fast Enough


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Editor’s Comment: 

Bernanke’s comments corroborate years of projections on this blog and by others including Johnson and Roubini.  We are kidding ourselves if we think that the economy is going to improve without addressing the housing problem.  In order to bring unemployment down to a level where the threat of financial chaos is truly diminished aggregate demand must increase significantly.  In our country aggregate demand is largely determined by consumer demand.  Consumer demand exists only where consumers have sufficient resources available to them to buy things.  

 At one time credit was relatively unimportant since median income for the middle class was sufficient to run a household on one income and still purchase the goods and services that the economy had to offer.  For the last 35 years median income has either been stagnant or decreased in real dollar terms depending upon which analysis is used as an index.  Unemployment is high and as Bernanke admits, any indication that unemployment is improving is coming largely from a decrease in layoffs rather than an increase in hiring.  Savings are virtually non-existent.  Therefore we can safely assume that consumer demand, representing 70% of aggregate demand will not improve as a result of money held by consumers or earned by consumers.  

In the wake of the neo conservative flood where it was stupidly assumed that reducing wages would not have a long term negative effect on consumer demand, the replacement for wages was debt.  We have run the gamut of credit card debt and other consumer finance to the extreme of payday loans which collectively siphon a substantial amount of what would be aggregate demand.  The recipients of this largesse are the banks and the losers are the eager institutional investors seeking higher returns.  Consumers are mostly maxed out on every form of credit that could be available to them.  Therefore any hope of an increase in aggregate demand from consumers based upon their willingness to spend even if they lack the financial resources is a fairy tale.  Simply stated, consumers lack money and credit and therefore lack the ability to make significant purchases in the marketplace.  Those who point to minor upticks in the purchases of ipads or iphones are ignoring the greater reality.  

The financial industry chased most of America and corralled them into a scenario in which “pretend” money was used instead of real money.  They did it using housing as the bait.  Again the investors are the losers but so are the homeowners and the tax payers who are now paying the fictitious bill with freshly minted dollars that are constantly diminishing in value.  The use of the home as a piggy bank from which one could make an ATM like withdrawal for the purchase of goods and services is also gone.

That leaves us with aggregate demand being 70% dependent upon a class of people who have been cut out from participation at the table where commerce is intended to flow.  The only remedy is to create incentives for those consumers who are or were homeowners to return to that table.  In order for this to happen the pornographic amounts of money blowing through the few major banks who remain in charge of our financial system must be stopped and the flow must be reversed.  There is ample reason to reverse that flow besides the fact that the banks have grown too fat.  Most of the money controlled by those banks consists of ill gotten gains produced by fraud at the closing table with investors and the same fraud at the closing table with borrowers.  The obvious solution is to restore the victims of the fraud through restitution which would also have the even greater benefit of restoring confidence in the american financial system.

Those who are pursuing policy that depends on the status quo being maintained are ignoring a basic legal fact.  Chain of title in real property is determined by reference to hundreds of years of common law, statutory law and constitutional law.  Eventually this game must end.  Ultimately if we are to see the kind of improvement that Bernanke and others feel is necessary for the economy to actually recover they are going to be required to give up on the myth of too big to fail and to embrace the possibilities of bringing 7,000 community banks and credit unions to the table where a handful of mega banks once reigned supreme.

Perhaps if they give fairness and equity a chance they will come to realize that getting the cooperation of banks to purchase US Treasury Debt does not have to be a deal with the devil.  Right now only a handful of banks are in on that deal where they borrow money at the Fed Window at an effective rate of zero and purchase US Treasury debt to keep the government running.  The spread between the overnight Fed Window rate and the rate paid by the US Treasury is a gift to the banks that caused us this misery.   If we are going to pursue that kind of policy to kick the can down the road is to give the gift to the innocent banks rather than to the merchants of doom. 

Bernanke says U.S. needs faster growth

By Pedro da Costa and Jason Lange

(Reuters) – The U.S. economy needs to grow more quickly to bring the unemployment rate down further, Federal Reserve Chairman Ben Bernanke said on Monday, defending the central bank’s policy of very low interest rates.

