Where is all that money the banks took? Hiding in Plain Sight

You’ll probably never get to this point in litigation but if you do, you’ll be glad you read this. Obviously there is a lot of talk about where all the money went. Right off the top the banks took some 20%+ off of the money that investors gave them to invest in mortgages. That is $2.6 trillion alone off of the $13 trillion in “mortgages” that were mostly defective or fabricated. Then add their profit from insurance and credit default swaps which might amount to on a nominal basis several times the original $13 trillion invested and we get an idea of how much money is being withheld from world economies including the United States.

The answer is that they are hiding it in plain sight and in conjunction with legitimate investments from many other investors and entities. They are putting it in the stock market, mostly, causing it to rise without reason, and to a lesser extent they are putting it into bonds. If someday someone traces the first dollar in from investors all the way through the convoluted fabricated system of what the banks called securitization and the rest of us know was a PONZI scheme, you’ll find it right in front of you listed in the Wall Street Journal.

And if you Google it, you’ll see that BofA’s security analysts agree that the Dow Jones Average and other equity indexes are not reflecting true economic activity. They didn’t get the memo to shut up and sit down. That is what happens when you are too big to fail — you are also too big to manage, too big to jail and too big to regulate. The complicity of regulators, auditing firms and others in this mess has yet to be determined but it seems likely that there will be suits and prosecutions against the auditing firms for taking management’s word for the data rather than testing it the way any first course in auditing 101 would teach future CPA’s. I do know, because I taught auditing classes when I was getting my MBA.

Where is the money that the bankers siphoned out of our economy? Hiding in plain sight in the equity markets. With societies in chaos and economies in tailspins around the world, somehow the equity indexes are reaching record highs and profits are being recorded that are clearly not conforming to economic activity that in some countries is at a virtual standstill or even declining.

Yet the equity markets supposedly are a measure of future earnings which magically appear, justifying the increase in stock prices. If I stole a few trillion dollars and I needed a place to hide it, I would invest it relentlessly in the equity markets and to a lesser degree into debt instruments.

The increase in the DJIA represents trillions in wealth increase — or it represents a deposit of ill-gotten wealth generated by the Wall Street banks and their co-venturers. With GDP so fragile around the world my conclusion is that economic activity around the world is not reflecting any support for the increase in expectations and increase in stock prices.

The banks cornered the market on money and had to decide where they were going to hide ill-gotten profits that most people don’t understand, know about or care about. The obvious answer was, when they were holding trillions of dollars, where the dollar was in possible jeopardy, was to put the money in equities on a slowly increasing relentless purchase of stocks and bonds.

Stocks are measured in numbers of shares rather than strictly dollar denominated accounts. This allows the holders of equities to sell in any marketplace converting the investment into any currency of their choice, potentially avoiding the negative impact of a sudden devaluation of the type that made George Soros so rich.

Undoubtedly this logic has not escaped other legitimate investors and investment managers. Thus the bull market effects produced by the underlying floor of bankers’ purchases of equities is hidden under an increase in legitimate buying. It is a perfect plan as long as receivers are not appointed over the mega banks and dollars are traced to their origin and destination.

If things seem upside down when you turn on the news, now you know why. It is still hard for people to wrap their head around this proposition. All anecdotal evidence which is now so extensive that it almost qualifies as a scientific survey, points to at least 2/3 of all mortgages being fatally defective as perfected liens, unreported compensation on loans (that the banks say were charged against investors) is present in nearly all loans of every kind where a claim of securitization is present, and bank profits and capital have continued to rise even though as intermediaries, they should be making less money because there is less economic activity in a recession or stagnant economy.

That money in the mega banks is our money — taxpayers, shareholders of insurance companies, shareholders of guarantors and co-obligors, investors who advanced the money the homeowners who put up their homes as collateral on non-existent or defective transactions in which the loan and property were intentionally inflated in value. The extra money in those deals were funneled into off shore accounts and transactions that were never taxed by agreement with the jurisdiction in which the the transactions were cited as taking place even though it all happened in the good old USA. I have seen the document where Bermuda accepted the jurisdiction over the transaction and agreed not to tax it.

Although this is my opinion for general information purposes, I feel comfortable sharing it with the public  because I have enough facts from current events and enough experience from my own past experience on Wall Street to be confident that the above rendition is true. Once again I remind readers that the legal consequence of these practices might vary from state to state and even between judges in the same district. Federal and State courts are likely to treat these presentations differently as well.

And just because you are right, doesn’t mean you can prove it or win. So it is imperative that you consult with an attorney who knows all the facts of your case, is familiar with securitization and is licensed in the jurisdiction in which your property or domicile is located.

Premarkets: Dow defies gravity, S&P nears record
http://money.cnn.com/2013/03/15/investing/premarkets/

Senate “Whale” Report Reveals JP Morgan as a Lying, Scheming Rogue Trader (Quelle Surprise!)
http://www.nakedcapitalism.com/2013/03/senate-whale-report-reveals-jp-morgan-as-a-lying-scheming-rogue-trader-quelle-surprise.html

Goldman partner Barg moves to New York from Asia in new role
http://www.reuters.com/article/2013/03/15/us-goldman-barg-idUSBRE92E0CS20130315

Cities, Counties Realize They Have Common Interests With Homeowners

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One More Windfall for the Banks

Editor’s Comment:  

If it is any comfort, the chief financial officers and treasury management officers of cities and counties are starting to realize that they are victims of the banks and that most of these bankruptcies (Stockton CA for example) or near bankruptcy were completely avoidable. Their complaints are sounding more and more like the complaints of homeowners. And they are both right. Those debts should not be paid at all until the amount of the debt can be ascertained in real dollars and the identity of the actual losing party — whether they are defined as creditor or not —- can be ascertained. I don’t think any of the cities, counties or the homeowners and businesses whose debts were subject to false claims of securitization should pay anything to anyone until the governments and law enforcement figures it out. 

The federal government is the only one with the resources to go through all the data  and come up with at least an approximation of the truth of the path of the money. The Courts, Judges and Lawyers are woefully under-resourced to take this mess apart. The only reason that Too Big to Fail is believed by anyone is that nobody fully understands the consequences and actual money impact of the false cloud of derivatives created by the banks exceeding all the money in the word by a wide margin. We have let the Banks minimize the actual currency in favor of looking at a cloud of illusions created by the banks which they and only they want treated as real. We will find the same things operating on student loans where the intermediated banks actually never funded the loans but claim a guarantee from the Federal government. 

These debts should fall squarely on the banks, whether they fail or not, until we get a real accounting of the real transactions in which real money exchanged hands. And that is the mantra of my seminars for lawyers, paralegals, homeowners, city and county officials coming up at the end of this month as I travel through Phoenix, Stockton,  Anaheim etc. 

There is no possibility that  actual debt is $800 Trillion because all the money we have in the world amounts to only $70 trillion. So the loans were part of a chaotic, complex series of dots on a scatter diagram wherein all the data was an illusion except perhaps one of the hundreds of dots on each loan, bond or mortgage. And they certainly were not secured because the terms of repayment and the amount of the loan were off from the beginning as was the index from which they took data to change the so-called payments dude on loans that perhaps never existed but certainly do not exist now. 

The door that opened just a crack has been the Libor rate scandal in which the banks, led by Barclay’s, set interest rates based upon actual and perceived movement of interest rates in the markets. As in other things, these rates were as bogus, since 2008 as the Triple AAA ratings offered to investors in Mortgage-Backed Bonds and the appraisals offered to homeowners. 

City and County officials, once completely blind to the realities of the situation and skeptical of homeowner claims that the mortgages, foreclosures and auctions were rigged, are now realizing that their loans, interest rates, and terms were rigged just like homeowners’ were and that the trap they supposedly are in is an illusion just like the premises upon which Wall Street convinced them (city and County officials) that these loan products were viable and correct implementation of sound fiscal policy.

It wasn’t sound fiscal policy, they weren’t good loans and had the officials actually understood what Wall Street was doing —- creating false demands for services and infrastructure as well as complex financial products that were doomed from the start, they would never have gone ahead with these bonds or loans. Now the whole municipal market is as screwed up as the mortgage and housing markets and we know the banks are to blame because they have already admitted everything necessary to blame them. 

Besides prosecuting claims against the banks for civil and criminal penalties, everyone needs to contemplate the consequences of the status quo and whether they want to change it. One such game changer is eminent domain takeovers of  those toxic mortgages that “seemed right at the time.” But more than that, the cities and counties must look to experts who understand the derivative market (as well as anyone can) and realize that their debt, like everyone else’s debt is an illusion created in the cloud of credit derivatives now estimated at $800 trillion while the total amount of real credit and currency is only $70 trillion. 

Like Homeowners, they must realize that while they borrowed the money, the loan or liability created by the loan or bond was an illusion already paid in full at the time they incurred the obligation. That seems impossible but so does the news on these subjects as one digs deeper and deeper. The banks collected up all the money made under these circumstances and gave their people bonuses amounting to 50% of the profit of each financial institution. Inside that “profit”were trading profits claims by trading fake paper claimed to be owned by the banks while the paper was in the cloud of derivatives that is 10-12 times all the money in the world. 

