Chase-WAMU: Is it time to Declare Non Judicial Foreclosure Unconstitutional As Applied?

Faced with a notice of foreclosure sale from a company claiming to be the trustee on a deed of trust, homeowners in judicial states are forced to defend using well known facts in the public domain that are not evidence in a court of law. This is particularly evident in scenarios like the Chase WAMU Agreement with the FDIC and the US Bankruptcy Trustee on September 25, 2008.

In my opinion the allowance for nonjudicial foreclosure in circumstances where a new party appears under a lawyer’s claim that the new party is the beneficiary under a deed of trust under parole claims of securitization is an unconstitutional application of an otherwise constitutional  statutory scheme.

All such foreclosures should be converted to judicial and the claimant must prove the essential element under Article 9 §203 UCC that it has a financial interest in the debt because they paid for it. Forcing homeowners to prove that such an interest does not exist is requiring homeowners to have access to knowledge that is unavailable and solely within the control of the party falsely claiming to have the right to enforce the deed of trust and promissory note.

In my opinion this is an unconstitutional application of an otherwise constitutional statutory framework. In plain language it favors expediency and moral hazard over truth or justice.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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I have received questions, most notably from Bill Paatalo, the famed Private Investigator who has provided so much information to lawyers, homeowners and a=everyone else about the foreclosure crisis relating to non judicial foreclosures and the Chase-WAMU farce in particular. Here is my answer:

If what you’re saying is that the FDIC never became the beneficiary under the deed of trust, that is correct. But the legal question is whether it needed to become the beneficiary under the deed of trust. As merely a receiver for WAMU the question is whether WAMU was a beneficiary under the deed of trust and the answer is no because they had already sold their interest or presold it before origination.

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If WAMU was an actual beneficiary then the FDIC was the receiver for the beneficial interest held by WAMU. If that is the case the FDIC could have been represented to be beneficiary on behalf of the WAMU estate for foreclosures that occurred during the time that FDIC was receiver.
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If WAMU was not an actual beneficiary and could not, as your snippet suggests, sell what it did not own, then the FDIC’s receivership is irrelevant except to show that they had no record of any loans owned by WAMU.
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One key question that arises therefore is what is a beneficiary? In compliance with Article 9 §203 UCC I think all states that a beneficiary is one who has paid value for the debt, owns it and currently would suffer a debit or loss against that asset by reason of nonpayment by the borrower. Anything less and it is not a beneficiary. And if it isn’t beneficiary, it cannot instruct the trustee to send out notices as though it was a beneficiary.
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So any notice of substitution of trustee, which starts the whole foreclosure process is bogus — i.e., void as in a nullity. The newly named trustee does not possess the powers of a trustee under a deed of trust. Hence the notice of default, sale and trustee deed are equally bogus and void. They are all nullities and that means they never happened under out laws even though there are lawyers claiming that they did happen.
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Despite the Ivanova decision in California declaring that such foreclosures can only be attacked after the illegal foreclosure, this is actually contrary to both California law and the due process requirements of the US Constitution.
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With more and more evidence of fake documents referring to nonexistent financial transactions, the time is ripe for some persistent homeowner, with the help of a good lawyer, to challenge not only the entire Chase-WAMU bogus set up, but to get a ruling from a Federal judge that the abr to preemptive lawsuits to stop collection or foreclosure activity is unconstitutional as applied.
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In nonjudicial states it converts a statutory system which is barely within constitutional bounds to an unconstitutional deprivation of property and civil rights without due process, forcing the homeowners to come up with answers and data only available to the malfeasant players seeking to collect revenue instead of paying down the debt.

Paralegal Training — Entity Research

Producing a USEFUL report that can identify gaps, inconsistencies and deficiencies in the primary documents used for foreclosure is a complex task. It must be thorough and it must be correct and free from “opinions” that the writer is not qualified to present. Opinions ruin credibility under they come from a qualified expert with credentials, education, training and experience in cases other than your own.

This article is devoted to one tiny step in the process of forensic research and investigation. A properly trained paralegal is far more likely to get it right than a pro se litigant and even most lawyers.

GO TO LENDINGLIES to order forms and services. Our forensic report is called “TERA“— “Title and Encumbrance Report and Analysis.” I personally review each of them for edits and comments before they are released.

Let us help you plan your answers, affirmative defenses, discovery requests and defense narrative:

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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STARTING POINT: An entity has been identified in a document that is in the chain of title as recorded in the public records in the county where the property is located.
  1. You must report on the status of that entity.
  2. Did that entity exist at the time the document was supposedly executed?
  3. Is that entity actually a part of the chain of title or is it merely referenced? Or is it not clear, because of the way the signature block was constructed?
  4. Does that entity exist now?
  5. What is the history of that entity?
  6. Has that entity been involved in alleged robo-signing in other cases — check with top 400 robosigners.
  7. Based upon the documents and facts you have obtained, is there any indication as to whether that entity has a financial interest in the debt, the note or the mortgage? [They are different. In order to foreclose the foreclosing party must own all three].
Where to start? Start on your own. Become proficient in Google searches.
Step by Step: Example XYZ Savings Bank, FSB. First look in search index on LIVINGLIES BLOG
  1. Google: “Who is XYZ Savings Bank FSB”
  2. Google: “What is a “Federal Savings Bank?”
  3. Google:  “Implodometer”
  4. Google: “Where is XYZ Savings Bank FSB located?”
  5. Google: “Where is XYZ Savings Bank FSB registered?
  6. Google: “XYZ Savings Bank FSB + merger”
  7. Google: “XYZ Savings Bank FSB + FDIC”
  8. Google: “XYZ Savings Bank FSB + lawsuit”
  9. Go to LIVINGLIES BLOG homepage and insert name of entity in search index.
Example Report:
  1. XYZ Savings Bank FSB is referenced on an instrument bearing the title “Assignment of Mortgage.” There is no reference to a financial transaction in which the debt, note or mortgage was acquired.
  2. It was created (or chartered) under and regulated by United States federal law, and administered by the United States Department of the Treasury’s Office of the Comptroller of the Currency, which shows XYZ Savings Bank FSB as “Active”on its website.
  3. The specific reference to XYZ Savings Bank FSB is that the “Assignment” instrument dated the 5th day of July 2009 recites that Ocwen Loan Servicing is the attorney in fact for XYZ Savings Bank FSB. No Power of Attorney is attached to the instrument nor has any such power been presented in any of the documents we have reviewed. Discovery and further investigation should be focused on whether the “assignment” actually transferred any rights to the Assignee.
  4. XYZ Savings Bank FSB is presented as the trustee for the 123 Trust. No organizational document for the 123 Trust  has been presented for our review. The trust may or may not exist and therefore XYZ Savings Bank FSB may or may not be the trustee.
  5. XYZ Savings Bank FSB is a Federal Savings Bank and currently exists as an independent entity with headquarters in Akron, Ohio. It was formerly known as First Community Bank which was formerly known as Akron Savings Bank, organized under the laws of the State of Ohio.
  6. It has not been party to a petition for bankruptcy or seizure by the FDIC.
  7. It has not been a party to any merger nor has it ever been acquired by another entity.
  8. It was created (or chartered) under and regulated by United States federal law, and administered by the United States Department of the Treasury’s Office of the Comptroller of the Currency, which shows XYZ Savings Bank FSB as “Active”on its website.
NOTE: Our paralegal staff stands ready to help ghostwrite discovery, pleadings, motions and other documents. This is performed under my supervision and subject to my edits and comments. Go to LendingLies for more information.

Wells Fargo “Lending” Securities It Didn’t Own

Translation: WFB was the “custodian” of alleged “mortgage-backed” certificates issued for the benefit of investors who paid billions of dollars for ownership of the certificates. WFB “Loaned” those alleged securities to brokers. The brokers in exchange provided “collateral” the proceeds of which were reinvested by WFB. In short, WFB was laundering the investors money for the sole benefit of WFB and not for the investors who owned the certificates and certainly to the detriment of the brokers and their buyers of derivative instruments based upon the loan of the securities.

This case reveals the flowering of multiple levels arising from false claims of securitization. First WFB issues certificates from a fictitious trust that owns nothing. Then it keeps both the money paid for those certificates and it keeps the certificates as well. On Wall Street this practice is called holding securities in “street name.” Then WFB engages in trading on securities it doesn’t own, but which are worthless anyway because the certificates only represent a promise from the REMIC trusts that exists only on paper.

It is all based upon outright lies. And that is why the banks get nervous when the issue of ownership of a debt, security or derivative becomes an issue in litigation. In this case the bank represented the trades as ownership or derivative ownership of “high grade money market instruments” such as “commercial paper or bank time deposits and CDs.”

None of it was true. WFB simply says that it thought that the “instruments” were safe. The lawsuit referred to in the linked article says they knew exactly what they were doing and didn’t care whether the instruments were safe or not. If the attorneys dig deeper they will find that the certificates’ promise to pay was not issued by an actual entity, that certificates were never mortgage-backed, and that WFB set it up so when there were losses it would not fall on WFB even though WFB was using the named trust basically as a fictitious name under which it operated.

So I continue to inquire: why does any court accept any document from WFB as presumptively valid? Why not require the actual proof?

Let us help you plan your defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

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Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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Hat Tip Bill Paatalo

see  WFB Securities Lending Scheme

The investments by WFB went into “mortgage backed assets.” Really? So let’s see how that works. First they create the certificates and sell them to investors even though neither the investors nor the trust have any interest in mortgage assets. Then they “loan” the same certificates to brokers, who provide collateral to WFB so that WFB can “reinvest” investor money using commingled investor money from a variety of sources.

Then derivatives on derivatives are sold as private contracts or insurance policies in which when the nonexistent trust assets are declared by WFB to have failed, in which WFB collects all the proceeds. The investors from all layers are screwed. And borrowers, as was originally planned, are screwed.

The lender to the borrower in the real world (where money is exchanged) are be the investors whose money was in the dynamic dark pool when the loan of money occurred. But the investors have no proof of ownership of the debt because of the false documents created by the “underwriter” bank.  The money from the second tier of investors is used to “purchase” the certificates WFB is “printing”. And then derivatives and hybrid derivatives and synthetic derivatives are sold multiplying the effect of every certificate issued. Such has the control over currency shifted from central banks who control around $8 trillion of fiat currency to the TBTF banks who boast a shadow banking market of $1 quadrillion ($1,000,000,000,000,000.00).

This every loan and every certificate is multiplied in the shadow banking market and converted into real money in the real world. Based upon prior securities analysis and review of disclosures from the publicly held banks it thus became possible for a “bank” to receive as much as $4.2 million on a $0.1 Million loan (i..e, $100,000). But in order to maintain the farce they must foreclose and not settle which will devalue the derivatives.

Then having done all that through control of a dynamic dark pool of investor money they must of course create the illusion of a robust lending market. True this particular case involves a business acquired when WFB acquired Wachovia. But WFB acquired Wachovia because it was the actual party in control of a false securitization scheme in which Wachovia acted primarily as originator and not lender.

WFB barely cares about the interest rate because they know the loans that are being approved won’t last anyway. But its trading desk secures extra profits by selling loans with a high interest rate, as though the loans had a low interest rate thereby guaranteeing two things: (1) guaranteed defaults that WFB can insure and (2) buying low (with investor money) and selling high (to investors).

All of which brings us back to the same point I raised when I first wrote (circa 2007) about the systemic fraud in securitization not as an idea, but in the way it had been put into practice. Using established doctrines in tax litigation there are two doctrines that easily clear up the intentional obfuscation by the banks: (1) The single transaction doctrine and (2) the step transaction doctrine. Yes it is that simple. If the investors didn’t part with their money then the loan of money would have never reached the desk of the closing agent. If the homeowners had not been similarly duped as to who and what was being done, they would never have signed on the dotted line.

To assume otherwise would be the same as assuming that borrowers were looking for a way to waste money on non-deductible down payments, improvements and furniture in exchange for a monthly payment that everyone knew they couldn’t afford.

 

Financial Industry Caught with Its Hand in the Cookie Jar

Like the infamous NINJA loans, the REMICs ought to be dubbed NEITs — nonexistent inactive trusts.

The idea of switching lenders without permission of the borrower has been accepted for centuries. But the idea of switching borrowers without permission of the “lender” had never been accepted until the era of false claims of securitization.

This is just one example of how securitization, in practice, has gone far off the rails. It is significant to students of securitization because it demonstrates how the debt, note and mortgage have been separated with each being a commodity to sell to multiple buyers.

