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JP Morgan Sues FDIC for WAMU Cash Over Disputed Mortgage Bonds

Posted on December 19, 2013 by Neil Garfield

EDITOR’S NOTE: The dots are starting to get connected. Here JP Morgan who said they were the successor for everything that was WAMU turns out to be arguing that this didn’t actually happen and that some money is still left in the WAMU “estate.” The issue that is not raised is what else is in the WAMU estate? I content that there are numerous loans or claims to loans that were never transferred to anyone successfully and I think the FDIC and JPM both know that. Chase is trying to limit its exposure for bad bonds while at the same time claiming ownership or servicing rights for the underlying mortgages.

Which brings me to a central procedural point: if these cases are to be properly litigated such that the truth of the transaction(s) comes out, then it cannot be done on the rocket docket of foreclosures. It should be assigned to regular civil litigation or even better complex litigation because the issues cannot be addressed in the 5-10 minutes that are allowed on the rocket docket.

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JPMorgan (JPM) has sued the Federal Deposit Insurance Corp. for a portion of the $2.7B remaining in the FDIC receivership that liquidated Washington Mutual following the sale of its branches and deposits to JPMorgan for $1.88B during the financial crisis in 2008.

The lawsuit is the latest development in the dispute between JPMorgan and the FDIC over who should assume Washington Mutual’s legal liabilities, such as those related to the sale of problematic mortgage bonds.

Meanwhile, JPMorgan has been sued by the State of Mississippi for alleged misconduct while going after credit-card users for missed payments. The bank’s sins include pursuing consumers for money they didn’t owe, Mississippi said.

The state is the second to sue JPMorgan over the issue, the other being California, while 15 others are examining the matter. JPM is already in early settlement talks with 14 of them.

Read more at Seeking Alpha:
http://seekingalpha.com/currents/post/1470511?source=ipadportfolioapp_email

Filed under: CASES, CORRUPTION, evidence, expert witness, foreclosure, foreclosure mill, GARFIELD KELLEY AND WHITE, investment banking, Investor, MODIFICATION, Mortgage, Motions, Pleading, securities fraud, Servicer, TRUST BENEFICIARIES, trustee | Tagged: Chase, complex litigation, FDIC, foreclosures, JP Morgan, JPM, rocket docket, WAMU, WAMU estate | 10 Comments »

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

Posted on October 25, 2013 by Neil Garfield

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

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

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

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

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

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

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

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

Only $4 Billion of JPM $13 Billion Settlement Goes for “Consumer Relief”

Posted on October 23, 2013 by Neil Garfield

For assistance in understanding the content of this article and purchasing services that provide information for attorneys and homeowners see http://www.livingliesstore.com.

Josh Arnold has written an interesting article that reveals both realities and misconceptions arising from gross misconceptions. His misperceptions arise primarily from two factors. First he either ignores the fact that JPM was integrally involved in the underwriting, sale and hedging of the alleged mortgage bonds, never actually acquired the loans or the bonds on which they claimed a loss, and made huge “profits” from fictitious trades disguised as “proprietary” trading which was a cover for tier 2 yield spread premiums that were never disclosed to investors or borrowers. The deregulation of those mortgage securities may have provided cover for the fraud that occurred to investors, but the failure to disclose this “compensation” to borrowers violates the truth in lending act and state deceptive lending laws.

Second, the article is based upon a point of view that is not surprising coming from a Wall Street analyst but which is bad for the country. The ideology behind this is clear — Wall Street is there to make money for itself. That has never been true. Wall Street exists solely because in a growing and complex economy, liquidity must be created by breaking up risks into portions small enough to attract investors to the table. Whether they make money or not depends upon their skill in running a company.

Unfortunately in the early 1970’s the door was flung wide open when broker-dealers were allowed to incorporate and go public. Just ask Alan Greenspan who believed the markets would self correct because the players would act rationally in their own self interest. As he he says in his latest book, the banks did not act rationally nor in their own best interest because they were being run by management that was acting for the self interest of management and not the company. Back in the 1960’s none of this would have occurred when the broker-dealers were partnerships —leading partners to question any transaction by any partner that put the partners at risk. Now the partners are remote and distant shareholders who are among the victims of management fraud or excess risk taking.

The effect on foreclosure defense is that, at the suggestion of the former Fed Chairman, we should stop assuming that the broker dealers that are now called banks were acting with enlightened or rational self-interest. The opening and closing statement should refer to the information like this article Quoted below as demonstrating that the banks were openly violating common law, statutory, and administrative rules because the losses from litigation would not be a liability of the actual people who caused the violations.

Any presumption in favor of the foreclosing bank should be looked at with intense skepticism. And in discovery remember to ask questions about just how bad the underwriting process was and revealing the absolute fact, now proven beyond any reasonable doubt, the goal was for the first time NOT to minimize risk, but rather to force applications to closing because of giant profits that could be booked as soon as the loan was sold, since at the time of closing the loans were already part of a reported chain of securitization. Investigation at real banks as opposed to “originators” will reveal two sets of underwriting rules and practices — one for their own portfolio loans in compliance with industry standards and the other for the vast majority of loans that were claimed to be part of a fictitious cloud of securitization that did not comply with industry standards.

In the end my initial assessment in 2007-2008 on these pages is proving to be true. The unraveling of this mess will depend upon quiet title lawsuits and lawsuits for damages resulting from violations of the Truth in Lending Act — where those gross profit distortions at the broker-dealer level are required to be paid to the homeowner because they were not disclosed at closing.
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From Seeking Alpha website, by Josh Arnold —

JPMorgan’s (JPM) legal woes got a lot worse over the weekend with its well-publicized $13 billion settlement. JPM already has much more than that set aside to pay legal claims so it’s really a non-event for the bank; they saw it coming to a degree. I’m not here to debate whether or not JPM’s employees misled investors, including Fannie and Freddie, but what I think the most important, and disconcerting, piece of this settlement is the way it was undertaken by the Administration.

Think back to 2008 when the world as we knew it was ending. Smaller financial institutions were failing left and right and even the larger players, including Lehman, Bear Stearns, Washington Mutual, Wachovia and others eventually found themselves in enormous trouble to the point where distressed sales were the only way to stave off bankruptcy (save Lehman, of course). The federal government, eager to avoid a massive crisis, asked JPM, Wells Fargo (WFC) and others to aid the effort to avoid such a calamity. Both obliged and we know history shows JPM ended up with Washington Mutual and Bear Stearns while Wells purchased Wachovia as it was on the cusp of going out of business. At the time, JPM CEO Jamie Dimon famously asked the government, as a favor for bailing out WaMu and Bear Stearns, not to prosecute JPM down the road for the sins of the acquired institutions. This is only fair and it should have gone without saying as the idea of prosecuting an acquirer for something the acquired company did as an independent institution is preposterous.

However, that is exactly where we find ourselves today with the settlement that has been struck. JPM has said publicly that 80% of the losses accrued from the loans that are the subject of this settlement were from Bear and WaMu. This means that, despite Dimon’s asking and the fact that the federal government “urged” JPM to acquire these two institutions, JPM is indeed being punished for something it had nothing to do with. This is a watershed moment in our nation’s history as the next time a financial crisis rolls around, who is going to want to help the federal government acquire failing institutions? Now that we know that the reward for such behavior is perp walks, public shaming via our lawmakers (who can’t even fund their own spending) and enormous legal fines and settlements, I’m thinking it will be harder for the government to find a buyer next time.

Not only is the subject of this legal settlement and the very nature of the way it has been conducted suspect, but even the fines themselves as part of the settlement amount to nothing more than tax revenue. The $13 billion is split up as follows: $9 billion in penalties and fees and $4 billion in consumer relief. The penalties and fees are ostensibly for the “wrongdoing” that JPM must have performed in order to be subject such a historic settlement. These penalties and fees are for allegedly misleading investors in these securities and misrepresenting the strength of the underlying loans. The buyers of these securities, however, were all very sophisticated themselves, including the government sponsored entities. These companies had analysts working on these securities purchases and could very well have realized that the underlying loans were bad. However, Fannie and Freddie blindly purchased the mortgages and were eventually saddled with large losses as a result. But instead of the GSE’s taking responsibility for bad investment decisions, the government has decided to simply confiscate $13 billion from a private sector company while Fannie and Freddie have claimed zero responsibility whatsoever for their role in the losses.

The other $4 billion is earmarked for “consumer relief” but the worst part of this is that these loans were sold to institutions. This means that this consumer relief is simply a bogus way to confiscate more money from JPM and the alleged reason has no basis in reality. The consumer relief portion would suggest that JPM misled the individual consumers taking the loans that were eventually securitized but that is not what the settlement is about. In fact, this is simply a way to redistribute wealth and the Administration is taking full advantage. In order for the redistribution of wealth to make the alleged victims whole it would need to be distributed among the institutions that purchased the securities. So is this part of the settlement, under the guise of “consumer relief”, really just another tax levy? Or is it going to consumers that had absolutely nothing to do with this case? Either way, it’s confiscatory and doesn’t make any sense. Based on reports about this consumer relief portion of the settlement, this money is going wherever the Administration sees fit. In other words, this is simply tax revenue that is being redistributed and given to consumers that have absolutely zero to do with this case.

Even the $9 billion in penalties and fees is going to be distributed among various government agencies and as such, this money is also tax revenue. Otherwise, the money for these agencies would eventually come from the Treasury but instead, JPM is going to foot the bill.

I’m not against companies that have done something wrong being punished. In fact, that is a necessary part of a fair and open capitalist system that allows the free world the economic prosperity it has enjoyed over history. However, this settlement is a clear case of the federal government confiscating private assets in order to redistribute them among government operations and consumers that had absolutely nothing to do with the lawsuit. I am extremely disappointed in the way the Administration has handled this case and other banks should be on notice; it doesn’t matter what you did or didn’t do, if you’ve got the money, the government will come after you.

In terms of what this means for the stock, JPM has already set aside $23 billion for litigation reserves so when the bill comes due for this settlement, JPM has more than enough firepower available to pay it. In fact, this settlement is likely a positive for the stock. Since this is likely to be the largest of the fines/settlements handed down on the Bank of Dimon, the fact that the uncertainty has been lifted should alleviate some concern on the part of investors. In addition to this, since JPM still has a sizable reserve, $10 billion or so, left for additional litigation, investors may be surprised down the road if JPM can actually recoup some of that litigation expense and boost earnings. Not only would that remove a multi-billion drain on book value but it could also increase the bank’s GAAP earnings if all litigation reserves weren’t used up. In any event, even if that is not the chosen path, JPM could still recognize higher earnings in the coming quarters if it sees it needs less money set aside each quarter for litigation reserves. Again, this is very positive for the stock but for more tangible reasons.

The bottom line is that JPM got the short end of the stick with this settlement. Not only is the bank paying for the sins of others but it is paying very dearly and sustaining reputational damage in the process. I couldn’t be more disappointed with the way the Administration’s witch hunt was conducted and the end result. But that is the world we apparently live in now and if you want to invest in banks you need to be prepared to deal with confiscatory fines and levies against banks simply because they can’t stop the government from taking it.

However, JPM is better positioned than perhaps any of its too-big-too-fail brethren to weather the storm and I think that is why there was virtually no movement in the stock when the settlement became public. JPM has been stockpiling litigation reserves when no one was looking and has done well in doing so. With the looming threat of this settlement now come and gone, investors can concentrate on what a terrific money making machine JPM is again. Trading at a small premium to book value and only nine times next year’s earnings estimates, JPM is the safe choice among the TBTF banks. Couple its very cheap valuation with its robust, nearly 3% yield and the largest settlement against a single company in our country’s history behind it and you’ve got a great potential long term buy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Share this ArticleComments(8)

Don Dion
Oct 23 07:49 AM
Josh,

Great article. See also http://seekingalpha.co…

Don

Filed under: CORRUPTION, evidence, expert witness, GARFIELD GWALTNEY KELLEY AND WHITE, investment banking, Investor, MODIFICATION, Mortgage, Motions, Pleading, securities fraud, Servicer, STATUTES | Tagged: Alan Greenspan, closing statement, discovery, JPM, opening statement, proprietary trading, quiet title, TILA, TILA damages, undisclosed compensation at loan closing | 8 Comments »

At Least 50% JPM Mortgages Have Errors

Posted on April 11, 2013 by Neil Garfield

If you are seeking legal representation or other services call our Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.