That debt has long since been paid in full. The only question remaining is whether we can identify the actual people who have lost actual money and what we are going to do for them. But paying the banks on the loan or bonds is certainly not one of the alternatives that should be considered because, like the bailout, it just gives them one more windfall.

Rate Scandal Stirs Scramble for Damages

As unemployment climbed and tax revenue fell, the city of Baltimore laid off employees and cut services in the midst of the financial crisis. Its leaders now say the city’s troubles were aggravated by bankers’ manipulation of a key interest rate linked to hundreds of millions of dollars the city had borrowed.

Baltimore has been leading a battle in Manhattan federal court against the banks that determine the interest rate, the London interbank offered rate, or Libor, which serves as a benchmark for global borrowing and stands at the center of the latest banking scandal. Now cities, states and municipal agencies nationwide, including Massachusetts, Nassau County on Long Island, and California’s public pension system, are looking at whether they suffered similar losses and are weighing legal action.

Dozens of lawsuits filed by municipalities, pension funds and hedge funds have been consolidated into a few related cases against more than a dozen banks that are involved in setting Libor each day, including Bank of America, JPMorgan Chase, Deutsche Bank and Barclays. Last month, Barclays admitted to regulators that it tried to manipulate Libor before and during the financial crisis in 2008, and paid $450 million to settle the charges. It said other banks were doing the same, but none of them have been accused of wrongdoing.

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Editor’s Comment:

Now that securities analysts are looking at investments the way I was trained to see them, it is now possible to see the way the mortgage bond market should have operated, why it didn’t operate according to industry standards and why it is continuing to drain the economies of the U.S. Economy and the economies and societies of the western world.

There are two general types of risk in any investment. The first type is return of principal and the second type is the rate of return. The rate of return is the amount of money paid to the investor in addition to the principal. In today’s markets the two main contenders for investment money are equities (stocks) and liabilities (bonds). The price of an investment depends upon risk more than anything else: “is this price worth the risk that I will get my money back along with the targeted rate of return (interest in the case of bonds).

The inescapable rule has always been and always will be that if an issuer is seeking investment capital they must pay higher and higher interest rates for every degree of increased risk. If the risk is return of capital they are junk bonds. If the risk is that the rate of return (interest) on bonds may vary from the stated or targeted return, that too will increase the cost of capital to those issuers seeking investment capital.

My conclusion is that mortgage bonds have so destabilised the markets and confidence in the bond markets, that they are difficult to evaluate using common sense industry standards. Sure enough we see here that the slightest move away from the bonds with the absolute lowest risk of return of principal results in huge jumps in the cost of capital. And if the issuer of that bond is downgraded to a higher risk, their bonds will take a beating. Each beating amounts to a reduction in the open Market price paid for the bond — which means that the investor who bought at or near par value is now considered likely to receive less of his principal back and most probably will take a “haircut” on both principal and interest.

The obvious solution is to remove mortgage bonds from the bond Market through whatever means are necessary and to show the world that such bogus bonds will not be tolerated in the U.S. Or anywhere else. Yet we continue to kick the can down the road. Not only have we failed to give recognition to what world bankers have understood for four years — that mortgage bonds are worthless — we compound the problem by having government entities sell these “securities” under circumstances that ought to land any issuer or broker in jail.

The U.S. Government and the U.S. treasury have become co-conspirators in the largest economic crime in human history and to add insult to injury they think we are all too stupid to see it. Francois Hollander as the new president of France stands as living testimony that the people will neither be apathetic nor stupid on the issue of the Banks and finance. As leader of the socialist party, the election if this marginalised candidate sent Sarkozy packing for Hollande’s arrival on May 16, 2012, which is less time than the ordinary eviction takes in the United States.

Pretending the mortgage bonds have value is hurting us. Failing to get restitution to the victims of this fraud is hurting us even worse because it is retarding our efforts at economic recovery. And the failure of all three branches of government to assure that this fraud will end, that stolen property and money will be returned, and that criminal perpetrators will go to jail is perpetuating a widening income inequality that often presages social upheaval. If we keep going like this, the United States of America might become a confederation of regions. China will become the next bully on the block and we will all be learning mandarin whether we want to or not.

How to Play the Bond Market Now

Many pros are bracing for higher interest rates but are willing to shoulder some risk of defaults

By MICHAEL A. POLLOCK

Bond investors, pick your poison.

Interest rates are pitifully low for old standbys like Treasurys and highly rated corporate bonds. But the risk factor increases so rapidly the more one tries to reach for higher returns that it is hard these days to know how to allocate fixed-income dollars. Before investing, one has to carefully weigh and compare risks including rising rates, possible defaults, currency swings and liquidity.

To get the best balance of risk and return, the answer may be mixing various types of taxable and municipal bonds for maximum diversification.

In the current climate, many pros also suggest that investors say yes to moderate credit risk but limit their exposure to an eventual rise in rates.

Here’s how to strike a good balance between risk and reward in today’s bond market:

Know the two basic types of bond risk and how those risks compare

Many people mistakenly believe bonds are entirely safe. Actually, bondholders continually face two major threats to the value of their investments: interest-rate risk and credit risk.

The first stems from expectations that stronger economic activity will fan inflation, eroding returns on securities that pay fixed rates of interest—as most bonds do. Such worries can spark selling. And as prices fall, that pushes up yields, which move the opposite way. You might not be affected if you hold individual bonds and don’t sell before maturity, although rising yields do entail an opportunity cost: You’re stuck with low rates while newer securities would offer better returns. But if you own a bond fund, the risk is greater: Funds don’t have a final maturity and lose value as long as rates are rising.

The other key concern, credit risk, results from fears that a bond issuer can’t make interest payments or repay principal at maturity. The trade-off is higher-risk issuers have to pay higher interest to lure bond buyers, boosting investors’ income if the bond doesn’t go bad.

Robert Hall, a fixed-income fund manager at Boston-based MFS Investment Management, is among those who say it makes sense now to base bond-investment decisions more on credit risk than on rate risk.

Most bond professionals believe rates are going to climb eventually. But “trying to anticipate rates has been a losing game,” says Mr. Hall. During the economic recovery so far, U.S. rates have remained near historic lows because of strong global demand for lower-risk investments and central-bank actions to keep rates low in order to spark growth.

Assessing an issuer’s credit risk is an easier exercise, by comparison. “You can get your hands around credit risk” by scrutinizing an issuer’s financial reports, Mr. Hall says.

Some investors have been taking more credit risk this year. According to fund tracker Morningstar Inc., MORN -0.66% high-yield funds—which hold below-investment-grade, or “junk,” bonds—attracted nearly $15 billion through March. Tax-exempt and emerging-markets funds, where credit risk also plays a big role, saw good inflows, too.

To temper rate risk, climb lower on the corporate credit ladder.

Corporate bonds are rated according to perceived default risk. And the more default risk a bond carries, the less it tends to trade in sync with U.S. Treasurys. That means a portfolio of lower-rated bonds isn’t as vulnerable to any broad rise in rates.

Currently, 10-year investment-grade corporate bonds yield around 3%, or about one percentage point over 10-year Treasurys. That yield premium doesn’t adequately compensate for the principal loss they could suffer if rates were to spike, says Mr. Hall of MFS.

He arrives at this conclusion by doing some basic bond math. This involves computing a bond’s so-called duration, or interest-rate sensitivity, which is determined by its yield and time left until maturation. For a highly rated 10-year corporate bond, the sensitivity measure is about 7. If you multiply 7 by a hypothetical percentage-point increase in yields, you get the amount by which the bond’s price is likely to fall in response.

So, for the 10-year corporate in question, if rates rose by one percentage point, the impact would be a 7% decline in the value of your investment before any interest is paid.

But if you move lower on the ratings ladder to double B, the top tier for high-yield, below-investment-grade bonds, you’ll get around 6% to 7% in yield and a rate sensitivity around 4. If yields rose one percentage point, such bonds might still have a positive return after interest.

Another reason to own lower-rated corporate issues is that default risk has been falling, says Sabur Moini, a high-yield bond manager at Payden & Rygel, Los Angeles. As more investors have warmed to lower-rated bonds, their issuers “have done a very good job at reducing debt, keeping costs low and building up cash balances,” he says.

Mix in some municipals for possible tax savings.

Last year, muni prices plummeted as investors fled the sector amid fears of surging defaults by financially strapped local governments. Now, although prices have recovered somewhat, munis still offer very good value, says Dan Genter, who heads RNC Genter Capital Management in Los Angeles.

The interest that munis pay is exempt from federal income tax, and generally also from state tax in the state of issuance, so munis historically have yielded only about three-fourths as much as taxable Treasurys. But in an unusual situation, munis now yield about the same as Treasurys. That makes them cheap—not only to people in the top tax bracket, but to everyone, says Mr. Genter.

At around 2.5%, the current yield of top-quality, intermediate-maturity munis is the after-tax equivalent of nearly 4% on a taxable bond for an investor with a 33% marginal federal tax rate. The after-tax equivalent could be higher if federal tax rates increase next year, as scheduled under current law.

As muni investors have been focusing more on credit risk, the market has been trading less in sync with Treasurys. That means munis other than those with long maturities could offer some protection against any broad rise in Treasury yields, says John Miller, co-head of global fixed income at Chicago-based Nuveen Asset Management.

