FedUpUSA

Archive for October 13th, 2010

Hoh hoh hoh….

NEW YORK – JPMorgan Chase’s CEO says the bank has stopped using the electronic mortgage tracking system used by major financial institutions.

Lawyers have argued in court proceedings that the system is unable to accurately prove ownership of mortgages.

They’ve been winning some of those arguments too.

If JP Morgan has pulled out of MERS, they’re done, but more importantly, this sort of no-confidence vote, right into the face of MERS saying all is ok and legal, leaves you with every title they have touched being potentially impaired.

Oh, and on top of that?  Dimon, on the conference call this morning, wouldn’t give a projection on reserves for legal expenses related to Foreclosuregate.

I wonder why not Jamie?

The last bank, and arguably the one that has the most to lose, Wells Fargo, which up until now has fervently denied it engaged in robosigning and thus refused to halt foreclosures, has just been caught red-handed by the FT. In a sworn deposition, which will certainly lead to a foreclosure halt by Warren Buffett’s pet bank, and confirmation that WFC was merely lying like everyone else on Wall Street, the Financial Times has obtained legal documents that prove Wells was merely one of many. Per the FT: “Legal documents obtained by the Financial Times suggest that Wells Fargo, the second-largest US mortgage servicer, also used a “robo signer”. Unlike its rivals, Wells Fargo has not halted foreclosures. The San Francisco-based bank said on Tuesday it was reviewing some pending cases, but it has maintained that it has checks and balances designed to prevent serious procedural lapses.” Now that Wells’ checks and balances end up neither checking nor balancing, perhaps it is time for Charlie Munger to tell the shareholders of Wells to “suck it in“, as the bank is about to be faced with a rather simple dilemma: beg for TARP 2 (and confirm that Munger, and his partner, are nothing but a bunch of pathetic senile hypocrites) and thus more taxpayer bailouts, or see a huge portion of its shareholder value (and thus Charlie Munger’s precious, precious money) about to be wiped out.

In a sworn deposition on March 9 seen by the FT, Xee Moua, identified in court documents as a vice-president of loan documentation for Wells, said she signed as many as 500 foreclosure-related papers a day on behalf of the bank.

Ms Moua, who was deposed as part of a foreclosure lawsuit in Palm Beach County, Florida, said that the only information she verified was whether her name and title appeared correctly, according to the document.

Asked whether she checked the accuracy of the principal and interest that Wells claimed the borrower owed – a crucial step in banks’ legal actions to repossess homes – Ms Moua said: “I do not.”

Ms Moua nevertheless signed affidavits that said she had “personal knowledge of the facts regarding the sums of money which are due and owing to Wells Fargo”. The affidavits were used by the bank in foreclosure proceedings.

Ms Moua added that before reaching her desk, it was her understanding that the foreclosure documents had been reviewed by outside lawyers.

Wells declined to comment on the deposition but said its records show its “foreclosure affidavits are accurate”. The bank added: “When we find team members who do not follow procedure, we fix what is done incorrectly. Until this case is resolved, we should keep in mind that a deposition does not suggest a wrongful foreclosure.”

And with that, the foreclosure moratorium which TurboTaxing Tim so had hoped to avoid, becomes a self-imposed reality…Or is it: to our big surprise we read in the News-Press.com, that despite the banks’ self-imposed moratorium, the foreclosures are, in fact, continuing:

But in Lee County, court records show both of those banks have continued to get court judgments allowing the sale of mortgages on foreclosed houses at public auction.

That’s despite statements from both banks that they stopped doing that about two weeks ago.

April Charney, a Jacksonville-area legal aid attorney who’s an expert on foreclosure issues, said she’s hearing similar reports from around the country.
She scoffed at the banks’ protests that they didn’t intend for the judgments to be issued.

“It’s a farce,” she said. “We’re all being played.”

JP Morgan spokesman Tom Kelly said Tuesday he didn’t know the bank’s attorneys were continuing to get judgments allowing them to go forward with auctions.

Twelve judgments have been issued in Lee for JPMorgan since Oct. 2, the latest on Tuesday, according to court records.

“We reached out to our local foreclosure counsel and asked them to ask the courts not to enter judgments,” Kelly said. “I don’t know what happened there.”

At this point we wonder: will Wall Street ever stop lying to the American public (no), and even when it pretends to do so, will it at least be true to its word for at least a few days. Ultimately, these two questions are far more imporant than whether or not a bunch of documents were filed properly and reside where needed. If 99% of the American population can not have any faith and trust in those who truly rule the country (Wall Street for those who may be confused) then America is one food crisis away (and thanks to Bernanke’s liquidity laxatives we give that a few months at most) from outright social unrest.

