BAILOUT TO STATE BUDGETS: AZ Uses Housing Settlement Money for Prisons

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Editor’s Comment:

The general consensus is that the homeowner borrowers are simply at the bottom of the food chain, not worthy of dignity, respect or any assistance to recover from the harm caused by Wall Street. Now small as it is, the banks have partially settled the matter by an agreement that bars the states from pursuing certain types of claims conditioned on several terms, one of which was the payment of money from the banks that presumably would be used to fund programs for the beleaguered homeowners without whose purchasing power, the economy is simply not going to revive. Not only are many states taking the money and simply putting it into general funds, but Arizona, over the objection of its own Attorney General is taking the money and applying to pay for prison expenses.

Here is the sad punch line for Arizona. The prison system in that state and others is largely “privatized” which is to say that the state “hired” new private companies created for the sole purpose of earning a profit off the imprisonment of the state’s citizens. Rumors abound that the current governor has a financial interest in the largest private prison company.

The prison lobby has been hard at work ever since privatizing prisons became the new way to get rich using taxpayers dollars. Not only are we paying more to house more prisoners because the laws a restructured to make more behavior crimes, but now our part of the housing settlement is also going to the prisons. Another bailout that was never needed or wanted. Meanwhile the budget of  Arizona continues to rise from incarcerating its citizens and the profiteers (not entrepreneurs by any stretch of the imagination) are getting a gift of more money from the state out of the multistate settlement.

Needy States Use Housing Aid Cash to Plug Budgets

By SHAILA DEWAN

Only 27 states have devoted all their funds from the banks to housing programs, according to a report by Enterprise Community Partners, a national affordable housing group. So far about 15 states have said they will use all or most of the money for other purposes.

In Texas, $125 million went straight to the general fund. Missouri will use its $40 million to soften cuts to higher education. Indiana is spending more than half its allotment to pay energy bills for low-income families, while Virginia will use most of its $67 million to help revenue-starved local governments.

Like California, some other states with outsize problems from the housing bust are spending the money for something other than homeowner relief. Georgia, where home prices are still falling, will use its $99 million to lure companies to the state.

“The governor has decided to use the discretionary money for economic development,” said a spokesman for Nathan Deal, Georgia’s governor, a Republican. “He believes that the best way to prevent foreclosures amongst honest homeowners who have experienced hard times is to create jobs here in our state.”

Andy Schneggenburger, the executive director of the Atlanta Housing Association of Neighborhood-Based Developers, said the decision showed “a real lack of comprehension of the depths of the foreclosure problem.”

The $2.5 billion was intended to be under the control of the state attorneys general, who negotiated the settlement with the five banks — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally. But there is enough wiggle room in the agreement, as well as in separate terms agreed to by each state, to give legislatures and governors wide latitude. The money can, for example, be counted as a “civil penalty” won by the state, and some leaders have argued that states are entitled to the money because the housing crash decimated tax collections.

Shaun Donovan, the federal housing secretary, has been privately urging state officials to spend the money as intended. “Other uses fail to capitalize on the opportunities presented by the settlement to bring real, concerted relief to homeowners and the communities in which they live,” he said Tuesday.

Some attorneys general have complied quietly with requests to repurpose the money, while others have protested. Lisa Madigan, the Democratic attorney general of Illinois, said she would oppose any effort to divert the funds. Tom Horne, the Republican attorney general of Arizona, said he disagreed with the state’s move to take about half its $97 million, which officials initially said was needed for prisons.

But Mr. Horne said he would not oppose the shift because the governor and the Legislature had authority over budgetary matters. The Arizona Center for Law in the Public Interest has said it will sue to stop Mr. Horne from transferring the money.


Nevada AG Asks Pointed Questions to DOJ and HUD

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See Full Letter from Masto to DOJ and HUD Here 1-27-12

Hawaii did it, Nevada did it and now other states are doing it. Seeing the devastating effect on the state economy and the ensuing effects on the nation’s economy and the world finance, State Attorney generals are taking matters into their own hands, and pressing the points that hurt. The Banks don’t like it because it undermined their narrative. This year, 2012, is the year when most of the truth will come out and it will blow your mind to find out just how pernicious and pervasive this false, faked, securitization has been.