Illustrating the divergence, Nuveen All-American Municipal Bond returned 5.1% in the first four months of 2012, even after Treasury rates blipped higher in March. In contrast, the iShares Barclays 7-10 Year Treasury IEF -0.02% ETF returned just 0.6%, according to Morningstar.

Own emerging-markets bonds for yield and diversification.

Bonds of emerging-markets nations such as Brazil and Malaysia have yields five percentage points or more above those of government bonds in developed countries. And owning such bonds essentially means you are lending money to governments that are in a stronger position to repay it than governments of many developed countries, says Robert Stewart, a managing director and emerging-markets specialist at J.P. Morgan Funds in London.

The chief downside to these bonds is their volatility. These nations may have stronger growth prospects and smaller debt burdens than the U.S., for example. But at times of financial uncertainty, investors tend to rush back to the perceived safety of U.S. Treasurys.

Last September, as Europe’s financial woes prompted a flight to safety, the average emerging-markets bond fund tracked by Morningstar posted a negative 7.5% return for the month.

The answer for many investors is to add a modest helping of emerging-markets bonds to your plate—perhaps around 5% to 10% of your overall bond allocation, says Mr. Stewart.

Volatility-averse investors should choose a fund that invests mostly in U.S. dollar-denominated bonds because in uncertain times, bonds denominated in local currencies may be hurt more by flight to safety than those issued in U.S. dollars.

For instance, about 90% of the bonds owned by TCW Emerging Markets Income are denominated in dollars. The fund, which yields 6.5%, has large holdings of bonds issued in Brazil, Mexico and Russia.

To simplify things, consider funds with a diverse mix of securities.

Because institutional players dominate the credit markets, people with less money to invest who want credit exposure are usually better off owning mutual funds than individual bonds. Funds offer much better liquidity than individual corporate bonds, meaning that it is easier to buy and sell a position.

You could get moderate credit exposure through a fund in Morningstar’s multisector bond-fund grouping. Such funds invest in a mix of U.S. government, corporate and high-yield securities and periodically adjust holdings based on market conditions and manager expectations. Multisector funds also may have some holdings of non-U.S. bonds.

Among strongly performing multisector funds, Loomis Sayles Bond recently had about 60% of its holdings in corporate debt securities for an average portfolio credit rating of double-B and a moderate interest-rate sensitivity of 5.5. The fund also had about a third of its portfolio in non-U.S. securities. Over the 10 years through April, it ranks in the top 6% of Morningstar’s multisector group, with an average annual total return of 10%.

Michael Collins, who oversees multisector fund strategies at Prudential Investments, believes it is unclear whether U.S. rates will rise significantly in the near future. Still, in the funds he helps manage, Mr. Collins has been loading up on high-yield bonds because of the cushion they can provide against rising rates. Says Mr. Collins, “High-quality bonds don’t pay much, and you potentially have a lot of downside there.”

THE REAL MONEY TRAIL

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

EDITOR’S NOTE: THIS SUBMISSION FROM NJ CONSUMER IS A LITTLE DIFFICULT TO BREEZE THROUGH, BUT IT CONTAINS GOOD RESEARCH AND GOOD QUESTIONS.

At least one point emerging from all this information is that the basic concepts of default, performing loans and non-performing loans have been perverted by the securitization hoax. If Wall Street’s intention had been something other than deception, all of this would be clear as a bell. But what they were looking for was a way to take money from investors and not give it back, take houses from homeowners and not account for it, and take taxpayer money for losses than never occurred.

I have already written about the fact that the bonds given to the investors (actually non-existent, because they were “uncertificated”) contained vastly different parties and terms than the note signed by homeowners. There are several reasons this is important.

The investor/lenders are the only real source of funds and the only people who actually were at risk to lose money if they were not repaid. Somehow Wall Street managed to insert itself as a mere intermediary and actually claim the houses, the debts and force fees on both investors and homeowners that were improper, undisclosed, illegal and unconscionable.

For purposes the bailout, they took the investor loss and claimed it as their own, taking taxpayer money in the trillions to bailout their ailing enterprises. Most investors received nothing out of that money. And for sure, no borrower ever received a credit for money received on their obligation even though the government waived rights of subsrogation against the homeowner. So the debt was paid by the government and the borrower still owed it, making the obligation worth far more because it was being repaid several times over.

For all other purposes Wall Street took the loans receivables as their own without ever having advanced any money to the borrowers or to the investors for purchase of the obligation. In order to keep the investors placated they made sure the investors continued to get paid regardless of what was really happening with most of the money. They did this first, by using the investors own money to send them payments as though they were from borrowers. That is a fact and it is right in the prospectus of most “securitized” pools (which contain nothing of value).

They did the same thing with insurance, credit default swaps, cross-collateralization payments, over-collateralization payments, etc., and sold the same borrower obligation several times over (as much as 40 times over) by changing the apparent terms of the loan to look like another loan, or by covering the “sale” with language that made it look like a hedge product, like a credit default swap, synthetic CDO, or insurance. In each case, the money was received, sometimes courtesy of the U.S. Government, under an express waiver of subrogation, which means that the payor agreed that this payment ends the matter.

The loss was covered by an actual payment of money but neither the investor/lender nor the homeowner/borrower was ever given the information to allocate it to their bond or note or obligation. But so far, the Banks have succeeded in covering this up. So far, neither the investors nor the borrowers have fully realized that they are entitled to an accounting for ALL money transactions relating to the investors bond and the homeowners loan.

The reason is simple. As for the investor, they don’t want to pay the money to the investor and they don’t want the investor knowing how much money was made using the investor’s partnership (REMIC) in name only. As for the borrower, they don’t want the borrower getting credit for what the investor did or should have received as a result of the payments that were due under the bond. This would defeat the ability of the Wall Street to treat loans as being in default when in fact they were either paid in full or paid ahead.

Thus far, the banks have succeeded in directing the attention of the courts, the lawyers and the pro se litigants to the very narrow accounting provided by servicers as to the payments made by ONLY the borrower. When the time comes that the government payments, the insurance payments, the servicer payments, the counterparty payments, and the proceeds of other credit enhancements are taken into account, the picture will change. It will be obvious that virtually none of the amounts demanded in foreclosures, none of the amounts shown in the end of month statements on loans, and none of the distribution reports to investors were true, correct or even well-intentioned.  

by Consumer in NJ

Maybe you don’t understand the point of the cut/pasting of the original 11 bank credit facility who started this mess connecting Lawyers Title Corporation, LandAmerica, Commonwealth, TD Financial Services, etc.

In good faith, I’ll continue sharing good information. I’m a researcher not a blogger. I’m a consumer harmed finding loopholes that harmed the economy transaction by transaction. What are you doing in good faith? Anyone who is a consumer not a blogger who understand and wants to be the ghost writer fine meanwhile I’m not seeing in the bulic domain the information I’m sharing that is important to how the economy harmed by money laundering a crime against the nation collective acts intentional collaboration, collusion methodical movement of cash right out of the nation c/o Mortgage Servicers affilaites of national banks. Thank you Office of the Comptroller of the Currency Hawke, Duggan, and who is the new guy? .

You need an attorney who knows the law. How are you going to know if you have a good attorney? How will you ask educated questions if the attorney has fiduciary interests of others ?

RED FLAG, attorney who promises you a loan modification connected to REO Lender’s reo broker, lender, dealer agaent affilaite beneficiary of the subservicer, robo-mill default lenders ?

RED FLAG attorney who says you don’t have to pay anything upfront.

Foreclosure was scary until Foreclosuregate. What is scary now is what Congress and the President, has not done about the OCC and CFPA c/o Federal Reserve.

What you don’t understand will hurt you.

We all proved that we are stupid people who signed stupid contracts. The Court will say a prudent buyer beware.

Obligor (Seller of loan) on your behalf signed mortgage backed note separating at time of ‘purchase’ of financial product the note from the debt. The Servicer c/o Purchaser sold back servicing rights takes possession of pledged asset cash of promissory note borrower co-signed.

The Tempory Lender recorded as the only document ‘Mortgage/Deed of Trust’ proves we did not understand that the ‘TRUST’ Cash paid by Purchaser separated the Note and DEED at time of purchase of ‘mortgage’ a financial product placed into public domain.

Alert all you whippersnappers signing the same documents today, ask for access to all of the related governing agreements between Seller and Purchaser, Obligor, Beneficiary, etc.which were intentionally witheld by the Obligor from all who come before you. Make an educated decision that its ok your property deed and note are separated..

The Obligor has the OBLIGATION to pay all principal and interest payments on a debt. We are the debtor c/o Obligor who allowed affilaites as third parties to Sell Loans purchased by …

Because you did not seek a copy of the Obligor’s contract and Agreements Sale & Serive Agrement, Loan Purchase Agreement, etc., and now don’t care to review agreements available on the public domain SECINFO . Com, and FFIEC . GOV Federal Reserve System reveals how the money moves to/from Parent Chase Manhattan Corporation 1998, 1998 with entity – data processing servicer is the Federal Reserve System Classification – Mortgage Electronic Registration Systems, Inc. (MERS). and all MERS Members then by default c/o FREDDIE MAC shareowner are ‘affiliates’ of national banks Mortgage Servicers (Norwest Mortgage, inc, Americas Servicing Co, Premier Asset Services, Wells Fargo Home MOrtgage, Chase Home Lending, GMAC Mortgage Corp of IA, ….
You don’t understand what I’m taling about. Sorry. Call be happy to help you understand what you don’t know that is harming you, your famaily, friends, neighbors, your municipality, your state and nation.