The selection of an attorney is an important decision and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Editor’s Comment: The real reason why the foreclosure reviews were terminated was not because of the expense, complexity or time it was taking to do them. The real reason was that the people close to the reviews were finding “error rates” that were 10 to 20 times the rate claimed by the banks. That is a euphemistic way of saying the foreclosures should never happened in at least 50% of the foreclosures that did happen. And now they are saying you can have $1,000 on average for your trouble instead of getting your house back or enough money to replace it.

The “problem” the OCC is addressing is that directive from the Obama administration to not kill the megabanks, issued on the information from those megabanks that killing them will kill the world economy. That is pure horse crap. And now books are coming out detailing how that the TBTF doctrine is both false and highly destructive to our economy, past, present and future.

If a bank is carrying assets that are really not worth anything, then those assets should not be included in the requirements for capital structure of that banks. They either need more money (which they have lying in the Cayman Islands) or they must fall apart, after being resolved by the FDIC.

We are left with an economy built on an illusion that creates the illusion of recovery until it busts again. And it will. As Zillow points out today, the apparent price increases remain out of line with income and are solely based upon low interest rates which will start to go up to normal levels at some point. Once that happens, people won’t be able to afford paying even on modest loans because they just don’t have the income or credit to enter into a transaction that is destined to fail.

The latest “settlements” involving billions of dollars of payments to homeowners who were wrongfully foreclosed, is a drop in the bucket for what the banks owe back to the American economy, investors who purchased bogus mortgage-backed bonds from unfunded and possibly nonexistent “trusts” whose “trustees” have nothing to do except collect their own fees.

Obama promised transparency and in some ways he fulfilled that promise. One notable exception is in banking and finance where the entire business is dependent upon big lies. The simple answer is that if someone’s house was foreclosed wrongfully they should either get the house back or compensation for the loss of the house based upon the figures used to induce the homeowner borrower to enter into the deal.

That means the banks should be stuck with the false appraisals now that we know they are false. And the banks should absorb the risk of loss now that we know there was no underwriting committee or procedures to verify the collateral, income of the borrower or viability of the loan.

If we start telling the truth, then the clawback of wealth for those thrown under the bus into poverty and those who have still managed to stay in the middle class will be a far superior method of providing stimulus to an economy that at this point relies upon the financial services sector to make up for almost 50% of the GDP we lost when we lost manufacturing and other outsource jobs abroad.

Small business will inevitably improve by leaps and bounds, hiring the bulk of the workers who are unemployed or those who have given up looking for work. Median income rises, with the ability to pay more on a higher mortgage increasing directly promotional to the increase in median income. The shortage of housing for sale is solely the result of foreclosures and underwater homeowners, which accounts for more than 25% of all homes that could be on the market and are not.

When you base your policy on a lie, then more lies must be told to prop up the original lie. And eventually, as we have repeatedly seen throughout history, the house of cards collapses — again and again. What we need is a mechanism to evaluate all foreclosures — past, present and future — and if the foreclosures are or would be wrongful, then they shouldn’t be done and the victims should be compensated.

OCC Releases Embarrassing List of Foreclosure Review Payouts on Eve of Senate Hearings
http://www.nakedcapitalism.com/2013/04/occ-releases-embarrassing-list-of-foreclosure-review-payouts-on-eve-of-senate-hearings.html

Scant Relief in Foreclosure Payouts
http://stream.wsj.com/story/markets/SS-2-5/SS-2-207702/

http://www.forbes.com/sites/francinemckenna/2013/04/01/jpmorgan-chase-still-haunted-by-foreclosure-reviews-and-more/

GAO Report on Foreclosure Reviews Misses How Regulators Conspired with Banks Against Homeowners
http://www.nakedcapitalism.com/2013/04/gao-report-on-foreclosure-reviews-misses-how-regulators-conspired-with-banks-against-homeowners.html

http://http://www.nakedcapitalism.com/2013/04/wells-fargos-reprehensible-foreclosure-abuses-prove-incompetence-and-collusion-of-occ.html

The Banks’ “Penalty” To Put Robosigning Behind Them: $300 Per Person
http://www.zerohedge.com/news/2013-04-09/banks-penalty-put-robosigning-behind-them-300-person

http://http://www.scribd.com/doc/134192424/Naked-Capitalism-Whistleblower-Report-on-Bank-of-America-Foreclosure-Reviews

Regulators: 4.2 million foreclosure settlement checks to be mailed
http://www.housingwire.com/news/2013/04/09/regulators-42-million-foreclosure-settlement-checks-be-mailed

Independent Foreclosure Review: 1,135 Borrowers to Receive Max $125,000 Payment in Fraudclosure Settlement
http://4closurefraud.org/2013/04/09/independent-foreclosure-review-1135-borrowers-to-receive-max-125000-payment-in-fraudclosure-settlement/

Filed under: CDO, CORRUPTION, Eviction, foreclosure, GARFIELD GWALTNEY KELLEY AND WHITE, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: False appraisals, financial services, foreclosure review settlements, foreclosure reviews, Gdp, JPM, median income, unemployment, zillow | 158 Comments »

Buying U.S. Foreclosures: A Risky Business

Posted on July 13, 2012 by Neil Garfield

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14 Things Every Canadian Buyer Should Know Before Taking the Plunge

Editor’s Comment:

Canadians and other foreign investors are joining with U.S. investors in buying distressed residential real estate in the U.S. Practically by definition they have no idea about the risks they are taking. They are taking the “knowledge” from 15 years ago and applying it to a market that does not even remotely resemble the old market.

Canada weathered the storm caused by Wall Street antics by simply not playing. Canadian banks saw inherent risks and moral hazards that they wanted no part in playing. While the rest of the world laughed at Canada’s stuffiness, the banks, and its depositors are just fine thank you, although their economy is taking a hit due to a decline in demand for exports. So Canadians with Canadian money that is not debased are coming to America in droves to take advantage of the “oversold” prices of housing. They are buying these properties in droves and unwittingly making themselves part of a corrupt marketplace in which they could lose their money, their title, their property and their right to possession of that property because they bought it from someone who didn’t own it or because they assumed that the old mortgage had been paid off and properly satisfied. This article explains why investors show exercise great care to preserve the value and existence their investments.

1. With the Massachusetts Supreme Court having decided that foreclosure is only valid if the would-be forecloser owns both the note and the mortgage — a black letter law concept that has been in existence since before the American Revolution — the questions are evolving from issues relating to wrongful foreclosures to “what do we do about it, now that we know the foreclosures did not meet the basic elements of a foreclosure action under any analysis?”

2. Some decisions, like Hogan in Arizona appear to create a debatable issue. But read closely, the decision stands for the proposition that it is not necessary to possess the note in order to give the instruction to the Trustee on Deed of Trust to issue a Notice of Default and/or a Notice of sale. It does not state that anyone without proper credentials can present themselves as the creditor. So the auction, if it occurs, is strictly limited to cash bids, since the creditor has neither stepped forward nor made a claim as to the amounts due.

3. In a prescient note, the Hogan court simply states that the borrower neither denied the debt nor the security instrument or the note. If they do so, then the game is on, and the banks and servicers are “out of the money.” They are not creditors, they have only the most tenuous argument to present themselves as sub-servicers, and they have no authority to speak for the Master servicer or the investors from whom money was taken under false pretenses.

4. It is now apparent that this has not escaped attorneys or judges. If there is a denial of the obligation, note, mortgage (Deed of Trust), plus a denial of the default and the amount claimed as due from a party whom the borrower denies is the creditor, the case must move forward into discovery. A motion for summary judgment by the banks and sub-servicers will be routinely denied if it is met with an affidavit from the homeowner or borrower that contains these denials. Now that borrowers and even homeowners who have already lost their property in foreclosure and eviction are overturning foreclosures, regaining title and possession of the property, the “new” buyer is left with only a claim for money from their title carrier and a potential claim against the bank or servicer that “sold” them the property.

5. The title companies have already decided this point. They will and they’re routinely writing exceptions into the title policy that actually puts the liability for indemnification on the buyer rather than the title company, if the claim arises out of illegal origination or illegal foreclosures.

6. The Bank will fight the Buyer on the warranty deed recitals until the investor gives up. But the main point, is that investment is US distressed property is buying a lawsuit UNLESS you file a quiet title action and it sticks. Remember, you are giving notice to John Does 1-10,000 through publication who probably don’t read your local paper that publishes legal notices.

7. These investor lenders have a legitimate beef. They gave up money and signed papers that assured them they were getting good loans within 90 days of the transaction in which the investor advanced the money to the investment banker. What they are getting is bad loans pitched over the fence years after the transaction. In the foreclosures, especially the non-judicial foreclosures, there is no need or opportunity to give notice to the investors that this loan is NOW claimed to be part of the pool they think they own.

8. The investors now have a good reason to enter the picture and assert that they don’t want this bad loan, they didn’t buy it and it wasn’t transferred into the “pool” within 90 days of the investor’s closing with the investment banker. Thus they can argue without any real defense from the banks that the assignments are mere offers that the pools neither accepted nor could accept under the terms of the prospectus and pooling and servicing agreement. But whether they make the claim or simply COULD make the claim, that is the essence of clouded title. And that is how you end up in a lawsuit you never imagined.

9. Add to that the assignment was fabricated, forged and fraudulently presented without any financial transaction backing it up, and the investor wins hands down.

10. Realtors are no help on this since all they want is property moving thus producing commissions. They like to point out that the deed in a short-sale is much better because it is the homeowner who actually signs the deed. And that is true. what they ignore is that the payoff of the old mortgage was taken by a stranger to the transaction who accepted the money and then issued an authorized release and satisfaction of the old mortgage lien when the buyer closes.

11. The banks and sub-services are starting up their own title companies or entering into confidential agreements with the title companies that incidentally were part owners of Mortgage Electronic Registration Systems, Inc (MERS) or the JPM entity they ran for a while when they saw the hand writing on the wall for MERS. But they are only creating the appearance of insurance protection with no intention of honoring the claim or fixing the title problem they reported to the buyer wasn’t there. Now the ttile companies say their title report is only a worksheet and you have no right to rely on it. There are about ten thousands cases in precedent that disagree with this ridiculous assertion.

12. The bottom line is that a buyer who does not negotiate the right provisions in the title policy (it CAN be done) is going to go through (1) euphoria about how brilliant he is to have picked up such a bargain (2) no title and/or (3) two or more mortgages that still encumber the property despite the supposed payoff and recording of release and satisfaction.

13. The final coup de grace is that the buyers who fail to heed these warnings wil find themselves bankrupt when it comes down to selling or refinancing the property or when they find themselves defending a lawsuit from a former homeowner demanding that the foreclosure be overturned and possession restored. There are thousands of these cases and within the next 2 years there will be tens of thousands of these cases. Your title company is not likely to defend you unless you negotiate that and other terms into the your title policy.

14. BOTTOM LINE: Don’t close without an experienced real property attorney and if he or she is dismissive of these claims then they are just as ignorant as you are. Move on to an attorney who does understand negotiation of the terms of deed and title policy and leave the paper pushers in the dust. If you want more help, write to me at neil@livingliesblog.com.

