Keiser’s Forensic Analysis Workshop

You must remember the judiciary moves slowly is assimilating new facts or patterns in the marketplace. In order to break through a Judge’s preconception of the mortgage origination process, you need to have something that is clear in is presentation of facts, and obvious in its impact.

The reasons for having analysis performed by an independent third party is that it transforms empty argument into a question of fact. Anything that leads to a questions of fact gives you leverage in and out of court. In court, it allows you to credibly raise the issues so that discovery and an evidentiary hearing will allow your claims to be heard on the merits. No “audit” or analysis is PROOF or EVIDENCE unto itself. What it should do is give you something to hold in your had while talking to the Court, and which clearly contests the “facts” that the pretender lender is trying to have the Court assume (which is why objections, motion practice, discovery and evidentiary hearings are so important).

Lots of mistakes are being made on both sides of the mortgage crisis. Brad, in hosting this new forensic analysis workshop, seeks to help analysts avoid the usual pitfalls, recognize the issues that an expert or lawyer or homeowner may be required to present, and work toward providing the litigation support required to achieve a successful result.

There are a number of good workshops out there that can help forensic auditors, lawyers, experts and even lay people understand how to proceed when they wish to challenge some company that claims to be your lender or servicer. Max Gardner’s boot-camps are very good venues for understanding securitized loans, applying law and procedure to the challenge and coming out with good results. April Charney, who is giving a workshop soon in California is adding non-judicial states to the scope of her workshops for the first time. And Brad Keiser, who has been doing the survey workshops with me for a year and a half is now offering an important, even essential, workshop that drills down on forensic analysis of mortgages and foreclosure proceedings.

Brad, being a former banker himself with one of the nations largest banks, has performed virtually all of the research I use in connection with TILA, RESPA etc. A long-time friend, he has worked with me to bring LivingLies from two dimensional blog postings to three dimensional live presentations.

The output is what is important in any analysis of your mortgage or foreclosure situation. It doesn’t matter what work a company says they will do, even if they completed their engagement. The question is whether it is useful in producing an actual result. That is where the intersection of what is working in court and what is not comes into play. The issue here is knowing what you have, planning your strategy, and choosing the right procedures, lawyers, experts etc. in achieving a well-defined goal. Brad and I have carefully analyzed the forensic process and found a number of things that rise to the level of prime importance:

  1. Finding out whether there are patent violations of existing federal and state lending laws that can be identified for further action by the homeowner or their attorney. This among other things involves an examination of the Annual Percentage rate disclosed on the Good faith estimate, the timing of the good faith estimate, the presence of the traditional (but illegal) yield spread premium), affordability and other factors including discrepancies between the GFE and the HUD settlement statement. A key component of this part of the analysis often overlooked by “TILA Auditors” is an examination of the settlement transaction where the alleged loan was closed revealing discrepancies between the beneficiaries of the mortgage, the note, the title insurance, the mortgage insurance etc. and the use of “nominees” instead of naming the real parties in interest, which is evidence of a table-funded loan.
  2. Revealing the latent violations of lending laws and regulations caused by securitization of loans. Here is where the second and much larger yield spread premium appears and must be estimated by your expert or analyst using tables prepared by an expert. In addition. it reveals discrepancies in signatures, dates and parties in connection with fabricated or forged assignments used to justify the foreclosure by a party not named as lender or beneficiary.
  3. Determining whether there are refunds or rebates due back to the homeowner/borrower either from the original named lender or some other party in a securitization chain.
  4. Discovering facts that show a pattern of deceptive or predatory lending.
  5. Researching the loan to determine the record title chain, the probable securitization of your loan, and providing you with the right questions to ask as tot he identity of the creditor and demanding an accounting from the creditor, as opposed to simply a servicer that serves as a buffer between the debtor (homeowner) and the creditor (Investor owning mortgage backed securities).
  6. Providing adequate information and forms to the lawyer or client on sending out a Qualified Written Request, Debt Validation Letter or Demand Letter.
  7. Highlighting the most significant issues in your loan for the expert to use in preparing a declaration or the lawyer to use in filing a lawsuit, a petition for temporary injunction, or a bankruptcy petition.