While he offered no indication the Fed is keen to embark on a third round of bond purchases, Bernanke also made clear the central bank is in no rush to reverse course after responding aggressively to a deep recession.

The jobless rate has dropped to 8.3 percent from 9.1 percent last summer, a move Bernanke said was “somewhat out of sync” with the rather modest pace of economic growth.

He said the decline could reflect an effort by businesses to recalibrate their payrolls after unusually heavy job cuts during the recession. If this is the case, he said, progress may stall.

“To the extent that this reversal has been complete, further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies,” Bernanke told the National Association for Business Economics.

U.S. stocks climbed on hopes that Bernanke’s speech could be a precursor to more Fed bond purchases, with each of the major indexes up at least 1 percent. The dollar fell against the euro, but prices for U.S. government debt also slipped as worries about Europe’s debt crisis eased, sapping a safe-haven bid.

The U.S. central bank lowered overnight interest rates to near zero in December 2008 and has bought $2.3 trillion in debt securities to drive other borrowing costs lower in an effort to spur faster growth and cut unemployment.

“Reading between the lines, it sounds like he’s pushing the ball forward toward having a discussion about doing more,” said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi, on the sidelines of the NABE conference.

After its last two meetings, the Fed said it would likely keep rates near zero at least through late 2014, but upbeat economic signs, including solid employment growth, have led investors to bet on a move as early as the middle of next year.

Bernanke’s speech appeared aimed at pushing back against those expectations.


U.S. gross domestic product grew 3 percent in the fourth quarter, but is expected to have slowed to just below 2 percent in the first three months of this year. For all of last year, it grew only 1.7 percent, which would normally be too slow to move the unemployment rate lower.

Sluggish economic demand has kept alive the potential for more Fed bond purchases, despite the signs of improvement in the labor market.

The policy does have detractors, including some inside the central bank. Philadelphia Federal Reserve Bank President Charles Plosser on Monday said central banks should not have unfettered ability to purchase assets because that violates the traditional separation of monetary and fiscal policymaking and can allow governments to inflate away debts.

“Granting vast amounts of discretion to our central banks in the expectation that they can cure our economic ills or substitute for our lack of fiscal discipline is a dangerous road to follow,” Plosser told a conference in Paris.

That discomfort and differences over the outlook for the economy have led to an unusually wide range of views among policymakers over the proper course.

While a few officials are pushing for a further easing of monetary policy and some think rates might not need to rise until 2016, a hawkish minority believe the Fed would do well to reverse course this year. Bernanke is likely in the middle, biding his time to determine whether more bond purchases are needed but resolute in his thinking that any rate hikes can wait until 2014, analysts say.

The Fed chief reiterated his concern about long-term unemployment, which he said could cause workers’ skills to atrophy, but he argued against the notion that much of the problem was due to shifts in the economy that had made workers’ skills obsolete. If that were the case, the Fed might need to tighten policy sooner rather than later.

“The continued weakness in aggregate demand is likely the predominant factor. Consequently, the Federal Reserve’s accommodative monetary policies, by providing support for demand and for the recovery, should help, over time, to reduce long-term unemployment as well,” he said.

Setting the Stage for the Next Great Depression


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Editor’s Comment: 

Special Note to Readers: Thank you for your good wishes on my speedy recovery. It helps a lot to know that the people whom I seek to serve feel the same way about me as I do about them.

Despite the huge loss taken by homeowners thus far ($13 trillion) and the even larger loss taken by the American taxpayers for fabricated bailouts of fake losses (around $25 trillion, thus far) the banks and their paid politicians are presenting us with the prospect of making the last 4 years only a dress rehearsal for the big one. 

By removing investor protections and by obscuring what little transparency we had left in terms of required disclosures, there is only one thing standing between us and complete oblivion: wishful thinking. With this “JOBS” bill, we add insult to injury to investors. And the reason is obvious as well — as long as the Banks have the power and control the narrative, they are going to use that power. As long as the Banks wield that kind of power, investment in anything American will be subject to caveat emptor — let the buyer beware.