Let us help you analyze your case: 202-838-6345
Get a consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see https://asreport.americanbanker.com/news/new-risk-for-loan-investors-lending-to-a-different-company

Leveraged loan investors are now concerned about whether they are funding a loan to one entity and then “by succession” ending up with another borrower with a different credit profile, reputation, etc. You can’t make this stuff up. This is only possible because the debt has been separated from the promissory note — the same way the debt, note and mortgage were treated as entirely separate commodities in the “securitization” of residential mortgage debt. The lack of connection between the paper and the debt has allowed borrowers to sell or transfer their position as borrower to another borrower leaving the “lender” holding a debt from a new borrower. This sounds crazy but it is nevertheless true. [I am NOT suggesting that individual homeowners try this. It won’t work]

Keep in mind that most certificates issued by investment bankers purportedly from nonexistent inactive trusts (call them NEITs instead of REMICs) contain an express provision that states in clear unequivocal language that the holder of the certificate has no right, title or interest to the underlying notes and mortgages. This in effect creates a category of defrauded investors using much the same logic as the use of MERS in which MERS expressly disclaims and right, title or interest in the money (i.e., the debt), or the mortgages that reregistered by third party “members.”

Of course those of us who understand this cloud of smoke and mirrors know that the securitization was never real. The single transaction rule used in tax cases establishes conclusively that the only real parties in interest are the investors and the borrowers. Everyone else is simply an intermediary with no more interest in any transaction than your depository bank has when you write a check on your account. The bank can’t assert ownership of the TV you just paid for. But if you separate the maker of the check from the seller of the goods so that neither knows of the existence of the other then the intermediary is free to make whatever false claims it seeks to make.

In the world of fake securitization or as Adam Levitin has coined it, “Securitization Fail”, the successors did not pay for the debt but did get the paper (note and mortgage or deed of trust). All the real monetary transactions took place outside the orbit of the falsely identified REMIC “Trust.” The debt, by law and custom, has always been considered to arise between Party A and Party B where one of them is the borrower and the other is the one who put the money into the hands of the borrower acting for its own account — or for a disclosed third party lender. In most cases the creditor in that transaction is not named as the lender on the promissory note. Hence the age-old “merger doctrine” does not apply.

This practice allows the sale and resale of the same loan multiple times to multiple parties. This practice is also designed to allow the underwriter to issue investors a promise to pay (the “certificate” from a nonexistent inactive trust entity) that conveys no interest in the underlying mortgages and notes that supposedly are being acquired.

It’s true that equitable and perhaps legal rights to the paper (i.e., ownership) have attached to the paper. But the paper has been severed from the debt. Courts have inappropriately ignored this fact and stuck with the presumption that the paper is the same as the debt. But that would only be true if the named payee or mortgagee (or beneficiary on a Deed of Trust) were one and the same. In the real world, they are not the same. Thus we parties who don’t own the debt foreclosing on houses because the real parties in interest have no idea how to identify the real parties in interest.

While the UCC addresses situations like this Courts have routinely ignored statutory law and simply applied their own “common sense” to a nearly incomprehensible situation. The result is that the courts apply legal presumptions of facts that are wrong.

PRACTICE NOTE: In order to be able to litigate properly one must understand the basics of fake securitization. Without understanding the difference between real world transactions and paper instruments discovery and trial narrative become corrupted and the homeowner loses. But if you keep searching for things that ought to exist but don’t — thus undercutting the foundation for testimony at deposition or trial — then your chances of winning rise geometrically. The fact is, as I said in many interviews and on this blog as far back as 2007, they don’t have the goods — all they have is an illusion — a holographic image of an empty paper bag.

Trustee v Active Trustee US Bank Fails to show or even attempt to show it is an active trustee

CASE DISMISSED,WITH LEAVE TO AMEND. US BANK DECLINED TO AMEND. CASE DISMISSED.

Even where there is a clerk’s default “The burden is on the plaintiff to establish its entitlement to recovery.” Bravado Int’l, 655 F. Supp. 2d at 189.

Here is an example of how lawyers purport to represent US Bank when in fact they are creating the illusion that they represent a trust and in reality they are representing a subservicer who is receiving orders from a master servicer of a nonexistent trust. As Trustee of the nonexistent trust USB had no active role in the nonexistent trust. As the inactive Trustee for a nonexistent Trust, no right, title or interest in the debts of homeowners were within any scope of authority of any servicer, subservicer or master servicer. Each foreclosure is a farce based upon assumptions and presumptions that are exactly opposite to the truth.

Given the opportunity to amend the complaint, lawyers for USB chose not to amend — because they could not plead nor prove the required elements of an active trustee. Because of that USB lacked standing to bring the action except as agent for an active trust or on behalf of the trust beneficiaries. But where the certificates show that the certificate holders do NOT have any interest in a mortgage or note (true in about 70% of all cases), then they too lack of standing. And if the Trust is not an active Trust owning the debt, note or mortgage then it too lacks standing.

Let us draft your motions and do the research necessary to draw the attention of the court to the fraud taking place under their noses. 202-838-6345
Get a consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Hat tip Bill Paatalo

see Memorandum and Order – USBank Trust NA as Trustee for LSF9 MPT v Monroe

See Judgment – USB Trust for LSF9 v Monroe –

While this case discusses diversity and other issues concerning US Bank “as trustee” the reasoning and ruling clearly expose the truth about pleading irregularities by attorneys who purport to represent US Bank or a REMIC Trust.

A debt is an asset to anyone who owns it. Industry practice requires that for transfer of ownership, there must be an agreement or other document providing warranty of title, confirmation of the existence and ownership of the debt and proof of authority of the person executing the document. Go into any bank and try to borrow money using a note as collateral. The bank will require, at a minimum, that the debt be confirmed (usually by the purported debtor) and that each party in the chain show proof of purchase.

Without consideration, the assignment of mortgage or endorsement of the note is just a piece of paper.

When there is an assertion of ownership of the loan, what the banks and so-called servicers are actually saying is that they own the paper (note and mortgage) not the debt. In the past this was a distinction without a difference. In the era of patently f false claims of securitization, the debt was split off from the paper. The owner of the debt were without knowledge that their money was not under Trust management nor that their money was being used to originate or acquire loans without their knowledge.

The securitization sting is accomplished because the owners of the debt (the investors who sourced the funds) are unaware of the fact that the certificate they are holding is merely a promise to pay from a nonexistent trust that never was utilized to acquire the debts and whose ownership of the paper is strictly temporary in order to foreclose.

The failure to make that distinction between the real debt and the fake paper is the principal reason why so many people lose their homes to interlopers who have no interest in the loan but who profit from the sale of the home because a judgment was entered in favor of them allowing them to conduct a foreclosure sale. 

This case also sets forth universally accepted legal doctrine even where there is a clerk’s default entered against the homeowner. The Judge cannot enter a judgment for an alleged debt without proving the debt — even if the homeowner doesn’t show up.

“When a default is entered, the defendant is deemed to have admitted all of the well- pleaded factual allegations in the complaint pertaining to liability.” Bravado Int’l Grp. Merch. Servs., Inc. v. Ninna, Inc., 655 F. Supp. 2d 177, 188 (E.D.N.Y. 2009) (citing Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). “While a default judgment constitutes an admission of liability, the quantum of damages remains to be established by proof unless the amount is liquidated or susceptible of mathematical computation.” Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974); accord, e.g., Bravado Int’l, 655 F. Supp. 2d at 190. “[E]ven upon default, a court may not rubber-stamp the non-defaulting party’s damages calculation, but rather must ensure that there is a basis for the damages that are sought.” United States v. Hill, No. 12-CV-1413, 2013 WL 474535, at *1 (N.D.N.Y. Feb. 7, 2013)

“The burden is on the plaintiff to establish its entitlement to recovery.” Bravado Int’l, 655 F. Supp. 2d at 189.

 

Maine Case Affirms Judgment for Homeowner — even with admission that she signed note and mortgage and stopped paying

While this case turned upon an  inadequate foundation for introduction of “business records” into evidence, I think the real problem here for Keystone National Association was that they did not and never did own the loan — something revealed by the usual game of musical chairs that the banks use to confuse and obscure the identity of the real creditor.

When you read the case it demonstrates that the Maine Supreme Judicial Court was not at all sympathetic with Keystone’s “plight.” Without saying so directly the court’s opinion clearly reveals its doubt as to whether Keystone had any plight or injury.

Refer to this case and others like it where the banks treated the alleged note and mortgage as being the object of a parlor game. The attention paid to the paperwork is designed by the banks to distract from the real issue — the debt and who owns it. Without that knowledge you don’t know the principal and therefore you can’t establish authority by a “servicer.”

The error in courts across the country has been that the testimony and records of the servicer are admissible into evidence even if the authority to act as servicer did not emanate from the real party in interest — the debt holder (the party to whom the MONEY is due.

Note that this ended in judgment for the homeowner and not an involuntary dismissal without prejudice.

NEED HELP PREPARING FOR  TRIAL? We can help you with Preparation for Objections and Cross Examination, Discovery and Compelling Responses to Discovery Requests with Our Paralegal Team that works directly with Neil Garfield! We provide services directly to attorneys and to pro se litigants.
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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Hat Tip to Bill Paatalo

Keybank – maine supreme court

Here are some meaningful quotes from the Court’s opinion:

KeyBank did not lay a proper foundation for admitting the loan servicing records pursuant to the business records exception to the hearsay rule. See M.R. Evid. 803(6).

KeyBank’s only other witness was a “complex liaison” from PHH Mortgage Services, which, he testified, is the current loan servicer for KeyBank and handles the day-to-day operations of managing and servicing loan accounts.

The complex liaison testified that he has training on and personal knowledge of the “boarding process” for loans being transferred from prior loan servicers to PHH and of PHH’s procedures for integrating those records. He explained that transferred loans are put through a series of tests to check the accuracy of any amounts due on the loan, such as the principal balance, interest, escrow advances, property tax, hazard insurance, and mortgage insurance premiums. He further explained that if an error appears on the test report for a loan, that loan will receive “special attention” to identify the issue, and, “[i]f it ultimately is something that is not working properly, then that loan will not . . . transfer.” Loans that survive the testing process are transferred to PHH’s system and are used in PHH’s daily operations.

The court admitted in evidence, without objection, KeyBank’s exhibits one through six, which included a copy of the original promissory note dated April 29, 2002;3 a copy of the recorded mortgage; the purported assignment of the mortgage by Mortgage Electronic Registration Systems, Inc., from KeyBank to Bank of America recorded on January9, 2012; the ratification of the January 2012 assignment recorded on March 6, 2015; the recorded assignment of the mortgage from Bank of America to KeyBank dated October 10, 2012; and the notice of default and right to cure issued to Kilton and Quint by KeyBank in August 2015. The complex liaison testified that an allonge affixed to the promissory note transferred the note to “Bank of America, N.A. as Successor by Merger to BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, LP,” but was later voided.

Pursuant to the business records exception to the hearsay rule, M.R. Evid. 803(6), KeyBank moved to admit exhibit seven, which consisted of screenshots from PHH’s computer system purporting to show the amounts owed, the costs incurred, and the outstanding principal balance on Kilton and Quint’s loan. Kilton objected, arguing that PHH’s records were based on the records of prior servicers and that KeyBank had not established that the witness had knowledge of the record-keeping practices of either Bank of America or Countrywide. The court determined that the complex liaison’s testimony was insufficient to admit exhibit seven pursuant to the business records exception.

KeyBank conceded that, without exhibit seven, it would not be able to prove the amount owed on the loan, which KeyBank correctly acknowledged was an essential element of its foreclosure action. [e.s.] [Editor’s Note: This admission that they could not prove the debt any other way means that their witness had no personal knowledge of the amount due. If the debt was in fact due to Keystone, they could have easily produced a  witness and a copy of the canceled check or wire transfer receipt wherein Keystone could have proven the debt. Keystone could have also produced a witness as to the amount due if any such debt was in fact due to Keystone. But Keystone never showed up. It was the servicer who showed up — the very party that could have information and exhibits to show that the amount due is correctly proffered because they confirmed the record keeping of “Countrywide” (whose presence indicates that the loan was subject to claims of securitization). But they didn’t because they could not. The debt never was owned by Keystone and neither Countrywide nor PHH ever had authority to “service” the loan on behalf of the party who owns the debt.]

the business records will be admissible “if the foundational evidence from the receiving entity’s employee is adequate to demonstrate that the employee had sufficient knowledge of both businesses’ regular practices to demonstrate the reliability and trustworthiness of the information.” Id. (emphasis added).

 

With business records there are three essential points of reference when several entities are involved as “lenders,” “successors”, or “servicers”, to wit:

  1. The records and record keeping practices of the initial “lender.” [If there are none then that would point to the fact that the “lender” was not the lender.] Here you are looking for the first entries on a valid set of business records in which the loan and fees and costs were posted. Generally speaking this does not exist in most loans because the money came a third party source who knows nothing of the transaction.
  2. The records and record keeping practices of any “successors.” Note that this is a second point where the debt is separated from the paper. If a successor is involved there would correspondence and agreements for the purchase and sale of the debt. What you fill find, though, is that there is only a naked endorsement, assignment or both without any correspondence or agreements. This indicates that the paper transfer of any rights to the “loan” was strictly for the purpose of foreclosing and bore new relationship to reality — i.e., ownership of the debt.
  3. The records and record keeping practices of any “servicers.” In order for the servicer to be authorized, the party owning the debt must have directly or indirectly given authorization and come to an agreement on fees, as well as given instructions as to what functions the servicer was to perform. What you will find is that there is no valid document from an owner of the debt appointing the servicer or giving any instructions, like what to do with the money after it is collected from homeowners. Instead you find tenuous documentation, with no correspondence or agreements, that make assertions for foreclosure. The game of musical chairs has bothered judges for a decade: “Why do the servicers keep changing” is a question I have heard from many judges. The typical claims of authorization are derived from Powers of Attorney or a Pooling and Servicing agreement for an entity that neither e exists nor does it have any operating history.