As I have repeatedly stated on these pages, a TILA Audit is a start but it usually won’t produce the result of a modified loan that is acceptable tot he homeowner or the nullification of the obligation, note or mortgage.

Before securitization of mortgage loans, the process of examining loan transactions was fairly straight forward and fairly simple. With securitization the analysis requires a much higher level of sophistication that enables the lawyer or homeowner to present or proffer evidence of wrong-doing or improper procedures accounting or disclosure on the part of the securitization chain that produced your loan from the investment in mortgage backed bonds by investors.

Voting Fraud

I’ve kept quiet about this too long. I guess I thought that whoever was doing it would stop out of fear of discovery. I no longer believe that. In my opinion a Republican will be elected in the next Presidential election. Actually that is not true. A more explicitly true statement would be that a Republican will be sworn into office regardless of who was elected. I reach this conclusion easily. You see, I know how it is being done. 

I know the business of creating, programming, using, marketing and selling ATM machines and payment devices like you see in stores where you swipe your card. On the ATM side the company that has the hold on  the market is Diebold, but there are others. The Diebold model is essentially what was used (copied by others) in the creation of electronic “ATM” voting machines. 

Making changes to the design and construction of an ATM machine requires considerable expense and retooling. So even the removal of the receipt function would require considerable programming, changes in telecommunications and manufacturing. It would have been LESS expensive and MORE profitable for Diebold to retain the receipt function. It obviously would provide a clear audit trail which would available to verify the results of any election.

Since everyone requires a receipt or at least the option of a receipt in performing a financial transaction, the programming to support that, and the “intelligence” (the chip inside the machine) and the actual construction of the ATM would need to be changed and redesigned because of the awkwardness of a space where a receipt would normally appear. 

Diebold, which is taking on a new name du jour,  closely connected to the Republican party and the inner guard easily was awarded the contract to produce voting machines across the country by like minded Republican officials who received their marching orders from Washington. Even the method of acquiring the machines was provided from the White House. Nothing was left to chance. 

Favoritism is no surprise, but what was done here is disturbing to say the least. An ATM manufacturer was picked because of the similarity of functions — verifying, authenticating, tabulating, and communicating.

The first design of the voting machine included a receipt which was assumed everyone would want. That design, produced by someone who was merely a design professional working within Diebold in anticipation of getting the contract for voting machines, was based upon obvious functions — security, accurate tabulation, and a receipt for auditing and reconciliation purposes — all functions that any ATM design professional was intimately familiar with. In fact, the original design called for a double receipt — one for auditing in the event of a recount to confirm the automated tally and one for the voter.

Several things happened after that which resulted in events which cast doubt on not only the electoral process generally, but the 2004 election and the New Hampshire Democratic primary specifically. It probably casts doubt on the entire American electoral process. 

First the design was changed eliminating the receipt.  Second, the programming was supplied by an outsource programmer — something that was completely unnecessary and unusual but not unique. Third, the design and programming prevented any audit other than tabulating the numbers that were posted to a candidate. The process by which the numbers are posted to each candidate is not subject to an actual audit where the “transaction” can be examined. Diebold and other companies who have created these machines refuse to share the original programming language to the State and County Officials in charge of elections and who have demanded the “source” code. 

The reason that they have deferred compliance with publishing or allowing access to the source code is not a legal one. It is a political reason. The source code contains permissions for changes in the way that the machine posts the individual vote of an individual voter to one candidate or another. The default method is to post it as it was voted. But the permission is in the code to allow other algorythms to be used. 

Those permissions would not exist unless they were intended to be used. The voting is not automated in the sense of “no human Hands.” The method of posting the numbers to each candidate is an algorythm (software program) which can be tuned in favor of any candidate. The investigating press has explored the manual methods by which the machines could be tampered with, but the probability is that there is a second method of telecommunications with the machines that resets the algorythm to one of several choices.

