Warren, Cummings and Waters to Banks and Regulators: Not So Fast!!!


What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, Tennessee, Georgia, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Analysis: As we move into the fifth inning of a nine inning game, it looks like we are going into overtime. Just as the GOP failed to read the census and lost the national elections, the Banks have failed to read the Congressional Census and are finding that the “deals” they made with regulators and law enforcement are not the end of the story. There are people in office now who do actually give a damn and who want to do something about Wall Street grifting.

Elizabeth Warren is leading the charge: They want full disclosure of the failed review process, and full disclosure of the deal that was reached. This could be a problem for banks who are holding worthless mortgage bonds and for entities claiming that they own loans that either never existed at all or were misstated in every meaningful way.

Warren and others want oversight of the deal this time and they are likely to get it, one way or another. It would be nice is the President took some time out of his schedule, albeit precious little free time exists, and decide for himself the direction that should be taken now that Geithner is leaving. Maybe he already has.

The questions that remain in the context of doing what is best for the country remain unresolved:

  1. Knowing that the title chain is corrupted in all 50 states and that the amount of chaos ranges all the way up to 80%, what are the remedial steps required to boost confidence in the title registries around the country? At present it is a leap of faith to even buy a plot of empty land.
  2. Knowing now that the investors put up the money and borrowers put down payments on homes and refinancing, how will the victims of Wall Street chicanery be compensated by a appointment of a receiver? Restitution is a fundamental bedrock for fraudulent deals. What economic, legal or financial reason would there be to allow the Wall Street banks that took and kept the loss mitigating payments from insurance, credit default swaps, and bailouts for the U.S. Treasury and Federal Reserve.
  3. Knowing that the quantitative easing and Federal bailouts, insurance and credit default swaps were supposed to mitigate damages and most importantly re-start lending and commerce, how do we move those trillions (estimates run as high as $17+ trillion) back to the economy which remains gasping for air.
  4. Knowing that the Wall Street frequently diverted documents and money from investors, this leaving borrowers with no authorized party with whom they could negotiate a modification based upon the true balance owed on the loans, how will the government announce its conclusions without starting a run on the big banks that may bleed over to the small banks.
  5. Knowing that some 14 banks have grown to a size with cross border relationships that there is no one regulatory agency to watch and correct them, how will the banks be brought down to a size that can be regulated? And in a related matter, how do we level the playing field such that the mega banks no longer control the size, growth, and business plans of smaller banks.
  6. AND knowing the criminal acts performed by or on behalf of the mega banks by specially created corporations, law offices and other vendors, how will the government bring these people to justice in a way that is meaningful — i.e., that will deter Wall Street titans from doing it again?
  7. How will the government take the reigns of regulation such that settlements for pennies on the dollar avoids civil and criminal prosecution by the government that is supposed to protect those who cannot adequately protect themselves, and avoids administrative complaints against the bank charter.
  8. How will the administration demonstrate to every American that the Government is running the show, not the Banks.
  9. Knowing that the vast majority of foreclosures were completed” by strangers to the transactions, what do we do the displaced homeowners and the homes that were put in distress as a result of a ball of lies?
  10. If the review process was revealing damages to homeowners (and indirectly to investors) that were vastly understated, as alleged by numerous whistle-blowers, then what will be installed as a watchdog over that process and what resources will be applied to get to the truth rather than a PR result?

Warren Demands Transparency On Failed Foreclosures

Elizabeth Warren Demands Mortgage Settlement Documents From Regulators

OCC Says Bank Losses Mounting on Defective Foreclosures and Loans

Featured Products and Services by The Garfield Firm


LivingLies Membership – If you are not already a member, this is the time to do it, when things are changing.

For Customer Service call 1-520-405-1688

Editor’s Comment:  

This has been my point, although the article below only covers a small part of the losses that will eventually befall the banks and servicers. The banks are carrying assets on their balance sheet that do not exist — especially, as this article points, out home equity lines of credit that are second in priority to the first mortgage. We already know that those home equity loans are worthless. But even the first mortgages are claimed as assets despite the fact that the bank didn’t put up one dime to fund the mortgage or purchase it. How the big accounting firms are permitting this, why the SEC is not objecting to it, is amystery only if you believe in the tooth fairy. They are missing it because they have been told not to bring down the banks — at least not yet. Eventually though, the true figures will emerge and the so-called large or mega banks will be shown for what they are — the same sham that was created in the origination of the loans.

Regulator Warns of Mortgage Losses for U.S. Banks

by Alan Zibel

WASHINGTON–U.S. banks may be hit with a new round of mortgage losses over the next five years as borrowers who took out home-equity loans a decade earlier face increased monthly payments, a regulator warned Thursday.The Office of the Comptroller of the Currency warned that more than half the amount borrowed on equity lines at national banks, or $221 billion out of $380 billion, will face higher payments from 2014 to 2017, exposing banks to the possibility of losses if some equity-line borrowers default.

Home-equity lines extended during the mid-2000s housing-market-boom years typically had a 10-year period in which the borrower made only interest payments. When that period ends, borrowers must start to pay back the principal balance as well, increasing monthly payments for some homeowners who have seen their incomes and property values decline.

Darrin Benhart, deputy comptroller for credit and market risk at the OCC, said “banks are going to have to be thinking about ways that they’re going to address” the problem, including debt restructuring. Analysts have been voicing similar concerns. In a May report, Deutsche Bank identified First Horizon National Corp. (FHN), PNC Financial Services Group Inc. (PNC), TCF Financial Corp. (TCB) and Huntington Bancshares Inc. (HBAN) as institutions that are most exposed to losses from home-equity lines.