Rescission Precision Goes to U.S. Supreme Court Petition for Mandamus

10 years ago, seeing where the foreclosure wave was going and watching court cases, I said on these pages that the only solution to these foreclosures is Mandamus. First to stop judges from applying legal PRESUMPTIONS and second to stop judges from ignoring TILA rescission. Now someone has done it and others might follow suit, if you pardon the pun. Lawyers were not well versed in mandamus and pro se litigants had never heard of it. So for the most part everyone has been screaming and yelling about injustice, fabrication, forgery and perjury.

Ironically it is Dan Junk, pro se, who has done the best legal writing on the issue of TILA Rescission and has chosen, in my opinion, the best route to getting the Supreme Court to issue an order prohibiting judges from disregarding TILA Rescission and requiring judges to follow the law in 15 U.S.C. §1635. The irony is doubled because of Dan’s last name (Junk) and the fact that the securitization scheme arose partly out of the junk bond craze 30 years ago. Except of course that back then Wall Street pirates WERE sent to prison.

SCOTUS has the option of taking any case they want to review. They did take the Jesinoski v Countrywide case from which this Petition for Mandamus arises. And once they take it for review, they can still deny the writ leaving decisions on rescissions in limbo and creating case precedent where Judges have the option of disregarding the law as written in a statute in virtually any kind of case.

This one was filed, as I understand it, last Friday. It may or may not be considered timely. The reason I am publishing the Petition for the Writ of Mandamus is  that it attacks exactly on point what is happening in the courts — namely, “denying” the existence and effect of TILA rescission even after it has taken effect as a nonjudicial remedy.

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see

Junk SCOTUS Petition for Writ of Mandamus on TILA RESCISSION

Hiding in Plain Sight_ Jesinoski and the Consumer_s Right of Resc

Jesinoski decision

Dan Junk attended one of my first seminars back in the days when I was co-presenting with Brad Keiser. In litigation for around 9 years, he has followed this blog (and many others) and fought off the “inevitable” foreclosure as long as he could in Ohio. Besides clear evidence of substantive defenses Dan had sent a notice of rescission within the 3 years stated in the TILA Rescission statute.

Like thousands of judges across the country in State and Federal courts, the timely and effective rescission was ignored simply because the judges didn’t like the result. The ultimate decision was against him because the courts continue to allow legal presumptions to apply even though they create “alternate facts” in conflict with reality.

Blind justice supposedly requires courts to apply the law, as written by the Federal and State legislatures. The answer for Dan was not in some attempted appeal but rather to seek a sweeping ruling from the Supreme Court of the United States that specifically requires all judges, whoever situated, to follow the TILA Rescission law. There is adequate evidence to show that this is of great public importance inasmuch as virtually all judges are committing the same “error” to wit: not taking TILA rescission literally or seriously.

We’ll see what happens. But in the meanwhile do give a careful read of the Brief Dan filed. This could be a moment where everything changes.

Stupid Law

Hat tip to Bill Paatalo who wrote the main article. See link below.

I would like to say that this could have happened only in Arkansas, but that isn’t true. Watch how the Court twisted itself into a pretzel in its determines effort to make Wells Fargo win despite admitting to unlawfully altering the note by a forged endorsement.

I note also how the court steadfastly avoids the subject of ownership of the debt and clings to the notion that ownership of the note — i.e., the piece of paper that is EVIDENCE OF THE LOAN — is as deep as the court is willing to go.

see https://bpinvestigativeagency.com/wells-fargo-admits-to-executing-wamu-note-endorsement-in-2013-and-gets-away-with-it/

Register Now- 2 CLEs: Death of a Salesman — when the party who “originated” an apparent loan transaction is dead or bankrupt.

 

 

Unrhetorical Questions — Money, Lies and Accounting Records: Gander and Goose

Why are our courts routinely accepting allegations and documents from foreclosing banks that they would summarily throw out if the same allegations and documents came from borrowers?

 How can possession of an ALLONGE construed as ownership

of the debt without any other evidence being presented?

Why is the standard definition of “Allonge” ignored?

IF THE COURT IS USING THE TERMS OF “ALLONGE”, “ASSIGNMENT”AND “ENDORSEMENT” INTERCHANGEABLY, WHY DOES ALL THE LITERATURE ON LEGAL DEFINITION AND ELEMENTS SAY OTHERWISE? ARE WE MAKING A NEW UCC?

WHY ARE COURTS ALLOWING ENDORSEMENTS (SHOULD BE SPELLED “INDORSEMENT”) IN BLANK TO TRANSFER THE LOAN WHEN THE BASIS OF THE PROPONENT’S AUTHORITY TO FORECLOSE IS A DOCUMENT THAT FORBIDS ACCEPTANCE OF  ENDORSEMENTS IN BLANK?

 I recently received a question from an old friend of mine who was a solicitor in Canada and who is frustrated with our court system that continues to assume the validity of loans that have already been thoroughly discredited. He has attempted on numerous occasions to get information through a qualified written request or a debt validation letter and has attempted to verify the authority of any party to whom he would address a request for modification of his loan in Florida. While chatting with him online I realized that this information might be of some value to attorneys and borrowers. The principal point of this article is the old expression “what is good for the goose is good for the gander.” For those of you who are unfamiliar with the old expression it means that there should be equality of treatment, all other things being equal. In mortgage litigation is apparent that when an allegation is made or a proffer is made through counsel rather than the introduction of evidence, the courts continue to function from both a misconception and  misapplication of the Rules of Court and the rules of evidence.

 When the case involves one institution against another, the same arguments that are summarily  rejected when they are advanced by a borrower are given considerable traction because the argument was advanced by a financial institution or financial player that identifies itself as a financial institution. In fact, a review of most cases reveals a much heavier burden on the party defending against the loss of their homestead than the party seeking to take it —  which is a complete reversal of the way our justice system is supposed to work.  The burden of proof in both judicial and nonjudicial states is constitutionally required to be on the party seeking affirmative relief and not on the party defending against it.

In the nonjudicial states, in my opinion, the courts are violating this basic constitutional requirement on a regular basis under circumstances where the party announcing a right to enforce a dubious deed of trust, collection on a dubious note, and therefore having the right to sell the property without judicial intervention despite the inability of the foreclosing entity to produce any evidence that it owns the debt, note, mortgage rights,  or even demonstrate a financial interest in the outcome of the foreclosure sale; to make matters worse the courts are allowing trustees on deeds of trust to be appointed or substituted even though they have a direct or indirect financial relationship with the alleged lender.

These trustees are accepting “credit bids” without any due diligence as to whether or not the party making the offer of the credit bid at auction is in fact the creditor who may submit such a credit bid according to the statutes governing involuntary auctions within that state.  In nonjudicial states the burden is put on the borrower to “make a case” and thus obtain a temporary restraining order preventing the sale of the property. This is absurd. These statutes governing nonjudicial sales were created at a time when the lender was easily identified, the borrower was easily identified, the chain of title was easily demonstrated, and the chain of money was also easily demonstrated. Today in the world of falsely securitized loans, the courts have maintain a ministerial attitude despite the fact that 96% of all loans are subject to competing claims by false creditors. The borrower is forced to defend against allegations that were never made but are presumed in a court of law. If anything is a violation of the due process requirements of the United States Constitution and the Constitution of most of the individual states of the union, this must be it.

 In the judicial states,  the problem is even more egregious because the same presumptions and assumptions are being used against borrowers as in the nonjudicial states. Thus in addition to being an unconstitutional application of an otherwise valid law, the judicial states are violating their own rules of civil procedure mandated by the Supreme Court of each such state (or to be more specific where the highest court is not called the Supreme Court, we could say the highest court in the state).  This is why I have strongly suggested for years that an action in mandamus be brought directly to the highest court in each state alleging that the laws and rules, as applied, violate constitutional standards and any natural sense of fairness.

 Here is the question posed by my Canadian friend:

(1)  The documents are phony documents (copies) produced by Ben Ezra Katz. It will cost me several thousand dollars to have a document expert evaluate the documents and then testify if they find them to be copies. At the beginning of this case, The Plaintiff’s attorney (Ben Ezra Katz associate) told the court (I do have a transcript) that they has found the ORIGINAL documents (note, mortgage, etc.) and that they had couriered the ORIGINAL documents to the clerk of Court. They did a Notice of Filing which on its’ face states ORIGINAL documents. I can not afford a document expert, however the AG in S. Florida has an open investigation into this case. Would I be out of line in requesting that they include this case per-se as part of their investigation and accordingly make a determination as to if or if not the subject documents which are on file with the clerk of court are originals or copies ??
(2)  The only nexus that Wells Fargo produces to establish themselves as a real party in interest is a hand filled out allonge (copy attached). Please note that the signer only signs as “assistant secretary” without further specifics. On the basis of what they provide it is virtually impossible to depose this person to determine if she actually did or did not sign this document, and if so what is her authority to do so.  I want to launch some sort of discovery that seeks to discover what else the Plaintiff has which would support the alleged allonge. Things such as any contracts, copies of any consideration, what was the consideration, who authorized the transaction, etc.  Do you have any suggestions in this regard. I bounced this off my attorney and I am not sure that we are on the same page. He wants to go to trial and have the proven phony documents as the main thrust. I agree with that, however I also would feel far better if we were able to cut them off at the knees as to standing such as the alleged allonge is part of the phony documents, and there are no documents that the Plaintiff can produce to support not only its’ authenticity, but its’ legitimate legal function. I do not like to have all of my eggs in one basket.

 And here is my response:

 You are most probably correct in your assessment of the situation. If they lied to the court and filed phony documents you should file motion for contempt. You should also file a motion for involuntary dismissal based on the fact that they have had plenty of time to either come up with the original documents or alleged facts to establish lost documents. The affidavit that must accompany the allegation of lost documents must be very specific as to the content of the documents and the path of the documents and it must the identify the person or records from which the allegations of fact are drawn. They must be able to state with certainty when they last had the original documents if they ever did have the original documents. If they didn’t ever have the original documents then an affidavit from them is meaningless. They have to establish the last party had physical custody of the original documents and establish the reason why they are missing. If they can’t do those things then their foreclosure should be dismissed. The more vague they are in explaining what happened to the original documentation the more likely it is that somebody else has the original documentation and may sue you again for recovery. So whatever it is that they allege should result in your motion to strike and motion to dismiss with prejudice. As far as the attorney general’s office you are correct that they ought to cooperate with you fully but probably incorrect in your assumption that they will do so.

I think you should make a point about the allonge being filled out by hand as being an obviously late in the game maneuver. You can also make a point about the “assistant Sec.” since that is not a real position in a corporation. Something as valuable as a note would be reviewed by a real official of the Corporation who would be able to answer questions as to how the note came into the possession of the bank (through interrogatories or requests for admission) and  what was paid and to whom for the possession and rights to the note, when that occurred and where the records are that show the payment and how Wells Fargo actually came into possession of the note or the rights to collect on the note. As you are probably aware the predecessor that is alleged to have originated the note or alleged to have had possession of the note must account for whether they provided the consideration for the note and what they did with it after the closing. If they say they provided consideration than they should have records showing a payment to the closing agent and if they received consideration from Wells Fargo they should have those records as well.

But the likelihood is that neither Option One nor Wells Fargo ever funded this mortgage which means that the note and mortgage lack consideration and neither one of them has any right to collect or foreclose.   In fact, since they are taking the position that the loan was not securitized and therefore that no securitization documents are relevant,  neither of them can take the position that they are representing the real party in interest as an authorized agent for the real lender.  And the reason you are seeing lawsuits especially by Wells Fargo in which it names itself as the foreclosing party is that the bank knows that Iit ignored and routinely violated essential and material provisions of the securitization documents including the prospectus and pooling and servicing agreement upon which investors relied when they gave money to an investment banker.

In that case, since you seek to modify the loan transaction and determine whether or not it is now or is potentially subject to  a valid mortgage, you should seek to enforce a request for information concerning the exact path of the money that was used to fund the mortgage. And you should request any documentation or records showing any guarantee, payment, right to payment, or anything else that would establish a loan to you where actual money exchanged hands between the declared lender and yourself. The likelihood is that the money was in a co-mingled account somewhere —  possibly Wells Fargo —  which came from investors whose names should have been on the closing and the closing documents.  Those investors are the actual creditors. Or at least they were the actual creditors at the time that the loan money showed up at the alleged “loan closing.” Since then, hundreds of settlements and lawsuits were resolved based upon the bank tacitly acknowledging that it took the money and used it for different purposes than those disclosed in the prospectus and pooling and servicing agreement. These settlements avoid the embarrassing proof problems of any institution since they not only ignored the securitization documents, more importantly, they chose to ignore all of the basic industry standards for the underwriting of a real estate loan because the parties who appeared to be underwriting the loan and funding the loan had absolutely no risk of loss and only had the incentive to close deals in exchange for sharing pornographic amounts of money that were identified as proprietary trading profits or fees.