The Banks and the administration seem to believe that they can literally bully investors into making investments in American assets — stocks, binds and real estate, in particular. This is a stupid assumption. Just because other governments and large investors have had to play along with the American fiscal and financial policies while they regain their balance, doesn’t mean that central bankers and prospective investors have forgotten that Wall Street essentially committed an act of financial terrorism on the scale of Ghengis Khan. Nor will they forget that the American regulators not only let it happen, they promoted the cover-up afterwards.

We don’t need to read tea leaves anymore. The bond market, never regulated properly is now the wildwest. Almost anywhere else seems more attractive than the U.S. because only the U.S. has broken its promise of protection and regulation of the banks. So we are now stuck in a holding position where auctions are failing or faked. The only major buyer of U. S. Treasuries are the big banks who are buying the bonds with our own money printed by the Federal Reserve. It’s a Ponzi scheme. People are simply biding their time waiting for a better reserve currency to emerge — which now only requires the issuer to enforce common sense rules. 

The housing Market is no mystery either. Each year we hear that this is the bottom of the Market. Each year the market drops a little more. The reason is simple: we have allowed the great masses of people to enter into loan deals that created an inventory of millions of homes — with millions more on the way — that nobody wants at any price. They’re bulldozing them now.  The argument is that investors will feel assured and confident once they know that the notes and mortgages will be enforced even if the loans were defective in every conceivable way. We don’t need conjecture here. Reality supplies us with a ready answer to that argument — investors are not buying it, the Market is frozen and cannot recover.

Contrary to the exotic theories of policy-makers driven by bank narratives, it is the Banks that are not trusted, not the borrowers. It is the regulators that are not trusted not homeowners. And yet we insist on loading the burden of this mess mostly on the back of homeowners and taxpayers who are buying “homes” without title, buying mortgage bonds that don’t exist and leaving foreign investors to buy homes for cash also without title and very possibly acquiring a liability that has never been disclosed.  If the banks had lost money like the rest of us then we could make the argument that they had simply screwed up.  But they didn’t.  They made money.

Confidence in American financial markets can only be restored if prospective investors, already burned recently by horribly disfigured bonds, perceive that it is truly safe to invest in American assets. That can’t happen unless disclosure is required and unless the message is sent loud and clear that the banks suffer the penalty for violations, management goes to jail for committing fraud, and property is returned to victims of the largest financial scam in human history — so far.

Last Ditch Attempt To Save A Little Bit Of Investor Protection In The United States

By Simon Johnson

As it currently stands, the “JOBS” bill now before the Senate would gut investor protection in the United States.  The title of the bill is a complete misnomer – anything that weakens investor protection makes it more risky to invest in companies and increases the cost of capital to honest entrepreneurs.  (For more background on the bill and links, see this piece.)

Much of the 1930s-era Securities legislation, which served us well for more than 70 years, is about to be repealed in a moment of bipartisan madness.

Almost all attempts to amend the House version of this legislation – and to make it more favorable to investors – have now failed in the Senate, and the “cloture motion” received more than 60 votes (so the bill cannot be filibustered).  But Senator Jack Reed (D., Rhode Island) is leading one last charge to make the Senate version more reasonable.

Here is the issue with H.R. 3606 (as the House version of the bill is known), from Senator Reed’s website:

“The SEC requires public companies to disclose meaningful financial information to the public. This provides a common pool of knowledge for all investors to judge for themselves whether to buy, sell, or hold a particular security. Only through the steady flow of timely, comprehensive, and accurate public information can people make sound investment decisions. The result of this information flow is a far more active, efficient, and transparent capital market that facilitates the capital formation so important to our nation’s economy. H.R. 3606 would roll back key investor protections, denying the public critical information that is essential to make sound judgments and would ultimately not lead to the proposed goal of the bill: providing for access to capital, particularly for small emerging companies.”

The “JOBS” bill would permit even very large companies to avoid all public disclosures.

Amazingly, it would also exempt these companies from having to comply with the federal regulation regarding mergers and acquisition.  Private equity firms would even be able to manipulate the market while making a tender offer for shares – the kind of behavior that has really been taboo (and illegal) since the 1930s.

Senator Reed has put forward an amendment, #1931, that will at least partially retain some of our existing investor protections and disclosure requirements.