The OCC report, the first in a series of semi-annual reports on financial risks in the banking system, also said banks have shifted to higher-risk investments to boost interest-rate returns, a development that could create future losses for banks.

The OCC separately is studying which banks could be hit the hardest if interest rates rise. For larger banks the regulator said it will focus on problems with mortgage servicing as well as underwriting standards for business loans and exposure to European institutions. The agency also will scrutinize smaller banks to look at loss exposure from commercial real-estate loans and new types of auto and other lending products

The report said banks still face a huge overhang of delinquent and foreclosed properties stemming from the nationwide housing bust. And the nation’s largest banks “continue to face profitability challenges” from deficiencies in their foreclosure-processing operations, which bank regulators are forcing the nation’s largest mortgage servicers to overhaul.

The report, however, said that banks are in a far stronger financial position than before the recession of 2007-2009, with higher levels of capital around the industry, particularly at the largest banks.





Foreclosure Strategists: OCC & Federal Reserve Bank: Foreclosure Review Process

Featured Products and Services by The Garfield Firm

NEW! 2nd Edition Attorney Workbook,Treatise & Practice Manual – Pre-Order NOW for an up to $150 discount
LivingLies Membership – Get Discounts and Free Access to Experts
For Customer Service call 1-520-405-1688

Want to read more? Download entire introduction for the Attorney Workbook, Treatise & Practice Manual 2012 Ed – Sample

Pre-Order the new workbook today for up to a $150 savings, visit our store for more details. Act now, offer ends soon!

Editor’s Comment:

Contact: Darrell Blomberg  Darrell@ForeclosureStrategists.com  602-686-7355

Meeting: Tuesday, June 26th, 2012, 7pm to 9pm

OCC & FRB have finally established dollar amounts for
”errors, misrepresentations, and other deficiencies in the 
foreclosure process” for the Independent Foreclosure Reviews!

Complaint filing date extended to September, 30, 2012!

As we are all aware the OCC (Office of the Comptroller of the Currency) has been inviting homeowners / dispossessed homeowners with a personal link to foreclosures that were in process or completed in 2009 or 2010 to file complaints.  Many people have been loathe to go through the complaint process because of the lackluster prospect of receiving a paltry $2,000.  Well, that has officially changed in writing!  The OCC and the FRB (Federal Reserve Bank) have now established dollar amounts for the remedies of errors, misrepresentations, and other deficiencies in the foreclosure process.


If you know any homeowners who were foreclosed or dispossessed of their home after January 1, 2009 or they were alleged to be in default of their note prior to before December 31, 2010 this is a must attend meeting.  (I believe you could even make a valid argument for anybody that received a 1099A or 1099C anytime in 2009 or 2010 even if their sale / dispossession was long before January 1, 2009.)



Hogan Decision & Subsequent Actions

We will review the Hogan v Washington Mutual Bank, N.A. decision and explore the Motions for Reconsideration submitted by both the Appellants and the Appellees.


Ninth Circuit Appeals Court Audio – Beth Findsen

Local foreclosure defense attorney Beth Findsen argued in front of the Ninth Circuit Appeals Court in San Francisco in the Mariusz Buchna, et al. v. Bank of America NA, et al. ( No. 10-17651) case last Friday.  Here is a link to the audio of that proceeding.



$50 Million Sweep is ON HOLD!

On Tuesday, 2012-06-12, the plaintiffs and defendants in the Morones – Hernandez v Horn (Az AG) & Ducey (Az Treasurer) case stipulated that the $50 Million Sweep from the Attorneys’ General Settlement Funds will not be transferred to the State of Arizona General Fund until at least 2012-12-31!  The Minute Entry can be found at this link:

See “COURT WATCHERS – Upcoming Hearings” section below for next hearing information.

We meet every week!

Every Tuesday: 7:00pm to 9:00pm. Come early for dinner and socialization. (Food service is also available during meeting.)
Macayo’s Restaurant, 602-264-6141, 4001 N Central Ave, Phoenix, AZ 85012. (east side of Central Ave just south of Indian School Rd.)
COST: $10… and whatever you want to spend on yourself for dinner, helpings are generous so bring an appetite.
Please Bring a Guest!
(NOTE: There is a $2.49 charge for the Happy Hour Buffet unless you at least order a soft drink.)


I have set up a Facebook page. (I can’t believe it but it is necessary.) The page can be viewed at www.Facebook.com, look for and “friend” “Foreclosure Strategist.”

I’ll do my best to keep it updated with all of our events.

Please get the word out and send your friends and other homeowners the link.


I have set up a MeetUp page. The page can be viewed at www.MeetUp.com/ForeclosureStrategists. Please get the word out and send your friends and other homeowners the link.

Home Defenders League

The Home Defender’s League supported the Lilly Washington event.  They are building a nationwide coalition to support underwater and distressed homeowners.  Here is a link to their website:

They have a feature story about Lilly Washington at this link:

May your opportunities be bountiful and your possibilities unlimited.

“Emissary of Observation”

Darrell Blomberg



DON’T Leave Your Money on the Table

Featured Products and Services by The Garfield Firm

LivingLies Membership – Get Discounts and Free Access to Experts

For Customer Service call 1-520-405-1688

Editor’s Comment:

The number of people passing up the administrative review process is appallingly low, considering the fact that many if not most homeowners are leaving money on the table — money that should rightfully be paid to them from wrongful foreclosure activity (from robo-signing to outright fraud by having non-creditors take title and possession).

The reason is simple: nobody understands the process including lawyers who have been notoriously deficient in their knowledge of administrative procedures, preferring to stick with the more common judicial context of the courtroom in which many lawyers have demonstrated an appalling lack of skill and preparation, resulting in huge losses to their clients.