Keep complaining that you don’t understand. I won’t give up.
I don’t wany anyone to roll over and lose their home through ignorance for if you do you are part of the problem and allowing the perpetrators to continue harm the economy one mortgage at a time. ITts bad enough both Houses of Congress, The OCC, The Federal Reserve, 12 Federal Home Mortgage Loan Corporations, FHA, HUD, and they pulled over federal taxes from you for the Consumer Financial Protection Agency who all protect government interest of only GINNEMAE guaranteed loans and self interests of all private wealth institutional bankers and institutional investors. Do you think the FEDERAL RESERVE is the ‘Central Bank’? Nope sorry its not. Do you thing the FHMA lawsutis protect non-conforming loans NOPE does not.

In default, you do not lay down like a dog because your scared.
You don’t have to listen to some REO broker quick move into an apartment
Does the party standing before the court Plaintiff have the right as note holder in due course to take the property. That is all a foreclosure is.due to default (hardship) (loss of job) (sickness) (divorce) all the top 5 stressors in life. My intentions as a consumer harmed to help reveal the loopholes which harmed our economy.

The Agreements governing your mortgage did not start and stop the day you signed the mortgage promissory note.

By the way the Temporay Lender aka Seller of the Loan already authorized the loan and ordered the cash from a purchaser before you signed the promissory note. WHich means legally the loans was already signed and you are a what co-signor?

The harm to the economy methodical c/o money laundering. Corportions are perpetual entities, whose assets include, contracts, agreements, registration statements, T-1 Indenture, Trusts, etc., assets as receivables think of it like if you die and had money a house a busienss a car, another house, another buisness. How would the estate be assigned a value? The business a value? That may help you understand the one loan combined with all loans 2003-2008 which harmed the economy by laundering cash right under the noses of each federal regulatory agency c/o OCC.

2. Seller is sole owner of Loan
Seller has authority to Sell, transfer and assign the same …(see manual not attached)
Seller attests there has been no Assignment, sale or hypothecation thereof by Seller
except the usual hypothecation of the documents in connection with Seller’s normal banking transactions in the conduct of its business.

Hypothecation new word: (for me)

What Does Hypothecation Mean?
When a person pledges a mortgage as collateral for a loan, it refers to the right that a banker has to liquidate goods if you fail to service a loan.

The term also applies to securities in a margin account used as collateral for money loaned from a brokerage.

You are said to “hypothecate” the mortgage when you pledge it as collateral for a loan

New Word: Rehypothecation:
When a broker pledges hypothecated client owned securities in a margin account to secure a bank loan. Rehypothecation also known as a margin loan. Related terms (Banking, Brokers, Pledged Asset, Hypothecation.

Pledged Asset

What Does Pledged Asset Mean?
An asset that is transferred to a lender for the purpose of securing debt.

The lender of the debt maintains possession of the pledged asset, but does not have ownership unless default occurs.

A pledged asset is returned to the borrower when all conditions of the debt have be satisfied.

Home buyers can sometimes pledge assets, such as securities, to lending institutions in order to reduce the necessary down payment. Thus, these securities would not have to be sold in order to meet the down-payment requirements, allowing for any capital appreciation while maintaining the associate mortgage benefits.

Related terms Capital appreciation; Collateral; Default; Hypothecation, Loan, Mortgage, Rehypothecation …
Bonds, Fixed Income, Personal Finance

WHAT ABOUT ‘Sub-Sovereign Obligation – SSO”
What Does Sub-Sovereign Obligation – SSO Mean?

A form of debt obligation issued by hierarchical tiers below the ultimate governing body of a nation, country, or territory. This form of debt comes from bond issues and is issued by states, provinces, cities or towns in order to fund municipal and local projects.

Also referred to as a “municipal (muni) debt obligation”.

This form of debt obligation is commonly created by municipalities in order to meet funding requirements. Issuing bodies are responsible for their own debt issues, which can carry significant risk depending on the financial health of the municipality.

WHAT ABOUT ALL THOSE ‘NIMS’ IN REMIS? Hmmm. Relate back to the ‘cash’ taken out of ‘TRUST’ custody of a pension fund or municipality, c/o Non-Deposit Trust Company Non-Member ‘cash’ purchaser ordered by ‘seller’ originator deposits ‘cash’ c/o depositor individual bank closing agent, …for a new Loan.
If existing loan is placed in default and not really paid off (during a refinance) there are a lot of ifs, but the loan can be placed in forced default over 90-120 days and repurchased depending upon ‘agreements. What does your agreement say? Read a simple one from 9/24/1998 re Countrywide Purchaser and E-Loans Seller (Originator). Google Purchase.
A debt collector robo-firm c/o subservicer instructed by Servicer c/o Investors/Owner of ‘mortgage note’ Pleged Asset

Trying to take your property. How? What in writing gives them the right to attach the debt to the Pledged Asset?
Master Servicer ‘agreeded’ in REMIC SERVICER who purchased servicign rights was in control after 90 days.

A 90 day default common for REMICS, there are other defaults that can occur between buisness entities seller and purchaser.

If mortgage affixed a MIN# that affiliate of a national bank’s Mortgage Servicer did not register transactions at RETAIL with County Clerk/Recorder because the ASSIGNMENT/Mortgage Promissory Note borrower signed with Temporay Lender is the Assignment, statutory taxes paid by borrower for credit line increase in a documented called a mortgage promissory note like an amendment to the exisint mortgage if a refiance – a loan modiifcation.

MERS MEMBERS by default are automaticfally affiliates of a National Bank’s Mortgage Servicer. Keep in mind the OCC since 2003 has protected all MERS MEMBERS c/o Federal Reserve private wealth managers who assigned visitorial powers c/o Supremacy Clause trump State Attorney Generals trying to enfoce laws can’t secure evidence related to any transactions ‘cash’ attached to ‘Mortgage Servicers affilaites of national banks. Chase Bank NA all MERS MEMBERS affiliates of natioanl banks Chase, Wells Fargo BanK NA, GMAC Bank c/o NASCOR dba Wells FArgo Asset Securities Corp. That is one joint venture governing loan originated c/o affiliates of these banks may do business in the names of these banks and the depositor ‘Wells Fargo Asset Securities Corp’….

Every rolling 12 month period, the ‘debt’ serviced, the servicer posts asset ‘receivables’ for 12 months…

Select Servicers maintain huge portfolios of many loans.
The servicer may have made an agreement to pay the P&I pending sale of REO property c/o subservicer for example GMAC Mortgage Corporation who will advance funding as a Tempoary Lender c/o REO Lender of Premier Asset Services affilaite – who is that? an affiliate of a Mortgage Servicer of a national bank, Welsl Fargo Bank NA. Hmmm.

You need to understand what was once illegible to me the agreements and decphier the relationship to secure evidence and to figure out if documents you have are accuate business statements you can pursue through the courts seeking disclosure of the agreements that govern the transactions.

if you want ‘evidence’ there is NO one answer fits all.

You each have a ‘Loan’ 0123456789 that went through an ‘origination’

During that origiantion, a purchaser and seller’ depending upon the governing agreement, exchanged cash. The written agreements provide the ‘agency’ authority. Look for your evidence. Look for loopholes. Find ‘evidence’ or you’ll lose.

Go back — go back — go back and find the original agreements.

1998 is a good place to start, when the integrated networks in place for Origiantions already existed and operating, over the CLOUD, portals connecting bank closing agents, title and settlement agents, MERS Members, TD Servicers, First America, Fideltiy, DocX, LPS, LSI, eLynx, etc., and all of the robo-firms in agreement with all the sub-servicers, servicers, ….

Example: Lawyers Title Services bank closing agents, title agenies, virtual notary services c/o title and settlemetn agencies, etc.

Select a simple one where you don’t have any paradigmns and read and you’ll understand better. Your preconceived ideas divert and hide the truth.

MERS exists c/o Chase Manhttan Corp as Parent of Mortgage Electronic Systems, Inc. Yes you read correct. What does that mean? The ‘joint venture’ between FREDDIE MAC, Chase, WFC, GMAC (private). The dollars ‘income’ flowed to Chase c/o Mortgage Electronic Registration Systems, Inc.

All MERS MEMBERS by default ‘affiliates’ of national banks, federal associations, federal savings banks…..by 3/13/2000 when Financial Holding Companies now parent money flows through Federal Reserve System in light of day between ‘Real Estate Industry’, ‘Insurance Industry’ and ‘Banking Industry’.

Google Purchase Loan Agreement
Select
Example:
Loan Purchase Agreement
Countrywide Home Loans Inc.
E-Loans Inc.
9/24/1998

‘LOAN PURCHASE AGREEMENT’
9/25/1998
COUNTRYWIDE HOME LOANS, INC, A NY CORPORATION AS ‘PURCHASER’ OF LOANS FROM E-LOANS ‘Seller’ Originator

E-LOAN, INC. A CALIFORNIA CORPORATION ‘SELLER’ OF LOANS

COUNTRYWIDE AGREES TO PURCHASE LOANS SECURED BY REAL PROPERTY WITH SERVICING OF THE LOANS FROM ‘SELLER’ E-LOANS

COUNTRYWIDE CORRESPONDENT LENDING DIVISION LOAN PURCHASE PROGRAM

PARTIES AGREE:Seller & Purchaser

“Related terms’ Collateral, Loan, Mortgage, Pledged Asset, Rehypothecation …

1. ELIGIBLE LOANS SELLER MUST BE APPROVED QUALIFIED AND/OR LICENSED TO ORIGINATE SUCH LOANS – so we can assume E-Loans has affiliates who are qualifed in all 50 states.

