Will the Findings from the Brief “Foreclosure Review” Process Be Released?

“The truth is that they stopped the review process and “Settled” because the regulators were under a mandate to protect the banks. They were finding far too many wrongful and illegal foreclosures. The investigator testified that the small sampling they used was not random but rather designed to show how few foreclosures were illegal. But even that showed that at least 6500 homeowners had been illegally foreclosed and evicted. The banks and regulators were sitting on a time bomb so they swept it under the rug with “settlements” to cover up the widespread pandemic rush to illegal, wrongful foreclosures where strangers to the transaction took title to property at a foreclosure sale by submitting a “Credit bid” in which they had absolutely no interest or authority.”  —- Neil F Garfield Livinglies.me

Not long ago, if someone told you that the government would review the foreclosure process, find that many people were foreclosed illegally and wrongfully — perhaps up to 90% — and then step in to protect the banks with a pennies on the dollar settlement WITHOUT TELLING THE FAMILIES THAT WERE WRONGFULLY FORECLOSED THAT IT HAD BEEN DETERMINED THAT THEY WERE ILLEGALLY AND WRONGFULLY FORECLOSED — you might have said, it can’t be true — things are not that bad.

Besides, you might say, how could the foreclosures have been illegal and wrongful to the point that the banks would agree to pay any settlement, even if it was pennies on the dollar. After all, as Judges are want to say “You took the loan, you didn’t pay, you lose your house.”

But in open session sworn testimony before the Senate Committee on banking and finance, under questioning from Senator Warren (see recent post for the video) that is exactly what the investigator admitted. In fact, it gets worse — they entered into the settlement to get this out of the way fast and sweep it under the rug.  And, the investigator admitted that they had not yet notified those whom the agency had already found had definitely been illegally and wrongfully foreclosed and evicted from their homes. Worse, the investigator admitted that no decision had been made when or if those families would be notified.

So here we have the government withholding information of civil and perhaps criminal wrongdoing, not informing the victims that they not only have a cause of action for damages, but that the proof is already in the hands of the regulatory agencies. And perhaps worse, this admission comes AFTER Bernanke assured Senator Warren that the victims would be notified.

So Judges, lawyers, borrowers and investors across the land and indeed across the world are still laboring under the misapprehension that when the dust settles the home will still be foreclosed. Not so.

If the real creditor has not stepped up to enforce the debt there can only be one reason — they have already been paid. And if they have already been paid, then the balance due from the borrower to that creditor is zero. And if someone else paid it, the most they COULD have is an action in contribution or unjust enrichment against the borrower; but they don’t have that right because they expressly waived it. Nonetheless, the Federal reserve is “buying” these mortgage bonds, supposedly backed by mortgage loans that we have now seen were paid or unenforceable at the rate of $85 Billion per month.

The presumption ought to be, based upon the filings of the regulatory agencies, the settlements and the sworn testimony before Congress, that the foreclosure is suspect and Judges should stop ramming these wrongful foreclosures down the throat of lawyers whose objections and arguments are dismissed without a thought. We don’t have to wait for the evidence before we decide. The time to decide is now because the evidence IS in.

And even if you can’t get the information from the regulatory agencies who claim the results to be confidential even though they admit what is in them, aggressive lawsuits against the pretender lenders should lead to huge awards to borrowers and their attorneys. What are you waiting for? Stop wasting time by delaying the cases so that the client gets another month of free rent and start being the aggressor in discovery, pleading and litigating.

Watch Elizabeth Warren Grill Regulators Over Illegal Foreclosures

A Brief Refresher on Glass Stegal From Barry Ritholtz

http://www.housingwire.com/fastnews/2013/07/18/bernanke-regulators-will-release-some-details-foreclosure-reviews

It’s Not Even a Bubble: Foreclosures on the Rise

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Editor’s Comment: Realtors and Banks want you to think that you need to buy now before the  market takes off and prices spiral upward. I say don’t believe a word of it.

If you are buying to live in a house, you should know that the actual and shadow inventory of foreclosures will keep intense downward pressure on housing prices for many years to come. Some estimates, including mine, are that the housing market might take more than 10 years to recover and that it could be as much as 20 years. This is why so many people are renting rather than buying. Rental values are going up because there is actual demand for renting.

If you are buying for investment, see the above paragraph. You might have a viable investment if you are willing to stay in for the long pull and you are willing to take on the duties and obligations of a landlord.

If you are selling and you are waiting for the market to bottom out, or maybe you see a spike and you think you’ll wait just a little bit longer to get a higher price, forget it. Sellers, as realtors will even tell you, are mostly unrealistic about the sales price of their property. This is because they bought or once saw the price of their property at twice the price as the offers now. The reason is simple — prices went up but values stayed the same or even declined. The difference between prices and values has never been as big a deal as it is now.