The fact is, administrative procedures are easier than court procedures especially where you have mandates like this one. The forms of complaints and evidence are much more informal. It is much harder for the offending party to escape on a procedural technicality without the cause having been heard on the merits. 

The banks were betting on two thngs when they agreed to this review process — that people wouldn’t use it and that even if they used it they would fail to state the obvious: that the money wasn’t due or in default, that it was paid and that only a complete accounting from all parties in the securitization chain could determine whether the original debt was (a) ever secured and (b) still existence. They knew and understood that most people would assume the claim was valid because they knew that the loan was funded and that they had executed papers that called for payments that were not made by the borrower.

But what if the claim isn’t valid? What if the loan was funded entirely outside the papers they signed at closing? What if the payments were not due? What if the payments were not due to this creditor? And what if the payments actually were made on the account and the supposed creditor doesn’t exist any more? Why are you assuming that the paperwork at closing was any more real than the fraudulent paperwork they submitted during foreclosure?

People tend to think that if money exchanged hands that the new creditor would simply slip on the shoes of a secured creditor. Not so. If the secured debt is paid and not purchased then the new debt is unsecured even if the old was secured. But I repeat here that in my opinion the original debt was probably not secured which is to say there was no valid mortgage, note and could be no valid foreclosure without a valid mortgage and default.

Wrongful foreclosure activity includes by definition wrongful auctions and results. Here are some probable pointers about that part of the foreclosure process that were wrongful:

1. Use the fraudulent, forged robosigned documents as corroboration to your case, not the point of the case itself.

2. Deny that the debt was due, that there was any default, that the party iniating the foreclosure was the creditor, that the party iniating the foreclosure had no right to represent the creditor and didn’t represnet the creditor, etc.

3. State that the subsitution of trustee was an unauthorized document if you are in a nonjudicial state.

4. State that the substituted trustee, even if the substitution of trustee was deemed properly executed, named trustees that were not qualified to serve in that they were controlled or owned entities of the new stranger showing up on the scene as a purported “creditor.”

5. State that even if the state deemed that the right to intiate a foreclosure existed with obscure rights to enforce, the pretender lender failed to establish that it was either the lender or the creditor when it submitted the credit bid.

6. State that the credit bid was unsupported by consideration.

7. State that you still own the property legally.

8. State that if the only bid was a credit bid and the credit bid was invalid, accepted perhaps because the auctioneer was a controlled or paid or owned party of the pretender lender, then there was no bid and the house is still yours with full rights of possession.

9. The deed issued from the sale is a nullity known by both the auctioneer and the party submitting the “credit bid.”

10. Demand to see all proof submitted by the other side and all demands for proof by the agency, and whether the agency independently investigated the allegations you made. 

 If you lose, appeal to the lowest possible court with jurisdiction.

Many Eligible Borrowers Passing up Foreclosure Reviews

By Julie Schmit

Months after the first invitations were mailed, only a small percentage of eligible borrowers have accepted a chance to have their foreclosure cases checked for errors and maybe win restitution.

By April 30, fewer than 165,000 people had applied to have their foreclosures checked for mistakes — about 4% of the 4.1 million who received letters about the free reviews late last year, according to the Office of the Comptroller of the Currency. The reviews were agreed to by 14 major mortgage servicers and federal banking regulators in a settlement last year over alleged foreclosure abuses.

So few people have responded that another mailing to almost 4 million households will go out in early June, reminding them of the July 31 deadline to request a review, OCC spokesman Bryan Hubbard says.

If errors occurred, restitution could run from several hundred dollars to more than $100,000.

The reviews are separate from the $25 billion mortgage-servicing settlement that state and federal officials reached this year.

Anyone who requests a review will get one if they meet certain criteria. Mortgages had to be in the foreclosure process in 2009 or 2010, on a primary residence, and serviced by one of the 14 servicers or their affiliates, including Bank of America, JPMorgan Chase, Citibank and Wells Fargo.

More information is at independentforeclosurereview.com.

Even though letters went to more than 4 million households, consumer advocates say follow-up advertising has been ineffective, leading to the low response rate.

Many consumers have also grown wary of foreclosure scams and government foreclosure programs, says Deborah Goldberg of the National Fair Housing Alliance.

“The effort is being made” to reach people, says Paul Leonard, the mortgage servicers’ representative at the Financial Services Roundtable, a trade group. “It’s hard to say why people aren’t responding.”

With this settlement, foreclosure cases will be reviewed one by one by consultants hired by the servicers but monitored by regulators.

With the $25 billion mortgage settlement, borrowers who lost homes to foreclosure will be eligible for payouts from a $1.5 billion fund.

That could mean 750,000 borrowers getting about $2,000 each, federal officials have said.

For more information on that, go to nationalmortgagesettlement.com.



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

EDITOR’S NOTE: The next step — compensating those who lost homes to pretender lenders. Who would have thought?

It was already happening on a small scale as the price for the “cash for keys” program rose steadily and then dropped and then started increasing again. There the bank got a quick release and the keys from a cooperating homeowner that didn’t know or care that the home they were giving up was still theirs to keep.

Now there are private deals being made all over the place by entrepreneurs who will help finance or assist homeowners in fighting off the bank or who will do their own cash for keys version where the entrepreneur pays the homeowner for a real signature on real documents, including a deed, assignment of rights etc. The homeowner usually gets to stay another couple of months for free in addition to the payment received (usually around $1,000-$5,000).

Now the OCC is completing a process that has long been in the works — figuring out how to compensate victims of wrongful foreclosure.

It all comes down to this: without the signature of the homeowners in the chain of title, there can be no “asset” on the books of the bank that is worth anything. And most homeowners have not signed anything —- yet. Nobody can buy anything and get clear title where there is a claim of securitization and the original homeowners in that chain have not released their rights or, better yet, signed a quitclaim deed.