-Loans sold include
Conforming Conventional (GINNE MAE), Jumbo…not guaranteed by Ginne Mae,, Second Mortgage Loan Program (what is that resale of purcahsed loans after 120 days?), etc. Each defined with a unique set of rules.

GinneMae the only government guaranteed loans regulations govern conforming loanos conforming loans, and all non-conforming loans are considered Alt-A Loans (1) missing GSE requirement (no income verification). How do you know if your loan was conforming or not? Ask? Secure discover and find LPS ‘Non-Conforming’ printed on reports.

Whether conforming or non-conforming all of the loans from Sellter will be purchased by purchaser Countrywide in accordance with this Loan Purchase Agreement, and manual not attached herewith, that you get only if you are an affiliate, member, subscriber, vendors, servicer, whatever.

Have you read your agreements that govern the loan you signed as borrower? It was signed before you signed by the Seller who issued the insurance c/o Temporay Lender, the commitment to issue cash or accept cash, insurance for the event of a default. A default in some agreements may be the interest and late payment fee’ after 90 days if not paid places the loan in forced default. You know how they sent back checks for partial payments the servicer refused to take anything but the total amount owned? Why not take some? Because once 90 days in default, the loanos may be resold and repurchased.

Do you know what the Seller is responsible for? Look at a real agreement and look up the vernacular you don’t understand don’t apply what you think the work ‘lender’ and ‘temporary lender’ mean. And Pretender Lender is not a financial term. Temporary lender is a financial business entity role of some business entity who makes money in 3 different ways. Does not mean all Temporay Lenders do all that.

Countrywide Purchaser of Loans and E-Loans the Seller agree

1. Seller shall fully underwrite each Loan (prior to submission to Countrywide)

9/24/1998 Loan Purchase Agreement refers to ‘must use’ if avaialble’ a Countrywide-approved automated-underwriting system for underwriting the loan.

2. Commitment to Purchase Loaons
Seller may commit to sell a Loan to purchaser Countrywide (refer to manual we don’t have)

Countrywide will confirm conditions of sale of Loan to Countrywide, deliver confirmation Commitment to Seller, set for terms of transaction, Countrise ‘purchaser’ will pay for each Loan (refer to manual affects Purchase Price).

Terms of Commitment
Including Purchase Price Effective Period
Seller is approved by Countrywide to sell Loanos to Country wide on a bulk sale basis …
Countrywide and ‘Seller’ E-Loans shall execute Addendum to ‘Loan Purchase Agreement (BULK SALES) which will be attached and incorporated into this Agreement by reference (not attached).

Countrywide has right (BUT NOT OBLIGATION) to underwrite any Loan submitted for purchase

Seller’s repurchase obligations under Section 9 hereof… 270 days later…

Seller delivers to Countrwide appraisal of real estate security for each Loan
Appraisal signed by a qualified appraiser (see manual not attached) prior to Countrywides approval to purchase loan.

4. Delivery of Loan Documents

When is a loan deemed ‘delivered’ to Countrywide

A) if it is received by Countrywide within the Commitment Period

B) if Loan in compliance with Delivery of Closed Loans and Funding Documentation (see manual not attached)

C) Loan has no outstanding conditions that prevent Countrywide from FUNDING purchase. Example: failure to deliver within 120 days of Loan purchased (forward sold) any of the required documentation Countrywide Assessment fee of $50 per month after initial 120 day grace period. $50 if 1 or more documents.
Failure to deliver to Countrywide one or more of the original documents specified in Delivery of Closed Loans (see manual not attached) within 270 days from date the Loan was purchased by Countrywide shall obligate SELLER to repurchase Loan pursurant to Section 7 of this Agreement.

5. Payment of Purchase Price and Seller’s Wire Instructions
Countrywide Purchaser shall after receipt of loan documentation package TILA – HUD etc., deliver the Purchase Price (less any fees or discounts due to Countrwide)

Commitment to Seller
Seller’s wire instructions ‘Order Cash for Loanj0123456789;’ or in accordance with any bailee letter or trust receipt submittted with the Loan 01234567890 (all as determined in the ‘sole’ and ‘abosolute’ discretion of Countrywide.

6. Sellers Obligations, Representations & Warranties
Seller prepresents and warrrants each Loan offered for sale (purchase by Countrywide)

1 Loan documents duly executed by trustor/mortgagor
Loan documents acknowledged and recorded;

each Loan is valid
Each Loan complies with all cirterial (see manual not attached)
Note and Deed of Trust/Mortgage constitute4 entire Agreement between trustor/mortgagor and the beneficiary/mortgagee

There is no verbal understanding or written modification which would affect terms of note or deed of trust/mortgage

except by written instrument delivered

and expressly made known to the beneficiary/mortgagee and recorded if recording is necessary to protect interests of beneficiary/mortgagee.

2. Seller is sole owner of Loan
Seller has authority to Sell, transfer and assign the same …(see manual not attached)
Seller attests there has been no Assignment, sale or hypothecation thereof by Seller
except the usual hypothecation of the documents in connection with Seller’s normal banking transactions in the conduct of its business.

Hypothecation new word: (for me)

What Does Hypothecation Mean?
When a person pledges a mortgage as collateral for a loan, it refers to the right that a banker has to liquidate goods if you fail to service a loan.

The term also applies to securities in a margin account used as collateral for money loaned from a brokerage.

You are said to “hypothecate” the mortgage when you pledge it as collateral for a loan

New Word: Rehypothecation:
When a broker pledges hypothecated client owned securities in a margin account to secure a bank loan. Rehypothecation also known as a margin loan. Related terms (Banking, Brokers, Pledged Asset, Hypothecation.

Pledged Asset

What Does Pledged Asset Mean?
An asset that is transferred to a lender for the purpose of securing debt.

The lender of the debt maintains possession of the pledged asset, but does not have ownership unless default occurs.

A pledged asset is returned to the borrower when all conditions of the debt have be satisfied.

Home buyers can sometimes pledge assets, such as securities, to lending institutions in order to reduce the necessary down payment. Thus, these securities would not have to be sold in order to meet the down-payment requirements, allowing for any capital appreciation while maintaining the associate mortgage benefits.

Related terms Capital appreciation; Collateral; Default; Hypothecation, Loan, Mortgage, Rehypothecation …
Bonds, Fixed Income, Personal Finance

There are 2 defaults going on at the same time with Countrywide

Simple explanation provided by Investopedia

What Does Default Mean?
1. The failure to promptly pay interest or principal when due. Default occurs when a debtor is unable to meet the legal obligation of debt repayment. Borrowers may default when they are unable to make the required payment or are unwilling to honor the debt.

2. The failure to perform on a futures contract as required by an exchange. Investopedia explains Default

1. Defaulting on a debt obligation can place a company or individual in financial trouble. The lender will see a default as a sign that the borrower is not likely to make future payments. For example, if Company XYZ is unable to make a coupon payment on its bonds, the bondholders would place XYZ in bankruptcy. This would give the company an opportunity to claim XYZ’s assets as a form of repayment for the debt.

2. Defaulting on a futures contract occurs when one party does not fulfill the obligations set forth by the agreement. The default usually involves not settling the contract by the required date. A person in the short position will default if he or she fails to deliver the goods at the end of the contract. The long position defaults when payment is not provided by the settlement date.

 

NO END IN SIGHT: MINNESOTA SHUTS DOWN COMPLETELY

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EDITOR’S NOTE: It’s frustrating. Many of us did the math and came up with the only possible conclusion. State and local governments would default, starting now, in increasing numbers. They default on essential, social and other services leaving he citizens without any government at all. We wanted it to stop before it came to this. But for reasons that defy rational thinking, very few people are willing to connect the current economic crisis with the fall of the housing market, despite the fact that the housing industry has been a bell-weather for the economy for many decades.

If the housing crisis was a slump caused by the common economic factors of demand (over-exuberance) and supply (over-building) fueled by negligent lending practices we could say with some assurance that it will simply play out and we will recover. But we are not recovering and things are getting worse — all because the Wall Street banks are not being held to task for committing the largest fraud in world  history and because the fraud is continuing in the form of bogus foreclosures with bogus auction sales, depriving middle America of the last vestige of economic power in what is hailed as a free-market economy.

States don’t have a chance of recovery. Their status is that they were robbed of their treasury by investments in bogus mortgages bonds, pillaged by the illusion of a housing boom in which they made commitments that could not be sustained because the housing market was doomed, and deprived of revenue from employed workers, small business success, and tax and fee evasions, amounting to billions of dollars in each state. Arizona lost a minimum of $3 billion according to government experts there and yet they are gridlocked on whether to collect the taxes, fees and fines together with the damages caused to the state budget by the Great Securitization illusion.

