NO Reason to Modify: Banks Foreclosed to Collect 100 cents on the Dollar from the Government

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Editor’s Comment:

The math is simple which is why we are now offering as part of a forensic loan specific analysis, a HAMP analysis and proposal along with the worksheets that back it up. If they foreclose, then they get all the money due on the mortgage even if they would only get 30% of that (see previous article) in foreclosure. This is really simple folks. If you had two “buyers” who would you sell to — the one offering $300,000 or the one offering $100,000?

The servicers and master servicers have only one major incentive in play because our elected officials have let it stay in play — the paper representing mortgage bonds and loans which undoubtedly are riddled with misrepresentations and bad data, is worth 100% if the government gets it but only 30% if anyone else gets it. This is welfare for the largest banks that stole from the citizens and are being allowed to keep the money and gamble more with our future. This isn’t about deficits or budgets. This is about fraud and restitution.

The victims of fraud — all of them including financial institutions (if they are innocent, which is another story) should receive full restitution and if the net balance due on any one loan is proportionately reduced by receipts of payments from the servicer, the proceeds of insurance, credit default swaps and credit enhancements (and of course restructuring into even more exotic pools that are never reported, thus rendering even the “trust” to be non-existent), a fair deal can be reached because the principal will have been reduced.

Foreclosure Fraud 101 – How (not) to Fraudclose on a Default When There is No Default in Order to Steal $$$ from the Govt (FDIC)

By ZeroHedge.com

This little gem comes over from Mark Stopa…

Take a look at this Final Judgment, where a borrower prevailed over BB&T at trial. Yes, the bank was sleazier than the skuz on the bottom of my shoes, declaring this borrower in default when there was no default. But take a close look at WHY the bank did so. As the Final Judgment reflects, the bank was financially motivated to declare a default because it knew the government was going to pay the mortgage in the event of default.

As if that’s not disgusting enough, what makes it even worse was that BB&T did not even loan the money – a prior bank did. Yet as a result of a deal with the FDIC, BB&T was in the position of pocketing millions of dollars from our government merely by declaring this borrower in default. This should piss off everybody in America – a bank that didn’t loan money wrongly declares a default so it can collect millions from our government. Where is the outrage?

Don’t believe me? Don’t take my word for it – read the findings of Judge Levens in this Final Judgment.

From the judgment…

The evidence adduced at trial and considered by the court demonstrated that Plaintiff breached it duties of good faith and fair dealing in its contractual relationship with Defendants. The evidence also demonstrated that Plaintiff was motivated to behave in such as manner as a direct result of the PSA; that is, Plaintiff stood to profit by declaring a fraudulent default under the subject loan, collecting from the FDIC under the PSA for such default, and then enforcing the subject loan against Defendants, and retaining the property until such time as a real estate turnaround occurred in hopes to dispose of the property at the peak of the market. In fact, Mr. Bruni testified that Plaintiff may have already applied to the FDIC for a loss share payment on this loan. And Defendants’ expert, Jim Howard, explained that it was possible Plaintiff could have already applied for and received a payment from the FDIC on this loan, perhaps in an amount as high as $1,800,000.00. Notably, Plaintiff nowhere credited such potential payment from the FDIC against the amounts sought in the instant litigation; thereby giving the impression that Plaintiff might be “double dipping”, and possibly “triple dipping” if market conditions favorably change and the property likewise increases in value.

DISCUSSION

The evidence was clear that there was a long and unblemished record of good faith timely monthly payments by Defendants. The evidence is also clear that, both on legal and equitable grounds, a bona fide default never occurred, and the resulting loan acceleration and lawsuit were improvidently initiated by Plaintiff for purposes of trying to maximize collection simultaneously from the future sale of the property after favorable stabilization occurred. The evidence is clear that Plaintiff committed significant wrongdoing and breached the implied duty of good faith and fair dealing of a financial institution, such that the instant cause of action should be denied in its entirety.