Livinglies and the American Homeowners Cooperative is preparing to launch two programs directed at providing compensation to  victims of wrongful foreclosure transferring the risk of the fight with the banks to entities better financed and better resourced than any individual homeowner.

My opinion? Stand and fight. The equity in your home might be, and probably is equal to its value — because there is no valid mortgage against it. The obligation you signed for is probably unsecured and probably paid in full already by the exotic maneuvering of Wall Street bankers, who want to keep the money AND take your house. When somebody on Wall Street makes a lot of money making a “smart” move, everyone applauds even though he didn’t really work for it. I’d say homeowners’ smart move is to stay and fight. If you win, you get the house free and clear or something close to that. If you lose, you don’t seem to be any the worse for wear. Let the Bankers feel what it is like to be under water.

Check with a licensed attorney before acting on anything you read on this blog.

October 4, 2011

Review of Foreclosure Mistakes Is Set By OCC

Millions of current and former homeowners will have a chance to get their foreclosure cases examined to determine whether they should be compensated for banks’ mistakes, under a wide-ranging review being planned by federal regulators.

The review process, which could be unveiled in the next few weeks, will be open to borrowers who were in some stage of foreclosure in 2009 or 2010. Estimates prepared by the Office of the Comptroller of the Currency, which will oversee the review, indicate that 4.5 million borrowers could be eligible for review.

John Walsh, acting head of the OCC, unveiled some aspects of the plan in a speech last month to banking executives, when he said the agency was exploring “the best means of ensuring that injured homeowners had the opportunity to seek relief,” when they were harmed by lender improprieties.

The process will include a broad public-outreach campaign, including direct mail to eligible borrowers and a single website and toll-free number. The reviews will be conducted by independent third-party companies that were hired earlier this year by 14 banks that signed consent orders in April with the OCC and the Federal Reserve. The regulators had to sign off on the selection of these companies.

“It’s a substantial undertaking at great expense to the banks,” said Tim Rood, a partner at Collingwood Group, a housing-finance consulting firm.


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


EDITOR’S COMMENT: Fascism is a system in which the government is essentially run by business. The premise of fascism is that successful commerce (as measured by the government that is controlled by business) leads to a successful society. Italy tried it and we know what happened there. Like anywhere else,  including the United States, without the government being the referee in the marketplace, it is only BIG BUSINESS that succeeds — leaving small business, entrepreneurs, innovation, and consumers to eat dirt.

When regulators know their next job, and their future prospects will come from the banks they are regulating they essentially submit themselves to the control of their future employers. That is what has happened in banking. That is what has happened with our government. And that is why the elephant in the living room is being ignored.

The current PLAYBOOK of the banks, duly followed by most regulators and virtually all members of congress and virtually all legislatures around the country (except Hawaii?), is looking for a way out of the mortgage mess by having regulators intervene in what is essentially state law and what has clearly been gross negligence at best, and malfeasance or criminal activity on the part of the banks at worst. The victims are clearly identified — investors who bought the falsely valued mortgage bonds that were nothing like what was described and homeowners who bought the falsely valued loan products based upon falsely valued real estate in deals that were nothing like what was described.

In short, the Banks wish to use their unbridled control over government and in particular the regulators, to redefine banking, risk law and morality so that they can escape the criminal prosecution that followed the savings and loan scandal of the 1908’s where over 800 bankers went to jail. (yes that’s right, as a class, they have a prior criminal record, so this time their punishment should be worse).

While the main action is in court where the banks are losing ground every day just by looking at the truth, the facts, the evidence and the results of their mean-spirited creation of the illusion of securitization, citizens (consumers, past and present) must be ever vigilant and raise hell when they are doing something that is plainly bad for the country and bad for our children and grandchildren. Let your representatives and the regulators know in writing that you don’t approve of the job they are doing regulating the banks or in the handling of the foreclosure crisis which now looks like it will persist for decades.

The goal is NOT to preserve the health of the banks at all costs. The goal, as clearly set forth in our constitution and in case law going back centuries, is to protect and serve the members of the society that have agreed to a form of governing themselves. If that goal changes, then government is spurious. Government becomes our jailers instead of our protectors and if they won’t protect us against financial terrorism and we let them, what is to prevent them from deciding that it is “best for the country” (meaning themselves) to cease protecting us from anything else, including military threat.

May 19, 2011, 5:00 am

When Regulators Side With the Industries They Regulate

Today's Economist

Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.”

The Office of the Comptroller of the Currency is one the most important bank regulators in the United States — an independent agency within the Treasury Department that is responsible for “national banks” (for more on who regulates what in the United States, see this primer).

Over the last decade, the Office of the Comptroller of the Currency repeatedly demonstrated that it was very much on the side of banks, for example with regard to fending off attempts to impose more consumer protection. (James Kwak and I covered this in “13 Bankers,” and those details have not been disputed by the agency or anyone taking its side.)

After suffering some serious and well-deserved loss of prestige during the financial crisis of 2007-9, the comptroller’s office survived the Dodd-Frank reform legislation and is now back to pushing the same agenda as before. In its view and that of its senior staff — including key people who remain from before the crisis — the “safety and soundness” of banks requires, above all, not a lot of protection for consumers.

This is a mistaken, anachronistic and dangerous belief.

Probably the most egregious mistake made by the Office of the Comptroller of the Currency during the subprime boom was to push back against state officials who wanted to curtail malpractice in housing loans, including predatory lending.

The comptroller’s office ultimately lost that case before the Supreme Court, but its delaying action meant that an important potential brake on abuse and excess was not available — which contributed to the worst business practices that took hold in 2006 and 2007 (see this nice summary or Eliot Spitzer’s account).