Specifically, Senator Reed’s amendment would close or limit a major loophole that will allow large companies to avoid registering with the SEC (and therefore escape much regulation).  The Reed Amendment would clarify how to define “shareholders” for the purpose of determining if a business is so widely owned that it must register with the SEC.  Under the Amendment, the count should be based on beneficial owners of the shares, i.e., real people.  The goal is to prevent evasion of the SEC registration threshold through “nominal” owners holding the shares for large numbers of beneficial owners.

Big companies like H.R. 3606 – they will be regulated less and if the cost of capital rises for start-ups, that actually helps them.  The Chamber of Commerce, the American Bankers’ Association, and the Independent Community Bankers of America have all weighed in heavily against the Reed Amendment – the idea of escaping SEC scrutiny greatly appeals to them.

The Chamber of Commerce’s letter against the Amendment to Senators closes with this statement – or you might call it a threat (bold and underlining in the original):

“The Chamber strongly opposes this amendment and may consider including votes on, or in relation to, this amendment in our How They Voted scorecard.”

Under Senate rules, the Reed Amendment would need just 51 votes today in order to pass.  But against this kind of corporate firepower, does this entirely reasonable Amendment have any chance?



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March 21, 2012. Phoenix, Az. Neil F Garfield had emergency open heart surgery on Wednesday, March 7.  The surgery was successful and he has been discharged from the hospital.  He is now recovering at home.  Many thanks to our guest bloggers who filled in during the time that Neil was “under the weather”.  Neil has started writing again, and is hoping to return to his usual output soon.  Services have continued without interruption.  A former Wall Street insider and trial attorney, Neil Garfield has been the editor and author of the blog livinglies.wordpress.com for nearly 5 years and has served as expert witness across the country.

The Emperor’s New Clothes Revisited


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Editor’s Comment:

Back when I first started writing the blog I was looking for an easy parable that would simplify the exotic theft performed by Wall Street. It did not occur to me that I would need to write a second blog alerting the readers to government complicity in compounding both policy and fiscal errors committed by the Federal Government. In 2007 and 2008 the situation was dense and complex with varying layers of plausible deniability to cover up what turned out to be the largest economic crime in human history-a milepost that will standout even hundreds of years from now. Now the government is engaging in the same transactions lending an aura of legitimacy to transactions that were not only fraudulent but which also corrupted our property title system. The degree of corruption that has been revealed so far is barely the tip of a toxic iceberg. The premise here is simply that the investment banking entities sold worthless mortgage bonds to investors based on the promise that the bonds would have value because millions of mortgage loans were being assigned in exchange for the money held in REMIC pools as a result of the sale of the worthless mortgage bonds to investors.

It has never been true that the investment banking industry owned or undertook any risk associated with the underwriting of those mortgage loans. It has also never been true that the investment banking entities that sold the mortgage bonds to hapless pension funds and other institutional investors ever owned any of those mortgage bonds for their own account. Why would they? They knew very well that the loans and the pools had been created with poison pills to assure virtual destruction of the entire apparatus that was later described as securitized loan.

For reasons that are easily explained by reference to the political realm but which are completely unjustified by reference to any generally accepted principals of finance and accounting, the investment banks have falsely been allowed to claim the losses of their first victims-the pension funds and other investors who bought mortgage bonds. In so doing and without any questions the government set the stage for a bail out of the financial industry, the total size of which can be expressed in multiples of our Gross Domestic Product. As we have slowly and painfully learned government agencies and government sponsored entities were willing conspirators

So the first lie is that the banks never owned the loans, the second lie is that the banks never owned the mortgage bonds, and the third lie is that the government bought and sold the mortgage bonds from the investment bankers. With each announcement of the purchase or sale of mortgage bonds by the Federal Reserve or other U.S. agencies we slip a little deeper into the abyss from which we may never emerge. The transactions referred to in the article below are non-existent and consist of false declarations from both sides of the transaction-the government and the investment bankers. First the investment bankers pretended to sell mortgage bonds which they never owned to the government; and then the government pretended to sell the same mortgage bonds back to the investment bankers. Since neither one had an ownership interest in the mortgage bonds we are forced back to the parable of the Emperors New Clothes. We are to accept the information of this “transaction” as though it had any basis in reality or truth. In fact, it has none. And to add insult to injury, the mortgage bonds themselves are intended to “derive” their value (hence the word “derivative”) from underlying mortgage loans that were properly sold and underwritten by appropriate industry players. This is and remains a lie in that both the terms of the transactions with the homeowners and the documents containing declarations of fact relating to the transactions were patently false and fraudulent in that they were intended to deceive everyone outside of the financial services industry.