Sounds like the plaintiff committed much more than “significant wrongdoing” but I guess when you’re the bank it isn’t a crime.

Now do you understand why there are so many “DEADBEATS” that do not pay their bills?


Mortgage Meltdown Consequences

 

Mortgage Meltdown Consequences — New Money, Old Money and New Dynamics — 

Cashless ATM, “second chance bank accounts” and other services auger well for Small Banks and Credit Unions.

 

The simple fact is that there isn’t any small bank who can’t provide the same services to any type of customers that a large one can. And if States would start depositing their entitlement and other money and revenue into state chartered local community banks, they would regulate their own state and local economies by insuring that reinvestment through loans would be on the local level with local deposits and a return to common sense in lending. It would also score political points for anyone running for local or statewide office. 

 

News from the Bureau of Engraving and Printing in Washington D.C. (BEP) — they are going to change the size of the various denominations of U.S. currency. There are also changes coming to prevent the Supernote coming out of North Korea which uses the same paper and managed to get the same printing presses that the BEP uses. They have been flooding the market with counterfeit currency quite successfully and the trend seems to be on the increase although, according to government reports, if they can be believed, the problem is not yet a large one.

 

A clean-out of the ATM cash locations will start to occur when the new bills come out since 85% of the cash terminals in most portfolios are unprofitable anyway and the operators will not be inclined to spend more money on a new cash dispenser for a location that isn’t making money anyway. This will present a new opportunity for those who permit or operate Cashless ATM terminal locations (Community banks, Credit Unions and Independent Sales Organizations). 

Networks like NYCE, AFFN, American Express, COOP and CU24 that allow “scrip” terminals (A/k/a Cashless ATMs) will be the prime beneficiaries of this trend. Cirrus and PLus who merely look away are likely, especially now that they are public, to specifically encourage the use of Cashless ATM after years of “opposing” it on paper. 

Companies like SMARTBanks (which has long-dominated the world of cashless ATMs) are likely to become major players in financial services as their volume once again mushrooms and their offering of services continues to diversify. It seems that with every step, the financial institutions that seek to block the ability of the small bank or credit union competitor cause another event that eventually comes up and hits them in the face, like a rake stepped upon in the field. 

Add to that the availability of “second chance checking” for those who don’t qualify to open a regular checking account and overdraft privileges on these strictly electronic bank accounts, and you have a prescription for a resounding come-back of the small financial institution and the death-knell of the once mighty giant players. 

 

“Second chance checking” places the small financial institution squarely in the path of the giants (who are now otherwise occupied with saving their skins) seizing the opportunity to provide services to the “unbanked” or under-banked population. Overdraft privileges allows small institutions to partner with -non-predatory lending vendors and offer a smart and socially acceptable way of providing short-term emergency loans placing them squarely in the way of growth of Payday loans.

 

Adding to this are world events that certain increase the risk if not the certainty that the dominance of the U.S. dollar in world currency is coming to an end, and that with constant devaluation of the dollar and inflation, merchants are starting to demand other currencies. There is even a tendency in foreign markets that will be vastly exacerbated by the advent of the new money being printed — where older wrinkled dollars are being devalued on the spot in favor of newer, crisper ones. 

 

In short, the mortgage meltdown with its CDO/CMOs, (really financial derivative breakdown, including over $500 trillion in derivative issues over the years) which undermined the confidence in American financial markets, is likely to cause a not-so subtle shift in the willingness to accept U.S. currency for payment of non-tax debt. And dollar reserves held by central bankers around the world are likely to reflect this shift by lowering the amount of dollar reserves and increasing the reserves of other currencies, especially the Euro. 

 

In short, people going to an ATM will be looking for alternatives. Even if the twenty dollar bill is preserved as to size in order to save the cash dispensing ATM terminal, the level of distrust as tot he quality and buying power of that money is likely to cause something of a shift in consumer and merchant acceptance of old dollars or even the new dollars, causing merchants to keep more than one currency in their drawers — old U.S. currency, new U.S. Currency and probably the Euro. 