None of this needs to happen, although we have gone so far kicking the can down the road that some of the damage is irreparable. States could recover in an instant if they applied their resources to the enforcement of taxes, fees, fines and damages using existing law. Their budgets, while damaged, could be restored to normal levels in a normal recession.

But this is not normal recession and there is no free economy. Wall Street banks grabbed control of our government at the Federal, State and local level using a scheme so complex that they could claim anything they wanted to claim — including using state non-judicial and judicial proceedings to effectuate t he largest illegal land grab in history. This will go down in history as not only the largest fraud ever committed, and the largest ceding of power to the business sector, but the largest for all time to come as well. There won’t be another one like this for 500 years.

People ask me why the law isn’t being applied. Even the most unsophisticated consumer understands that if they tried to use a straw-man at the closing of a transaction without disclosing what they were doing the other party to the transaction (the banks in this case) would cry foul, refuse to complete the transaction and probably refer the matter for criminal prosecution. Yet if the perpetrator is a bank, the rules are suspended, the law is not applied, and the continuing devastation of our society continues.

The Banks have the ear of government. They say that no matter how badly they acted, they should not be brought down because if they are, the entire financial system will collapse. Not true. The entire financial system consists of both huge entities crossing international borders and at least 7,000 large and small community banks and credit unions with the exact same access to electronic services, ATM convenience and every other aspect of commercial banking.

The sky is falling because the Banks are getting away with it and they continue to suck the life-blood out of our economy, changing our society forever, if we let them. Those public servants who fear their jobs will disappear if they take action are mistaken. They are dealing with a group of people without conscience and without any regard for the nation’s vital economic and security interests. They will use their tactics of undermining the narrative and preventing the application of basic law to achieve their aims. It is up to borrowers, collectively, to correct the damages because government won’t do it, even if it means, like in Minnesota, that they waive their claims against the perpetrators of this fraud.

This is why I have sponsoring a group that is forming a cooperative that will save America using conventional means to inform consumers that they have remedies, that opposing the banks is a a deeply moral act of advanced citizenship. And through this Cooperative, members will be able to meet those who are offering help, assistance and services to defeat the final corruption of our society starting with the corruption of title.

Is your title safe? The answer is no. Is the economy safe? The answer is no. Are we secure from unreasonable search and seizure? No. Are we protected by due process. No- not if the banks are the ones taking our liberties and privileges away despite a constitution that, once upon a time, promissed a country that would be governed by a nation of laws, not men.

No End in Sight as Minnesotans Grapple With State Shutdown

By

ST. PAUL — The state of Minnesota screeched to a stop on Friday.

State parks were barricaded, and campers, Boy Scout troops and everyone else were sent on their way.

Heading into a holiday weekend in a state that savors its summers outdoors, licenses for fishing, hunting, trapping, boats and ATVs were unavailable for purchase. And all around the State Capitol — the place where all the troubles began — the streets were eerily empty and official buildings locked, plastered with hand-taped signs that offered a gentle explanation: “This building is closed until further notice due to the current state government service interruption.”

Right up to the midnight deadline on Thursday, Minnesotans, who have been known to boast of their professional, efficient government, had held out hope that the state’s divided leadership could reach a deal on how to solve a looming budget deficit. But in the end, the fundamentally different fiscal approaches of the Republicans and the Democrats here did not change, and Minnesota began its broadest shutdown of services in state history with no end in sight.

“Now we’re just waiting and hoping this will be short-lived,” said Mark Crawford, the manager at Lake Maria State Park who on Thursday had to inform scores of campers that they needed to pack up and leave and then, on Friday, became one of 22,000 state employees out of work without pay. “We’ll have to change our lifestyle for a little bit,” said Mr. Crawford, who is 60 and has worked in the parks for 35 years.

Since 2002, there have been six such shutdowns around the nation, including one in 2005 in Minnesota. Some lasted a few hours, others for days. But this time, the two sides appear far apart, the anger is palpable, and no one is confident of a quick resolution. By Friday evening, a spokeswoman for Gov. Mark Dayton, a Democrat, said no negotiations had been scheduled for the holiday weekend.

“There’s a lot of concern about whether this is going to be for a weekend or whether it will stretch into August,” said Liz Kuoppala, the executive director of the Minnesota Coalition for the Homeless, which, along with a long list of other groups (on behalf of people with H.I.V., battered women, mentally ill Minnesotans) pleaded on Friday before a retired State Supreme Court justice who has been designated to consider exceptions to the state financing freeze. “Part of the hardest part for people in the homeless shelters and elsewhere,” she said, “is not knowing what’s going to happen and what’s going to be paid for and what’s not.”

In a way, the standstill here may have begun last November, when the voters turned power in St. Paul upside down and picked leaders whose ideas about budgets, even during the campaign, could not have been more different from one another.

Republicans, who took control of both chambers of the Legislature for the first time in almost four decades, called for reining in spending as a way to pull the state’s budget, facing a $5 billion deficit, into control. But Mr. Dayton, who became the state’s first Democratic governor in 20 years, called for collecting more in income taxes from the very highest earners to spare cuts in services to Minnesota’s most vulnerable residents.

As the state’s new budget year approached, the opposing sides had negotiated privately, day after day, under a polite “cone of silence,” in which no one shared a peep about what the other side was asking for.

All vows of silence — and politeness — had vanished by Friday after talks fell apart and Minnesota found itself the only state in the nation closing down. At least 45 states had agreed to spending plans by Friday, officials at the National Conference of State Legislatures said, and the handful of states still finishing their work did not appear at risk of shutdown.

The entire episode left some Minnesotans baffled, posing questions to anyone they came across on Friday. Were highway rest stops open? (No.) Were courts open? (Yes.) Was the Minnesota Zoo open? (No.) Was the local swimming pool open? (Yes; only state functions were affected.)

Even as the state found itself with no approved budget, certain state services deemed essential never stopped. State police patrol and prison operations went on, as did payments to the state’s schools and payments for food stamps, welfare benefits and some programs for the disabled.

Other social services programs, though, including assistance for child care and some services for the blind, had received no such exemption as of Friday, officials said. Nor did the state’s lottery, racetracks, or about 100 road construction projects that were already under way around Minnesota. Torn-up patches, marked only by lonely orange cones, were common sights on Friday.

But even within state agencies, officials found themselves sorting through what must keep going and what ought not. Most prison guards stayed put, for instance, but the state Department of Corrections said it was ending family and volunteers’ visits and yoga classes for prisoners and — if the shutdown lasts long enough for service to lapse — prisoners will see no more cable television.

For many here, though, the largest question was how Minnesota’s leaders might ever reach some accord.

For all the talk of compromise and suggestions by Republicans at one point on Thursday that a deal might be close, it appeared by Friday that the central philosophical divide — between holding the line on spending and raising taxes to maintain services for those most in need — had never really been crossed. Each group retreated to its own side.

“This is a night of deep sorrow for me because I don’t want to see this shutdown occur,” Mr. Dayton told reporters shortly before the midnight deadline on Thursday. “But I think there are basic principles and the well-being of millions of people in Minnesota that would be damaged not just for the next week or whatever long it takes, but the next two years and beyond with these kind of permanent cuts in personal care attendants and home health services and college tuition increases.”

That evening, hundreds of protesters demanding a solution to the impasse gathered outside the Capitol, and Republican lawmakers, describing themselves as discouraged and disheartened, held what some described as a “sit-in” in their chambers urging the governor to call a special session so some state services might be kept running temporarily.

“We’re talking about runaway spending that we can’t afford,” Kurt Zellers, the Republican House speaker, said. “And we will not saddle our children and grandchildren with mounds of debts with promises for funding levels that will not be there in the future.”

David Maki-Waller, 41 and a resident of Northfield, was also thinking of his children on Friday, but of a more immediate problem: how to keep the four of them (15, 11 and 8-year-old twins) entertained over the long weekend now that the family’s reservation to camp at Frontenac State Park — secured months ago — had been canceled along with everyone else’s.

“They’ve been asking me for a Plan B,” Mr. Maki-Waller said. “What are we going to do this weekend? I don’t know. Everyone wanted to go camping.”

Lori Moore contributed reporting from New York.

NEW JERSEY BOND RATINGS FALL

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THE NEXT WAVE: MUNICIPAL BOND RATINGS AND DEFAULTS

EDITOR’S NOTE: With heads stuck in the sand, avoiding the “third rail” of acknowledgment that tens of trillions of dollars of mortgage transactions are fatally defective, which would save or partially save the budgets of most states, counties and cities, New Jersey took it on the chin with a downgrade in the announced quality of their bonds. This from the rating agencies that told the states,, counties, cities and investors that CDOs were AAA rated (virtually risk free).

Meanwhile the spin machine is running full time reminding readers and listeners that bankruptcy is not an option under current law for government entities. Of course they avoid the obvious — the legal remedy of bankruptcy has nothing to do with the factual reality of BEING bankrupt.

As the stimulus money runs out, the downgrading will reach a roar, and while the SEC searches around for alternatives to the current rating agencies, we will still be marching to the tune of S&P, Moody’s, and Fitch. Defaults seem inevitable but anyone who says so is verbally beaten to death. We like to wait for our disasters to strike before we do anything about them.