The number of foreclosures has plummeted in those states that have put up a fight. Why? Not because they were banned but because those states that require proof of authority to foreclose, proof of the accounting and the proof of settlement or the ability to mediate, have all but eliminated foreclosures. Now the question is how do we correct the corruption of the the title registries, get people restored to their homes and force the pretenders to compensate victims of fraud, forgery, and outright theft.

Catherine Cortez Masto has mastered the basics of securitization and she, like Beau Biden in Delaware, Schneiderman in New York, Coakley in Maine and others don’t like what they see — corroboration of some of the worst nightmares of conspiracy theorists.

It won’t be long before the investigations get traction and start picking up steam. Indictments will follow but not for a few months, at least.

You will hear words from these prosecutors that you never thought you would hear about the banks conduct, the transfer of wealth through theft, and the commission of crimes  too numerous to list here. As the momentum picks up, you will see thousands convicted, jailed, defrocked from their law license, notary license, appraisal license, title license and even the license to do business in the states where they thought they had a lock on the whole thing. People are wide awake right now and when Americans awaken, things happen fast.

Here are some of the more important questions and my comments that were posed in a recently released letter to Thomas J. Perrelli at the U.S. Department of Justice and Shaun Donovan as secretary of the U.S. Department of Housing and Urban Development. It would be a good idea to take out those template discovery forms you have for clients and start your revisions. Stop assuming that anything the Banks said was true and start assuming the everything they said was false — including the losses they claimed to get the bailouts.

  1. What origination conduct did the federal agencies not release? [That’s not my question, it is Masto’s question. This is a direct frontal assault on the complicity of the Federal government in the mortgage mess. Inherently it addresses the issue of whether the origination process violated law, rules or regulations and whether there is a valid lien on most properties that were financed with investor money.]
  2. The State release refers to “…brother and sister corporations…” Please provide some clarity as to this particular phrase as used in the state release. [Masto is not going to be papered over by vague wording that could mean anything. She wants to know what went on. Where did the money go, and who were the parties involved?]
  3. The State release contains a provision that prevents the State AG’s and banking regulators from seeking to invalidate past assignments or foreclosures. Does this prevent States from effectively challenging future foreclosure actions that are based upon faulty prior assignments? [Masto nails it on the head. First of all this is AMNESTY for the Banks who committed crimes and want the government to ratify the crime since the government was complicit in allowing, creating and promoting the crime. It does nothing to clear up the title problems that currently exist or that will exist if the faulty assignments contain not only forgeries but fabrications of the truth of the transactions inherently referred to within the instruments.]
  4. Paraphrasing Masto, when will the results of existing investigations be made public — or do you want us to take your word for it that there are or are not weapons of mass financial destruction still hidden in the pile?
  5. Paraphrasing Masto, how will we be able toe enforce the new servicing standards or are we taking the word of the Banks and servicers who lied to us consistently up until this point in time?
  6. Paraphrasing Masto, how and when will consumers get relief if they were victims of fraud, chicanery and theft?
  7. Under what circumstances will the Monitor be able to access servicers source documents, i.e., the documents that form the underlying basis for the work papers? [Of course Masto knows that she will never see the source documents because they would contradict everything the Banks and servicers have said up until this point, one of many reasons she will not participate in the multi-state settlement.]
  8. What kind of data will the monitor be able to demand regarding the allocation and performance of servicers’ modification/other consumer relief? What compliance or enforcement provisions address the Monitor’s and States’ ability to enforce the consumer relief provisions? Before the claim of securitization of mortgage debt that never in fact was completed, there were simple formulas to determine whether the workout was good or bad for the lender. Now the servicers are using excuses like “everyone will do it” if they accept modifications, even though the proposed modifications i results in proceeds that are much higher than the results of foreclosure. So the real question is whether the consideration of modifications requires (a) authority and (b) no discretion if the proposed modification exceeds x% of fair market value of the collateral. If accepted, this change would have eliminated 2/3 of all the past foreclosures and 90% of the future ones.
  9. Please explain the assumptions on which the settlement value chart relies. It describes a maximum expected benefit; what is the minimum expected benefit? Can we get a range of values for each state.? [And what data exists showing the true liability for false, fraudulent, fabricated loans and foreclosures to compare with the settlement?]
  10. Paraphrasing Masto, how do these detailed formulas actually work in real life? What will be the effect on blighted areas and how can we as AG’s determine what risk is associated with acceptance of an agreement in which the probability of millions more foreclosures will take place under false pretenses, only to become abandoned property?