It was the absence of information that caused virtually everyone to misread the risks that were inherent in the mortgage meltdown period during which prices were artificially inflated. The same absence of information is leading Canadians to misinterpret the market and assume risks that are not apparent to them. It is only through competent professionals that they should complete any real estate transaction in the United States. In this case competence includes special knowledge of the securitization of mortgages, the current status of corruption in our title system, and the ultimate risk of losing the entirety of their investment, the title they thought they had, and the right to possession of property which they thought had been properly purchased and protected with a title insurance policy. Canadians would be unwise to accept the assertions of title companies who produce title reports and commitments for title insurance that merely perpetuate the corruption of title in America. These same entities actually have ownership interests in the private system of recording established by the banks. Virtually everyone in the marketplace has a conflict of interest that may ultimately dash the hopes on investors and potentially remove their nest egg meant for retirement.

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Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: assignment fabricated, Canada, Canadian, foreclosures, foreign investors, JPM, Massachusetts Supreme Court, Master Servicer, MERS, realtors, sub-servicers, title policy, U.S. Foreclosures a risky business | 69 Comments »

Szymoniak: Honesty Pays $46.5 Million in Whistleblower Suit

Posted on July 3, 2012 by Neil Garfield

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Editor’s Comment and Analysis:

It was and remains a big lie — the securitization the loans, the origination of the loans, the assignments, alleges and endorsements. $46.5 million sounds like a lot and these whistleblowers will get a “windfall” as a result of it. But it is a drop in the bucket and we need to fill the bucket. And our bucket list should include taking down the big banks, removing money from politics, and getting back to government by the people and for the people.

Schiller, the scholar who has been leading the way in economic analysis of the housing market, has offered an audacious plan that is the last possible way for government intervention to save the economy, which is heavily dependent upon consumer spending, particularly in the housing market. Eminent domain has long been sustain as the right of government to take private property and convert it to public use. Whether it is a highway, downtown redevelopment or other reasons, eminent domain has been played by the banks and developers as a way to get land they need, at a price that could not be achieved using the power of the government behind them.

While seemingly unusual and audacious, Schiller’s proposition has many precedents in history and should be considered as the last great hope after the 50 attorney generals agreed in the 50 state settlement that now prevents them from further investigation and prosecution against the banks. Schiller’s, the originator of the case-Schiller index showing that median income and income disparity is harmful to the economy and deadly to the housing market, proposes that we use the power of eminent domain to seize the remaining mortgages, and perhaps the property that has already been foreclosed, and remake the deals so that they make sense. Translating that means that the homeowners will get the deal that they should have received when they bought o refinanced their house. And it capitalizes on the inconvenient truth that it was the banks who created risks that neither the investors nor the homeowners signed up for.

By paying the value of the remaining mortgages — more than 30% are reported still under water and when carefully analyzed the figure is closer to 60%, the banks get no more and no less than they should, the investors still get their money — 100 cents on the dollar if they insist on payback from the banks in addition to the money from the new mortgages on the old property, and the homeowner is back in charge of his own home paying principal, interest, costs, fees and insurance and taxes that are fair market value indicators. It is better than the proceeds of foreclosures, so the banks now must argue that they have a right to take less money in order to get the foreclosure.

The banks want the foreclosure because they lied. And with the foreclosure it adds to the illusion that they funded or paid for loans in which they do not have a nickel invested. The fact that the balance sheets of the mega banks are going to take a giant hit is only an admission that the assets they are reporting are either not worth anything or are worth far less than the value shown on their public financial statements. They are still lying about that to investors, the SEC and other regulatory agencies.

So whistleblowers must pave the way and show the lies, show the inequality, show the inflated appraisals that could not stand the test of time and force government to act as it should. The chief law enforcement of the country and the chief law enforcement of each state owes his/her citizens at least that much and more. They must find ways to clear up the corruption of title records that are irretrievably lost.

And the lawyers who keep turning down these cases because they are too complex or too weak should take a close look at these whistleblower cases. The settlement, as always, comes before the trial because the fact remains that the banks are o the hook for their bets on the mortgages and not the mortgages themselves. Lawyers need to show a little guts and seek some glory and wealth from these cases, while at the same time doing their country a service.

We are turning the corner and the banks are starting to lose. Keep up the fight and your effort will probably go well-rewarded.

Whistleblowers win $46.5 million in foreclosure settlement

By James O’Toole

NEW YORK (CNNMoney) — Getting served with foreclosure papers made Lynn Szymoniak rich.

While she couldn’t have known it at the time, that day in 2008 led to her uncovering widespread fraud on the part of some of the country’s biggest banks, and ultimately taking home $18 million as a result of her lawsuits against them. Szymoniak is one of six Americans who won big in the national foreclosure settlement, finalized earlier this year, as a result of whistleblower suits. In total, they collected $46.5 million, according to the Justice Department.

In the settlement, the nation’s five largest mortgage lenders –Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500) and Ally Financial — agreed to pay $5 billion in fines and committed to roughly $20 billion more in refinancing and mortgage modifications for borrowers.

A judge signed off on the agreement in April, and in May — Szymoniak received her cut.

“I recognize that mine’s a very, very happy ending,” she said. “I know there are plenty of people who have tried as hard as I have and won’t see these kinds of results.”

Related: 30% of borrowers underwater

Whistleblower suits stem from the False Claims Act, which allows private citizens to file lawsuits on behalf of the U.S. when they have knowledge that the government is being defrauded. These citizens are then entitled to collect a portion of any penalties assessed in their case.

The act was originally passed in 1863, during a time when government officials were concerned that suppliers to the Union Army during the Civil War could be defrauding them.

In 1986, Congress modified the law to make it easier for whistleblowers to bring cases and giving them a larger share of any penalties collected. Whistleblowers can now take home between 15% and 30% of the sums collected in their cases. In the cases addressed in the foreclosure settlement, the whistleblowers revealed that banks were gaming federal housing programs by failing to comply with their terms or submitting fraudulent documents.

In Szymoniak’s case alone, the government collected $95 million based on her allegations that the banks had been using false documents to prove ownership of defaulted mortgages for which they were submitting insurance claims to the Federal Housing Administration.

The FHA is a self-funded government agency that offers insurance on qualifying mortgages to encourage home ownership. In the event of a default on an FHA-insured mortgage, the FHA pays out a claim to the lender.

Szymoniak’s case was only partially resolved by the foreclosure settlement, and she could be in line for an even larger payout when all is said and done.

As an attorney specializing in white-collar crime, the 63-year-old Floridian was well-placed to spot an apparent forgery on one of the documents in her foreclosure case, one she saw repeated in dozens of others she examined later.

“At this point, the banks are incredibly powerful in this country, but you just have to get up every morning and do what you can,” she said.

The other five whistleblowers in the settlement came from the industry side, putting their careers at risk by flagging the banks’ questionable practices.

Kyle Lagow, who won $14.6 million in the settlement, worked as a home appraiser in Texas for LandSafe, a subsidiary of Countrywide Financial. He accused the company in a lawsuit of deliberately inflating home appraisals in order to collect higher claims from the FHA, and said he was fired after making complaints internally.

Gregory Mackler, who won $1 million, worked for a company subcontracted by Bank of America to assist homeowners pursuing modifications through the government’s Home Affordable Modification Program, or HAMP. Under HAMP, the government offers banks incentive payments to support modifications.

Mackler said Bank of America violated its agreement with the government by deliberately preventing qualified borrowers from securing HAMP modifications, steering them toward foreclosure or more costly modifications from which it could make more money. He, too, claims to have been fired after complaining internally.

There’s also Victor Bibby and Brian Donnelly, executives from a Georgia mortgage services firm who accused the banks of overcharging veterans whose mortgages were guaranteed by the Department of Veterans Affairs, thereby increasing their default risk. Bibby and Donnelly won $11.7 million in the settlement; their attorneys did not respond to requests for comment.

Shayne Stevenson, an attorney who represented both Lagow and Mackler, said the two weren’t aware of possible rewards when they first brought their evidence to his firm.

“The reality of it is that most of the time, whistleblowers don’t even know about the False Claims Act — they don’t know they can make money,” Stevenson said. Both his clients, Stevenson added, “just wanted the government to know about this fraud, so they deserve every penny that they got.”

A Bank of America spokesman declined to comment on individual cases, but said the national settlement was “part of our ongoing strategy to put these issues, particularly these legacy issues with Countrywide, behind us.” BofA acquired mortgage lender Countrywide in 2008, thereby incurring the firm’s legal liabilities.

The other banks involved either declined to comment or did not respond to requests for comment.

Related: Foreclosures spike 9%

While the whistleblowers in the settlement scored big paydays in the end, the road wasn’t easy. Stevenson said his clients “were pushed to the brink” after raising their concerns, struggling to find work and beset by financial problems.

“They were facing evictions, foreclosure, running away from bills, trying to deal with creditors that were coming after them,” Stevenson said. “This went on and on and on, and this is part and parcel of what happens to whistleblowers.”

For Robert Harris, a former assistant vice president in JPMorgan’s Chase Prime division, the experience was similar.

Harris accused the bank of failing to assist borrowers seeking HAMP modifications and knowingly submitting false claims for government insurance based on wrongful foreclosures. He was stymied when he tried to complain internally, and says he was fired for speaking out.

While Harris ended up with a $1.2 million payout in the settlement, the father of five says he’s been blacklisted within the industry and exhausted by the ordeal.

“It completely turned my life upside down,” he said. “I’m trying to raise my kids, recover from a divorce, recover from the loss of my career — it just comes to down to surviving and putting this to an end.”

“I guarantee the other whistleblowers, too, have sacrificed a lot,” he added. “But to be able to sit back and sleep at night is worth it.”

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Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: Ally Financial, appraiser, BAC, Bank of America, Brian Donnelly, case-Schiller index, Citigroup, eminent domain, False Claims Act, Federal Housing Administration, FHA, Fortune 500, Gregory Mackler, HAMP, J.P. Morgan Chase, James O'Toole, JPM, Kyle Lagow, Robert Harris, Schiller, Shayne Stevenson, Szymoniak, Victor Bibby, Wells Fargo, WFC, Whisleblower | 18 Comments »

Arizona Foreclosure Mediation Considered

Posted on July 1, 2012 by Neil Garfield

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Editor’s Notes:

Mediation dropped Nevada foreclosures to much lower levels. That was especially true when the lawmakers put in provisions that made clear that this wasn’t a game. In order to foreclose you had to mediate first. And in order to mediate you had to have a decision maker present. AND if you are saying that the party showing up is a decision maker, you better have proof — which just another way of saying “standing.”

In the article below, it is clear that progress is slow but the proponents of mediation in Arizona are moving forward with a small pilot. Mediation is, after all, what nearly all the distressed homeowners want — a fair chance after some correction for the excesses of inflated appriasals and unaffordable loans foisted on the American public. Most homeowners are actually willing to accept mortgages where the principal due is still higher than the value of the property just so they can stay in the property. It is an unprecedented opportunity for the lender to get out of the mess they are finding themselves with all their REO proeprty subject to title challenges.

But the REAL problem is that strangers to the loan transaction are going to lose money unless the foreclosure goes through. So they are posing as lenders (pretender lenders) and pushing hard on fraudulent foreclosures because that results in a judicial or legal event in which the property was deemed to be in the REMIC pool (even if it wasn’t) and the loss falls on the investors instead of these strangers. These strangers are well known to us — BofA, Citi, JPM, Wells Fargo etc. They are fighting mediation because it threatens to expose the farce — that none of the foreclosures before were real and that the current ones are no more valid, legal or just than the old ones.

Homeowners simply do not owe money to these people posing as foreclosers, and they never did. There is no basis for foreclosure because the money came from investor lenders with whom the borrower never had the opportunity to make a deal because the real facts were withheld from both the investor lenders and the homeowner borrowers. That leaves the banks holding the bag, legally, if the law is applied and that is exactly what should happen. The obligations arising from the funding by pension funds should be settled through mediation and modification. Foreclosures would and should end, and our national nightmare would be over.