And the reason why this is so important is that the mortgage lien could never be perfected in the absence of the legitimate creditor who had advanced actual money to the borrower or on behalf of the borrower. This basic truth undermines the industry and government claims about the $13 trillion in loans that still are alleged to exist (despite multiple payments from third parties in multiple resales, insurance contracts and contracts for credit default swaps). The abundant evidence in the public domain as well as the specific factual evidence in each case negates any allegation of ultimate facts upon which relief could be granted, to wit: the money came from third-party investors who are the only real creditors. The fact that the money went through intermediaries is no more important or relevant than the fact that you are a depository bank is intended to honor checks drawn on your account provided you have the funds available. The inescapable conclusion is that the investors were tricked into making unsecured loans to homeowners and that the entire foreclosure scandal that has consumed our nation for years is based on completely false premises.

Your attorney could pose the question to the court in a way that would make it difficult for the court to rule against you. If the lender had agreed to make a loan provided you put up the property being financed PLUS additional collateral in the form of ownership of a valid mortgage on another piece of property,  would the court accept a handwritten allonge from you as the only evidence of ownership or the right to enforce the other mortgage? I think it is clear that neither the banks nor the court would accept the hand written instrument as sufficient evidence of ownership and right to collect payment if you presented the same instruments that they are presenting to the court.

PRACTICE HINT: In fact, you could ask the bank for their policy in connection with accepting its mortgages on other property as collateral for a business loan or for a loan on existing property or the closing on a new piece of property being acquired by the borrower. You could drill down on that policy by asking for the identification of the individual or committee that would decide whether or not a handwritten allonge would be sufficient or would satisfy them that they had  adequate collateral in the form of a mortgage on the first property and the pledge of a mortgage on a second piece of property.

The answer is self-evident. No bank or other lending institution or lending entity would loan money on the basis of a dubious self-serving allonge.  There would be no deal. If you sued them for not making the loan after the bank issued a letter of commitment (which by the way you should ask for both in relation to your own case and in relation to the template used by the bank in connection with the issuance of a letter of commitment), the bank would clearly prevail on the basis that you provided insufficient documentation to establish the additional collateral (your interest in the mortgage on another piece of property).

The bank’s position that it would not loan money on such a flimsy assertion of additional collateral would be both correct from the point of view of banking practice and sustained by any court has lacking sufficient documentation to establish ownership and the right to enforce. Your question to the court should be “if justice is blind, what difference does it make which side is using an unsupportable position?”

HSBC Hit with Foreclosure Suit; FHA’s $115 Billion Loss Scenario; Return of the Synthetic CDO?
http://www.americanbanker.com/bankthink/hsbc-hit-with-foreclosure-suit-fhas-115-billion-dollar-loss-scenario-1059622-1.html
Massachusetts foreclosures decline 79% as local laws stall the process
http://www.housingwire.com/news/2013/06/05/massachusetts-foreclosures-decline-79-local-laws-stall-process
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Money from thin air? If the bank does not create currency or money then where does the money come from? Answer investor deposits into what they thought was an account for a REMIC trust. And if the money came from investors then the banks were intermediaries whether they took money on deposit, or they were the underwriter and seller of mortgage bonds issued from non existent entities, backed by non existent loans. And any money received by the banks should have been for benefit of the investors or the REMIC trust if the DID deposit the money into a trust or fiduciary account.Dan Kervick: Do Banks Create Money from Thin Air?
http://www.nakedcapitalism.com/2013/06/dan-kervick-do-banks-create-money-from-thin-air.html

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Editor’s Notes:

The article below speaks plainly, although at some length about the role of money and the role of Wall Street, the need for regulation and where we should look for remedies for what ails our society.

While the author is entirely correct from a theoretical standpoint, the fact that corruption and abuse emanates from Wall Street is conveniently side-stepped. So I conclude that it is a planted article written by someone who understands too well what went wrong.

To begin with money is not merely a social construct with the sort of neutral value or nature that the author portrays. Money has become the dominant religion in America. In other countries the presence or absence of money is not nearly as important as the services and protection of government that the citizens expect. Here money has assumed a religious component in two respects — first, in order for it to exist and be useful, people must believe that the paper or numbers on their bank statement are real purchasing power and second, Americans have accepted a unique perspective on money extending far beyond the concept of respect for those who have made a lot of money. They are like gods above our laws and whose wrath is to be feared. 

The purchasing power of the dollar has been declining since the Wall Street scandal began. The can was kicked down the road a few times because the victims of Wall Street’s antics in Europe are reacting appropriately to the rug being pulled out from under them. So the dollar looked safer than the other currencies that are in chaos or transition now. But everyone knows that Wall Street caused this chaos, and they did it because our government pulled the referees off the playing field leaving only the bullies to make up their own rules. The religious fervor with which our policies are dominated by money and banking to the exclusion of services and protection of our citizens is appalling and precisely why the large banks must crash and be taken apart with pieces going to the real players in the banking system that do fit the description of banks in the article below.

Our failure to take responsibility for not regulating the banks and letting them into the rooms where the levers of power are pulled is precisely why the belief of everyone other than Americans who don’t trust the dollar or the U. S. will ultimately topple the dollar as the world’s reserve currency. And, when any credible alternative to the dollar emerges, everyone including rich Americans will flock to the new currency. It’s strictly business. The U.S. has so debased its currency, its economic foundation and its infrastructure for power, transportation and public safety that we don’t stand a chance.

Where other countries are wrangling with the problems of delivery of safety and opportunity to their citizens, the American government is still arguing about ” class warfare.” The discussion here is not on point and while Europe looks more chaotic now, they will look a great deal better later because they did deal with the real issues of people and the purpose of government.

Excusing Wall Street from lying, cheating, and corrupting our society and marketplace through the sorrowful and stern pronouncement that private banks have one goal which is to make money for their owners — begs the issue of the long term viability of any enterprise whose only goal is to make money. As the Citizens United case told us, corporations are fictions,  but they are legal fictions entitled to act like a legal person under the law. True enough. And people who commit wrongs are ordinarily held accountable for anti-social behavior. In America they are not held accountable and the victims are seen as bugs who should be squashed with every step.

Bullying, emanating from the power that we gave up when we started worshipping money, is how the regulations were removed, how the judicial system allowed millions of fake foreclosures to go through on the premise faked defaults, and why even the Massachusetts Supreme Court while admitting the wrongful behavior declined to apply it retroactively. Those who steal far less money are forced into making restitution to diminish the loss of their liberty. Here the loss of liberty is not on the table and restitution is thus left to innovative homeowners and attorneys who can outwit the new world order of money and property. 

The corruption of our title caused by MERS is a perfect example. The only valid way of handling  the situation is to void all MERS transactions. Instead we now have a hybrid of transactions laced with corrupted title and claims that are now sitting in the files of the county recorder’s office. So the choices we have are that we accept title as it is which rewards thieves, or we just convert our system to MERS and caveat emptor as to title. Either way we will never know the real status of our title or our mortgages. 

These things won’t happen in countries that see money as a vehicle or tool. And that fact is going to isolate the U.S. from the rest of the world. A marketplace where the certainty of transactions completed and the title is always subject to clouds or defects is a third world unstable country. Welcome to America, 2012 — unless we do something about it.

Misunderstanding Banking Is Bankrupting                 The Entire Society

Cullen Roche, Pragmatic Capitalism

Much has been written since the JP Morgan trading fiasco and the big Congressional hearing last week – some of it enlightening, but most of it confusing some of the basic elements about banking and money in general.  I was reading this piece yesterday on Bloomberg about the responsibilities and the “job” of banks.  It got me thinking about how badly people confuse the role of banks in our system.  So I thought I’d chime in.

Banks are, at their core, profit seeking establishments that serve as the lifeblood of a complex payments system in the monetary system.  Banks make a profit by having liabilities that are less expensive than their assets (well, it’s more complex than that, but let’s keep things simple here).   They compete for deposits and business by offering various products and services.  In the USA banks are almost exclusively owned by private shareholders (as in, not the government or public sector).   Like most other private profit seeking entities the goal of a bank is not just to service the smooth facilitation of this payments system, but to to make money for its owners.  Most of the time, these two functions do not conflict, but at times the risks banks take can indeed jeopardize the functioning of the system.  Despite all the bad press that banks receive the progress surrounding their various services have actually had a positive impact on the world (for the most part).  Bank accounts, credit cards, debit cards, investment services, business hedging services , etc are all elements that make the institution of money more useful and more convenient.  Seeing as money is a tool and a social construct it makes sense that banks have evolved products and services to help facilitate the ease of its usage (all in the name of competition and profit generation, of course).

But we have to ask ourselves the question again.  What is Wall Street’s job?  Wall Street’s job is simple.  It is to increase earnings for their shareholders.  It is not to provide jobs for the private sector.  It is not to make sure the US economy is running smoothly.  It is not to make sure you feel good about your day to day life.  It is to generate a profit for its owners.  This is the essence of private banking.  To generate a profit.  But banks play a unique role in our capitalist system.  I’ve explained before that banks are not the engine of capitalism.  They are simply the oil in the machine.  As the oil in our machine, banks must be functioning smoothly in order for the machine as a whole to be functioning smoothly.  So when big banks do bad things that threaten their well-being parts of the system begin to malfunction.  And sometimes when these mistakes are big enough the contagion leads to the entire machine malfunctioning and requiring a major repair (hello 2008!).

But make no mistake, your local bank is not your best friend or a public purpose serving charity.  For instance, when a bank extends a mortgage (a word literally meaning “death security pledge” from the latin root “mortuus” for death and germanic “security pledge”) they are not doing you some charitable service to help you buy your home.  They are rating your credit risk and evaluating you as a potential profit engine for their shareholders.  That might not be the most pleasant way to think about it, but it is what it is.  A bank is not a charity.  It does not really care if your mortgage results in jobs or happiness for you.  Of course, it would be great if this did because that might result in more future business, but the bank does not need these things from you in order to generate a profit.  It really just wants to manage its risks in a way that helps to generate a profit for their shareholders without excessive risk.  Obviously, the debtor finds the mortgage advantageous, but don’t confuse this service for charity work.  It’s just good old fashioned profit seeking and offering a service where one is needed (in this case, the debtor being able to obtain money they could not otherwise currently obtain).

The business of private banking is largely about risk management.  A good bank manages risk by understanding how the various business components threaten the stability of the overall bank and align with this goal of generating a profit.   And as we ripped down the regulations structuring the amount of risk these institutions can and cannot take (in addition to making the risk taking business more complex) we realized that banks just weren’t very good risk managers.  This is not surprising to anyone who has been around markets for a while.  Investors and people in general are irrational, inefficient and poorly suited to manage the risks associated with complex dynamical systems.  So, for some reason, we all seem shocked when these profit seeking entities take excessive risks and prove to be poor risk managers.  And since we would never blame ourselves (the home buyers for instance) we blame the banking institutions.  And we write silly things about how they’re not doing their “job” or how they’re all out to screw the whole world.  It’s just not that black and white.

From a social perspective, this is all an extraordinarily interesting discussion.  Money is a social construct and a simple tool that helps us achieve certain ends within our society.  But money is something that is to be earned within our society (or utilized by the government in a democratic manner that is in-line with our goals as a society).  So there’s an interesting reality at work within the banking system.  Banks, as loan originators, act as a way to obtain access to money for someone who has not yet earned money.  And in return, they are charged a fee for “borrowing” this money that is technically not yet theirs.  If there was no interest fee attached to loans the demand for this money would obviously be through the roof and it would render it worthless.  Likewise, if banks make credit standards too lax, fail to properly asses risks and make credit plentiful they can create an imbalance within the system (by lending to people who can’t service their debt) that threatens the viability of the monetary system through the risk of excessive debt, defaults and inevitable de-leveraging (as we’re seeing now).  In this world of “what have you done for me lately” and “get rich quick” (or more often, appear rich quick!) you have a messy concoction of borrowers who want their McMansion YESTERDAY and lenders who are willing to give you the money to obtain that McMansion TODAY so they can generate a bigger profit TOMORROW.

To me, none of this is a conflict though and does not mean the system, at its core is corrupted or failing.  Banks are private profit seeking entities who play an important role in our society, but are not public servants and should not be public servants (a government managed loan system would almost certainly be a disaster waiting to happen).  Obtaining money is a privilege, not a right.  And a private profit seeking banking system serves to regulate the ability to obtain money before one has necessarily earned it (though there are certainly instances, such as some forms of government spending, where money is rightly distributed by political choice).  But because banks deal in distributing the social construct that binds our society together we have a responsibility to oversee that money so as to bring the interests of these profit seekers in-line with the interests of society as a whole.  So to me, it is not the capitalist profit motive that is evil here.  Nor is it the greedy consumption driven actions of the borrowers that is evil.  These are crucial elements of a healthy functioning monetary system.