Prices can be forced up by actual demand but never as much as we saw from the late 90’s to the peak at 2006. The prices went up because the payments went down or appeared to go down.

Free money was everywhere and nobody was reading the fine print or even questioning why Banks would offer such deals as teaser rates and other nonsensical things to entice people into signing up for mortgages, whose payment would eventually rise above their household income or where the payment was the equivalent of doubling the interest rate because they were going to be sitting with a home that declined to its real value.

The truth is that even if a recovery eventually occurs, it will be 20+ years before we see those prices again. And that will only result from inflation which eventually will pick up steam.

And by all means remember what I have been writing about these last few weeks. The title they are offering you, with a deed signed by a bank, or even a satisfaction of mortgage signed by a bank may not be worth the paper it is written on and the title policy normally excludes that sort of risk from what they  are covering in title insurance. So if you don’t pose the hard questions and negotiate a real title policy that covers all the known risks, you could be the angry owner of a white elephant that cannot be sold later nor refinanced.

From CNBC:

Home prices rose, just barely, in the second quarter of this year annually for the first time since 2007, according to online real estate firm Zillow. That prompted the popular site to call a “bottom” to home prices nationally. The increase was a mere 0.2 percent, but in today’s touch and go housing recovery, that was enough.

Nearly one third of the 167 markets Zillow tracks in this survey saw annual price gains from a year ago.

“After four months with rising home values and increasingly positive forecast data, it seems clear that the country has hit a bottom in home values,” said Zillow Chief Economist Dr. Stan Humphries. “The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own.”

Zillow’s report, which compares prices of homes sold in the same neighborhood, also showed a stronger 2.1 percent gain quarter to quarter, which is the biggest uptick since 2005. The biggest price gains, however, are in the markets that saw the biggest price drops during the latest housing crash. Phoenix, for example, saw a 12 percent annual price gain on the Zillow index.

That has other analysts claiming that the overall surge in national prices is due to price bubbles in certain markets.

“Strong demand, particularly in areas of California, Arizona and Nevada, are pushing up home prices very quickly in the short-term. And because many of the home purchases in these areas are cash transactions, there appears to be less braking of prices by our current appraisal system than seen in other parts of the country,” noted Thomas Popik, research director for Campbell Surveys and chief analyst for HousingPulse. “The trend raises the distinct possibility of housing price bubbles emerging in some of these hot housing markets.”

The supply of foreclosed properties for sale has been dropping steadily, as lenders try to modify more loans or actively pursue foreclosure alternatives, like short sales (where the home is sold for less than the value of the mortgage). Investors, eager to take advantage of the hot rental market, are having to spread out to more markets in order to find the best deals.

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“We were heavily into Phoenix early in the cycle. Those markets are heating up,” said James Breitenstein, CEO of investment firm Landsmith in an interview on CNBC Monday. “We see a shift more to the east, states like North Carolina, Michigan, Florida.”

While home prices on the Zillow index are improving most in formerly distressed markets, like Miami, Orlando and much of California, they are still dropping in other non-distressed markets, like St. Louis (down 4 percent annually) Chicago (down 5.8 percent annually) and Philadelphia (down 3.5 percent annually).

“Those people looking at current results and calling a bottom are being dangerously short-sighted,” said Michael Feder, CEO of Radar Logic, a real estate data and analytics company. “Not only are the immediate signs inconclusive, but the broad dynamics are still quite scary. We think housing is still a short.”

Radar Logic sees price increases as well, but blames that on mild winter weather that temporarily boosted demand. This means there will be payback, or weakness in prices during the latter half of this year. And even without the weather hypothesis, they see further trouble ahead:

“On the supply side, higher prices will entice financial institutions to sell more of their inventories of foreclosed homes and allow households that were previously unable to sell due to negative equity to put their homes on the market. As a result, the supply of homes for sale will increase, placing downward pressure on prices. On the demand side, rising prices could reduce investment buying,” according to the Radar Logic report.

Investors are driving much of the housing market today, anywhere from one third to one quarter of home sales. That makes these supposedly national price gains more precarious than ever, because they are based on a finite supply of distressed homes and that supply is dependent on the nation’s big banks. First time home buyers, who should be 40 percent of the market, are barely making up one third, and millions of potential move-up buyers are trapped in their homes due to negative and near negative equity.

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Homeowner Associations On the Attack, As Predicted Here

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Editor’s Comment:  Thousands of homeowner associations are filing foreclosure actions on banks owning property that are not paying the monthly assessments or special assessments. We’ve written about this before and encouraged the associations to do so.