 

FREE HOUSE Smoking Gun: ARE COUNTRYWIDE MORTGAGE BACKED SECURITIES MORTGAGE BACKED?

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Are Countrywide mortgage-backed securities really mortgage-backed?

EDITOR’S NOTE: BOA IS IN SERIOUS TROUBLE. I PREDICT THE BANK WILL CRASH AND SOON. As this article points out, the mortgage backed securities are not backed by mortgages. The transfers were not made. Whether the loan originated with  Quicken, Freedom, Aurora, BNC or anyone else, if it ended up with Countrywide the mortgage is not enforceable or even real. It is an unsecured debt subject to offset for liability for appraisal fraud, TILA violations, rescission remedies, fraud in the inducement etc. The only thing missing here is that it is not just a matter that the loans were never transferred by  Countrywide, it is about the fact that Countrywide never owned them and therefore COULDN’T TRANSFER THE LOANS.

WHAT DOES THIS MEAN?

  1. It means that the the only party to name in the quiet title lawsuit is the mortgagee of record — the mortgage originator.
  2. It means that the mortgage originator either didn’t ever have the right to call itself a creditor or doesn’t have that right now.
  3. It means that the mortgage is void and should be removed from the title registry, which is what quiet title is all about.
  4. And it means that with neither BOA, nor Countrywide being the creditor, they have no right to enforce the debt without NAMING the creditor on whose behalf they are initiating collection. If they disclose that, then it will be obvious that the real creditor wants no part of the actions to collect dubious debts procured by predatory and fraudulent lending practices.
  5. It means that the real creditor does not want to try to collect from the homeowner.
  6. It means that homeowners who have been foreclosed should be able to get their homes back free and clear even if there was a transfer or sale to a third party.
  7. It means that that any foreclosure involving BOA or countrywide is probably subject to being dismissed with prejudice forever.

QUOTES:

If the President or Treasury actually wanted to fix the housing market, the ability to do so is lying in all those court records, which show the systematic failure of securitization and the massive exposure the banks hold as a result. This would really help the economy – foreclosure problems are seen to add 1.25 points to the unemployment rate, according to one survey. But instead, they’ve
allowed the banks to pick and choose at their discretion who gets a modification. They’ve allowed the banks to use HAMP as a predatory lending scheme, to squeeze a few extra payments out of borrowers they planned to evict anyway. They’ve even allowed banks to continue toscrew even their customers who they gave a modification.

Fortune has examined dozens of court records that corroborate the
employee’s testimony. And if Countrywide’s mortgage securitizations
systematically failed as it appears they did, Bank of America’s
potential liability dwarfs its shareholder equity, as the
Congressional Oversight Panel points out.

Field is referencing Countrywide v. Kemp, and the sworn testimony of
Linda DeMartini, a top official at BofA. She acknowledged on the
record in a deposition that Countrywide never conveyed the mortgages
to the trusts, and that Countrywide notes “weren’t endorsed except on
a case-by-case basis generally long after securitization ostensibly
occurred.” This would mean that the mortgage-backed securities
composed of Countrywide loans are, in fact, non-mortgage-backed
securities. And Field did the grunt work of looking at the court
records, which back up DeMartini’s claim. None of the 104 Countrywide
notes she looked at in two New York counties were endorsed originally.
Read the whole story, it’s a good one.  [cont’d.]