I think we need to recognize that money is a social construct that is to be protected by the society that creates it.  But we must also understand that, while private profit seeking banks are a superior alternative to a government managed loan system, these banks will inevitably be poor risk managers at points during the business cycle.  There is plenty of blame to go around for the current debacle that is the US economy.  Home owners were greedy in the run-up and the profit seeking banks were quick to turn that extra demand into higher earnings per share.  This production/consumption component is a healthy functioning part of the capitalist machine.   But when it involves the very oil that greases the engine we must understand that this is a component of the economy that requires great oversight and better regulation.  I fear we still do not have this despite the recent changes.  And the result is that this boom/bust cycle is likely to continue causing people to believe the very essence of capitalism is corrupted when in fact, it is the users and their misunderstandings who have abused the system.  In failing to properly oversee the institution of money we have allowed it to fail us.

In sum, it is the misunderstanding of the essence of money that is evil here, not the system itself.  We have misunderstood the essence of money as a tool and a social construct and how it relates to modern banking.  And in doing so, we have allowed both borrowers and lenders to abuse that social construct.  And with 8% unemployment and a floundering economy it is not just the banking system that appears bankrupt, but our society as a whole.  Better oversight of the institution of money might not be able to fix our current problems, but it can certainly ensure that future generations don’t have to suffer through these same events.


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Securitization – The Undead Heart of The Shadow Banking Machine

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Editor’s Comment: 

The article below was written by David Malone of the Golem XIV: Author of the Debt Generation, website, and was submitted to this blog by ELLEN BROWN

Ellen is an attorney and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com and ellenbrown.com.  She is also chairman of the Public Banking Institute.

Securitization – The Undead Heart of The Shadow Banking Machine

At the centre of all debates about the Banking crisis, the shadow Banking system and the bank bail-outs is Debt. For a long time I have been arguing that what this debt is, is in fact a new, bank created, bank issued and ultimately bank debased debt-backed currency. And the collapse in value of this unregulated currency IS the crisis. Its cause and its logic.

In order to explain why I think this and why I do not think ‘fixing’ the banking system back to any semblance of how it was, just prior to the crash, will be anything other than a disaster, I have to explain how debt is turned into money. And how, clever as this process is, it also contains within it the seeds of its own undoing.

To do so I have to take you into the undead heart of the machine – securitization. Securitization is what animates the global financial and shadow banking system in whose shadow we now live. It is how modern finance turns debt into money. It is the impious alchemical dream of turning lead to gold, water into wine.

When Securitization was invented it soon wrested control of the money supply away from nations and gave it to the banks. Nations still printed and controlled their currency. But securitization gave banks the ability to print their own currency. And this new securitized currency, based on debt, was theirs to print, control, spend, and ultimately to debase. In short, it gave banks a power to rival nations. It is worth, therefore, understanding its outlines at least. Please don’t panic. Like most financial stuff its not nearly as difficult as the priesthood would have you believe.

So here we go into the hocus-pocus world of debt finance.

The Banker’s problem.

We start with a debt. It could be a loan extended to a corporation or a mortgage. We’ll go with a mortgage. A mortgage is a debt and a promise to pay that debt. This was the bedrock of traditional banking. The bank lent out cash in return for a greater amount to be paid back, but in installments over 25-30 years. Of course over the years there were risks of inflation and default if the debtor lost their job or died. These are ‘credit risks’ that were the stuff of traditional banking.

Traditional ‘credit risk’ banking was a slow business – and that was the problem.

All debts were ‘held to maturity’ (to the end of the mortgage) by the bank. All the debts/mortgages were therefore dead end deals. In that they generally did not, could not, lead to anything else. Money went out. A debt was held in its place and the money slowly came back. The bank’s profit came from what was and is called, ‘the spread’ between the rate of interest the bank charges on the money it has lent out and the interest the bank pays on the money it borrows. The main places the banks ‘borrowed’ was from central banks, from investors – either share holders or bond holders and most importantly from their own depositors. You can see that the scope for banks to grow in size wealth and power, was constrained by the rate of flow of real money in to the bank and the turn over of loans.

For banking to really grow the amount of money to borrow and the turn-over of loans had to be increased. Securitization did both these things. It cut the umbilical to an older gentler age.

The last hold-out of the barter system.

In a funny way banking was the very last hold out of the barter system. The bank gave you money – very modern – but in return you gave the bank a lien/a claim on your property. You bartered your house and a promise to give a steady stream from your income as collateral for cash. You got cash from the deal which you could spend – and used it to buy the property. But the bank did not get cash. In fact it got something it could not spend. It got an agreement to pay. And you if the debt defaulted then the bank got a house. Now that is barter.

The genius of securitization finally did away with the barter element of banking. It did so by turning mortgages (debt agreement) into money. Nothing short of modern alchemy.

This is how it works.

The key difference between debt and money is that you can spend money. So what do you have to do to debt to be able to spend it?

Three things: Standardize it and Guarantee it and when you have done these two, the third, Liquefy it, will follow of its own accord.

So first –

Standardize it

Think of a pocket full of coins. What makes them work is that they are all the same. Same metal, same designs, same issuer, same bank behind them, same value. Everyone knows what they are getting when they accept a standard coin. So everyone is happy to accept them knowing that the next person will also be happy.

Now think of a mortgage. Now imagine you have a pocket full of these. Which banks do. Each one is unique. Unique amount, unique collateral (the house) and unique credit risks of the particular person paying back the loan. The skill of the banker was to assess all these variables. The short-coming was that the end product was a pocket full of different and unique debt agreements. Like having a pocket full of different coins in different currencies. Very difficult to get people to accept random coins as payment.

Step one in securitization is to deal with that problem. Basically by melting the mortgages down to their base metal and recasting them.

And recasting them does one other critical job.  The problem with mortgages its that sometimes the borrower defaults and the bank loses some of the money it lent out. To put it in terms of our coin analogy, in every pocket-full there will be one which turns out to be a tin plug. But which one?

Securitization solves this problem.

The failure rate of mortgages, any loan in fact, is a matter of probability. Melting down and recasting the mortgages spreads the loss evenly. If you expect one mortgage in every hundred to default that would mean anyone buying a mortgage from you would have a one in a hundred chance of getting the one that will deafult and end up with a worthless piece of paper. But in securitization all hunderd mortgages are sliced in to an hundred peices and each securitiy gets one piece each from each mortgage. Now when that one in a hundred defaults the loss is evenly spread.

Suddenly there is no unknown. There is a mathematically expressible probability that the whole pool will lose one hundredth of its value. That is easy to calculate into the value/worth/price of the bundle. And one hundredth of that loss will turn up in each of the recast slices. Mortgages go in. Securities come out. Each made from the melted and recast value of all the mortgages in the pot. Each is stamped into the same form with the same worth. You have convert unique debt agreements into a standard coinage of known value. Suddenly you have a pocket full of money.

Standardizing is the first step towards inventing a new form of money. You have ceased bartering your cash in return for a dead end debt, and instead converted the debt back into money. And rather fabulously this money YOU control. The central bank doesn’t control how much gets printed. You do. All you have to do is print up debt agreements and securitize them. And you can potentially print as much as you like whenever you like. It really is a license to print money.

That is a security in its simplest possible form. But if you would like to be able to spend this money you have to now guarantee it. Step two.

Guarantee it

All money that isn’t actually made of gold or silver is actually a promissory note or debt. It is debt issued by the central bank and backed by the CB’s and the Nation’s promise to honour that note. Weird isn’t it. Here we are talking about how to turn debt to money. When all along it’s actually how to turn one kind of debt into another one. The difference between the two debts is how spend-able it is. How spend-able it is, is sometimes called its fungability or liquidity. I only mention this so you know what is really meant when bankers use these terms.

Anyway back to the chase. Money is money because it is guaranteed by the central bank and the state, to be always, 100% of the time, worth what the coin or note says it is worth and therefore will always be accepted as payment. The question here, is how exactly does this promise work? What is it the CB is promising to do.

We often hear CB’s referred to as the lender of last resort. In many ways it is better to think of them as a buyer of last resort. In the final analysis the CB promise and guarantee ultimately means the CB will itself accept those coins from you. So YOU will never be left holding a worthless piece of paper or scrap of metal. You need never fear being left with worthless coins because the CB which issues the stuff guarantees to accept them, buy them back from you. As long as everyone knows this then no one is afraid to accept and hold the stuff. And this is the Liquidity of realm money.

What the CB will give you in return for the money you eventually tender back to them, is another knotty problem. At the least we, the CB would say, will accept our notes and coins as payment for any debts you have. (Now I know this doesn’t make the problem go away. But don’t blame me for the short-comings of money. They were problems before I came along!)

So for the purposes of our discussion here, when you tender a coin for payment, no one is going to say to you, “Oh, no thanks. I don’t trust those things. Haven’t you got something else?”

Except, of course, when the credibility of that CB guarantee itself is called into question – sovereign default. When that happens the spend-able value of those notes and coins evaporates like a kiss on the wind. Which is exactly the risk the Bank bail-outs are forcing on us all. Just ask the Greeks, Latvians and Icelanders.

This problem of a guarantee is a serious problem for securitization and for the shadow banking system. Because the shadow banking system and the system of securitization does not have access to the Central Banks and their ultimate promise ‘to accept as payment’. For the simple reason that the CB did not issue the securitized debt/money. So why should they promise? They do, of course, accept some of the securities as collateral for getting a loan of ‘real’ money. But the promise-to-buy is not without conditions and can be withdrawn. Securitized debt-money does not benefit from the guarantee that the CB will be the purchaser of last resort for their currency. Thus securities are NOT guaranteed the way the CB’s own money is.

So the question is, what promise or guarantee could the bankers come up with to take the place of the CB promise? Who or what could be the buyer of last resort to stand behind their securitized money?

The answer is ingenious and/or foolish depending on your temperament and the situation. In ‘good’ times the answer works. The problem is in bad times it doesn’t. AT ALL.

But in good times, the answer is that the ‘market’ promises to be the buyer of last resort. Now of course the market is also the issuer as well. Which makes it rather circular. But as long as everyone in the market – the banks, money market funds, pension funds, rating agencies will accept the securitized debt as money then there is your promise. There is no promise by one single all powerful God who will redeem all promises. In place there is a promise that in a vast market there will always be enough buyers to buy and redeem whatever the market needs to move. Redemption without God. Good trick.

You standardize the debts, you guarantee someone will always accept them as payment and you automatically get the last ingredient for free – liquidity. And with liquidity the whole thing runs like a mighty river.

The point is that unlike the original debt we now have a tradable asset that is a kind of currency. The more readily it can be sold the more ‘liquid’ it is as an asset and the more it is like money/cash. Which is a good trick. Because debt is a dead end. Whereas cash is the open road.

So in place of a single God-like promise, there is a market of groomed and powdered god-lets who collectively have pretensions to being a god – and this ‘market god’ ‘guarantees’ that there will always be some god-let who wants to buy securitized debt. Now you can see where all the talk of ‘frozen credit markets’ comes from. What they are really saying is that the ‘market’s’, the god-let’s, promise, turned out to be good only as long as it wasn’t really needed, when times were good, but was worthless as soon as it was needed. That detail was presumably somewhere in the very small print.

And indeed down in the small print you find out that the undeclared complication running through all is RISK. It was there when I said ‘one in a hundred mortgages will default’. Seemed so reasonable when I said it, didn’t it? That was where the devil crept in. Who says it is always one in a hundred?

This is where we get to all the AAA rating stuff. This is where the dark side of securitization lurks.

PART TWO TO FOLLOW.

Wells Fargo, Option One, American Home Mortgage Relationship

Wells Fargo Bank, N.A. appears in many ways including as servicer (America Servicing Company), Trustee (although it does not appear to be qualified as a “Trust Company”), as claimed beneficiary, as Payee on the note, as beneficiary under the title policy, as beneficiary under the property and liability insurance, and it may have in actuality acted as a mortgage broker without getting licensed as such.

In most securitized loan situations, Wells Fargo appears with the word “BANK” used, but it acted neither as a commercial nor investment bank in the deal. Sometimes it acted as a commercial bank meaning it processed a deposit and withdrawal, sometimes (rarely, perhaps 3-4% of the time) it did act as a lender, and sometimes it acted as a securities underwriter or co-underwriter of asset backed securities.

It might also be designated as “Depositor” which in most cases means that it performed no function, received no money, disbursed no money and neither received, stored, handled or transmitted any documentation despite third party documentation to the contrary.