The government should have demanded its money back on the original sale by the investment banks. In that sale, the government acquired nothing. The return of the money to the government is being disguised as a sale, further corrupting title to both the mortgage bonds and the real property. If any actual sales had occurred, state and federal law would have required complete disclosure of those sales as a condition precedent to initiating or concluding any process in foreclosure. The current government policy of kicking the can down the road is at the expense of our prospects as a nation and at the expense of the citizens of the nation who subscribe to the belief that no person should be deprived of life, liberty or property without due process of law. Each of these foreclosures would fail if properly scrutinized. They would fail because the initial documentation was faked, and all documentation leading up to foreclosure compounded the fakery. Today we have our own government further compounding the fakery and lending credence to false transactions.

U.S. Completes Sale of Mortgage-BackedSecurities, Earning $25 Billion


WASHINGTON — The Treasury Department announced on Monday that it had finished selling the $225 billion in mortgage-backed securities it bought to help stabilize the markets during the worst of the financial crisis.

The government ended up making a $25 billion profit on the securities, which are guaranteed by Fannie Mae and Freddie Mac, the government-owned mortgage finance companies. The profit came from interest payments, principal and rising prices for the securities, the department said.

“The successful sale of these securities marks another important milestone in the wind-down of the government’s emergency financial crisis response efforts,” Mary Miller, assistant secretary for financial markets, said in a statement. “This program helped support the housing market during a critical moment for our nation’s economy and delivered a substantial profit for taxpayers.”

Treasury bought $225 billion in mortgage-backed securities in 2008 and 2009 as part of a wide-ranging effort to stabilize the housing and financial markets, an effort started by the Bush administration and continued and amplified under President Obama.

In March 2011, the Treasury Department announced that it would start to sell off what remained of its portfolio. To avoid disturbing the still-fragile housing finance market, it limited sales to $10 billion a month, and said it would discontinue the sell-off if any market disturbances occurred.

Thus far, Treasury’s sale of its mortgage-backed securities portfolio has provided a lucrative return to the taxpayer. But it is only one piece of a broad and expensive effort to prevent the collapse of the financial system and housing market.

The government also put Fannie Mae and Freddie Mac under federal conservatorship in 2008, and the taxpayer has spent about $150 billion bailing out the two government-sponsored enterprises.

Estimates vary, but the Federal Housing Finance Agency projects the ultimate cost to the taxpayer for Fannie Mae and Freddie Mac could be $121 billion to $193 billion, depending on the strength of the housing market and other variables.

Treasury also spent about $414 billion to buy bad assets and restore confidence in American financial institutions via the Troubled Asset Relief Program, also known as TARP. That program, though much hated by the public, has received significant revenue from its sale of stakes in participating institutions and from interest payments. The nonpartisan Congressional Budget Office expects it to ultimately cost taxpayers about $34 billion.

The Federal Reserve also initiated significant purchases to prop up the financial markets in the wake of the crisis. According to its most recent release, the Federal Reserve still has about $850 billion in mortgage debt on its books, along with about $1.7 trillion in Treasury debt. The Federal Reserve delivered $78.4 billion of earnings on its portfolio to the Treasury in 2010, and $76.9 billion in 2011.

In recent months, investors have tentatively returned to buying mortgage-backed debt. The housing market seems to be strengthening as well. In a monthly report released on Monday, Fannie Mae economists cited a stronger labor market and other improving indicators as hopeful signs that 2012 might be the start of a housing turnaround.

But, it noted, “while mortgage rates have hovered near their record lows, purchase mortgage applications have remained at depressed levels,” indicating that there remained significant weakness.

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