The irony is very interesting here. The Banks, having never funded a loan and never purchased a loan, managed to foreclose a loan they never had and get title, possession and even eviction if the rightful homeowner failed to leave as ordered by the bogus pretender lender. Now they must pay the taxes, insurance, and maintain the place as it is written in the Declaration of Condominium, or Community restrictions. AND they must pay monthly “Dues” or assessments as well as special assessments.

So that free house the bank got by submitting a credit bid even though they were never the creditor and never had the right to call themselves a creditor, and even though the debt was either unsecured or paid off, now they re suddenly required to pay the piper.

After all, they say they are the homeowner now. So the banks, knowing this would happen have transferred title into “bankruptcy remote vehicles” which are in fact vehicles for avoiding creditors. A transfer in fraud of creditors is intended to be prosecuted by the Association or any other person effected and the association this time is neither intimidated nor unwilling to press their claim. These are the same banks that decimated their neighborhood. The battle is on.

I wonder how this disclosed to Canadian and other investors who think they are getting clear title? This is only one of several reasons why they are getting clouded title — the pendency of assessments.

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Pensions to Be Slashed By Fake Losses on Mortgage Bonds

 

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Editor’s Comment:  

Many of the most conservative, pro-business people who think they escaped the travesty of the mortgage scam and meltdown are in for a big surprise starting this year. Pension funds were the investors. And they lost big. In some cases the fund managers were in bed with the investment bankers who were peddling this crap.

If you read the Wall Street Journal they explain how the already underfunded pension funds (due to accounting tricks that were illegal and then made legal) are now unable to escape the reality admitting the losses being pitched over the fence at them by investment bankers who are rolling in money from bailouts, insurance (that should have paid the pension fund), credit default swaps (that should have paid the pension fund).

Deep in the articles is a description of exactly what is happening in simple math terms. That description applies equally to the intentionally manipulated underwriting standards to assure the loans would fail. If you or I did this, we would be in jail. Instead Jamie Dimon sits on the Board of the New York Fed. what a country. Millions of people are thrown out of their homes, cities and counties go bankrupt, most from mythical losses they don’t understand.

It all comes from what are called yield spreads, premiums and losses from changes in yield. Under normal protocol investors protect themselves by using various hedge products.

But the investment bankers didn’t make the investors the beneficiary of those hedges, they made themselves the beneficiaries instead. Since they were the agents of the investors they should and still can be forced to apply those proceeds, and pay them to the pension funds, which in turn will reduce the amount due under each loan that was funded.

Sources tell me that not only are the pension funds being forced to accept losses on loans they never owned until it was time to foreclose, but that some of the “bets” that went bad are being tacked on as additional fees or losses.

The pension funds are therefore suffering from two huge write-downs — one from the change in accounting rules that allowed them to kick the can down the road (passed 30+ Years ago), and the other from losses that don’t actually exist but were convenient for the banks to assert when they asked for bailouts.

Pension funds become underfunded automatically when the interest and dividends they get paid shrink. In order to bring up income they need to invest more. Neither the companies nor the pensioners are doing that so there is a shortfall. So when interest rates go down, someone must invest more money to earn the interest required to pay to the pensioners. Nobody is making that investment.

Example: If interest rates were 6% when the pension funds made commitments to retiring employees and the amount of money promised those retiring employees just happened to be $60,000, the pension fund would need $1 million invested (over simplifying by taking out amortization of principal). If interest rates fall to 3%, then the $1 million fund is only getting $30,000 per year. In order to raise it back up to $60,000 per year, the fund needs $2 million invested at 3% to stay fully funded. Without additional contribution, there is a $1 million shortfall.

Right now interest rates, manipulated as they are have never been lower which means that pension funds are getting less income than they were getting before, and since nobody is putting in more money to cover the difference the pension fund is underfunded.

When pension funds must declare the losses on mortgage bonds they will be far more underfunded than currently appears and the amount received by each pensioner will be slashed. Say thank you to Wall Street for that.

Curious coincidence: This same analysis applies to the tier 2 yield spread premium grabbed by the investment bank under false pretenses from investors. For purposes of this article you can spell investor as “Pension Fund.”

When the fund manager for the pension fund gave the investment banker $1 million in our example above, he was expecting a 6% return on investment.

But in the most unbridled breach of trust ever recorded in Wall Street history, the investment banker instead invested half the money at twice the rate.

So they only funded $500,000 in “mortgage” loans carrying a nominal interest rate of 12%, even though they had received $1 million and they pocketed the other $500,000 as “trading profits.”Anyone with any investment knowledge understands that this was (1) an immediate loss of $500,000 to the investor (Pension Fund) and (2) a probable loss of the other $500,000 or most of it after the obvious market crash this would cause.