The facts are simple: government is running out of money and prospects. People don’t have enough money as it is, so raising taxes is not going to produce more revenue. We’re not training our workers to function in the modern economy, so the prospect of greater commerce or revenues to tax are also pretty dim. Past commitments for pensions and other forms of safety nets are getting expensive because the governments are not producing the tax revenue that was projected when those commitments were made.

The ONE place where the money can be located, the one source of tax revenue that is owed but both unpaid and unreported (Wall Street) is off limits. The simple admission of the scheme — that the mortgages, notes, loans, obligations and receivables generated by the holographic image of a financial structure that was never intended to be real — would produce substantial revenue, and allow for substantial recovery of losses taken by governments when they too bought mortgage backed securities that did not exist in form or substance.

It isn’t a magic bullet. But it would make the crisis aspect of our situation go away and return wealth to where it was stolen from — the middle class and poor. It isn’t the whole solution. But reality has a way of coming around to bite you. China is now positioning itself to have its own currency creep into the world markets as the world’s reserve currency. I don’t know if they will be successful (the idea that China is infallible has been bandied about without merit), but I DO know that central bankers, and commercial bankers around the world do not trust Wall Street, do not trust the the American government to do anything except protect Wall Street and do not trust the U.S. dollar.

If we lose our position in the world currency market, people should take notice. we will have a shellacking that will dwarf the 2010 elections. Financially, we are on the precipice of a looming crisis that far exceeds the scope of the Great Recession and thus threatens to compete with the Great Depression. While the White House and Congress continue to take their regulatory advice from the people who created this mess, the Court systems are getting the hang of it, and the remedy is coming faster and faster for most people, if they can hang on. The fraud might be addressed in large scope, but through the Court system, it may come too late to help us retain our market position in the world.

Costs Soaring, New Jersey Bond Rating Is Lowered

By RICHARD PÉREZ-PEÑA

NY Times

A top credit-rating firm lowered New Jersey’s bond rating on Wednesday, citing ballooning pension and other costs, and Gov. Chris Christie and Democrats in the Legislature wasted no time in blaming each other.

The firm, Standard & Poor’s, downgraded New Jersey’s general-obligation rating to AA-, from AA, and dropped the ratings on some other state debts even lower. The changes will increase the interest rates that the state must pay when it borrows money.

Standard & Poor’s has given lower ratings to just two states, California and Illinois; four others stand with New Jersey at AA-, which is the fourth-highest rating. The firm rates New York and Connecticut a notch higher, at AA.

A Standard & Poor’s credit analyst, Jeffrey Panger, cited New Jersey’s underfinanced pension and employee benefit funds, and his firm’s shift to putting more emphasis on such obligations.

The state reported last year that its pension system had $54 billion less than it needed to meet future obligations, one of the biggest such deficits in the country, and experts have said the state could run out of money within a decade. The fund for retiree health care is even further behind.

Year after year, lawmakers have failed to contribute what actuarial rules said was required to make the systems whole, increasing the size of the payment that the rules required the following year. In 2010, Mr. Christie’s first year as governor, the state was supposed to put $3 billion into the pension system, but in grappling with a large budget deficit, it contributed nothing.

The governor, a Republican, has said the state needs to curb government employee pensions and benefits to remain solvent, and at a public forum in Union City on Wednesday, he said the Democrats, who control the Legislature, had compared him to Chicken Little. “The sky started to fall in today,” he said, referring to the Standard & Poor’s action.

Such talk brought the governor criticism last month, when he mused publicly about the prospect, however distant, of a state bankruptcy — at a time when the state was marketing a new bond issue. Some bankers said he had spooked the market and possibly raised the state’s cost of borrowing by saying what chief executives usually refused to acknowledge.

Democrats said Wednesday that the governor was responsible for the downgrade, for failing to put money into pensions last year. They noted that last year they agreed to pension and benefit reductions for newly hired employees.

“It’s time the governor took responsibility for his own actions and stopped trying to blame others,” said Assemblyman Louis D. Greenwald, chairman of the budget committee.

Legal Research Society Uncovering the CUSIP Applications: Converting Notes into Bonds

LIVINGLIES—GARFIELD CONTINUUM BLOG

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

Editor’s Note: I’m not sure about the submission below and I invite comments. The point missing, I think, is that the notes themselves were not EACH converted into bonds. The securitization structure appears to me to be the intermingling of notes (which are probably invalid because they do not accurately reflect the loan obligation). The notes are thrown into a pool by a wave of a magic wand (i.e., just by entering them on a proprietary spreadsheet instead of actually transferring the documents legally). The principal amount of the notes, according to Charles Koppa who has researched this thoroughly, exceeds the principal amount of the bonds issued from the pool (i.e., the trust or SPV) by a factor of 20%. That’s called overcollateralization.

The interesting question which I think Koppa and the LRS are beginning to hone in on is this: how could the bond payable to investors be overcollateralized? If the investors advanced $1,000,000 and they have receivables from loans to homeowners totaling $1,200,000. But if you think about it, that is not possible. The receivables would either have to be overstated (fraud) or something else is working here. If the nominal value of the receivables is $1,200,000 that means that $1.2 million was FUNDED. Since the pretender lenders are not funding the loans except by use of investor money who thought they were buying bonds (that in many cases might not have ever existed in reality, something that the CUSIP research might reveal), where did the extra $200,000 of FUNDING come from?

Once you eliminate all possibilities except one, that ONE regardless of how improbable or counter-intuitive, must be the answer. So my answer three years ago and now is the same: the pretender lenders entered data on the same loan obligation with minor differences in dates or other index on more than one spreadsheet for more than one pool and issued bonds including the same loan obligation in multiple pools. The investor buying the bond under the mistaken belief that he has the protection of the property values and the protection of the receivables turns out to have neither.

The concept of overcollateralization was probably accepted because of the essential LIE at the base of the securitization scheme and which has yet to be completely absorbed by the courts or mainstream media: investors thought they were buying loans that had already been funded by originating banks. Hence the question of where did the money come from was solved. It appeared to come from the funds of the originators who were then selling them upstream into securitization chains. It made perfect sense. It just wasn’t true. The TRUTH was that the all the money came from the investors not the loan originators. The TRUTH is that the sale of “bonds” to investors took place first, before the loans were funded, exactly the converse of what the investors thought.

Thus the illusion of overcollateralization could only be created by literally selling the same asset (receivables from a funded loan) several times. It was an illusion because at the time of the purchase of the bond there were no loans and thus there were no receivables. Like the foreclosure procedures that have landed the pretenders in hot water, the method of operation was to back-fill where necessary. All eyes were on the flow of money and cutting up the money pie as it came down from the investors and then as it came up from the homeowners. The investors were never meant to be paid in full, like every Ponzi scheme. They were intended to be lulled into thinking it was working long enough for them to be “reloaded” (i.e., to sell them more garbage).

LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL

From: john@showmetheloan.net
Sent: 11/11/2010 11:16:35 P.M. Central Standard Time
Subj: VERY VERY IMPORTANT// from the desk of John Stuart

This just in:
I attended a weekly meeting of legal researchers in AZ, I have not attended in a while. They have started meeting at our workshop, every Thursday 7pm to 9pm. The Legal Research Society,, http://www.legalresearchsociety.org (I think)

Terry, the group leader and old friend brought up a concept, I will tell you what happened, how I think we should use, and then why I think it might work.

1. Terry had a friend being sued by a credit card company. The friend, just for the hell of it, asked the cc company for the CUSIP number for the APPLICATION. The banks dismissed the case and has not come back. So Terry, after going thru RFAs and interroitories to no avail, decided to try it. On his next document he asked the bank for the CUSIP number for the APLLICATION. They have since disappeared.

2. I think we should ask the banks for CURRENT COMPLETE copies of the ORIGINAL APPLICATION:
Inclusive of: legible copy of the stamping that states:
PAY TO THE ORDER…..WITHOUT RECOURSE and the CUSIP number for the APPLICATION.

This applies whether it is a mortgage or a deed of trust.

3. Why I think this may work:
a. Notes are converted to bonds all the time, that is what CUSIP numbers are for. You can buy a bond with any note or instrument. Promissory note, Federal Reserve Note, any note can be used to buy a bond.
b. Applications are NOT instruments and CANNOT be converted to instruments.
c. If the bank obtained a CUSIP number for an application that means they illegally converted an application to an instrument to purchase a bond that they then used to obtain a loan from the government to pass thru money to convert real property.

If they really do get CUSIP numbers for applications the whole game is over with. No case, no foreclosure, no payments, no contest of ownership. Its done.

Thinking about it makes my head spin because of the simplicity. If that is what they have to do to get the loan from the feds so they don’t risk their own money everything makes sense. That would be why they can claim there is a loan and we are in on it, its our application. Then really, the ONLY law broken was that of unlawfully converting an application to an instrument. Which would then cause the instrument to be invalid, the bond invalid, the loan have to be repaid by the bank IF they foreclose, but NOT if they don’t and just drop the case. That’s one hell of a barganing chip.

Could it be this simple? Its possible. It sure would answer the question why are the judges ruling against Notes and accepting the other documents as evidence of the deal.

I do not know if this will work. The idea is less than two hours old. But I think everyone should start trying to figure it out. If no one comes up with a good argument I think we should go for it.