Hat tip to DR Blog

Arizona Foreclosure Mediation – Part 1

Last week at the Arizona Bar meeting my colleague Timothy Burr presented a progress report for the Foreclosure Mediation Unit of ASU’s Lodestar Dispute Resolution Program. The program was well attended and has generated some buzz in the legal community. In some sense this was the FMU’s coming out party as we’ve been keeping a low profile because we’re in its pilot program phase. In my mind there’s nothing worse than rolling out a new program and touting it as a big deal before actually doing anything and then watching it die a humiliatingly public death.

Before talking about the program, a little background. Arizona is a state where almost every foreclosure is a non-judicial foreclosure, although judicial foreclosure is an option it is very rarely used. Non-judicial foreclosures tend to be short and sweet (or bittersweet as the case may be) because they are purely contractual as noted in the deed to the property. Here’s a link to the best online primer on trustee’s sales I’ve found, and here’s the shorthand version. If you fall behind in your payments and the creditor decides to go forward with a trustee’s sale, a notice is placed on the house’s door announcing a trustee’s sale will occur 90 days from the posting, and the sale occurs on that day unless there’s a serious problem (like fraud or other similarly egregious claims brought in court) or there’s a last minute agreement between the creditor and debtor(s).

In 2009 I worked with others to create an Arizona Foreclosure Mediation Task force, and after several meetings it was clear that we didn’t have the clout to get anything off the ground so we disbanded. However, in late 2010/early 2011 the state was part of a nationwide settlemen with some of the big banks related to mortgage issues, and the Attorney General’s Office set aside part of those settlement monies for grants to assist with the state’s mortgage crisis. Through this granting source the law school was able to obtain the funds to get foreclosure mediation off the ground. And, once the funds came in we hired Tim to direct and build the program.

Our initial question was – how do we even get into the game? In judicial foreclosure states it’s pretty easy to know how to do this. Other non-judicial foreclosure states such as Nevada, Washington, Oregon, and Hawaii have created statutory schemes requiring mediation before the trustee’s sale. Such legislation has been proposed in Arizona since 2008 or so, but it hasn’t gone anywhere. Thinking that the only sure fire mediation referral source would be a court, I spoke with the Pro-Se Clerk at the Bankruptcy Court and asked if a foreclosure mediation program might benefit the court. To my surprise he happened to be looking into ways to deal with pro-se bankruptcy filers who were filing for bankruptcy simply to hold up trustee’s sales. While bankruptcy can slow down the trustee’s sale process, the creditors typically are allowed to go forward with the sale when the court finds there’s no legal reason to keep it from going forward (again, the handy primer). So far that’s been the vast majority of cases in the bankruptcy court. At the end of last summer we presented a foreclosure mediation proposal to the court. In this meeting the judges talked about the numerous cases where there clearly was a communication problem between the debtor and the mortgage servicers and/or holders, and they liked the idea. So, we entered into an agreement to report back after 25 referrals, at which time the court and the FMU would decide whether we should go forward with another 75 referrals.

My next post will present data about our first 25 referrals, which formed the basis of Tim’s presentation last week. And just so you know, we are going forward with the next 75 referrals.

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Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: Arizona Foreclosure Mediation, BofA, Citi, JPM, mediation, Nevada Foreclosure Mediation, REMIC pool, REO property, Wells Fargo | 16 Comments »

Fed Orders Ally, BOA, Citi, JPM, Wells Fargo to Pay $766.5 Million in Sanctions

Posted on February 16, 2012 by Neil Garfield

Unsound and Unsafe Processes and Practices in Residential Loans

Editor’s note: Once again we have an administrative finding and an admission by the BIG 5 that their servicing and practices are both unsafe and unsound. These are fines, not restitution. The Banks regard this as the price of doing business and the Federal Reserve System, led by the NY Fed, on which the likes of Jamie Dimon are Board members, makes it look like they are doing something. But it is a long way to stretch these findings into conclusive proof that these unsafe and unsound practices apply to any particular loan.

On the other hand, it lends considerable support to the argument that the accounting is not complete, the documentation is neither complete nor does it conform to the full story — the reconciliation of money and practice with the requirements of the closing documents with the lender (investors), the requirements of the closing documents with the borrower (homeowner), the truth of the representations made in court by those seeking to foreclose, and the truth of how the money was funded and distributed, contrary to the chain of documents and the proffers made in Court by entities seeking to foreclose.

From the information we have at hand, if properly presented, the would-be forecloser should be forced in discovery to prove up the transactions that are described in assignments, substitutions of trustees and other documents. And in failing to prove the boiler plate recital “for value received” their case should collapse. The reference to transactions in which the loan was allegedly bought and sold are false in most cases, which means that there was no sale because nobody paid anything. It is the same with the auction wherein a credit bid is submitted by a non-creditor who cannot prove that they bear a risk of loss for non-payment of the loan.

Further, it probably is true that the forged, fabricated false documentation referred to in the Missouri indictment, are a cover-up for a more essential defect — that the loan origination documents lack full disclosure of the the identity of the real creditor, the fees and other compensation earned, and the actual terms of repayment to the creditor which are contained in the securitization documents, not the documents at the closing of escrow with the borrower.

The biggest cover-up is the amount due on the debt and the very existence of the declared default. With the servicer paying the creditor, the creditor is not in any position to declare a default regardless of whether the borrower made payments or not. The servicer, not being party to the mortgage has no rights to foreclose although they could allege that they have some right of restitution from the borrower, but since the servicer has no contract with the borrower, there is no basis for foreclosure.

Other payments to the creditor, or the agents of the creditor in the securitization chain by insurers, counterparties in credit default swap contracts and intermingling receipts and liabilities by cross collateralization within the pool are made with the express waiver of subrogation, which means they are making the payments but they waive any right to collect from the homeowner. Crediting these payments to the investors and the corresponding loan accounts would greatly reduce the debt due without any resort to “principal reduction” or “principal correction.” The legal principles are that the creditor is only entitled to be paid once and it is only the creditor who has the right to foreclose and submit a credit bid at auction.

A creditor who has already received a payment cannot demand the same payment again from the borrower. The strategy of the Banks is to claim ownership of the loan, auction the property and submit their own credit bid which is false. The strategy of the homeowners is to penetrate the veils of secrecy and obfuscation of the banks and show through the records or absence of records that the transactions claimed by the conduits in the securitization chain never were completed because no value was exchanged and to show that they are entitled to a full accounting of all money received by or on behalf of the creditor.

This information is especially important in exercising rights under HAMP and other debt relief and modification programs. Without a starting point in which the borrower knows the true balance of the debt, the borrower is left to guess or estimate or waive the amount of payments received by or on behalf of the creditor.

Unless and until the Court, or any of the regulatory authorities forces the creditors and the bank conduits to show all money received and all money paid out, with dates, payees and the purpose of the transaction, there is no right to pursue foreclosure. Trustees are breaching their statutory and common law duties by failing to exercise due diligence on this point especially since the information, like these sanctions and the prior Cease and Desist orders are already in the public domain.

Once the Court orders the bank or servicer to comply with the ordinary requirement to provide a FULL accounting, experience indicates that the cases will inevitably settle on favorable terms to the borrower. Failure of the Judge to grant such an order is an appealable order, that probably entitles the homeowner to obtain a review through interlocutory appeal.

Federal Reserve Board releases orders related to the previously announced monetary sanctions against five banking organizations

Release Date: February 13, 2012

For immediate release

The Federal Reserve Board on Monday released the orders related to the previously announced monetary sanctions against five banking organizations for unsafe and unsound processes and practices in residential mortgage loan servicing and processing. The Board reached an agreement in principle with these organizations for monetary sanctions totaling $766.5 million on February 9, 2012.

Attachments:

Ally Financial Inc. (PDF)
Bank of America Corporation (PDF)
Citigroup Inc. (PDF)
JPMorgan Chase & Co. (PDF)
Wells Fargo & Company (PDF)

For media inquiries, call 202-452-2955

SOURCE: http://www.federalreserve.gov

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: 60 minutes, AHMSI, Ally, appraisal fraud, attorney general, auction fraud, BOA, Chris Koster, Citi, credit bids, DocX Indictment, foreclosure fraud, FORECLOSURE SETTLEMENT, foreclosures, forgery, housing market, housing prices, investors, JPM, linda green, LPS, Missouri, mortgage fruad, mortgages, Robo-Signing, settlement, strategic default, Wells Fargo | 25 Comments »

Our Turn to Strike Back: Schneiderman Files Massive Lawsuit Against Pretenders

Posted on February 3, 2012 by Neil Garfield

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,”

EDITOR’S NOTE: Don’t confuse this with other cases. This is the first shot that seeks to drive a stake into the heart of the foreclosure process and NOW, unlike before, the defendants have committed themselves in millions of foreclosures where upon challenge they had been successful at playing shell games with the documents. Everything they did is engraved in stone now and it either can’t be justified or it can be. Schneiderman has crafted a well-written, well-reasoned lawsuit, but more than that this lawsuit in long a facts and short on presumptions. That is what makes it different.

Read this and use it in your pleadings.

A.G. SCHNEIDERMAN ANNOUNCES MAJOR LAWSUIT AGAINST NATION’S LARGEST BANKS FOR DECEPTIVE & FRAUDULENT USE OF ELECTRONIC MORTGAGE REGISTRY

Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings

Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable

Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process

NEW YORK – Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as “MERS certifying officers,” have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party uad the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.

The lawsuit further asserts that the MERS System has effectively eliminated homeowners’ and the public’s ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.

Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the “nominal” mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a “nominee” (or agent) for most major lenders, it remains the “mortgagee” in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.

MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.

MERS’ conduct, as well as the servicers’ use of the MERS System, has resulted in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially clouded titles on properties throughout the State of New York. In fact, several New York judges have questioned the standing of the foreclosing party in cases involving MERS loans and the validity of mortgage assignments executed by MERS certifying officers.

The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:

MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.
MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and “robosigned” by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party’s inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.
MERS’ indiscriminate use of non-employee “certifying officers” to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an “Assistant Secretary,” “Vice President,” or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer’s own employer. Moreover, as a result of the defendants’ failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.
MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS’ role with respect to their loan by providing inadequate disclosures.
The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.

The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices.

The matter is being handled by Deputy Bureau Chief of the Bureau of Consumer Frauds & Protection Jeffrey K. Powell, Assistant Attorney General Clare Norins, and Assistant Solicitor General Steven C. Wu, under the supervision of First Deputy Attorney General Harlan Levy.

Attachment:

Final Summons And Complaint

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: appraisal fraud, BOA, foreclosure fraud, FORECLOSURE SETTLEMENT, foreclosures, housing market, housing prices, investors, JPM, MERS, mortgage fruad, mortgages, settlement, strategic default, uaction fraud, Wells | 53 Comments »

Reuters: Calls Mount to Break Up Bank of America

Posted on January 25, 2012 by Neil Garfield

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Weakness of BOA Poses Threat to Entire System

Editor’s Comment: When I proposed it 4 years ago, it was dismissed as the ravings of a fringe lunatic. Now it’s mainstream. BOA, Citi, JPM et al are in no better shape than the banks that were allowed to fail. In fact, they are in worse shape than some of them and should be allowed to fail because they are not viable businesses and represent a large black hole through which taxpayer money, debt and revenue is poured with regularity.

Now leading groups of consumer advocates, academics and economists are calling for the dismantling of the megabanks, some for the reasons expressed here, and some because from a specific financial perspective — it is too dangerous to leave a tottering giant riddled with cancerous lesions to lead the financial markets. It makes no sense. A “run on the bank” is almost inevitable and when it happens the result will be catastrophic, the group says, and I agree with them.

See Full Story on Reuters

(Reuters) – A group of consumer advocates, academics and economists want to end “too-big-to-fail” banks, starting with Bank of America Corp.