Smoking Gun on BofA Securitization Fraud
‎Yesterday, ‎June ‎03, ‎2011, ‏‎6:09:34 PM | David Dayen

(photo: woodleywonderworks)

HUD Secretary Shaun Donovan told the LA Times today that a settlement
between top banks and state and federal regulators on foreclosure
fraud would be inked in “a matter of weeks.” HUD has been pretty close
to the settlement talks, so I don’t totally doubt him, though I’m
wondering exactly how many Attorneys General they expect to sign on to
a deal, with Republican AGs distancing themselves and Democratic AGs
undertaking their own investigations. Interestingly, Tom Miller’s
chief spokesman contradicted Donovan quickly after the LAT published,
saying “While we certainly hope we can reach a settlement in a matter
of weeks, we don’t know how long it will take.”

Donovan said flatly that the banks’ offer of $5 billion in penalties
for robo-signing and other fraudulent practices was “unacceptable,”
but made no attempt to give a more acceptable figure (regulators
reportedly made a $25-$30 billion offer initially, and told banks last
week they would be on the hook for $17 billion in civil lawsuits if
they didn’t settle). And how could he offer a figure? There hasn’t
been enough investigation to determine the extent of the abuses. Heck,
Abigail Field did more investigation by herself into Bank of America’s
faulty mortgage docs than probably anyone in the foreclosure fraud
working group negotiating with the banks.

Are Countrywide mortgage-backed securities really mortgage-backed? Do
banks even have the legal right to foreclose on certain homes?

These are just a few of the questions raised since the foreclosure
crisis revealed shoddy mortgage servicing practices at many of the big
banks – practices that have led to countless investigations and
lawsuits. Court testimony by a former Countrywide employee added to
the intrigue last fall, because she confessed that many loans there
weren’t properly handled, bringing into doubt the validity of
Countrywide’s securitization process. Bank of America, which owns
Countrywide, quickly silenced the discussion with firm denials.

But Fortune has examined dozens of court records that corroborate the
employee’s testimony. And if Countrywide’s mortgage securitizations
systematically failed as it appears they did, Bank of America’s
potential liability dwarfs its shareholder equity, as the
Congressional Oversight Panel points out.

Field is referencing Countrywide v. Kemp, and the sworn testimony of
Linda DeMartini, a top official at BofA. She acknowledged on the
record in a deposition that Countrywide never conveyed the mortgages
to the trusts, and that Countrywide notes “weren’t endorsed except on
a case-by-case basis generally long after securitization ostensibly
occurred.” This would mean that the mortgage-backed securities
composed of Countrywide loans are, in fact, non-mortgage-backed
securities. And Field did the grunt work of looking at the court
records, which back up DeMartini’s claim. None of the 104 Countrywide
notes she looked at in two New York counties were endorsed originally.
Read the whole story, it’s a good one.  [cont’d.]

This is a bombshell. If the regulators were in any way competent,
DeMartini’s testimony would have stopped them cold. They would have
engaged in the same analysis as Field, and presented to BofA the stark
truth that they have no ability to foreclose on Countrywide loans that
were securitized, which would lead to all kinds of charges from both
homeowners facing foreclosure, and from investors who were scammed
when they purchased the securities. They would have signaled to the
other banks, who did little different during the bubble, that they had
the goods on them as well. The underlying exposure is massive. That
would be the kind of ammunition needed to force compliance from BofA.
But none of this has been done.

The Obama Administration knows that housing is among the biggest, if
not the biggest, problems with the economy right now. The President
said it in a meeting with House Democrats yesterday. I liked this side
note: “The President said housing was the main thing dragging down the
economy, with Geithner nodding solemnly like they’d done everything
humanly possible for the last 27 months to fix the housing market.”

If the President or Treasury actually wanted to fix the housing
market, the ability to do so is lying in all those court records,
which show the systematic failure of securitization and the massive
exposure the banks hold as a result. This would really help the
economy – foreclosure problems are seen to add 1.25 points to the
unemployment rate, according to one survey. But instead, they’ve
allowed the banks to pick and choose at their discretion who gets a
modification. They’ve allowed the banks to use HAMP as a predatory
lending scheme, to squeeze a few extra payments out of borrowers they
planned to evict anyway. They’ve even allowed banks to continue to
screw even their customers who they gave a modification.

And this “settlement,” whatever it offers, won’t change that fact.


Jake Naumer

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