In short, despite the sue of the word “BANK”, it was not acting as a bank in any sense of the word within the securitization chain. However, it is the use of the word “BANK” which connotes credibility to their role in the transaction despite the fact that they are not, and never were a creditor. The obligation arose when the funds were advanced for the benefit of the homeowner. But the pool from which those funds were advanced came from investors who purchased certificates of asset backed securities. Those investors are the creditors because they received a certificate containing three promises: (1) repayment of principal non-recourse based upon the payments by obligors under the terms of notes and mortgages in the pool (2) payment of interest under the same conditions and (3) the conveyance of a percentage ownership in the pool, which means that collectively 100% of the ivnestors own 100% of the the entire pool of loans. This means that the “Trust” does NOT own the pool nor the loans in the pool. It means that the “Trust” is merely an operating agreement through which the ivnestors may act collectively under certain conditions.  The evidence of the transaction is the note and the mortgage or deed of trust is incident to the transaction. But if you are following the money you look to the obligation. In most  transactions in which a residential loan was securitized, Wells Fargo did not work under the scope of its bank charter. However it goes to great lengths to pretend that it is acting under the scope of its bank charter when it pursues foreclosure.

Wells Fargo will often allege that it is the holder of the note. It frequently finesses the holder in due course confrontation by this allegation because of the presumption arising out of its allegation that it is the holder. In fact, the obligation of the homeowner is not ever due to Wells Fargo in a securitized residential note and mortgage or deed of trust. The allegation of “holder” is disingenuous at the least. Wells Fargo is not and never was the creditor although ti will claim, upon challenge, to be acting within the scope and course of its agency authority; however it will fight to the death to avoid producing the agency agreement by which it claims authority. remember to read the indenture or prospectus or pooling and service agreement all the way to the end because these documents are created to give an appearance of propriety but they do not actually support the authority claimed by Wells Fargo.

Wells Fargo often claims to be Trustee for Option One Mortgage Loan Trust 2007-6 Asset Backed Certificates, Series 2007-6, c/o American Home Mortgage, 4600 Regent Blvd., Suite 200, P.O. Box 631730, Irving, Texas 75063-1730. Both Option One and American Home Mortgage were usually fronts (sham) entities that were used to originate loans using predatory, fraudulent and otherwise illegal loan practices in violation of TILA, RICO and deceptive lending practices. ALL THREE ENTITIES — WELLS FARGO, OPTION ONE AND AMERICAN HOME MORTGAGE SHOULD BE CONSIDERED AS A SINGLE JOINT ENTERPRISE ABUSING THEIR BUSINESS LICENSES AND CHARTERS IN MOST CASES.

WELLS FARGO-OPTION ONE-AMERICAN HOME MORTGAGE IS OFTEN REPRESENTED BY LERNER, SAMPSON & ROTHFUSS, more specifically Susana E. Lykins. They list their address as P.O. Box 5480, Cincinnati, Oh 45201-5480, Telephone 513-241-3100, Fax 513-241-4094. Their actual street address is 120 East Fourth Street, Suite 800 Cincinnati, OH 45202. Documents purporting to be assignments within the securitization chain may in fact be executed by clerical staff or attorneys from that firm using that address. If you are curious, then pick out the name of the party who executed your suspicious document and ask to speak with them after you call the above number.

Ms. Lykins also shows possibly as attorney for JP Morgan Chase Bank, N.A. as well as Robert B. Blackwell, at 620-624 N. Main street, Lima, Ohio 45801, 419-228-2091, Fax 419-229-3786. He also claims an office at 2855 Elm Street, Lima, Ohio 45805

Kathy Smith swears she is “assistant secretary” for American Home Mortgage as servicing agent for Wells Fargo Bank. Yet Wells shows its own address as c/o American Home Mortgage. No regulatory filing for Wells Fargo acknowledges that address. Ms. Smith swears that Wells Fargo, Trustee is the holder of the note even though she professes not to work for them. Kathy Smith’s signature is notarized by Linda Bayless, Notary Public, State of Florida commission# DD615990, expiring November 19, 2010. This would indicate that despite the subject property being in Ohio, Kathy Smith, who presumably works in Texas, had her signature notarized in Florida or that the Florida Notary exceeded her license if she was in Texas or Ohio or wherever Kathy Smith was when she allegedly executed the instrument.

Loan or investment . . . what did the homeowner receive?

Maher Soliman and Steve Kop have hit the nail on the head. The only grey area that needs to be explored is the same cinfused mess that started this. The SPE is a conduit by definitition. It is a REMIC. That means it does NOT own the mortgages and notes and it does not own the mortgage backed securities. But the strategy you are seeking to employ would have an interesting outcome: in all probability it would either go by default in your favor or they would come out and say that the REMIC/SPV/SPE doesn’t hold anything and that you have no right to a receiver over the assets of the investors. I still like the strategy. You just have to realize that you will met with more obfuscation.

A registrant is anyone offering to sell stock privately or shelve. Depending on the situation the registrant can be forced to place its structured investment (Pass through Trust) platform and Special Purpose Entity (SPE) it manages, into receivership after the credit market problems have slashed the value of the SPE and trust assets in half. Receivership is a type of corporate bankruptcy in which a receiver is appointed by bankruptcy courts or creditors to run the company.

The responsibility of the receiver is to recoup as much of the unpaid loans as possible. Being in receivership is not an enviable situation for a company. Oftentimes, receivers find that the best way to pay back loans is to liquidate the company’s assets, which effectively puts the company out of business.
The investment banking capital partner can bail out the trust with additional capital if seeking to fight this move by the creditors.

I contend that the rules and definition for an impaired asset under GAAP and FASB criterion should have collapsed the value of the assets way prior to this proposed triggering “enforcement event”. Under the rules governing the registrant, a receiver would then have to be called in.

The action will be a severe embarrassment for the bank and parent or “parties” that no doubt had 18 months to address the problems with what will be the first of hopefully many asset backed mortgage trusts headed into receivership.

These Enron disciples take an absolutely ignorant approach slicing the assets up between investors, while planning on taking (who knows what), something in the billions for itself for its own equity stake. The receiver’s job is to realize the best value possible, which is usually achieved by selling assets. However, the management can open discussions with a receiver, once appointed, to discuss alternative arrangements to provide liquidity”.

Receiver is a person appointed by a bankruptcy court or secured creditor to run a company for a short period of time in a manner that will ensure as much debt is paid back to creditors as possible. The main purpose of a receiver is to use a company’s assets in a way that will most effectively pay back creditors. Depending on where a receiver is appointed, there are numerous restrictions on how he or she runs a business. For instance, in many jurisdictions a receiver can run a company only for 14 days.

In turn, a receiver’s main function is often to:
Liquidate all available assets.

When a receiver is appointed, the company is said to be “in receivership.” We don’t know for sure the degree of retained interest the Federal Savings Banks maintain in the assets I believe they house. The transfer of the beneficial interest is all a subsequent event with MERS hanging out there as a nominated beneficiary waiting to take directions.

Pundits who acknowledge that selling the assets where there are few buyers, would not realize the best value possible are missing something. You the consumer who is due a modification or short sale based on the same inclination . . . of value agrees.

Understand the undertaking to press a registrant and platform into receivership…I have. Foreclosure are primary limited to SISA or SIVA assets only. If more than one asset is behaving in such a way (delinquency) month in and month out then classify the asset as impaired. Classify them under all as toxic waste by products of traditional acceptance and lending practices.

Dispose of the waste in their entirety as a group of assets sharing common characteristics. I assure you the receiver will find reasons supporting derecognition and for classifying asset impairment not properly reserved and now must be written down. According to GAAP all long term assets are subject to constant review when circumstances and situations change such that an indication of the value of the assets carried is likely not recoverable.

A write down to the true asset market value is FAR from something void of establishing market value where there are few buyers. I know of a few hundred thousand foreclosure victims who would eagerly bid their properties back in liquidation. It meets the sprit and objectives of TARP. Furthermore the borrower MIGHT JUST BE VIEWED AS SOMEONE WHO CONTRIBUTED ITO BRINGING THE CDO INVESTMENT TO THE TRUST. Borrowers are the only sane market makers I am aware of motive to pay top dollar on a discount and allow the appropriate “party and balance sheet” to realize the best value possible. In other words it’s a win. The degree of discount may be a problem for homeowners seeking to participate in liquidation.

Some kind of maneuvering could perhaps allow the Trustor (borrower) to be considered a creditor.

THE KOPSOL THEORY:
Consider the concept whereby a borrower becomes a creditor and the consumer homeowner is integral to the registrant by posting their

1) Personal guarantees
2) Rated credit score
3) Underlying collateral and
4) Received dividends
5) using their home as a margin account

The dividend are forgiving the second like an accreting bond and six to 12 months of payments (missed accrual) then a modification agreement. Or was that really a Reverse Repurchase agreement disguised as a “modification”?

Either way its something that would require a 1099 at year end to show consideration by the parties….WAIT A MINUTE!

Loan or investment . . . what did the homeowner receive?

Thomas Friedman Calls Out Clinton and McCain on Gas Tax Proposal

The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

Good for Barack Obama for resisting this shameful pandering.

 

April 30, 2008
OP-ED COLUMNIST

Dumb as We Wanna Be

It is great to see that we finally have some national unity on energy policy. Unfortunately, the unifying idea is so ridiculous, so unworthy of the people aspiring to lead our nation, it takes your breath away. Hillary Clinton has decided to line up with John McCain in pushing to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for this summer’s travel season. This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.

When the summer is over, we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit.

No, no, no, we’ll just get the money by taxing Big Oil, says Mrs. Clinton. Even if you could do that, what a terrible way to spend precious tax dollars — burning it up on the way to the beach rather than on innovation?

The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”

Good for Barack Obama for resisting this shameful pandering.

But here’s what’s scary: our problem is so much worse than you think. We have no energy strategy. If you are going to use tax policy to shape energy strategy then you want to raise taxes on the things you want to discourage — gasoline consumption and gas-guzzling cars — and you want to lower taxes on the things you want to encourage — new, renewable energy technologies. We are doing just the opposite.

Are you sitting down?

Few Americans know it, but for almost a year now, Congress has been bickering over whether and how to renew the investment tax credit to stimulate investment in solar energy and the production tax credit to encourage investment in wind energy. The bickering has been so poisonous that when Congress passed the 2007 energy bill last December, it failed to extend any stimulus for wind and solar energy production. Oil and gas kept all their credits, but those for wind and solar have been left to expire this December. I am not making this up. At a time when we should be throwing everything into clean power innovation, we are squabbling over pennies.

These credits are critical because they ensure that if oil prices slip back down again — which often happens — investments in wind and solar would still be profitable. That’s how you launch a new energy technology and help it achieve scale, so it can compete without subsidies.

The Democrats wanted the wind and solar credits to be paid for by taking away tax credits from the oil industry. President Bush said he would veto that. Neither side would back down, and Mr. Bush — showing not one iota of leadership — refused to get all the adults together in a room and work out a compromise. Stalemate. Meanwhile, Germany has a 20-year solar incentive program; Japan 12 years. Ours, at best, run two years.

“It’s a disaster,” says Michael Polsky, founder of Invenergy, one of the biggest wind-power developers in America. “Wind is a very capital-intensive industry, and financial institutions are not ready to take ‘Congressional risk.’ They say if you don’t get the [production tax credit] we will not lend you the money to buy more turbines and build projects.”

It is also alarming, says Rhone Resch, the president of the Solar Energy Industries Association, that the U.S. has reached a point “where the priorities of Congress could become so distorted by politics” that it would turn its back on the next great global industry — clean power — “but that’s exactly what is happening.” If the wind and solar credits expire, said Resch, the impact in just 2009 would be more than 100,000 jobs either lost or not created in these industries, and $20 billion worth of investments that won’t be made.

While all the presidential candidates were railing about lost manufacturing jobs in Ohio, no one noticed that America’s premier solar company, First Solar, from Toledo, Ohio, was opening its newest factory in the former East Germany — 540 high-paying engineering jobs — because Germany has created a booming solar market and America has not.

In 1997, said Resch, America was the leader in solar energy technology, with 40 percent of global solar production. “Last year, we were less than 8 percent, and even most of that was manufacturing for overseas markets.”

The McCain-Clinton proposal is a reminder to me that the biggest energy crisis we have in our country today is the energy to be serious — the energy to do big things in a sustained, focused and intelligent way. We are in the midst of a national political brownout.

Fed Lies and Sound Bites

The latest change in Fed policy sounds good. You get that warm fuzzy feeling that credit will loosen up and that things are getting better. But the fact remains, that this is ANOTHER transfer of the power to create money to the PRIVATE sector, it is another green light for PRIVATE TAXATION, and worst of all, it comes at a time when inflation is already running high and threatening to become worse than at any time in recent history.

Flooding the market with more dollars is simple: it reduces the value of those dollars. as the value goes down some businesses will appear to prosper, but when those business owners go to buy something, they will realize they lost profit even though their accountants report they made more. In nutshell, if it costs $25 to buy a loaf of bread or $15 to buy a gallon of gas, the fact that your sales went up won’t do you any good.

Beware the earnings figures from public reporting companies. There is no FASB directive that requires real disclosure of real earnings in constant currency. This will become painfully obvious as the next 12 months unfold.