Naturally, post-debacle the Office of the Comptroller of the Currency talks an ostensibly better game but, as Joe Nocera put it, “it sure looks as though the country’s top bank regulator is back to its old tricks.” In discussions regarding a potential settlement on mortgage foreclosures — and how they have been handled — the comptroller’s office has supported an outcome that is more favorable to the banks (see the Nocera column for more details).

Now it is again insisting that federal regulation pre-empts the ability of states to regulate in a way that would protect consumers.

In a letter on May 12 to Senator Thomas Carper, Democrat of Delaware, the agency asserted that its pre-emption regulations are consistent with the Dodd-Frank Act (see this interpretation by Sidley Austin, a law firm, which I draw on). There is a lot of legalese in the letter but the basic issue is simple — are states allowed to protect their consumers vis-à-vis national banks, or do they have to rely on the Office of the Comptroller of the Currency, despite its weak track record?

The comptroller’s office is clear — the states are pre-empted, meaning that national comptroller regulations will always overrule them on the issues that matter. (As a technical matter, the issue comes down to what is known as visitation: whether state-level authorities can gain access to bank documents if the bank or the comptroller’s office has not already determined that there is a problem.)

The American Bankers Association was, not surprisingly, delighted: “The O.C.C.’s action helps clarify the rules of the road for national banks and how they serve their customers.”

Richard K. Davis
, chief executive of U.S. Bancorp and then chairman of the Financial Services Roundtable, a powerful lobbying group, emphasized the importance of the pre-emption issue to national banks in March 2010, during the Dodd-Frank financial reform debate in the Senate: “If we had one thing to fight for, it would be to protect pre-emption.”

It is hard to know which would seem more incredible to a second grader: that we left in place the same agency that was responsible for a significant part of past misbehavior, or that this agency seems determined to continue with the same philosophy and policies.

The problem is not that the Office of the Comptroller of the Currency sees its primary duty as the “safety and soundness” of the financial system. Rather, the danger to the public arises because it has consistently taken the view that the best way to protect banks — and keep them out of financial trouble — is to allow them to be harsh with consumers.

This is worse than short-sighted — it completely ignores all externalities, such as how business practices and ethics evolve, and it pays no attention to even the most basic macroeconomic dynamics, such as the fact that we have a credit cycle during which we should expect lenders to “race to the bottom” in terms of standards.

The Office of the Comptroller of the Currency should have been abolished by Dodd-Frank. Unfortunately, it is too late for Congress to revisit this issue. President Obama should at the very least nominate a new head of the Office of the Comptroller of the Currency — the job has been open since August of last year — and a serious reformer could make a great deal of difference.

Under its current leadership and with its current approach, the Office of the Comptroller of the Currency is putting our financial system into harm’s way. The lessons of 2007-9 have been completely lost on it. As Talleyrand said of the Bourbons, “They have learned nothing and forgotten nothing.”

“Keep your fingers crossed but I think we will price this just before the market falls off a cliff,” a Deutsche Bank manager wrote in February 2007

Internal emails indicate Deutsche Bank knew they were bankrolling toxic mortgages by Ameriquest and others

Internal emails indicate Deutsche Bank knew they were bankrolling toxic mortgages by Ameriquest and others


In 2007, the report says, Deutsche Bank rushed to sell off mortgage-backed investments amid worries that the market for subprime loans was deteriorating.

“Keep your fingers crossed but I think we will price this just before the market falls off a cliff,” a Deutsche Bank manager wrote in February 2007 about a deal stocked with securities created from raw material produced by Ameriquest and other subprime lenders.

Deutsche Bank Analyst: Overpay For Our Assets, Or You’ll Regret It

By Zachary Roth – February 12, 2009, 3:49PM

For a while now, it’s seemed like Wall Street’s message to government has been: We screwed up. But if you don’t rescue us on our terms, you’re all gonna be in trouble.

But you don’t usually see that expressed quite as clearly as it was in a research memo sent out yesterday by a senior Deutsche Bank analyst, and obtained by TPMmuckraker.

In the memo — one of Deutsche’s daily “Economic Notes” sent out to the firm’s clients, and to some members of the press — Joseph LaVorgna, the bank’s chief US economist, essentially, appears to warn that if the government doesn’t pay high prices for the toxic assets on the books of Deutsche and other big firms, there will be massive consequences for the US economy.

Writes LaVorgna:

One main stumbling block to the purchasing of troubled assets has been pricing, specifically how does the government price a diverse set of assets in a way that does not put the taxpayer on the hook. However, this should not be the standard by which we judge the efficacy of the plan, because a more prolonged deterioration in the
economy will result in a higher terminal unemployment rate and a greater deterioration of the tax base. As such, the decline in tax revenues will crimp many of the essential services provided by the government. Ultimately, the taxpayer will pay one way or another, either through greatly diminished job prospects and/or significantly higher taxes down the line to pay for the massive debt issuance required to fund current and prospective fiscal spending initiatives.

We think the government should do the following: estimate the highest price it can pay for the various toxic assets residing on financial institution balance sheets which would still return the principal to taxpayers.

One leading economist described the memo to TPMmuckraker as a “ransom note” to the US government. And David Kotok of Cumberland Advisors, who writes such research memos for his own clients, acknowledged that the memo, like all such communications, could be interpreted as an attempt to influence policy-makers.

Still, seeing the memo as a threat to the government to drive the softest of bargains wouldn’t be entirely fair. Kotok that cautioned that the effects of a single analyst’s memo are limited: “Joe LaVorgna doesn’t have enough clout to hold the US government hostage.”

LaVorgna himself was blunt: “I don’t write editorials,” he told TPMmuckraker.