ZeroHedge

Now we’re cooking!  From Florida to DOCX and LPS…… say hello to the birdie!
Subpoena DT to Docx L.L.C

subpoenaLPS

Hattip to Weidnerlaw…

The FDIC has a herculean challenge in confronting the too big to fail banks.  There is little doubt that having institutions that are too big is part of the reason for the current systemic crisis.  Yet through the last few years the solution has been to make these banks even bigger allowing their web to spread even further and deeper into the economy.  The FDIC has an insolvent Deposit Insurance Fund (DIF) backing up $13 trillion in banking assets.  And what the banks call assets is simply stunning.  Bank of America for example has $2.3 trillion in assets (or a larger amount than the annual GDP of California).  Yet 41 percent of the assets are backed by loans, predominately real estate loans.

Let us take a look at the breakdown of the $2.3 trillion:

Source:  Bank of America mid-year report

I’m not sure if the public realizes that banks can label loans as assets based on accounting rules.  This would be like calling your auto loan an asset but keep in mind an asset to you is likely a liability to a bank. How many loans are still priced at peak levels here?  Bank of America currently has a market cap of $132 billion.  Let us assume that the loan portfolio is overvalued by 15 percent.  That means we are talking about an overvaluation of $143 billion, enough to wipe out the current market cap.  The current structure of the system is to pretend that the assets in the too big to fail banks are still somehow worth more than what the market will pay.

It is interesting given the current foreclosure moratorium crisis to see where Bank of America dominates:

Bank of America is the number one deposit bank in California and Florida where the biggest bust of the housing market is taking place.  Bank of America has $817 billion in total deposits at their institutions:

Source:  FDIC

Here is where you can see why the pretend game is virtually the only way out at least from the perspective of the banking system.  How in the world will the FDIC insure $817 billion in deposits if they have an insolvent DIF?  Where will the money come from?  If you guessed the taxpayer you would be right.  So in essence the FDIC is merely the intermediary right now between the too big to fail banks and the taxpayer.  It is interesting that in the last few weeks bank failures have slowed down yet the troubled bank list keeps growing.

And Bank of America is only one of many of the too big to fail banks out there:

$7.4 trillion in deposits are in FDIC insured banks.  All this is being backed up by faith and confidence in the system.  This is similar to how banks claim their “assets” are worth more than what the current market will pay for them.

It becomes apparent why none of the too big to fail banks has been taken apart.  The current mechanism in place simply is unable to handle even one bank.  Yet this is absolutely necessary.  Otherwise, the banks will merely get bigger and we will have a bigger crisis down the road.  Nothing will be averted just by keeping the current system in place.  As we are seeing with the negligent work on foreclosure paperwork these banks are unable to gain the confidence of the public.  These are the same banks that charge billions of dollars in overdraft fees and sock customers with charges from every angle.

Yet it might appear that the calm on the FDIC front means something is starting to brew:

“Oct. 8 (Bloomberg) — The Federal Deposit Insurance Corp. has authorized lawsuits against more than 50 officers and directors of failed banks as the agency aims to recoup more than $1 billion in losses stemming from the credit crisis.

The lawsuits were authorized during closed sessions of the FDIC board and haven’t been made public. The agency, which has shuttered 294 lenders since the start of 2008, has held off court action while conducting settlement talks with executives whose actions may have led to bank collapses, Richard Osterman, the FDIC’s acting general counsel, said in an interview.

“We’re ready to go,” Osterman said. “We could walk into court tomorrow and file the lawsuits.”

Time to get some of the money that was made by the banks during the crisis and regain some of those ill gotten profits.  These banks were bailed out by the taxpayer and have done nothing but enrich their bottom line while the middle class has been dismantled over the last decade.  It seems like the public is finally wising up to the key culprit of the crisis here.

My Budget360

Discussion about the true issues related to Foreclosuregate – gee, we bloggers were in front of this, but finally, after hammering on the issue for more than a year with MERS, and more than three and a half in total, we are getting some mainstream media coverage.

My only question: What the hell took you so long?  Sticking your head in the sand at the direct behest and perhaps orders of your corporate backers – until you couldn’t any more?

HERE IT COMES FOLKS – WATCH THIS CAREFULLY, ESPECIALLY AROUND 3:30 ONWARD.

Now add to this that it is being reported that JP Morgan/Chase – one of the founders of MERS – has walked away from it.  If the legs under that stool get kicked out all of the MBS trusts created using this mess are recognized as being invalid and over $6 trillion dollars of this crap, including a whole lot of Fannie and Freddie paper along with virtually all private-label MBS - all blows up at once.

No, The Fed can’t contain that, and neither can the Government.  Not in their wildest dreams can they put a cork in the litigation alone, say much less the rest.

We have to fix this folks, and I’ve put forward a way to do it.  But we damn well better get started and do it right damn now, along with dropping injunctions on the lot to prevent it from being detonated before we can dismantle it, because it doesn’t take much of the support for this system to be kicked out before you get a chain reaction, much like the old experiment in a room with a thousand set mousetraps into which one tosses a couple of ping-pong balls.

There are speculative investors out there who will trigger this intentionally (and make a hell of a lot of money doing it too) if we don’t put a cork in this, even if putting that cork in it requires that we “resolve” the big banks (and it does.)