Of course the people accepting those 12% loans were extremely poor credit risks and were literally guaranteed to default.

So Wall Street took the other half of the money they stole from the pension fund, unknown to the pension fund manager, and bet against the mortgages that were underwritten.

Instead of making the pension fund the beneficiary of that protection the investment banker made himself the beneficiary of the insurance, hedge or credit default swap.

And instead of informing the pension fund manager of the loss in a report in which the fund manager could detect what was really happening, the banks announced that the BANKS had suffered trillions of dollars in losses that never happened except in the mythical world of “cash equivalent” derivatives.

So if you are looking for the rest of your pension income you were promised, you can find it on Wall Street.

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Public outrage turns spotlight on bank regulators

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Editor’s Comment:  

It has taken six years for the public to absorb the enormity of the bank scandal, the lying, cheating and stealing. Now the spotlight is finally turned on the regulatory agencies whose employees shuttle back and forth between the agencies and the banks. They work for the banks, then they work for the agency that is supposedly regulating the bank. They work for the agency, then they work for one of the banks or bank associations regulated by that agency.

It isn’t the fault of the public, and it is only partly right to blame the press. The enormity was made possible by making the crimes so complex and hidden in the shadow banking system that the information and explanation took six years to come out. If the regulators were truly regulating instead of setting up their next job, the shadow banking system would not exist and there would be nonsuch thing as an off-balance sheet transaction.

If regulators were doing their job the shadow banking system could never have grown to ten times the real money banking system which is now scaring the crap out of everyone. The transparency required by existing law would have been enforced, which would have made it impossible to take the money of investors (depositors) and apply it on the Bank’s whim for the benefit of the bank instead of for the benefit of the investors. They couldn’t have sold the loan products multiple times without everyone knowing about it. They couldn’t have claimed the losses of the investors as their own for insurance bailouts, and then make the investor absorb the losses created by an intentionally corrupt system of loan underwriting.

Using industry standards as they existed for centuries, we would not be staring down the barrels of a shotgun, with one barrel containing the documentation of a transactions that never occurred and the other barrel carrying financial transactions that did occur but were never documented. The gap was a playground for bank criminals, as we are now seeing with increased clarity each week.

So who is to blame? There is plenty to go around. But those who make laws could fix the problem in a moment by prohibiting employment shuttling, in addition to the standard payoff or bribe. The promise of employment is a bribe. And that is why under current laws the banks and the individuals employed by the regulatory agencies who conspired with them can be sanctioned, indicted, tried, convicted and sentenced torsion and required to disgorge I’ll-gotten gains. This would release more than enough money to reduce all household debt including mortgages at the expense of the culprits who fixed the appraisal prices and suckered innocent people into really bad deals.

And just like Iceland, we could be enjoying renewed Economic growth, increased spending, decreased unemployment and restoration of a market that is free and fair. If you take the referees off the playing field and leave it to each player to make and change the rules as they go along, you can ALWAYS expect chaos and criminal conduct. The cry for less government interference or less government regulation can fairly be translated as PLEASE KEEP US OUT OF JAIL.

Bank Scandal Turns Spotlight to Regulators As big banks face the fallout from a global investigation into interest rate manipulation, American and British lawmakers are scrutinizing regulators who failed to take action that might have prevented years of illegal activity. 

Politicians in both London and Washington are questioning whether regulators allowed banks to report false rates in the run-up to the 2008 financial crisis and afterward. On Monday, Congress stepped into the fray, requesting information about the role of the Federal Reserve Bank of New York, according to people close to the matter. 

The focus on regulators and other financial institutions has intensified in the last two weeks after the British bank Barclays agreed to pay $450 million to resolve its case. British and American authorities accused the bank of improperly influencing key interest rates to deflect concerns about its health and bolster profits. 

The Barclays settlement is the first action stemming from a broad investigation into how banks set key benchmarks, including the London interbank offered rate, or Libor. The pricing of $350 trillion of financial products, including credit cards, mortgages and student loans, is pegged to Libor and other such rates.

Barclays Chairman Criticized in Parliament Over Rate Scandal During tense parliamentary testimony, Marcus Agius, Barclays’ chairman, was repeatedly questioned about the leadership and culture at the bank in the wake of the Libor scandal.

Diamond to Forgo Up to $31 Million in Bonuses From Barclays Robert E. Diamond Jr., the former chief executive of Barclays, will forgo deferred bonuses of up to $31 million, as the British lender looks to quell public anger over an interest rate-rigging scandal.


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