The group, led by consumer advocacy organization Public Citizen, plans to file a petition with the Federal Reserve Board and other regulators on Wednesday asking them to carve the bank into simpler, safer pieces.

The Fed and the coalition of regulators known as the Financial Stability Oversight Council have the authority to take such action under the Dodd-Frank financial reform law passed in 2010, the group said.

Nearly two dozen professors and groups have joined the effort.

… the petition is a dramatic criticism of regulators who have so far done little to shrink giant banks after the 2007-2009 financial crisis.

“Bank of America currently poses a grave threat to U.S. financial stability by any reasonable definition of that phrase,” the 24-page petition said.

It said Bank of America, the nation’s second-largest bank, is too large and complex, and that its financial condition could deteriorate rapidly at any moment, potentially causing the market to lose confidence in the bank.

“An ensuing run on the bank could cause a devastating financial crisis,” the petition said.

David Arkush, director of Public Citizen’s Congress Watch division, said a lot of the group’s concerns apply to other large banks, but that Bank of America is the institution most exposed to the housing crisis.

“Regulators need to get ahead of this and act proactively to reform Bank of America,” Arkush said.

Bank of America has had a tough time emerging from the financial crisis, particularly because of mortgage losses tied to its 2008 Countrywide Financial purchase.

The bank’s stock slid 58 percent last year as investors expressed disappointment with the speed of a turnaround and fear about the bank’s ability to comply with new capital rules.

Bank of America, the Fed and the Treasury declined to comment on the planned petition.

Some community groups decided to pass on signing the entreaty. Janis Bowdler, an official with the National Council of La Raza, said the letter was distributed on a list-serve for a coalition called Americans for Financial Reform, but her group decided not to join up.

“I don’t want to downplay the concerns that were raised,” said Bowdler, “but for now, a strong housing market and cleaning up Countrywide is the priority for us.”

NCLR is a national Hispanic civil rights organization. It receives financial support from Bank of America.

The Center for Responsible Lending, which has been critical of banks for mortgage lending practices, has also declined to participate. CRL president Mike Calhoun declined comment.

Bank of America was one of the large banks that received a government bailout during the financial crisis. It paid back the $45 billion in 2009, but analysts say it still needs more capital to absorb mortgage-related losses and to meet new international standards.

(Reporting By Rick Rothacker; Additional reporting by Dave Clarke in Washington and David Henry in New York; Editing by Phil Berlowitz)

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: Bank of America, bankruptcy, borrower, Citi, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, JPM, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND | 26 Comments »

Fitch cuts Ratings on Goldman, Deutsche, five other large banks

Posted on December 16, 2011 by Neil Garfield

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EDITOR’S COMMENT: Why would regulatory challenges be a threat to the financial viability of the Banks? answer: because the challenges they are talking about drive a stake though the heart of lies perpetuated by those Banks. the result is that they could be required to tell the truth. If they tell the truth, then they have a double whammy — (1) they don’t actually have the assets they report on their balance sheet which would immediately put them in violation of reserve requirements causing the immediate takeover and dissolution of those Banks and (2) they have a huge liability which is also not properly reflected on their balance sheet for damages and buybacks and potentially punitive damages for lying to investors and borrowers. Overstated assets and understated liabilities would place the Banks in negative net worth position and that would cause them to collapse.

This would actually be more of a change in our political system than in our financial system, notwithstanding the scare tactics of TBTF (too big to fail), which is nothing more than a living lie. Dissolution of the mega banks would shift Market power back to the more than 7,000 OTHER banks, and cut the amount of Bank money in politics by about 95% thus breaking the Bank oligopoly. A more decentralised Banking system would result in more intelligent loans being available to credit worthy start-ups and expansion of small businesses, who account for more than 70% of all U. S. Employment. Employment would rise because new jobs would be created. As more people went back to work, more taxes would be paid, thus giving Federal, State and local governments desperately needed tax revenue.

So overall the rating agencies are in agreement: the Mega Banks may be in for hard times. The only reason it isn’t a certainty is they don’t know if the public has the political will to kick the incumbents out of office and restore “order” to our political and economic system.

Fitch cuts Goldman, Deutsche, five other large banks
http://www.reuters.com/article/2011/12/16/us-banks-ratings-fitch-idUSTRE7BE2AO20111216?rpc=71&feedType=RSS&feedName=topNews <http://www.reuters.com/article/2011/12/16/us-banks-ratings-fitch-idUSTRE7BE2AO20111216?rpc=71&feedType=RSS&feedName=topNews>

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: bankruptcy, BOA, borrower, Chase, Citi, countrywide, Deutsch, disclosure, Fitch, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, Goldman, JPM, LOAN MODIFICATION, modification, quiet title, ratings, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND | 17 Comments »

NORRIS: LAWSUITS AGAINST AUDITORS ARE COMING AND THEY WILL BE HUGE

Posted on June 11, 2011 by Neil Garfield

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CLASS ACTION LAWYERS SHOULD LOOK AT A HOMEOWNER SUITS AGAINST MEGABANK AUDITORS

AUDIT STANDARDS REQUIRE A HEALTHY DEGREE OF “SKEPTICISM”

EDITOR’S NOTE: 4 years ago, I spoke with some people in the big SEC auditing firms that give “clean” letters to public companies stating that the financial statements are a fair representation of the financial condition and operations during the period covered by the statements. Those of us who studied auditing, or like me who have taught auditing, know that those clean statements have not been true for decades, including most notably the absence of a caveat regarding the viability of the companies that were engaged in questionable and in some cases unfathomable transactions involving exotic financial instruments. If Alan Greenspan couldn’t understand it, then how could the auditor write a letter like that for JPM, Citi, BOA, Wells Fargo, Chase, et al?

Like the false appraisals by a rating agencies for these exotic instruments, and like the false appraisals coming from lenders who hired appraisers to “come in” at the necessary fair market value of the underlying property in order to close the deal so they could quickly take their fees and toss the risk onto investors and homeowners, the absence of the auditors screams out for justice. What would have happened if the auditors said flat out that the viability of these megabanks was in question in the event these exotic instruments imploded,, and that there was no way for them to accurately confirm the value that management had placed on them nor anyway to confirm that they were tier 1, 2 or 3 assets?

The question answers itself. Without a clean letter, the companies would have been forced into a policy of reporting that was transparent which, after all, is the reason for the audit — so the investors, prospective investors and customers and vendors of the company can accurately assess their risk in doing business with these megabanks. What would have happened? We all know. If the statements showed what we know today to have been the truth all along, the entire securitization illusion would have collapsed even as it began, and the Great Recession would never have occurred, the housing market would never have gone thorough the gyration that now effect virtually 100% of all Americans, directly or indirectly, and the life-styles and in some cases the lives of depressed people who took the lives of their families and then themselves would never have in the history books or on the media — because they would have been non-existent.

Troubled Audit Opinions

By FLOYD NORRIS

On one side is an assessment of a company with a clean audit opinion from the Toronto office of Ernst & Young, and with bonds rated just below investment grade by Standard & Poor’s and Moody’s. It has raised billions in capital markets.

On the other is an investment research firm using the name Muddy Waters Research. It says the company, the Sino-Forest Corporation, is a fraud, and that its shares are worthless.

As this is written, there is no definitive answer as to who is right. But the initial reaction of the markets seemed to be that they had more trust in the short-seller — a company whose Web site gives no address — than in the auditor’s opinion.

The shares, traded in Toronto, lost more than 70 percent of their value in two days, shaving $3 billion off its valuation. Bond prices also plunged. Prices had to fall sharply before speculators could be found who were willing to bet that the financial statements really did, in the boilerplate words of the auditor’s letter, “present fairly, in all material respects, the financial position of Sino-Forest Corporation.”

If there was a fraud, there is no doubt that Ernst & Young will be sued, and there is even less doubt that it will deny responsibility. After all, its letter did make clear that management was responsible for the internal controls needed to assure the statements are “free from material misstatement, whether due to fraud or error.”

To the auditing industry, the fact that investors tend to blame auditors when frauds go undetected reflects unrealistic expectations, not bad work by the auditors. The rules say auditors are supposed to have a “healthy degree of skepticism,” but not to detect all frauds.

“There is a significant expectations gap between what various stakeholders believe auditors do or should do in detecting fraud, and what audit networks are actually capable of doing, at the prices that companies or investors are willing to pay for audits,” stated a position paper issued in 2006 by the chief executives of the six largest audit networks.

Note that last part. They suggested that if investors were really worried about fraud, they should consider paying more for a “forensic audit” that would have a better — but not guaranteed — chance of spotting fraud. Don’t like our work? Pay us more.

There is no doubt that some companies are easier to audit than others, and that Sino-Forest falls on the harder side. While it has headquarters in Toronto and Hong Kong, its operations are — or at least are claimed to be — spread out over much of China. The company says it manages nearly two million acres in forest plantations across China. Muddy Waters says that is a lie, and that its actual operations are much smaller.

Investors trying to decide whether to believe the Muddy Waters report, with its detailed assertion that the company’s claims are contradicted by Chinese records, would love to know just what Ernst did to check. What records did it inspect? Which tree plantations did it visit? Who did the work? Was it people from Ernst’s Toronto office, which signed the report, or people from a Chinese affiliate? How many auditors did the work, over what period of time?

Ernst’s audit opinion does not say, which is no surprise. Virtually every audit opinion in the world says almost the same thing, with no details about the company being audited. Auditors are paid millions of dollars to produce a report that no one thinks is worth reading.

On June 21, the Public Company Accounting Oversight Board, which regulates auditors in the United States, plans to ask for public comments on whether to require auditors to do more and say more.

One idea the board is expected to consider is requiring auditors to disclose more about what they did, and did not, do. Ideally, auditors would point to things that they could not audit. There are a lot of them now, and sometimes they are crucial.

“The foundation” of the Sino-Forest fraud, stated the Muddy Waters report, “is its convoluted structure whereby it runs much of its revenues through ‘authorized intermediaries.’ ” Those organizations supposedly process tax payments owed to China on wood production, the report said, thereby assuring the company “leaves its auditors far less of a paper trail.”

Auditors could be called upon to specify where they thought fraud was most likely in a given company or industry, and what they did to confront the risk. Investors could have a chance then of comparing the work of differing audit firms, as one firm disclosed it had checked something other auditors did not mention.

If an audit was expected to call attention to possibly critical information that was not available to the auditors, perhaps there might be pressure from investors on companies to make that information available. In any case, investors could better understand what the auditors knew — and did not know — in reaching their conclusions.

The problems with audits now go well beyond questions of fraud. A critical element for many banks is the valuation of securities that trade infrequently, if at all. There may be a wide range of possible estimates, and the auditor now must simply conclude the estimates are within that range. If so, it signs off.

To make things worse, the estimates may have come not from the company being audited, whose work the auditor can examine, but from a pricing service that views its models as proprietary, making them virtually impossible to audit. That fact is something investors should know, but now do not.

Nor do auditors disclose information about how reasonable an estimate is. In some cases, a wide range might be defensible, and investors have no way to know whether a company was particularly conservative or aggressive in its estimates. The oversight board may consider asking that companies disclose what they deem to be the range of reasonable estimates, and why they chose the one they did. Then the auditors could comment on that.

If auditors enforced some consistency on ranges, then financial statements of different companies might be more comparable, even though they chose different estimates.

The accounting oversight board is also expected to ask if it is time to end the “one grade fits all” audit model, in which every company is deemed to “fairly” present its results. Perhaps a second grade could be added, like “presents adequately,” for companies that push the envelope but do not violate the rules.

In addition, auditors could be called upon to discuss the risks the company was taking. They could also be asked to call attention to some of the most critical disclosures in the footnotes, something that French auditors already do.