THE FED
Fed expands auction, accepts wider collateral
NEW YORK (MarketWatch) — The Federal Reserve, along with other central banks, said Friday that it was increasing the funding it is providing to banks and announced that, for the first time, it was willing to accept bonds backed by auto loans and credit cards.
“In view of the persistent liquidity pressures in some term funding markets, the European Central Bank, the Federal Reserve and the Swiss National Bank are announcing an expansion of their liquidity measures,” the Fed said in a statement.
The Fed took the move in an attempt to flood the market with supply and lower short-term lending rates, such as the London interbank offered rate, or Libor.
The U.S. central bank announced an increase, to $75 billion from $50 billion, in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility, beginning with the auction on May 5.
This increase will bring the amounts outstanding under the TAF to $150 billion.
The move to expand the TAF was widely anticipated because of strong demand for loans through the program.See full story.
“The program is now reaching a magnitude where it can play a significant role in plugging the gap between the remaining demand for unsecured term funding in the bank market and the latest decline in supply following the run on Bear Stearns,” wrote Lou Crandall, chief economist for Wrightson ICAP.
The expansion was “probably marginally disappointing because there was a widespread expectation … that the Fed would extend the term of at least some TAF auctions to three months,” wrote Stephen Stanley, chief economist for RBS Greenwich Capital.
The TAF, announced on Dec. 12, was followed in March by the creation of several other Fed lending programs targeted at different sectors of the credit markets.
All told, the Fed has now offered to lend up to $462 billion in cash and Treasurys to the markets, in addition to the nearly unlimited funds available through the discount window and the primary credit dealer facility.
The three-month Libor rate — a benchmark for lending between banks — was 2.78% on Thursday, well above the 2% federal funds rate. Crandall said extra supply from the Fed in the next three weeks should tighten the spread between the Libor and fed funds rates.
Deeper cooperation
The Federal Open Market Committee also has authorized further increases in its existing temporary currency-swap arrangements with the European Central Bank and the Swiss National Bank.
These arrangements will now provide dollars in amounts of up to $50 billion and $12 billion to the European Central Bank and the Swiss National Bank, respectively, representing increases of $20 billion and $6 billion.
The FOMC also authorized an expansion of the collateral that can be pledged by bond dealers in the Fed’s Schedule 2 Term Securities Lending Facility auctions of Treasurys.
Primary dealers may now pledge AAA/Aaa-rated asset-backed securities, in addition to already eligible residential- and commercial-mortgage-backed securities and agency collateralized mortgage obligations.
Accepting asset-backed paper could help provide money to the student-loan market, Crandall noted. End of Story
Steve Goldstein is MarketWatch’s London bureau chief. Washington Bureau Chief Rex Nutting contributed to this report.

Response to Cat: Why Hold Onto an Upside Down Investment?

Mortgage Meltdown: Cat Writes:

cat

All good but why would I want to keep paying on a house that I owe $450,000 that is only worth $325,000 at best.

From HUD RELEASES TIPS FOR AVOIDING FORECLOSURE, 2008/04/22 at 9:42 PM

EDITOR’S RESPONSE:

THERE ARE ONLY TWO REASONS YOU WOULD WANT TO HOLD ONTO THE HOUSE — MONEY AND STRESS. Using the procedures and substantive claims addressed here it is POSSIBLE to get the mortgage note down to something considerably less than the value of the house.

The violations of TILA and other claims (including fraud) gives you a leg up on a complete refund of all the interest and points you paid, plus the down payment and improvements you made to the house, and a refund of the difference between what the house was really worth in fair market value and what it was stated to be worth.

Put all that together in a settlement (rather than a trial) and you can end up with a mortgage that is perhaps 50% of true fair market value, with your payments down by as much as 75%+ per month. 

Whether you offer an olive branch to the lender/investor of participating in the upside (an honest increase in the fair market value of the home) so that they recover some of their investment when you sell or refinance, is up to you. We would suggest that you offer that inasmuch as it is more likely to lead to settlement.

 

Choosing Recession: Well Written and Worth the Read

 

Forbes.com

Commentary
Choosing Recession
Lakshman Achuthan and Anirvan Banerji 04.21.08, 6:00 AM ET 

 

The 2008 recession guarantees many months of job losses that will boost foreclosures and feed the credit crisis. But if fiscal stimulus had reached consumers quickly, it would have forestalled a recession, helping to stabilize the housing market. Such a soft landing would have bought some breathing room in which to resolve the credit crisis until the lagged effect of monetary policy kicked in.

There is a raging debate about how the economy got into recession, and who is to blame. Many have concluded that the housing and credit bubbles guaranteed recession. But because this debate will influence policy for the next economic cycle, the right lessons must be learned from this series of unfortunate events.

An essential point is being overlooked–that this recession was actually avoidable as recently as several weeks ago. How could that be?

The Fed has rightly been lauded for its bold actions this year, but they hardly make up for its initial delay in getting serious about averting recession. Because monetary policy affects the economy with a lag, the Fed must be preemptive, not reactive. But, as in the lead-up to the 2001 recession, inflation concerns based on backward-looking indicators needlessly inhibited the Fed’s actions for far too long. This implies a fundamentally flawed monetary policy approach because inflation typically keeps rising in the early months of recession. More importantly, forward-looking inflation indicators were already falling last summer. The Fed had a green light to slash rates that it failed to heed until January. The Fed cannot afford to act like a deer in the headlights frozen in the face of higher food and energy prices that it cannot control.

As the new year began, The Economist noted, “One of the most reliable gauges is [Economic Cycle Research Institute’s] weekly leading index [which] is now showing its weakest performance since the 2001 recession.” But it also cited our view that “prompt policy stimulus could still avert a formal downturn.”

Shortly thereafter, Chairman Bernanke not only began aggressive monetary stimulus, but also endorsed quick fiscal stimulus, emphasizing that “it would not be window dressing.” Apparently realizing that the economy was on the cusp of recession, he may have understood that only timely fiscal stimulus could save the day. Given the history of fiscal stimulus arriving too late to head off recession, how was that even possible?

Prominent pundits have been predicting a U.S. recession since 2005, when Hurricane Katrina hit an economy under assault from Fed rate hikes and oil price spikes, a combination that had triggered many a past recession. With the advent of the home price downturn, the gloomy chorus grew throughout 2006.

In early 2007, Wall Street analysts were predicting up to 100 basis points of Fed rate cuts by year end. By June, faced with accelerating economic growth, they abruptly switched their call to zero rate cuts. The economy’s unexpected resilience actually triggered the credit crisis by invalidating expectations of modest resets to subprime adjustable rate mortgages.

U.S. growth plunged following the credit crisis, but the economy grew stubbornly through year end. Still, persistent pessimism made the dollar swoon further, cementing an export-driven boost to manufacturing.

The constant drumbeat of downbeat commentary compelled CEOs to aggressively reduce inventories, cutting the inventory/sales ratio to a record low by late 2007. For the first time, premature pessimism had created a unique opportunity for a self-correcting recession prophecy. At that juncture, even if consumers had spent only a fraction of the stimulus on consumption, in the absence of inventories it would have forced businesses to boost production and hiring, thereby stabilizing the job market.

Typically, business managers, surprised by recession, face a Wile E. Coyote moment when they realize that demand has plummeted. Stuck with soaring inventories, they slash production and jobs, thereby reducing consumer income and spending, which in turn feeds back into lower sales, triggering further production cutbacks, perpetuating the vicious cycle that is the hallmark of recession.

In every recession, the manufacturing sector accounts for more than half of the job losses, largely due to this inventory cycle dynamic. But this time, with inventories cut to the bone, this key recession driver was absent. Prompt stimulus would have been unusually potent, quickly reversing the recessionary vicious cycle.

Policy makers seemed to get the urgency. In January, Treasury Secretary Hank Paulson declared that “time is of the essence.” House Speaker Nancy Pelosi spoke of “timely, targeted and temporary” stimulus, and the administration and Congress enacted a tax rebate package with exemplary speed. The fatal flaw was their willingness to allow a delayed delivery of the stimulus. It was as if the medics had arrived and taken a quick decision to administer CPR–but in a few months rather than a few seconds.

Given the magnitude of the housing and credit bubbles, there was no way to avoid paying the piper once they had popped. But in this instance, resolving those excesses did not require a recession, which could have been forestalled by quick stimulus. Just as the Fed has demonstrated out-of-the-box thinking in recent weeks, so too fiscal policy makers needed to have found innovative ways to get money to the consumer in weeks, not months. That would have made all the difference.

Arguably, in a market economy, recessions are cathartic. But choosing recession is causing unnecessary collateral damage to millions of innocent bystanders while making it politically expedient to throw far more money at the problem than was needed to avert recession in the first place. Moreover, recessionary job losses will worsen the housing downturn.

Alan Greenspan recently emphasized the abrupt shifts that occur at business cycle turning points, noting that “you don’t gradually fall into recession, you jump.” That is precisely why the timing of policy is so critical in the vicinity of turning points.

In February, ECRI’s leading index for the nonfinancial services sector, which accounts for five out of eight U.S. jobs, locked onto a recessionary trajectory. In effect, the 3 a.m. call on the economy had gone unanswered.

Lakshman Achuthan and Anirvan Banerji are the co-founders of the Economic Cycle Research Institute, and the co-authors of Beating the Business Cycle: How to Predict and Profit from Turning Points in the Economy, published by Currency Doubleday.

 

Mortgage Meltdown: Freezing Home Equity Lines —Remedies

THE BOTTOM LINE: YOU HAVE RIGHTS AND YOU SHOULD EXERCISE THEM. DON’T TAKE THIS NONSENSE LYING DOWN. GO TO YOUR ATTORNEY GENERAL OR WHATEVER AGENCY PROTECTS CONSUMER RIGHTS AND LET THEM BATTLE IT OUT. GO TO THE BANKING COMMISSION IN YOUR STATE AND LET THEM BATTLE IT OUT.

THAT MERELY MEANS BORROWING FROM THE WORDS USED IN THIS BLOG AND WRITING A LETTER TO THOSE ADMINISTRATIVE AGENCIES DEMANDING ACTION. 

 

It seems that the lenders who were involved in the second tier of home mortgage finance (home equity loans) reserved to themselves some protections that nobody else received. They are sending letters out to everyone telling them the balance of their home equity line has been frozen and that no more money is available from the “equity” in their house. Of course this is because the equity never was there, only the illusion.

  • These lenders collected fees, points, costs and interest for  the full amount.
  • They now are using their “legal” right to freeze the equity line, without any refund of the fees, points, costs or interest paid by the borrower.
  • This amounts to an undisclosed increase in the cost of the loan under the Truth in Lending Act (TILA)  entitling the borrower to challenge the freeze, demand a refund of the fees, points, costs, and/or interest, and perhaps demand rescission of the home equity loan.
  • The borrower might be able to force the lender to complete its commitment on the home equity loan because of violations of TILA.
  • Borrowers who were planning to use this available source of cash are now damaged because in reliance on the appraisal and underwriting of the lender, they bought or refinanced a house under terms that were all based upon a false presumption: the fair market value of the house, which was inflated under a tacit agreement (conspiracy to defraud) the American public in general and you, the borrower in particular. 
  • This adds to the the potential causes of action against the primary lender as well: all the lenders and closing participants, including the auditor of the lenders, knew full well that you were relying on the appraisal, relying on the underwriting of the first and second mortgage lenders (i.e., the fact that they were taking a risk) only to realize, sometimes in as little as a few days, that market conditions did not support the value placed on the home.
  • Nor did actual market conditions support the false premises of closing and signing on your mortgages and notes.
  • Of many undisclosed facts, there was no risk to either lender because they knew when you closed that they were selling or had sold the the risk to an investment banking aggregator who was in turn selling derivative securities (collateralized mortgage obligations) to unsuspecting investors, thus deceiving and defrauding both the borrowers at one end and the buyers of the securities on the other hand, with all the middle men collecting fees and costs without risk.
  • Had you known that everyone at the closing had a direct financial incentive for you to sign the documents and that none of them were taking any risk or had performed any independent analysis of fair market value, and that appraisers were given either tacit or overt encouragement to appraise slightly higher than the deal, regardless of the fundamentals of fair market value is doubtful that you or anyone else would have signed such a deal. 
  • The entire scheme, taken collectively, was a fraud upon the entire economy which resulted in a systemic increase in apparent money supply forcing the legitimate sources of money supply to “make good” on these ornate methods of money creation. 
  • All that means the value of the dollar was decreased at the same time that the housing prices were falsely and deceptively increased thus putting you the borrower, your city, your county and your state behind an 8-ball that none of you knew existed until it was too late. 
  • Like all Ponzi schemes, the system collapsed causing widespread losses which have negatively impacted you economically.
  • You in turn relied upon the availability of the home equity line that was promised, and shortly after securing it, you are told, in classic bait and switch, deceptive practice that the value used in your closing which you thought was accurate is too low to support the continued funding of your home equity loan. 
Go Get ‘im , Boy/Girl!