By doing this, the results of an election can be changed quite easily and with precision. Care would have to be exercised in not creating a landslide in favor of what would have been the losing candidate since the exit polls would clearly be 180 degrees opposite. So the actual results must be monitored during the actual election and modified slowly by diverting votes from one candidate to another. This would require telecommunications in and out to a source other than the Official Supervisor of Elections. Such devices have been minaturized to such small dimensions that one could be looking right at it and not see it.

In the case of the 2004 election, the republicans naively assumed that the election would be close. But they realized by mid-morning  of election day that Kerry was winning by a landslide. Cheney went into the “situation room of the White House” at about 10:30 am after being told by Carl Rove that they had lost big.  Kerry’s people and the news organizations all confirmed a big win for Kerry. Cheney was caught by surprise. The thinking was that only a small amount of “tweeking” would be required. Now he had to change a landslide against them into a narrow victory that could be at least somewhat credible. 

He contacted his confidential IT person who put a particular strategy into motion whereby the machines would start taking some of the votes, then more votes from Kerry and adding them to Bush’s total. At the end of the day, the machine could only report how many people voted, and who they voted for — from a database created in the machine.  What people do not realize is that nothing is truly automated in the magical sense. It takes someone to key in a program to tell the machine what to do when it receives a certain instruction from the keyboard or screen.

Anticipating the possibility or probability of a loss, the Republicans can set up an IT strategy to interdict the voting in the machines so the results would be adjusted to their satisfaction. The machine was designed and programmed in a way that called for an audit which amounted to repeating the readout it originally gave and not the process or programming by which it made the tallies. 

No person has had access to the chip that was in the machine containing the algorythm used in the 2004 election. It was not necessary to manually approach each machine although that certainly was one way it could be done as had been amply and frequently demonstrated by many organizations investigating the potential for massive fraud in the electoral process. In fact, by now, the card containing the instructions for this programming probably cannot be tied any longer to any particular machine. Thus what I am saying here is impossible to verify. 


The second time it surfaced obviously, was in the New Hampshire Democratic primary. The Republicans had picked the candidate they wanted to run against: Hillary Clinton.  Again no surprise, normal politics. When she was the obvious front runner, nothing was required. She was set to win Iowa, New Hampshire and most of the other primaries handily. Stories were planted in the press about how nice she was even to Republicans and Newt Gingrich gave his historic warning about not underestimating the incredible strength of the Clintons. An effective myth of invincibility had been created by a tacit agreement between the Republicans and the Clinton political machine. what promises were made, is left entirely to conjecture. 

Then she lost Iowa — two candidates came out ahead of her. She was headed to New Hampshire where her 20 point lead in the polls, had not only evaporated, it had swung the other way. The day before the election and the morning of election day she was down at least 9 points, which was impossible to overcome. Then came the results where she was consistently ahead for the entire day never losing a margin of less than 2 points except for one brief moment in early tabulations where she was even with Obama. As in the 2004 Presidential election, again the exit polls had an Obama victory and again she was told during election day by her own people that she had lost, and people were ready to jump from her campaign. It was obvious she was losing and would lose big again in New Hampshire. It was equally obvious that going into South Carolina, she would most likely lose by an even wider margin. That would leave Obama as the probable candidate and possibly Edwards if Obama stumbled.

The Republicans new that they had an easy excuse — dislike of Hillary — to peg their November victory on, and that they could even make it wider margin than the 2004 election for that reason. This time it was obvious that the machines had to start interdicting votes from the start in order to create a credible voting pattern that the press would later trace to her staged or unstaged tears in the diner incident. 

Once again, no audit trail and no way of checking — unless someone up in new Hampshire gets a copy of this and someone gets the right IT person to look at the design of the machine as a whole and looks for communication devices that are built into the machine and secondary drives that direct the method of tabulation. 

Unless this is actually revealed in its entirety so that the American public can understand that none of their elections were secure of they used electronic “ATM” voting, it will continue, it will get refined and it will get “better.” The people in control will do everything they can to stay in control and expand their control. That’s why GW had that smirk on his face.   

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