If much of that happened, audit opinions could become a lot more interesting to read. Investors might actually learn something, and they might be able to form opinions about differences in audit firms.

Another long-overdue change would be to have the lead partner on an audit sign the opinion in the annual report. Now, the firm signs, and investors have no way of knowing who was responsible. If an audit signed by a certain partner later blew up, that could be devastating to his or her career if investors shied away from any companies whose audits he later signed. Would that make auditors more careful? Perhaps.

This week, as the controversy over Sino-Forest raged, Canadian regulators began an investigation and the company indignantly defended itself. “I have spent 17 years building Sino-Forest and I can promise investors we are not guilty of the charges levied against us,” said Allen Chan, the chairman. “Our financial statements have been audited by Ernst & Young a leading international audit firm….”

Its board appointed a special committee of three directors, all Canadians who served on the company’s audit committee and including a former Ernst partner, to investigate. The committee hired PricewaterhouseCoopers, another member of the Big Four.

Investors seemed confused. After the plunge of last week, the shares bounced around on extremely heavy volume this week. They rose a bit on Thursday to 5.15 Canadian dollars ($5.26), but were still down 72 percent from the price of 18.21 Canadian dollars just before the charges were aired last week.

Moody’s said it will review its ratings and “seek to assess the veracity of the claims” made by Muddy Waters. It gave details of what it would check.

But Ernst was mute, unwilling to either defend its work or discuss how it had reached its now-questioned conclusion that the financial statements “present fairly” the company’s condition. Investors who relied on the audit will just have to wait.

“It would be inappropriate to make any comment while the work of the special committee is ongoing,” said Amanda Olliver, a spokeswoman for the audit firm in Toronto. “In any event,” she added, “our professional obligations prevent us from speaking about client matters.”

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: bailout, Bank of America, bankruptcy, BOA, borrower, Chase, Citi, credit crisis, disclosure, Eviction, foreclosure defense, foreclosure offense, foreclosures, fraud, JPM, Lender Liability, predatory lending, quiet title, rescission, securitization, TILA audit, trustee, Wells Fargo | 13 Comments »

MEGABANKS LOSE THEIR LUSTER AS INVESTIGATIONS AND LAWSUITS PERSIST

Posted on May 18, 2011 by Neil Garfield

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BANK STOCKS HEADING LOWER AS BALANCE SHEETS DON’T ADD UP

EDITOR’S NOTE: At the end of the day, everybody knows everything. Goldman is losing its grip on the narrative. You can’t fool all the people all the time. If the pools were empty and the mortgage bonds were bogus, then any balance sheet carrying loans or securities based upon the illusion of securitization will need a major adjustment. If the loans were bad to begin with, if the appraisals and ratings were false, if the documentation of the loans described a fictitious transaction, then the real transaction remains undocumented, unsecured and probably unenforceable. Reports of income and assets by the banks would be greatly exaggerated while reports of their demise may still be wishful thinking, it is looking more and more likely every day.

Goldman No Longer Laps the Field

By JEFFREY GOLDFARB, ROB COX and LISA LEE

Goldman Sachs has lost its luster. The firm earned a best-in-class reputation for its history of profitability and navigating upheaval. But it seems less assured lately. In fact, Goldman is in danger of looking downright average.

It’s not the first time. Goldman has been sent reeling by shocks, from Penn Central’s bankruptcy in 1970 to Russia’s default in 1998. But the Goldman advantage comes from an ability not only to climb off the canvas but to thrive in the face of adversity.

Today’s investors are expressing doubt, or at least not giving the firm led by Lloyd C. Blankfein the benefit of it. Over the last decade, Goldman’s shares have outperformed those of the biggest American banks, including JPMorgan Chase and Morgan Stanley, as well as the Standard & Poor’s 500-stock index. But they have tumbled 16 percent this year, lagging rivals and the broader market.

One reason is Goldman’s struggle to get out of the headlines and clear its name in Washington even after last year’s record $550 million settlement with the Securities and Exchange Commission. The bank still faces the possibility the Justice Department will come after it or some of its people. Two analysts cut their ratings on Goldman’s stock last week for that reason.

Goldman’s gold-plated advisory business has been disappointing, too. For example, instead of its normal perch atop the United States merger rankings, nearly halfway through the year it ranks a dismal sixth, according to Thomson Reuters. That may help explain Monday’s reshuffle at the firm’s investment bank.

The company is not even so sure of itself anymore. Top executives told Barclays Capital last week that uncertainty about financial reform meant it could not stand by its long-term high-teens target for return on equity.

And while Goldman still commands a valuation premium to its largest rivals, it is trading at just 1.1 times book value. That implies it will barely cover its cost of capital. Five years ago, around the peak of the boom, Goldman fetched 2.6 times book, nearly twice JPMorgan’s multiple.

The advantage has shrunk to just 10 percent, only part of which can be put down to the compression associated with an industrywide bad patch.

Goldman and its supporters can argue the naysayers merely see the glass half empty. But to truly shine again, Goldman’s glass needs to be more than just half full.

Beware of Bubbles

It’s easy to make the parallel between today’s Internet stock frenzy and the bubble that popped a decade ago. But a comparison to the more damaging credit boom may be appropriate too. As they did amid dot-com mania, investors are taking big risks without clear rewards and signing their rights away.

The latest illustration comes courtesy of LinkedIn, the social network with a big following among those out of a job or looking for a new one. The company supersized the price of its initial public offering by 30 percent, giving the firm a potential value of as much as $4.3 billion when the I.P.O. prices, probably late on Wednesday.

At the top of the range, LinkedIn would fetch a valuation of 15 times trailing 12-month sales, or about 82 times earnings before interest, taxes, depreciation and amortization. Even assuming its growth trajectory continues over the next year, the I.P.O. would value LinkedIn at nine times future sales and nearly 70 times estimated Ebitda.

If LinkedIn’s chief executive, Jeff Weiner, can keep the company expanding at a similar pace for a few years, the company might grow into the value investors seem willing to accord it now. But that does not offer much upside and takes little account of LinkedIn’s risks, which are amply laid out in its prospectus.

LinkedIn’s debut also brings an extra frisson of danger that recalls the credit bubble that burst in 2008. Back then bondholders, in their headlong drive for yield, surrendered many of their covenants, the rules that determine what borrowers must or must not do. LinkedIn is asking investors to abdicate similar rights.

The shares the company is selling carry only a sliver of the voting power of Class B shares that LinkedIn founders, managers and staff own. This group will hold approximately 99.1 percent of the voting power after the I.P.O.

True, the mighty Google did a similar thing when it began to trade a few years after the dot-com bust. But LinkedIn is no Google. It may turn into another reminder that in bubbles investors give up too much today for the lure of riches tomorrow.

For more independent financial commentary and analysis, visit http://www.breakingviews.com.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: accounting, BOA, Citi, Goldman Sachs, JPM, stocks | 23 Comments »

JP Morgan: 8 people, 18,000 signed affidavits per month

Posted on June 8, 2010 by Neil Garfield

The bottom line is that none of these signors of affidavits have ANY personal knowledge regarding any document, event, or transaction relating to any of the loans they are “processing.” It’s all a lie.

In a 35 hour workweek, 18,000 affidavits per month computes as 74.23 affidavits per JPM signor per hour and 1.23 per minute. Try that. See if you can review a file, verify the accounting, execute the affidavit and get it notarized in one minute. It isn’t possible. It can only be done with a system that incorporates automation, fabrication and forgery.

Editor’s Note: Besides the entertaining writing, there is a message here. And then a hidden message. The deponent is quoted as saying she has personal knowledge of what her fellow workers have as personal knowledge. That means the witness is NOT competent in ANY court of law to give testimony that is allowed to be received as evidence. Here is the kicker: None of these loans were originated by JPM. Most of them were the subject of complex transactions. The bottom line is that none of these signors of affidavits have ANY personal knowledge regarding any document, event, or transaction relating to any of the loans they are “processing.” It’s all a lie.

In these transactions, even though the investors were the owners of the loan, the servicing and other rights were rights were transferred acquired from WAMU et al and then redistributed to still other entities. This was an exercise in obfuscation. By doing this, JPM was able to control the distribution of profits from third party payments on loan pools like insurance contracts, credit defaults swaps and other credit enhancements.

Having that control enabled JPM to avoid allocating such payments to the investors who put up the bad money and thus keep the good money for itself. You see, the Countrywide settlement with the FTC focuses on the pennies while billions of dollars are flying over head.

The simple refusal to allocate third party payments achieves the following:

Denial of any hope of repayment to the investors

Denial of any proper accounting for all receipts and disbursements that are allocable to each loan account

97% success rate in sustaining Claims of default that are fatally defective being both wrong and undocumented.

97% success rate on Claims for balances that don’t exist

97% success rate in getting a home in which JPM has no investment

(THE DEPONENT’S NAME IS COTRELL NOT CANTREL)

JPM: Cantrel deposiition reveals 18,000 affidavits signed per month

HEY, CHASE! YEAH, YOU… JPMORGAN CHASE! One of Your Customers Asked Me to Give You a Message…

Hi JPMorgan Chase People!

Thanks for taking a moment to read this… I promise to be brief, which is so unlike me… ask anyone.

My friend, Max Gardner, the famous bankruptcy attorney from North Carolina, sent me the excerpt from the deposition of one Beth Ann Cottrell, shown below. Don’t you just love the way he keeps up on stuff… always thinking of people like me who live to expose people like you? Apparently, she’s your team’s Operations Manager at Chase Home Finance, and she’s, obviously, quite a gal.

Just to make it interesting… and fun… I’m going to do my best to really paint a picture of the situation, so the reader can feel like he or she is there… in the picture at the time of the actual deposition of Ms. Cottrell… like it’s a John Grisham novel…

FADE IN:

SFX: Sound of creaking door opening, not to slowly… There’s a ceiling fan turning slowly…

It’s Monday morning, May 17th in this year of our Lord, two thousand and ten, and as we enter the courtroom, the plaintiff’s attorney, representing a Florida homeowner, is asking Beth Ann a few questions… We’re in the Circuit Court of the Fifteenth Judicial Circuit, Palm Beach County, Florida.

Deposition of Beth Ann Cottrell – Operations Manager of Chase Home Finance LLC

Q. So if you did not review any books or records or electronic records before signing this affidavit of payments default, how is it that you had personal knowledge of all of the matters stated in this sworn document?

A. Well, it is pretty simple, I have personal knowledge that my staff has personal knowledge of what is in the affidavit on personal knowledge. That is how our process works.

Q. So, when signing an affidavit, you stated you have personal knowledge of the matters contained therein of Chase’s business records yet you never looked at the data bases or anything else that would contain those records; is that correct?

A. That is correct. I rely on my staff to do that part.

Q. And can you tell me in a given week how many of these affidavits you might sing?

A. Amongst all the management on my team we sign about 18,000 a month.

Q. And how many folks are on what you call the management?

A. Let’s see, eight.

And… SCENE.

Isn’t that just irresistibly cute? The way she sees absolutely nothing wrong with the way she’s answering the questions? It’s really quite marvelous. Truth be told, although I hadn’t realized it prior to reading Beth Ann’s deposition transcript, I had never actually seen obtuse before.

In fact, if Beth’s response that follows with in a movie… well, this is the kind of stuff that wins Oscars for screenwriting. I may never forget it. She actually said:

“Well, it is pretty simple, I have personal knowledge that my staff has personal knowledge of what is in the affidavit on personal knowledge. That is how our process works.”

No you didn’t.

Isn’t she just fabulous? Does she live in a situation comedy on ABC or something?

ANYWAY… BACK TO WHY I ASKED YOU JPMORGAN CHASE PEOPLE OVER…

Well, I know a homeowner who lives in Scottsdale, Arizona… lovely couple… wouldn’t want to embarrass them by using their real names, so I’ll just refer to them as the Campbell’s.