Goldman Sachs Messages Show It Thrived as Economy Fell

Editor’s Note: Now the truth as reported here two years ago.
  • There were no losses.
  • They were making money hand over fist.
  • And this article focuses only on a single topic — some of the credit default swaps — those that Goldman had bought in its own name, leaving out all the other swaps bought by Goldman using other banks and entities as cover for their horrendous behavior.
  • It also leaves out all the other swaps bought by all the other investment banking houses.
  • But most of all it leaves out the fact that at no time did the investment banking firms actually own the mortgages that the world thinks caused enormous losses requiring the infamous bailout. It’s a fiction.
  • In nearly all cases they sold the securities “forward” which means they sold the securities first, collected the money second and then went looking for hapless consumers to sign documents that were called “loans.”
  • The securities created the intended chain of securitization wherein first the investors “owned” the loans (before they existed and before the first application was signed) and then the “loans” were “assigned” into the pool.
  • The pool was assigned into a Special Purpose Vehicle that issued “shares” (certificates, bonds, whatever you want to call them) to investors.
  • Those shares conveyed OWNERSHIP of the loan pool. Each share OWNED a percentage of the loans.
  • The so-called “trust” was merely an operating agreement between the investors that was controlled by the investment banking house through an entity called a “trustee.” All of it was a sham.
  • There was no trust, no trustee, no lending except from the investors, and no losses from mortgage defaults, because even with a steep default rate of 16% reported by some organizations, the insurance, swaps, and other guarantees and third party payments more than covered mortgage defaults.
  • The default that was not covered was the default in payment of principal to investors, which they will never see, because they never were actually given the dollar amount of mortgages they thought they were buying.
  • The entire crisis was and remains a computer enhanced hallucination that was used as a vehicle to keep stealing from investors, borrowers, taxpayers and anyone else they thought had money.
  • The “profits” made by NOT using the investor money to fund mortgages are sitting off shore in structured investment vehicles.
  • The actual funds, first sent to Bermuda and the caymans was then cycled around the world. The Ponzi scheme became a giant check- kiting scheme that hid the true nature of what they were doing.
April 24, 2010

Goldman Sachs Messages Show It Thrived as Economy Fell

By LOUISE STORY, SEWELL CHAN and GRETCHEN MORGENSON

In late 2007 as the mortgage crisis gained momentum and many banks were suffering losses, Goldman Sachs executives traded e-mail messages saying that they were making “some serious money” betting against the housing markets.

The e-mails, released Saturday morning by the Senate Permanent Subcommittee on Investigations, appear to contradict some of Goldman’s previous statements that left the impression that the firm lost money on mortgage-related investments.

In the e-mails, Lloyd C. Blankfein, the bank’s chief executive, acknowledged in November of 2007 that the firm indeed had lost money initially. But it later recovered from those losses by making negative bets, known as short positions, enabling it to profit as housing prices fell and homeowners defaulted on their mortgages. “Of course we didn’t dodge the mortgage mess,” he wrote. “We lost money, then made more than we lost because of shorts.”

In another message, dated July 25, 2007, David A. Viniar, Goldman’s chief financial officer, remarked on figures that showed the company had made a $51 million profit in a single day from bets that the value of mortgage-related securities would drop. “Tells you what might be happening to people who don’t have the big short,” he wrote to Gary D. Cohn, now Goldman’s president.

The messages were released Saturday ahead of a Congressional hearing on Tuesday in which seven current and former Goldman employees, including Mr. Blankfein, are expected to testify. The hearing follows a recent securities fraud complaint that the Securities and Exchange Commission filed against Goldman and one of its employees, Fabrice Tourre, who will also testify on Tuesday.

Actions taken by Wall Street firms during the housing meltdown have become a major factor in the contentious debate over financial reform. The first test of the administration’s overhaul effort will come Monday when the Senate majority leader, Harry Reid, is to call a procedural vote to try to stop a Republican filibuster.

Republicans have contended that the renewed focus on Goldman stems from Democrats’ desire to use anger at Wall Street to push through a financial reform bill.

Carl Levin, Democrat of Michigan and head of the Permanent Subcommittee on Investigations, said that the e-mail messages contrast with Goldman’s public statements about its trading results. “The 2009 Goldman Sachs annual report stated that the firm ‘did not generate enormous net revenues by betting against residential related products,’ ” Mr. Levin said in a statement Saturday when his office released the documents. “These e-mails show that, in fact, Goldman made a lot of money by betting against the mortgage market.”

A Goldman spokesman did not immediately respond to a request for comment.

The Goldman messages connect some of the dots at a crucial moment of Goldman history. They show that in 2007, as most other banks hemorrhaged losses from plummeting mortgage holdings, Goldman prospered.

At first, Goldman openly discussed its prescience in calling the housing downfall. In the third quarter of 2007, the investment bank reported publicly that it had made big profits on its negative bet on mortgages.

But by the end of that year, the firm curtailed disclosures about its mortgage trading results. Its chief financial officer told analysts at the end of 2007 that they should not expect Goldman to reveal whether it was long or short on the housing market. By late 2008, Goldman was emphasizing its losses, rather than its profits, pointing regularly to write-downs of $1.7 billion on mortgage assets and leaving out the amount it made on its negative bets.

Goldman and other firms often take positions on both sides of an investment. Some are long, which are bets that the investment will do well, and some are shorts, which are bets the investment will do poorly. If an investor’s positions are balanced — or hedged, in industry parlance — then the combination of the longs and shorts comes out to zero.

Goldman has said that it added shorts to balance its mortgage book, not to make a directional bet that the market would collapse. But the messages released Saturday appear to show that in 2007, at least, Goldman’s short bets were eclipsing the losses on its long positions. In May 2007, for instance, Goldman workers e-mailed one another about losses on a bundle of mortgages issued by Long Beach Mortgage Securities. Though the firm lost money on those, a worker wrote, there was “good news”: “we own 10 mm in protection.” That meant Goldman had enough of a bet against the bond that, over all, it profited by $5 million.

Documents released by the Senate committee appear to indicate that in July 2007, Goldman’s daily accounting showed losses of $322 million on positive mortgage positions, but its negative bet — what Mr. Viniar called “the big short” — came in $51 million higher.

As recently as a week ago, a Goldman spokesman emphasized that the firm had tried only to hedge its mortgage holdings in 2007 and said the firm had not been net short in that market.

The firm said in its annual report this month that it did not know back then where housing was headed, a sentiment expressed by Mr. Blankfein the last time he appeared before Congress.

“We did not know at any minute what would happen next, even though there was a lot of writing,” he told the Financial Crisis Inquiry Commission in January.

It is not known how much money in total Goldman made on its negative housing bets. Only a handful of e-mail messages were released Saturday, and they do not reflect the complete record.

The Senate subcommittee began its investigation in November 2008, but its work attracted little attention until a series of hearings in the last month. The first focused on lending practices at Washington Mutual, which collapsed in 2008, the largest bank failure in American history; another scrutinized deficiencies at several regulatory agencies, including the Office of Thrift Supervision and the Federal Deposit Insurance Corporation.

A third hearing, on Friday, centered on the role that the credit rating agencies — Moody’s, Standard & Poor’s and Fitch — played in the financial crisis. At the end of the hearing, Mr. Levin offered a preview of the Goldman hearing scheduled for Tuesday.

“Our investigation has found that investment banks such as Goldman Sachs were not market makers helping clients,” Mr. Levin said, referring to testimony given by Mr. Blankfein in January. “They were self-interested promoters of risky and complicated financial schemes that were a major part of the 2008 crisis. They bundled toxic and dubious mortgages into complex financial instruments, got the credit-rating agencies to label them as AAA safe securities, sold them to investors, magnifying and spreading risk throughout the financial system, and all too often betting against the financial instruments that they sold, and profiting at the expense of their clients.”

The transaction at the center of the S.E.C.’s case against Goldman also came up at the hearings on Friday, when Mr. Levin discussed it with Eric Kolchinsky, a former managing director at Moody’s. The mortgage-related security was known as Abacus 2007-AC1, and while it was created by Goldman, the S.E.C. contends that the firm misled investors by not disclosing that it had allowed a hedge fund manager, John A. Paulson, to select mortgage bonds for the portfolio that would be most likely to fail. That charge is at the core of the civil suit it filed against Goldman.

Moody’s was hired by Goldman to rate the Abacus security. Mr. Levin asked Mr. Kolchinsky, who for most of 2007 oversaw the ratings of collateralized debt obligations backed by subprime mortgages, if he had known of Mr. Paulson’s involvement in the Abacus deal.

“I did not know, and I suspect — I’m fairly sure that my staff did not know either,” Mr. Kolchinsky said.

Mr. Levin asked whether details of Mr. Paulson’s involvement were “facts that you or your staff would have wanted to know before rating Abacus.” Mr. Kolchinsky replied: “Yes, that’s something that I would have personally wanted to know.”

Mr. Kolchinsky added: “It just changes the whole dynamic of the structure, where the person who’s putting it together, choosing it, wants it to blow up.”

The Senate announced that it would convene a hearing on Goldman Sachs within a week of the S.E.C.’s fraud suit. Some members of Congress questioned whether the two investigations had been coordinated or linked.

Mr. Levin’s staff said there was no connection between the two investigations. They pointed out that the subcommittee requested the appearance of the Goldman executives and employees well before the S.E.C. filed its case.

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