 

I might add that regulatory influence European Central Bank will be probably vastly increase with respect control of financial markets all over the world including the United States where we have always jealously guarded our sovereignty but now surrendered it to a few financial “wizards” who undermined the position of the U.S., in the world at the worst possible time in the worst possible way with the worst possible outcomes for many borrowers, lenders, underwriters, auditors, investment bankers, and investors. 

 

Even if the twenty dollar bill is kept the same size there will be a run to the teller windows of banks, the drawer of merchants, and anywhere else people can lay their hands on the new currency which appears more sound. After all, since we are not on any gold standard or other back-up to the value of currency, the ONLY thing maintaining the dollar’s value is the confidence people have in it. 

 

It therefore follows that most operators of Cash ATMs are going to experience either a drop in the use of the ATM or a complete end to their use if the size of the twenty dollar bill changes — until they install a new cash dispenser. But even if a new cash dispenser is installed, merchants, as in New York City and other parts of the country are encouraging payment with Euros. The current ATM electronic and mechanical infrastructure is not sell suited at present to handle multiple currencies or multiple denominations in different sizes.

The ONLY infrastructure available to handle the versatility of demand for “money” is the merchant’s cash drawer, which will not only inure to the benefit of the operators of cashless ATM machines, but to the benefit of the merchants themselves. It is ONLY by getting a receipt and going to a live cashier that the demands of the customer will be met, at least in the short-term. 

A clean-out of the ATM cash locations will start to occur when the new bills come out since 85% of the cash terminals in most portfolios are unprofitable anyway and the operators will not be inclined to spend more money on a new cash dispenser for a location that isn’t making money anyway. 

This will present a new opportunity for those who permit or operate Cashless ATM terminal locations. Networks like NYCE, AFFN, American Express, COOP and CU24 that allow “scrip” terminals (A/k/a Cashless ATMs) will be the prime beneficiaries of this trend. Cirrus and Plus who merely look away are likely, especially now that they are public, to specifically encourage the use of Cashless ATM after years of “opposing” it on paper. 

Companies like SMARTBanks which has dominated the world of cash ATMs are likely to become major players in financial services as their volume once again mushrooms. It seems that with every step, the financial institutions that seek to block the ability of the small bank or credit union competitor eventually comes up and hits them in the face, like a rake stepped upon in the field. 

With the large financial institutions all in some sort of trouble now and the fact that the small ones were barred from playing in the CDO world (and therefore face no write-offs or liability), the time is ripe for small banks and credit unions to reassert their superiority in numbers, customer service and their ability to field more ATM locations than their largest competitors. Cashless ATMs cost, even now, less than 1/3 of the smallest cash dispensing countertop Cash dispensing ATM and cost 5% of the operating costs of the cash dispensers. Things are changing.

The good news for the consumer is that their convenience fees will go down or be eliminated in greater numbers because of the number of small banks offering surcharge-free access to a growing number of what the NYCE network calls “Point of Banking (a/k/a Cashless ATM a/k/a scrip terminals). 

 

The bad news is only for the banking giants who will see their ATM fee income and monthly statements income decline as more and more people gravitate back to their local banks. As depositors move and loan business moves and decentralization takes hold of the marketplace, supplanting what was a government-sponsored hegemony of a handful of banks, the flimsy foundation on which the giant financial services business model was built will crack and crumble. 

 

Add to that the availability of “second chance checking” for those who don’t qualify to open a regular checking account and overdraft privileges on these strictly electronic bank accounts, and you have a prescription for a resounding come-back of the small financial institution and the death-knell of the once mighty giant players. 

 

All these services and more are now available to any financial institution to offer customers who walk in through their door, through the proliferation of third party vendors who are willing to set up, sell, monitor, score risk and even take the risk on these accounts. It is the dawning of a new age, where the syndication and derivative schemes of the old fashioned giants are replaced by a better market system for distribution of credit, wealth and prosperity. Free-market enthusiasts should be excited.

 

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