So, just the other evening Mr. Campbell calls me to say hello, and to tell me that he and his wife decided to strategically default on their mortgage. Have you heard about this… this strategic default thing that’s become so hip this past year?

It’s when a homeowner who could probably pay the mortgage payment, decides that watching any further incompetence on the part of the government and the banks, along with more home equity, is just more than he or she can bear. They called you guys at Chase about a hundred times to talk to you about modifying their loan, but you know how you guys are, so nothing went anywhere.

Then one day someone sent Mr. Campbell a link to an article on my blog, and I happened to be going on about the topic of strategic default. So… funny story… they had been thinking about strategically defaulting anyway and wouldn’t you know it… after reading my column, they decided to go ahead and commence defaulting strategically.

So, after about 30 years as a homeowner, and making plenty of money to handle the mortgage payment, he and his wife stop making their mortgage payment… they toast the decision with champagne.

You see, they owe $865,000 on their home, which was just appraised at $310,000, and interestingly enough, also from reading my column, they came to understand the fact that they hadn’t done anything to cause this situation, nothing at all. It was the banks that caused this mess, and now they were expecting homeowners like he and his wife, to pick up the tab. So, they finally said… no, no thank you.

Luckily, she’s not on the loan, so she already went out and bought their new place, right across the street from the old one, as it turns out, and they figure they’ve got at least a year to move, since they plan to do everything possible to delay you guys from foreclosing. They’re my heroes…

Okay, so here’s the message I promised I’d pass on to as many JPMorgan Chase people as possible… so, Mr. Campbell calls me one evening, and tells me he’s sorry to bother… knows I’m busy… I tell him it’s no problem and ask how he’s been holding up…

He says just fine, and he sounds truly happy… strategic defaulters are always happy, in fact they’re the only happy people that ever call me… everyone else is about to pop cyanide pills, or pop a cap in Jamie Dimon’s ass… one or the other… okay, sorry… I’m getting to my message…

He tells me, “Martin, we just wanted to tell you that we stopped making our payments, and couldn’t be happier. Like a giant burden has been lifted.”

I said, “Glad to hear it, you sound great!”

And he said, “I just wanted to call you because Chase called me this evening, and I wanted to know if you could pass a message along to them on your blog.”

I said, “Sure thing, what would you like me to tell them?”

He said, “Well, like I was saying, we stopped making our payments as of April…”

“Right…” I said.

“So, Chase called me this evening after dinner.”

“Yes…” I replied.

He went on… “The woman said: Mr. Campbell, we haven’t received your last payment. So, I said… OH YES YOU HAVE!”

Hey, JPMorgan Chase People… LMAO. Keep up the great work over there.

Filed under: CASES, CORRUPTION, evidence, expert witness, foreclosure, foreclosure mill, foreign relations, Forensic Analysis Workshop, forms, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, Securitization Survey, Servicer, STATUTES, trustee, workshop | Tagged: accounting, affidavits, Chase Home Financial, Cotrell, Deposition, HERS, JP Morgan, JPM, personal knowledge, third party payment | 22 Comments »

Shack; JPM, Trustee Lacks Standing, Vacates Foreclosure

Posted on May 12, 2010 by Neil Garfield

The true answer is that securitization is a process that is still on going and not an event.The Real Party in Interest (and the real amount of principal due, if any) is in a state of flux hidden by obscure, hidden or “confidential documentation.” Don’t make it your problem to unravel it. Use your strength to force THEM to prove their claim whether it is in a judicial or non-judicial proceeding.

Editor’s Comment: In case you haven’t noticed, this case, along with some others I’ve heard about but not received, closes the loop. The Pretender Lenders have now tried to use all the major parties and some of the minor parties in foreclosures and when tested have failed to prove standing. standing is a jurisdictional matter and it basically boils down to “You don’t belong here, you have no rights to enforce, you have no interest in this litigation, so get out of here and don’t come back.”

They tried MERS, Servicers, Foreclosure Specialty processors, Trustees, originating “lenders” and they come up empty. why because they are all intermediaries and as Judge Holloway put it, the note is not payable to them, the mortgage does not secure them, the obligation is not due to them and therefore they can’t proceed. In non-judicial states they get around this requirement unless the homeowner brings suit.

So who is the real party in interest? See the Fordham Law Review article posted on this blog more than two years ago “Will the Real Party in Interest Please Stand Up.”

The answer isn’t easy, but the strategy is very simple — don’t accept responsibility for the narrative or you will be taking on the burden of proof in THEIR case. They have the information and you don’t. The true answer is that securitization is a process that is still on going and not an event. The Real Party in Interest (and the real amount of principal due, if any) is in a state of flux hidden by obscure, hidden or “confidential documentation. Don’t make it your problem to unravel it. Use your strength to force THEM to prove their claim whether it is in a judicial or non-judicial proceeding.

The real reason for them NOT simply bringing in the investors who at least WERE parties in interest is multifold:

The meeting of the investor with the borrower will result in comparing notes and the fact that not all the money advanced by investors was actually invested in mortgages will be “problematic” for the investment bankers who put this scheme together.

The meeting of the investor and borrower could result in an alliance in litigation in which the shell game would be impossible.

The meeting of the investor and the borrower could result in a settlement that cuts the servicers and other intermediaries out of the gravy train of servicing fees, foreclosures with rigged bids, etc.

The conflict of interest between the intermediaries and the investors might become evident, and lead to further litigation both from the investors and the SEC, state attorneys general and Department of Justice.

The investment vehicle (the “trust” or Special Purpose Vehicle) might have been dissolved with the investors paid off and/or with the “assets” resecuritized into a new BBB rated vehicle. This could lead to the nuclear question: what if any, is the balance due in principal on this OBLIGATION. Warning: If you let the narrative shift to the NOTE (which is merely evidence of the obligation) you risk being entrapped by the simple question “Did you make your payments under this note?” This immediately puts you on the defensive BEFORE they have established THEIR case. Since THEY are the party seeking affirmative relief, THEY should establish the foundation first.

And the last thing that comes to my mind is the last thing anyone wants to hear — was this obligation satisfied in whole or in part by third party payments through credit enhancements or federal bailout?

Hon. Arthur M. Schack does it again!

JP Morgan Chase Bank, N.A. v George

2010 NY Slip Op 50786(U)
Decided on May 4, 2010

Supreme Court, Kings County
Schack, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 4, 2010
Supreme Court, Kings County

JP Morgan Chase Bank, N.A., AS TRUSTEE FOR NOMURA ASSET ACCEPTANCE CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-AR4, Plaintiff,

against

Gertrude George, IVY MAY JOHNSON, GMAC MORTGAGE CORPORATION, DANIEL S. PERLMAN, et. al., Defendants.

10865/06

Plaintiff– JP Morgan Chase Bank
Steven J Baum, PC
Amherst NY

Defendant– Gertrude George
Edward Roberts, Esq.
Brooklyn NY

Defendant– Ivy Mae Johnson
Precious L. Williams, Esq.
Brooklyn NY

Arthur M. Schack, J.

_______________________________________________

Accordingly, it is
ORDERED, that the order to show cause of defendant IVY MAE JOHNSON, to vacate the January 16, 2008 judgment of foreclosure and sale for the premises located at 47 Rockaway Parkway, Brooklyn, New York (Block 4600, Lot 55, County of Kings), pursuant to CPLR Rule 5015 (a) (4), because plaintiff, JP MORGAN CHASE BANK, N.A., AS TRUSTEE FOR NOMURA ASSET ACCEPTANCE CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-AR4, lacked standing to commence the instant action and thus, the Court never had jurisdiction, is granted; and it is further

ORDERED, the instant complaint of plaintiff JP MORGAN CHASE BANK, N.A., AS TRUSTEE FOR NOMURA ASSET ACCEPTANCE CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-AR4 for the foreclosure on the premises located at 47 Rockaway Parkway, Brooklyn, New York (Block 4600, Lot 55, County of Kings) is dismissed with prejudice.

This constitutes the Decision and Order of the Court.

ENTER

___________________________

Hon. Arthur M. SchackJ. S. C..

Filed under: CASES, CORRUPTION, Eviction, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Servicer, STATUTES, trustee | Tagged: Arthur M. SchackJ. S. C, Fordham Law Review, George, GMAC MORTGAGE CORPORATION, JPM, lender, loan originator, MERS, NOMURA ASSET ACCEPTANCE CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, non-judicial, originator, Precious L. Williams, REAL PARTY IN INTEREST, SERIES 2004-AR4, servicer, shack, standing, Steven J Baum, trustee, vacate, Vacate foreclosure judgment | 43 Comments »

Finding WAMU Securitizations

Posted on January 18, 2010 by Neil Garfield

FROM an unidentified researcher:

Okay, So in all of my digging I have unearthed so many things I can’t start to explain it all but thought if I can save others the time and energy I most certainly will.

So here is what I know so far and if others have info please share.

Washington Mutual was the LARGEST!! bank failure in the history of this country. Why? Guess.

The value of the bank as estimated before the FDIC stepped in was 321 Billion give or take. What did it sell for to Chase with the FDIC help?
@ 1.9 Billion of .005 cents ish on the dollar

I wonder what they know that we don’t? Fraud mostly

So in researching your loan if you ended up with them as your servicer chances are you were part of the mess and you thought they were only a bank that you made payments to, right?

Well, you are not alone.

They did business with originator banks(fake pretending lenders that are really brokers) of the like of:

First Magnus Financial(bankruptcy in AZ)
Countrywide(Imploded and is now BofA)
Plaza Home Mortgage-active
First Horizon-active
Alliance Bancorp-unsure
Residential Funding-unsure
Mortgage IT
Steward Financial
UBS

This comes from my knowledge of the wonderful Neg Am Option ARM and may have many more players. Either way alot of the above lenders used a warehouse line of credit to fund the loan and then sell it to WAMU for securitization.

1) I am attaching a link to the WAMU Seller’s guide which explains the underwriting and the way the files are to be delivered etc.
Pay attention to the BLANK endorsement requirement on assignments(Why?)

They also make a point of keeping WAMU’s name out as the purchaser of the loans which I would say is a concealment issue. Add that to the MERS situation and you have more non-transparency

https://www.wamumsc.com/sellerguide/reports/pdf/msc_seller_all.pdf

2) Second is the Servicer Guide which explains the servicing procedures etc:

https://www.wamumsc.com/servicerguide/reports/msc_servicer_all.pdf

3) Third is a master Prospectus filed with the SEC which explains all of the advanced calculus that goes into confusing all but three humans on earth.

http://www.secinfo.com/dScj2.u2p2.htm#c38e

4) Then each bundle of securities gets an individual prospectus to go with it:

http://www.secinfo.com/dsvRa.v32u.htm

5) When they submit the bundle they list all of the loans in the trust at the time of creation. Here is what that looks like. This one has originating lenders names and the loans by number:

http://www.secinfo.com/d16VAy.u5c.htm

and another without lender names:

http://www.secinfo.com/d16VAy.vyb.htm

6) Here is a Pooling and Servicing Agreement that goes through the process of creating the securities and the pool of mortgage loans etc.:

http://www.secinfo.com/d16VAy.u83.d.htm

Here are various lawsuits that are filed against WAMU from investors that I have found so far. The last one is a link to the WAMU bankruptcy case and all of the documents that go with it. Chase and WAMU are battling over billions of assets. Interesting reading and gives details of underwriting and appraisal fraud:

http://securities.stanford.edu/1043/WAMUQ00_01/20091030_f01c_090155…

http://securities.stanford.edu/1042/WAHUQ_01/20091123_r01c_0900037.pdf

WAMU BK filing and case with Chase

http://www.kccllc.net/wamu

You may or may not be able to find if your loan is included in the above. You can narrow the search down to the year in which you closed your loan and search the above www.secinfo.com site and find the classes for your timeframe. Once you find the trust(WMALT 200? such and such) you can search the attachments for a FWP file and search through by zip code and see if you are included.