At the very least, the memo can be seen as a frank statement of position from the chief economist of a major bank: if the government doesn’t cave and buy up all the banks’ toxic assets at inflated prices, the country will suffer.

Nice fix we’ve got ourselves into.


COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

“If there had been a cop on the beat to hold mortgage servicers accountable a half dozen years ago,” she said at one point, “the problems in mortgage servicing would have been found early and fixed while they were still small, long before they became a national scandal.”

EDITORIAL COMMENT: It’s a simple answer really. She is real and they are not. She wants us to  have the truth, they want us to fight with each other over ideology while the truth sails away.

With Barofsky leaving the TARP watchdog, and the only meaningful prosecutions Warren is the only person left in the administration whose intent conforms with the job of a public servant protecting consumers from wholesale fraud by the banking industry. Now they are after her with a vengeance to extinguish the risk of action by the administration that puts away people who should be convicted felons, and the risk that restitution to the government, taxpayers, homeowners and investors will be seriously pursued.

Whereas Barofsky’s eye was on past transgressions and unraveling the mystery of the TARP money, Warren’s eye is more on the future to stop the banks from using business models that uses consumers as targets. We have a very unbalanced situation that seems likely to get worse unless Warren is successful.

The failure of Congress and thus the Justice department to include banking in the scope of industries where monopolies must be regulated and controlled has left the industry in charge of itself and controlling what little is left of government regulation. In any other situation the justice department would have a clear path to antitrust remedies. It’s like water, electric and phone service — if we are going to give companies monopolistic share of the marketplace and raise barriers to entry for competition, then they should be regulated like utilities or broken up into much smaller companies.

If water companies were allowed the freedom of the banks, we would be paying $100 per gallon. That is what we are doing in finance, but nobody wants to see it that way except a few people who are accused over being alarmist.

It strikes me as hypocritical for the anti-regulators to say that big government is unwieldy and can’t be managed properly and then allow the creation of a financial industry that in every real metric is bigger than government and even more unmanageable — and not possible to regulate. We’re getting the worst case scenario every way we turn. We’ve already tried deregulating the financial industry and except for top members of the industry itself, NOBODY IS BETTER OFF. Quite the contrary, debt, which is the life blood of the financial industry, is draining the life force out of economy.

Whenever it is that we push the reset  button to clear title and stabilize commercial transactions, it better include a practical view of the financial industry. It should be serving the needs of the country and the marketplace. Instead we have them dictating what the economy and the country will get.

Elizabeth Warren has an uphill battle without much support from anywhere that counts. SO she needs YOUR support by writing to her and your congressman and state legislators about the inequalities in our economy that have stretched us past the breaking point. The goal is to have a healthy and productive society and a fair marketplace governed by democratic principles. The current status quo, for which the banks have dug in their heels to maintain, is anti-capitalism, anti-free market, and anti American.

Capitalism is an economic system that is midway between fascism (controlled by business) and socialism (everyone gets a share of the pie). The American dream is what drives capitalism — where we know there will be inequalities and excesses and we are willing to tolerate that because that is how opportunity and innovation flourish creating better circumstances for each generation of Americans. Using the unfounded fear of socialism, big business has taken us over the line to fascism in the marketplace and the society. we are a nation in which the government does not respond, much less fear, the reaction of the people because they are so easily manipulated by sound bites that scare them. Elizabeth Warren is practical and firm in her drive to return us to true capitalism, in which trickery is not protected by a system where predators run the government.

We need to return the favor and give her support every way we can.

An Advocate Who Scares Republicans


The piñata sat alone at the witness table, facing the members of the House subcommittee on financial institutions and consumer credit.

The Wednesday morning hearing was titled “Oversight of the Consumer Financial Protection Bureau.” The only witness was the piñata, otherwise known as Elizabeth Warren, the Harvard law professor hired last year by President Obama to get the new bureau — the only new agency created by the Dodd-Frank financial reform law — up and running. She may or may not be nominated by the president to serve as its first director when it goes live in July, but in the here and now she’s clearly running the joint.

And thus the real purpose of the hearing: to allow the Republicans who now run the House to box Ms. Warren about the ears. The big banks loathe Ms. Warren, who has made a career out of pointing out all the ways they gouge financial consumers — and whose primary goal is to make such gouging more difficult. So, naturally, the Republicans loathe her too. That she might someday run this bureau terrifies the banks. So, naturally, it terrifies the Republicans.

The banks and their Congressional allies have another, more recent gripe. Rather than waiting until July to start helping financial consumers, Ms. Warren has been trying to help them now. Can you believe the nerve of that woman?

At the request of the states’ attorneys general, all 50 of whom have banded together to investigate the mortgage servicing industry in the wake of the foreclosure crisis, she has fed them ideas that have become part of a settlement proposal they are putting together. Recently, a 27-page outline of the settlement terms was given to banks — terms that included basic rules about how mortgage servicers must treat defaulting homeowners, as well as a requirement that banks look to modify mortgages before they begin foreclosure proceedings. The modifications would be paid for with $20 billion or so in penalties that would be levied on the big banks.

Naturally, the banks hate these ideas, too. So the Republican members of the subcommittee had another purpose as well: to use the hearing to serve as a rear-guard action against the proposed settlement.

“Under what statutory authority are you currently acting?” demanded Representative Patrick McHenry, a Republican from North Carolina, questioning the legitimacy of her role in setting up the consumer bureau. He also questioned whether the government had the right to impose a $20 billion penalty on the banks — and then use that money for (heaven forbid) mortgage modifications.