Mortgage Meltdown and Credit Crisis: News and Comment 4-2-08

U.S. economy in ‘very difficult period,’ Bernanke says

By Greg Robb

Last update: 9:30 a.m. EDT April 2, 2008

WASHINGTON (MarketWatch) – The outlook for U.S. growth has worsened since January and the possibility of a recession can’t be ruled out, Federal Reserve Chairman Ben Bernanke said Wednesday. “It not appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke said in testimony prepared for the Joint Economic Committee of Congress. “Clearly, the U.S. economy is going through a very difficult period.” His testimony supports the view that the Fed is not done cutting interest rates. The central bank has lowered its target overnight lending rate to 2.25% from 5.25% last fall, the largest percentage decline on record. Bernanke suggested the central bank is slowing down the pace of its rate cuts. “Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year,” he said. Inflation remains a concern, he noted, and some signs indicate that the public expects prices to continue rising. 

EDITOR’S NOTE: State Department Overview of Global economic transactions needed, along with a department of trained, serious, non-political economists who can report the actual effects and trends of global commerce on our foreign relations.

 

  1. According to the Secretary of State and the National Security Council, counterfeiting undermines currency and constitutes an ACT OF WAR if sanctioned or promoted by one government to the detriment of another. 
  2. By promoting the expansion of “money” supply through the latest “funny money schemes” of Wall Street, the United States has been the source of counterfeiting “cash equivalents” which are currently only part of the way through the process of undermining the financial strength, viability, social services and credibility of local and federal governments around the world. 
  3. These cash equivalents (derivatives) are the modern day equivalent of counterfeiting. 
  4. While it is not likely that a military response is on the horizon, it IS likely that economic and political responses will be coming from countries that include our friends and allies. 
  5. The effect on our foreign relations is immeasurable right now. 
  6. The effect on our own economy is understated intentionally by government reporting agencies: food prices in Arizona are up 19% (demonstrating that the true rate of inflation of geometrically higher than what the government is reporting). 
  7. Food and oil and other necessities are rising sharply in the U.S. because the dollar is sinking to new lows every month. Citizens must be made aware that the economic policies and choices we make, right down to individual purchases at the grocery store or other retail locations has a direct impact on the statement we are making in our foreign relations.
  8. Paulson’s “sweeping” proposals do nothing except sweep the problems under a rug too small to hold the debris. 
  9. What must be included in any plan for changes in how the government plays referee in in the marketplace (i.e., regulation), is a new division of the State department that assesses the impact of global economic commerce and recommends policy adjustments to heal and promote our relationships with sovereign nations. 

Swiss finance minister reportedly expects tax shortfall due to UBS

Switzerland’s finance minister Hans-Rudolf Merz expects the country to receive 1 billion Swiss francs, or $1 billion, less in taxes for 2007 as a result of the crisis at UBS AG (UBS: UBS Ag he told Swiss daily Tages-Anzeiger in an interview published Wednesday. See full story

By Polya Lesova MarketWatch 4/2/2008 9:06:00 AM Crude-oil futures rise modestly as traders look to data on U.S. petroleum inventories and eye strength in the dollar. See full story 

[EDITOR’S NOTE: Somehow people must be educated to understand the relationship between a weak dollar caused by excessive borrowing and flooding the marketplace with “funny money” and the price of gas at the pump. As the value of U.S. currency declines, more of it is required to purchase anything on the world market, including oil. If OPEC follows through on converting from dollars to Euros the effect will be magnified and the price of gas at the pump could easily exceed $10 per gallon same time next year. Wake up, America!]

Wider access to high-risk currency trading lures more investors

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By Gergana Koleva MarketWatch4/1/2008 7:33:00 PM

With over $3 trillion worth of foreign currencies changing hands every day, a growing number of retail investors who seek a boost to their portfolios and a hedge for the falling dollar are viewing the high liquidity of foreign exchange trading as a tonic for troubled times. See full story

National City mulling deal with KeyCorp: report

BOSTON (MarketWatch) — National City Corp. (NCC:

National City Corporation which has seen its stock battered due to its exposure to troubled loans and softening real estate markets, is contemplating a plan to sell itself to KeyCorp (KEY: KeyCorp (New) The Wall Street Journal reported Wednesday.

Fannie Mae revises standards for mortgages: report

Fannie Mae (FNM: Fannie Mae has told lenders it will require a credit score of at least 580 for most individual loans as part of the latest move to make its standards more stringent for mortgages it buys or guarantees, according to a report Wednesday in The Wall Street Journal. See full story 

[EDITOR’S NOTE: Talk about locking the barn door after all the horses are gone! What is needed besides changes in future regulation is a solution now, today, to the massive credit crisis which now extends to all new loans including auto loans. 

 

  • The solution does NOT lie in piecemeal, patchwork of rule changes by different agencies that will conflict with each other, congressional legislation that will conflict with other federal and state legislation, or bailouts of certain players because they are either more important or less “culpable” in the eyes of the beholder. 
  • What is needed is a fast consensus of ALL the players, agencies and leaders from across the spectrum from homeowners and borrowers, through lenders, appraisers, mortgage brokers, investment bankers, retail securities sales, and investors in derivatives to 
  • STOP foreclosures and evictions, 
  • KEEP homeowners in homes unless they can’t even afford to maintain them, 
  • RESTORE the balance sheet of investment bankers and investors, and 
  • HEAL the wounded dollar and staunch the bleeding — by reducing payments on al forms of excessive debt (caused either by artificially — i.e., manipulated — higher housing prices during 2001-2006, or caused by the nearly $1 trillion drain on credit card revolving debt that was promoted in every conceivable way despite interest rates so high that any financial planner or economist could tell you that the average person would NEVER pay it all back]. 
  • IMMUNIZE EVERYONE from civil and criminal action to get their cooperation (yes, Amnesty. It is more important to save our economy and standing in the world than to see a few “examples” in jail, or millions of people out on the street. We need no homeless people not a surge in their number. We need stable, rising house prices, not a view with “no end in sight.”).
  • EDUCATE the American public that this crisis transcends ideology and politics. Whatever your feeling about “entitlements”, personal responsibility and suffering the consequences, we are all bearing the brunt of this crisis every time we go to buy food, gas or other necessities. We are all bearing the brunt of this every time we expect social services like education, fire, police or paramedical help — and they are diminished because the local treasury has been depleted by losses in CDOs/CMOs and by inflation. We are all putting the burden on our children, grandchildren and great-grandchildren for spending money we didn’t need to (like over paying for medical care and drugs compared to all other countries and going to wars to protect an interest in oil which should have been abandoned long ago as a fuel source)

Obama comes closest in his proposals. But even he has failed to grasp all the horns of the bull]

Manhattan apartment sales fall most in 18 years as buyers wait

Manhattan apartment sales plunged the most in 18 years last quarter as buyers faced the prospect of a recession and job cuts at Wall Street securities firms. See full story at Bloomberg.com

Paulson says Treasury `flexible’ on housing measures

Treasury Secretary Henry Paulson indicated the Bush administration is willing to consider congressional plans to stem foreclosures by expanding government guarantees for mortgages. “I think you will continue to see flexibility as we learn and go forward,” Paulson said in an interview with Bloomberg Television in Beijing. See full story at Bloomberg.com

Lehman in market abuse claim

Lehman Brothers (LEH: Lehman Brothers Holdings Inc  on Tuesday said it had sent information to the Securities and Exchange Commission about possible abusive short-selling in its shares in recent days. Erin Callan, Lehman chief financial officer, said the SEC was examining whether hedge funds acted in concert to drive down the bank’s share price in the days following the near collapse of Bear Stearns. Such behavior could constitute market manipulation, subject to civil and criminal sanctions. See full story at FT.com

Private Taxation — American Healthcare

The answer to our unique American set of issues is not a single issue proposed solution, but a sea change in our premise: either we are a nation of people and laws to protect, defend and promote the health, safety and welfare of all our citizens or we are a vehicle for corporate interests that will do anything to maintain their positions of power and profit. Getting rid of the influence of lobbyists and the effect of campaign contributions on candidates is not some lofty ambition or ideal; it is an imperative that is the ONLY answer to having food on the table, gas in the tank and a roof over our heads.

A candidate for public office must (a) spend the time to learn about economics (b)  demonstrate their independence from special interests, (c) demonstrate their proficiency in understanding how economic trends impact the average voter and (d) educate the voter as to how economic policies are being used against them and what they can do about it. 

BEWARE OF PLATITUDES AND QUICK FIX PROPOSALS THAT WILL NOT WORK AND CANNOT DELIVER RELIEF TO THE HOME OR DINNER TABLE. 

Prospective voters who are considering support for candidates for public office or propositions and petitions having economic consequences are stuck between a rock and a hard place. The growing realization is that, in particularly in a global economy, some complex events are somehow having an effect on their daily lives. 

In the absence of any real information for each voter to make their own decision they are forced to rely on “mainstream” news, which is more fact based entertainment than informative, candidates who will say anything to get elected, and special interest advertising that mischaracterizes the choices.

Voters understand that food, fuel and medical costs are taking away more and more of their income with the same effect as if a new tax was enacted requiring them to fund the largest corporations in the world, whose losses are covered by taxpayers and whose windfall profits are closely guarded from consumers who don’t get the benefit of cost reductions, stockholders who don’t get the benefit of dividends, and merchants who don’t get the benefit of sales revenue from people who don’t have anymore money to spend. 

These “ private taxes” are reflective of the growing pattern of privatizing public finance. In short they are private taxes sanctioned by federal, state and local governments who themselves are victims of the pattern. In my opinion this represents “PRIVATE TAXATION” sanctioned by government.

Let’s look at some of the “proposals” for healthcare that are offered and watch how they work.

 

  1. American citizens spend more (35%-250%) on drugs, medical protocols,, tests and treatment than any other country in the world. The same drugs that cost $20 per pill in the U.S. can be purchased for $2.00 elsewhere. Protocols that would prevent disease or would cure them are virtually banned or are allowed to be “not covered” by insurance — resulting in the average person my age (61) taking thousands of pills per year that people in other countries are not taking because they don’t need them and because the pills themselves present risks of side effects that include everything up to and including death. 
  2. The financial excesses of the medical-pharmaceutical-insurance industry is supported by “laws” that protect the industry and which little or nothing to do with the health of any person. These excesses are present ONLY in the United States. 
  3. At the same time that we are spending more, we are suffering more medical disasters in more families every day. Longevity (life-span) in the United States is declining. Infant mortality is rising. Even average adult height has decreased in the Untied States and is now lower than many other countries.
  4. Protocols like chelation IV therapy, food supplements and vitamins, gene therapy, human stem cell therapy, and primitive cell therapy are being used all over the world, growing back diseased or missing organs, improving overall health, and improving vitality while at the same time vastly reducing the demands for medical treatment. Those other countries are spending less and delivering more. Several third world countries have now become centers for medical care of those Americans who have the money, time and physical ability to reach them. 
  5. National programs for health and fitness are not only improving physical health, but the all important index of happiness and contentment.
  6. Ideological arguments against these other systems are bogus arguments designed to distract American voters from the truth: the system is working here for those looking to earn a profit, whereas the system is working elsewhere in the world for those seeking to maintain a healthy population.
  7. The ideological argument against a single payer that negotiates prices, seeks preventative national programs and pursues the best possible treatments and cures is merely a hammer to threaten and frighten people with the prospect of “socialism” which most people translate as a loss of freedom, constant fear of government, loss of privacy, and a lack of disposable income at the end of the month.
  8. The truth is that all societies practice socialism as to those services that the government elects to provide. In the United States, taxes are used to pay for military, police, fire, education etc. In an ultimate irony, the heavy reliance on ideological argument over common sense has resulted in the the outcome most feared by those who are cajoled into voting against their interests: loss of freedom, constant fear of government, loss of privacy, and a lack of disposable income at the end of the month.
  9. The surrender of our healthcare to profit motivated private interests, like the surrender of prison management to private interests, like the surrender of regulation of sales of securities, creation of credit, expansion of monetary supply to private interests has led to a corporatocracy that threatens to consume the last dollar of every “average” American leaving them not only with no disposable income at the end of the month, but rather in debt up to their ears.
  10. Meanwhile the countries with “high” tax rates (which can simply be translated as honest transparency, as opposed to hiding the taxes in your utility bills, and covering up the private power of taxation given to corporate America) have satisfied, happy, free, contented populations who get along just fine and their citizens are not in debt and who are able to save up money and pay for things in cash.

American citizens have the exclusive right to vote in what should be a free society, but instead they are confronted with a corporate-government set of rules where the opportunities and choices are closing in on the the average guy or girl who is just trying to get through the month. 

Our incomes are being used to fund corporate losses, corporate abandonment of our own population for employment and training, military adventures that are funded by borrowing (which is future taxation), and huge windfall profits of oil companies, agricultural companies receiving “subsidies”, pharmaceutical companies, and insurance companies.

The answer to our problems is not a single issue proposed solution, but a sea change in our premise: either we are a nation of people and laws to protect, defend and promote the health, safety and welfare of our citizens or we are a vehicle for corporate interests that will do anything to maintain their positions of power and profit. Getting rid of the influence of lobbyists and the effect of campaign contributions on candidates is not some lofty ambition or ideal; it is an imperative that is the ONLY answer to having food on the table, gas in the tank and a roof over our heads. 

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