If you log into the secinfo site it may require you to register for free to continue access.

I hope this helps you find more info on your loan WAMU/CHASE loan and if you need help please let me know.

I will keep adding as I go so if anyone else has info please add it to the pile. I will try to keep it semi organized so that it is easy to find.

Happy reading!

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: Alliance bancorp, countrywide, First Horizon, First Magnus, JPM, Mortgage IT, Plaza Home Mortgage, Residential Funding, Steward Financial, WAMU, Washington Mutual | 34 Comments »

Bully Bonus: $11.7 Billion JPM

Posted on January 16, 2010 by Neil Garfield

“Each year they will launder more money back into the system and back onto the books so it becomes “on balance sheet” but the explanation of where the profits came from will be double-talk. But as long as we let them do it, they will be using the proceeds of purse snatching from the little people and wholesale robbery from the the taxpayers to pretend that they have higher and higher earnings, make their stock more and more valuable.

QUESTION FOR THE INVESTORS HOLDING CERTIFICATES OF MORTGAGE BACKED SECURITIES: HOW MUCH OF THIS DECLARED PROFIT AND THE BONUSES ACTUALLY SHOULD HAVE GONE TO YOU AS THE CREDITOR WHOSE INVESTMENT WENT SOUR? IS THERE A CONSTRUCTIVE TRUST HERE CREATED BY LAW? COULD IT BE THAT THE BENEFICIARIES INCLUDE YOURSELF, THE HOMEOWNERS AND THE TAXPAYERS THROUGH THEIR GOVERNMENT. ISN’T IT POSSIBLE THAT THESE ALLEGED PROFITS AND BONUSES WOULD COVER MUCH OF YOUR LOSSES?

ISN’T IT POSSIBLE THAT THE INVESTORS CONTINUE TO BE PLAYED AS FOOLS AS THESE BANKS AND OTHER INTERMEDIARIES SPLIT UP THE MONEY YOU INVESTED?

ISN’T IT POSSIBLE THAT THE SERVICERS AND OTHER INTERMEDIARIES ARE ACTING IN THEIR OWN INTERESTS AND NOT THE INTERESTS OF THE INVESTORS.?

ISN’T IT POSSIBLE THAT YOU HAVE THE RIGHTS OF A MINORITY SHAREHOLDER OR MINORITY PARTNER FOR ACCESS TO THE REAL INFORMATION ON WHAT IS BEING COLLECTED AND WHERE THE MONEY IS GOING?

“This is the start of the REST of the scheme. Gradually repatriating income that was previously undeclared. $23.7 trillion was skimmed largely by the four horsemen of the Apocalypse. All that taxpayer money, in cash, obligations and guarantees went out because these banks were “too big to fail” and we accepted the proposition that they were failing when in fact they were sitting on more money than the government had. The “loss” was an accounting loss allowable by changes to generally accepted accounting principles (GAAP), deregulation and failure of the SEC to enforce the most basic elements of disclosure. They called it “off-balance sheet” transactions.

Now they they are laundering the money back in and giving themselves bonuses out of the taxpayer money they obtained through misrepresentation of their REAL financial status.

Each year they will launder more money back into the system and back on the books so it becomes “on balance sheet” but the explanation of where the profits came from will be double-talk. But as long as we let them do it, they will be using the proceeds of purse snatching from the little people and wholesale robbery from the the taxpayers to pretend that they have higher and higher earnings, make their stock more and more valuable.

They have no trouble taking their bonuses in stock. They know the stock will be ever higher and higher and the price earnings ratios will go up, multiplying the effect of the higher earnings. They know it just as surely as they knew the loans would fail, that their influence in Washington was strong enough with the Bush administration to get free money for fake losses, and that their tacit agreement to let non-creditors sue on defective loans as hush money would keep the cycle going.

President Obama told the big four that the only thing between them and pitchforks from the populace was him and he was doing his best to maintain order. But they don’t get it and they won’t get it because they think, perhaps correctly, that they will get away with the multiple phase scheme to drain America dry. Get out the pitchforks or watch your country dry up into a memory.

What does this mean for litigation and discovery. Plenty. The offshore SIV’s are the vehicle through which this money was sequestered and they are the vehicles through which the money is being laundered back in. That is why you must emphasize that you want the WHOLE accounting and not just the part about the records of the servicer, master servicer or some other intermediary in the securitization chain. They will try to keep the court’s attention on the non-payment of the borrower while you are trying to get a full accounting of the money from the start of the transaction all the way from debtor through creditor.

To use a simple analogy, suppose you had a five year loan and you prepaid the principal at the rate of $1,000 per month for the first three years.

Now they come in and want the court only to look at the total obligation and the fact that you missed the last three payments but they refuse to allow you access to an accounting that would prove the total principal has been reduced by your previous prepayments of $36,00 in addition to the regular amortization contained in your regular monthly payments.

Now add the fact that after the closing they realized that they had overcharged you on points for the loan and other charges, and they sent you a letter to that effect but the credit doesn’t show up in the demand, their notice of default of their foreclosure.

You have a right to demand discovery based upon your allegation that there were was money paid and that there are adjustments due in the accounting and that they have only offered a partial accounting, their demand letter was incorrect and so was their notice of default. What I am suggesting is that all of the above may be true PLUS there may have been debits and credits arising from third party transactions with participants in the securitization chain that you are only just learning about and you have a right to discovery about that too.

REMEMBER: At this stage you are RAISING the question of fact, not proving it. You don’t have to be right to be entitled to discovery. You only have to make an allegation and it helps to have an expert declaration to go with it. Your goal is not to get the Judge to agree that these people can’t foreclose. Your goal is to get to the truth about your loan, the parties and all the money that exchanged hands. At the conclusion of discovery, properly conducted, and with the help of an expert, the case could very well be over.

New York Times

January 16, 2010

JPMorgan Chase Earns $11.7 Billion

By ERIC DASH

JPMorgan Chase kicked off what is expected to be a robust — and controversial — reporting season for the nation’s banks on Friday with news that its profit and pay for 2009 soared.

In a remarkable rebound from the depths of the financial crisis, JPMorgan earned $11.7 billion last year, more than double its profit in 2008, and generated record revenue. The bank earned $3.3 billion in the fourth quarter alone.

Those cheery figures were accompanied by news that JPMorgan had earmarked $26.9 billion to compensate its workers, much of which will be paid out as bonuses. That is up about 18 percent, with employees, on average, earning about $129,000.

Workers in JPMorgan’s investment bank, on average, earned roughly $380,000 each. Top producers, however, expect to collect multimillion-dollar paychecks.

The strong results — coming a day after the Obama administration, to howls from Wall Street, announced plans to tax big banks to recoup some of the money the government expects to lose from bailing out the financial system — underscored the gaping divide between the financial industry and the many ordinary Americans who are still waiting for an economic recovery.

Over the next week or so, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley are expected to report similar surges in pay when they release their year-end numbers.

But not all the news from JPMorgan Chase was good. Signs of lingering weakness in its consumer banking business unnerved Wall Street and drove down its share price along with those of other banks.

Chase’s consumer businesses are still hemorrhaging money. Chase Card Services, its big credit card unit, lost $2.23 billion in 2009 and is unlikely to turn a profit this year. Chase retail services eked out a $97 million profit for 2009, though it posted a $399 million loss in the fourth quarter. To try to stop the bleeding, the bank agreed to temporarily modify about 600,000 mortgages. Only about 89,000 of those adjustments have been made permanent. In a statementon Friday, Jamie Dimon, the chairman and chief executive of JPMorgan, said that bank “fell short” of its earnings potential and remained cautious about 2010 considering that the job and housing markets continued to be weak.

“We don’t have visibility much beyond the middle of this year and much will depend on how the economy behaves,” Michael J. Cavanagh, the bank’s finance chief, said in a conference call with journalists. Across the industry, analysts expect investment banking revenue to moderate this year and tighter regulations to dampen profit. As consumers and businesses continue to hunker down, lending has also fallen.

Just as it did throughout 2009, JPMorgan Chase pulled off a quarterly profit after the strong performance of its investment bank helped offset large losses on mortgages and credit cards. The bank set aside another $1.9 billion for its consumer loan loss reserves — a hefty sum, but less than in previous periods.

That could be a sign that bank executives are more comfortable that the economy may be turning a corner. The bank has now stockpiled more than $32.5 billion to cover future losses. Still, Mr. Dimon warned that the economy was still too fragile to declare that the worst was over, though he hinted that things might stabilize toward the middle of the year. “We want to see a real recovery, just in case you have another dip down,” he said in a conference call with investors. Earlier, Mr. Cavanagh said that the bank hoped to restore the dividend to 75 cents or $1 by the middle of 2010, from 20 cents at present.

Over all, JPMorgan said 2009 net income rose to $11.7 billion, or $2.26 a share. That compares with a profit of $5.6 billion, or $1.35 a share, during 2008, when panic gripped the industry. Revenue grew to a record $108.6 billion, up 49 percent.

JPMorgan has emerged from the financial crisis with renewed swagger. Unlike several other banking chiefs, Mr. Dimon has entered 2010 with his reputation relatively unscathed. Indeed, he is regarded on Wall Street and in Washington as a pillar of the industry. On Wednesday on Capitol Hill, during a hearing of the government panel charged with examining the causes of the financial crisis, Mr. Dimon avoided the grilling given to Lloyd C. Blankfein, the head of Goldman Sachs. Mr. Dimon was also the only banker to publicly oppose the administration’s proposed tax on the largest financial companies.

Moreover, JPMorgan appears have taken advantage of the financial crisis to expand its consumer lending business and vault to the top of the investment banking charts, including a top-flight ranking as a fee-earner. Over all, the investment bank posted a $6.9 billion profit for 2009 after a $1.2 billion loss in 2008 when the bank took huge charges on soured mortgage investments and buyout loans.

The division posted strong trading revenue, though well short of the blow-out profits during the first half of the year when the markets were in constant flux. The business of arranging financing for corporations and advising on deals fell off in the last part of the year, though Mr. Cavanagh said there were signs of a rebound in the first two weeks of January.

As the investment bank’s income surged, the amount of money set aside for compensation in that division rose by almost one-third, to about $9.3 billion for 2009. But JPMorgan officials cut the portion of revenue they put in the bonus pool by almost half from last year.

The division, which employs about 25,000 people, reduced the share of revenue going to the compensation pool, to 37 percent by midyear, from 40 percent in the first quarter. The share fell to 11 percent in the fourth quarter because of the impact of the British bonus tax and the greater use of stock awards.

Bank officials have said that they needed to reward the firm’s standout performance, but to show restraint before a public outraged over banker pay. Other Wall Street firms may make similarly large adjustments.

Chase’s corporate bank, meanwhile, booked a $1.3 billion profit this year, even as it recorded losses on commercial real estate loans. Still, that represents a smaller portion of the bank’s overall balance sheet compared with many regional and community lenders. JPMorgan’s asset management business and treasury services units each booked similar profits for 2009.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: $23.7 trillion, accounting, deregulation, discovery, foreclosure defense, foreclosure offense, gaap, generally accepted accounting principles, investors, Jamie Dimon, JPM, laudered money, MBS, question of fact, regulation, security, too big to fail | 13 Comments »

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The bottom line is that none of these signors of affidavits have ANY personal knowledge regarding any document, event, or transaction relating to any of the loans they are “processing.” It’s all a lie.

Having that control enabled JPM to avoid allocating such payments to the investors who put up the bad money and thus keep the good money for itself. You see, the Countrywide settlement with the FTC focuses on the pennies while billions of dollars are flying over head.

HEY, CHASE! YEAH, YOU… JPMORGAN CHASE! One of Your Customers Asked Me to Give You a Message…

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Hon. Arthur M. Schack does it again!

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