Spencer Bachus, Republican of Alabama, the new chairman of the Financial Services Committee, wanted to know how closely Ms. Warren had been consulting with the White House and Treasury Secretary Timothy Geithner about naming a director for the bureau — and whether she would accept a recess appointment “knowing the type of blowback from that.” (A recess appointment is a temporary appointment the president can make when the Senate is in recess, thus avoiding the need for Senate confirmation.)

Representative Steve Pearce, Republican of New Mexico, said that he fully expected the Consumer Financial Protection Bureau to be no better than “the S.E.C. and Mr. Madoff.” “Within two years,” he added, “your agency is going to be operating exactly the same, that it’s simply out there grinding wheels away.”

Representative Scott Garrett, Republican of New Jersey, zeroed in on the proposed settlement. Where in the statute did she have the authority to consort with the attorneys general? he demanded to know. “Are you making recommendations to government regulators about the dollar amount?” he badgered. “Is that part of your role, to make recommendations about dollar amounts?”

On and on it went, until the hearing sputtered to a close, two and a half hours after the browbeating had begun.

To listen to the House Republicans, you’d think the financial crisis of 2008 was like that infamous season of the long-running soap opera “Dallas,” the one that turned out to be a season-long dream. Subprime mortgages? Too-big-to-fail banks? Unregulated derivatives? No problem! With the exception of their bête noire, Fannie Mae and Freddie Mac, the Republicans act as if nothing needs to be done to prevent another crisis. Indeed, they act as if the crisis never happened.

The home page on the House Financial Services Committee’s Web site has been turned into a screed against Dodd-Frank. Clearly, the committee is going to spend this session trying to minimize the effect of the legislation, starving agencies of the funds needed to enact the regulations mandated by the new law, for instance. In fact, that effort has already begun.

It’s not just the House Republicans either. Already the Office of the Comptroller of the Currency has reverted to form, becoming once again a captive of the banks it is supposed to regulate. (It has strenuously opposed the efforts of the A.G.’s to penalize the banks and reform the mortgage modification process, for instance.) The banks themselves act as if they have a God-given right to the profit they made precrisis, and owe the country nothing for the trouble they’ve put us all through. The Justice Department has essentially given up trying to make anyone accountable for the crisis.

Thank goodness, then, for the attorneys general — and for Ms. Warren. On Main Street, where the attorneys general operate, it is pretty obvious that problems persist. During the subprime boom, many states tried to stop the worst lending abuses, only to be blocked by federal banking regulators. Now that the country is dealing with the aftermath of those abuses — the rising tide of defaults and foreclosures — it is the attorneys general who are, once again, put in the position of trying to stamp out abuses, this time of the foreclosure process itself.

Their leverage comes from the fact that the banks and their servicing divisions have, in the words of the University of Minnesota law professor Prentiss Cox, “routinely violated basic legal process” by, for instance, not transferring the note after the sale of a home. But in addition to assessing a financial penalty on the banks, the A.G.’s are trying to use the threat of litigation to force the banks to finally deal with defaulting homeowners more fairly and humanely. That is the essence of the settlement proposal that has been floating around. That — and a big push to finally come up with a modification plan that works.

When I spoke to Tom Miller, the Iowa attorney general — and the leader in this 50-state effort — he said that one reason he had asked Ms. Warren for advice was that she had already hired people with genuine expertise that he wanted to take advantage of. But that’s not the only reason. If the banks were to agree to settle the case on the A.G.’s terms, the Consumer Financial Protection Bureau would be the agency charged with enforcing the terms. So it makes sense to include its current leadership as they work through ideas for a settlement. Besides, the A.G.’s don’t really trust anybody else in the federal government to be on the side of financial consumers. Given their previous experience, why would they? Ms. Warren is the one person in Washington they feel is on the same side they’re on.

The notion that Ms. Warren lacks statutory authority to talk to the attorneys general is an objection so silly it is hard to take seriously. Consulting with the only government officials around who are actually trying to do something for financial consumers is precisely what she ought to be doing. Given that her agency could wind up enforcing the terms, it’s practically a necessity.

As for the idea the Republicans have been spreading talk that the attorneys general are overstepping their bounds by trying to force reform — and a big penalty — on the mortgage servicers, that’s pretty silly, too. As Adam Levitin, a Georgetown law professor, has pointed out on his blog recently, settlements are private agreements between two parties. The banks can accept what the A.G.’s are proposing. Or they negotiate different terms. Or they can reject them outright, and go to court to fight over the proper remedy. It’s really not any different from the multistate tobacco settlement of some years ago, which imposed some minor reforms on the tobacco industry along with a giant financial penalty. Congress had nothing to do with it.

I wish I could say with certainty that the ideas put forth by the attorneys general will finally help ease the foreclosure crisis. I hope they do. Mr. Levitin thought there was a decent likelihood of success; Mr. Cox, a former assistant attorney general himself, was also hopeful — though more skeptical. “So much of it rides on how well it is enforced,” he said.

Which is also why Ms. Warren is the most logical person to be the agency’s initial director: if the settlement does come to pass, no one will understand its terms better, or have a better feel for how to enforce them. Let’s face it: there isn’t anybody in Washington more fearless about standing up to the big banks. No wonder they don’t like her.

As I listened to her on Wednesday, I was struck anew at how clearly she articulates the need for the new bureau. “If there had been a cop on the beat to hold mortgage servicers accountable a half dozen years ago,” she said at one point, “the problems in mortgage servicing would have been found early and fixed while they were still small, long before they became a national scandal.”

Senate Republicans have vowed to block her appointment if President Obama nominates her. Yet even if her nomination goes down in flames, Senate confirmation hearings would be clarifying. Americans would get to hear Ms. Warren explain why the Consumer Financial Protection Bureau has the potential to help Americans. And they would get to hear Republicans explain why the status quo — including the everyday horror of the foreclosure mess — is just fine.

It has been much noted in recent months that President Obama seems unwilling to start a fight with Republicans. Maybe that’s why he has shied away from nominating Ms. Warren to a job for which she is so clearly suited. But if protecting financial consumers — and helping the millions of Americans struggling to hold onto their homes — isn’t worth fighting for, then what is?

How Many Banks Does It Take to Screw America?


EDITOR’S NOTE: The assumption is that if MERS is screwed we are all saved. I have it on incontrovertible authority that the mega banks already have a plan mapped out for that and in fact they are already putting it into action. Considering their success in kicking the can down the road so far, any singing and dancing should be muted. You see they don’t have to do anything because nothing will happen to them no matter what they do. That is the status quo and it does not seem like that is going to change.

So don’t rely upon the assumption that they are going to be required to give homeowners or borrowers something like the “free house” myth which they turned upside down on borrowers while the banks themselves stole the houses with a “credit bid” instead of cash.

ON THE OTHER HAND, LET’S LOOK AT THE LEGAL STATUS QUO AND YOU’LL SEE WHY THE LAWYERS ON THE OTHER SIDE ARE GETTING NERVOUS. It’s quite possible, even probable now, that in order to perfect the correct loan documents the banks, the pretenders, whoever (watch out for scams here) are going to offer incentives for homeowners to SIGN NEW DOCUMENTS. From what I’ve seen so far, it is pretty obvious and quite definitely confirmed by friends from the dark side that they are not going to sponsor a barbecue where they give out money. A toaster oven maybe, but not the whole mortgage.

BUT THE PEOPLE WHO ARE AS NASTY AS I AM, HAVE VERY LITTLE TO LOSE HOLDING OUT TO THE BITTER END AND REFUSING TO SIGN ANYTHING AND PURSUING QUIET TITLE. So far the number of people I have seen willing to tough out the case until the biter end is less than 3%, which is about half the normal default rate. So even if the number of people willing to fight doubles, the banks still have nothing to lose even if they give up the entire house equity and mortgage and note and even pay attorneys fees and damages. It’s no more than a rounding error.

THE FACT THAT AMERICA IS SCREWED BY THIS SECURITIZATION ILLUSION doesn’t bother anyone on Wall Street — it never did. The only thing Wall Street works for is a trade where something of perceived value moves and a fee is earned. Now here is the surprise for those regular readers of this publication: I don’t think there is anything wrong with Wall Street’s intent. They weren’t out to ruin the country, they just didn’t care. They were doing what they were created to do — improve liquidity to grease the wheels of commerce. I’m not saying that nobody should go to jail, mind you, but the real problem is that the promoters and creators of this so-called securitization scheme that never actually existed were never under any impression that they were breaking any law or that even if they did anything would happen to them. And they were right.

If you think you hate Wall Street, think again. What you really hate is the fact that government didn’t do the job of controlling Wall Street — a lesson we learned in the roaring 20’s, the salad oil scandal, the savings and loan scandal, the Long Term Capital Management Scandal, Enron, World-com, etc. etc. So if someone has you supporting a restriction on government regulation, they are being paid by Wall Street to keep you thinking that way. Think about it.

MERS Tapped for Federal Investigation

By: David Dayen Wednesday March 2, 2011 1:45 pm

We have yet another major bank today that fully expects to be dinged by federal and state regulators for sloppy mortgage practices.

PNC Financial Services Group Inc. expects to sign consent orders with U.S. regulators because of allegedly faulty mortgage servicing and foreclosures.

The orders are likely to come from the Federal Reserve and the Office of the Comptroller of the Currency, Pittsburgh-based PNC said today in its annual filing with securities regulators. The actions may include activities tied to the Mortgage Electronic Registration System, the registry designed to track mortgage-servicing rights and ownership of U.S. residential loans, according to the filing.

The MERS piece is interesting. As we know, MERS is basically at the end of its rope, forced to tell servicers to stop foreclosing in its name because of a string of lost court cases. Now, PNC, along with BofA and Citigroup, are saying publicly in regulatory filings that MERS may be ruled essentially invalid for mortgage transfers. Keep in mind that the major banks created MERS and still fund it.

Bank of America said legal challenges against MERS have asserted that use of the system can “cloud ownership” of a loan, according to its filing. The Charlotte, North Carolina- based lender, which ranks second in U.S. home lending and first among mortgage servicers, said it uses MERS for “a substantial portion” of new home loans, including those sold to investors or transferred into securitized trusts.

The process “is based on a well-established body of law that establishes ownership of mortgage loans by the securitization trusts, and we believe that we have substantially executed this process,” Bank of America said in its filing.

The question of MERS’s “legitimacy” drew scrutiny from the U.S. Justice Department and Congress as well as regulators and state attorneys general, Citigroup said in its filing. The bank “has determined that the integrity of its current foreclosure process is sound,” the New York-based firm said.

What does this mean for outstanding loans? Many states are working on legislation that would disallow foreclosures on homes without a full chain of title. California is the latest. If MERS is forced to the sidelines, or their process ruled invalid, what does this mean for the chain of title?

There’s a way out of this for the banks, to clean up the complete mess they’ve made, but they’d have to actually provide homeowners with relief to compensate for their near-destruction of the residential housing market. To those who find this unworkable – the serious ones, not McMegan – I would simply ask them what they believe is the proper relief. Because aside from the fact that investors and not servicers should be able to determine whether they allow principal mods to borrowers in trouble, and that all economic signs point to that as the best way to stop foreclosures and save the economy, allowing yet another massive case of financial fraud to pass without punishment does more damage to the integrity of the country than anything I can think of.

%d bloggers like this: