FedUpUSA

Very interesting hearing.  But the most-interesting part of it is right here….

The largest and most complex harm that may exist with the loans in default or foreclosure today is that the paperwork for the loans was not transferred correctly. I emphasize that what constitutes a correct transfer is a gray area; we need more direction from courts and legislatures on this subject. But there are plausible legal claims that the transfers of the notes and mortgages were not effective to give the trust full enforcement rights.

Uh, yep.  That’s the short version of where the problem lies…..

And it only gets better….

The implications of problems with transfer are serious. If the trust does not have the loan, homeowners may have been making payments to the wrong party. If the trust does not have the note or mortgage, it may not have standing to foreclose or legal authority to negotiate a loan modification. To the extent that these transfers are being completed retroactively, it raises issues about honesty in creating and dating the assignments/transfers and about what parties can do, if anything, if an entity in the securitization chain, such as Lehman Brothers or New Century, is no longer in existence. Moreover, retroactive transfers may violate the terms of the trust, which often prohibit the addition of new assets, or may cause the trust to lose its REMIC status, a favorable treatment under the Internal Revenue Code. Chain of title problems have the potential to expose the banks to investor lawsuits and to hinder their legal authority to foreclose or even to do loss mitigation.

And you thought that was it?  Oh no….

Another type of lawsuit risk is that consumers are able to sue the current holder of their note for violations that occurred at origination. Normally, these complaints fail because the holder of the note is thought to be a “holder in due course,” a person that receives protection from most of the claims that someone could bring against the originator of the note. However, if the notes do not meet the requirements of negotiable instruments, there cannot be a holder in due course. The person with the note merely is the possessor “bearer paper,” and can be sued for all wrongs associated with that note contract.

Now do you understand why nobody wants to come forward with the paper?  Well gee, what if the Trusts or worse servicers wind up with successor liability for the wrongs committed by the LENDERS?  (The trustees tend not to have much money – the servicers, on the other hand, are all the big banks…. oi!)

Finally, I want to share with the Panel that the lawyers that I have met over years of my research on mortgage servicing—both creditor lawyers and debtor lawyers—have nearly universally expressed that they believe a very large number (perhaps virtually all) securitized loans made in the boom period in the mid-2000s contain serious paperwork flaws, did not meet underwriting or other requirements of the trust, and have not been serviced properly as to default and foreclosure.

Oh, it’s not “just some paperwork” eh?  Yeah.

The second type of lawsuit that seems certain to follow the exposure of the flawed foreclosure procedure is a claim by investors that problems at loan origination, including a lack of paperwork to support a valid foreclosure, or mortgage servicing mishaps have increased their losses. These suits most obviously will seek to force the banks to “buy back” or “repurchase” loans that were improperly placed into a particular trust for securitization or were improperly originated. Investors could also argue for money damages for lost revenue stream or breach of fiduciary duty by the trust or the servicer to exercise good judgment in favor of in investors’ interests. These suits could be incredibly expensive for banks, requiring the payments of large claims to make investors whole and to satisfy the plaintiffs’ attorneys who will bring such cases.

Yep.  And those suits are just getting started.

But America does not have to continue in a “crisis.” We do not have to tolerate abuse of the legal system, systematic errors, bloated fees, and chaos in the housing and financial sector.

THANK YOU.

Now, let’s see the law come in and do the right thing.

We’re well beyond the point where this should have occurred, but all good movements start with one step.

And here’s the money quote:

If you don’t have time for three hours of testimony and questioning, you only need to listen to the this short little clip to “get it.”

Still think this is a

eh?

Ok.

Bestaluck on that.

Hoh hoh hoh….

Some interesting points in here….

First, the Court requires proof of the grant of authority from the original mortgagee, CAMBRIDGE HOME CAPITAL, LLC (CAMBRIDGE), to its nominee, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), to assign the subject mortgage and note on March 16, 2009 to INDYMAC FEDERAL BANK, FSB (INDYMAC). INDYMAC subsequently assigned the subject mortgage and note to its successor, ONEWEST, on May 14, 2009.

This was a portfolio’d loan?  Why do I have a problem believing that?  If – and I stress if – this was a portfolio loan, then ok.  If not, well, then there’s a few other assignments that have to be in there somewhere.  But wait a second… Cambridge appears to still exist!  Is this the same Cambridge?  If so, what (the fuck) do we have here?

You can’t possibly be serious….. Today, in 2010, we still have NINJA loans?  Oh, and for good measure, we have I/Os (bad enough) and worse, no-ratio loans (which I would argue are presumptively entered into in bad faith, as there is no attempt made to determine ability to pay.)

In any event, the Judge is demanding proof of provenance of the note.  Good!  It’s about damn time that someone started insisting that people coming to court asking for a security interest be enforced prove that they actually have one!

Then there’s this:

In the instant action, Ms. Johnson-Seck claims to be: a Vice President of MERS in the March 16, 2009 MERS to INDYMAC assignment; a Vice President of INDYMAC in the May 14, 2009 INDYMAC to ONEWEST assignment; and, a Vice President of ONEWEST in her June 30, 2009-affidavit of merit. Ms. Johnson-Seck must explain to the Court, in her affidavit: her employment history for the past three years; and, why a conflict of interest does not exist in the instant action with her acting as a Vice President of assignor MERS, a Vice President of assignee/assignor INDYMAC, and a Vice President of assignee/plaintiff ONEWEST. Further, Ms. Johnson-Seck must explain: why she was a Vice President of both assignor MERS and assignee DEUTSCHE BANK in a second case before me, Deutsche Bank v Maraj, 18 Misc 3d 1123 (A) (Sup Ct, Kings County 2008); why she was a Vice President of both assignor MERS and assignee INDYMAC in a third case before me, Indymac Bank, FSB, v Bethley, 22 Misc 3d 1119 (A) (Sup Ct, Kings County 2009); and, why she executed an affidavit of merit as a Vice President of DEUTSCHE BANK in a fourth case before me, Deutsche Bank v Harris (Sup Ct, Kings County, Feb. 5, 2008, Index No. 35549/07).

Oh, you mean that our fair Judge would also like Ms. Robosigner to explain who she gets paid by, how she gets paid, and more importantly, how she can overcome what appears to be a clear conflict of interest.

Shortly after Labor Day, as polls continued to sink, the Democratic National Committee (DNC) realized it needed a cash infusion for the upcoming midterm elections. Its chairman, former Virginia Governor Tim Kaine, turned to the Bank of America to secure a $15 million revolving credit line. Then, in the middle of this month, the Democratic Congressional Campaign Committee (DCCC) got another loan from BofA for an additional $17 million.

Problem: Was the loan adequately collateralized – that is, truly “arms length”?

Worse: Two days before the loan was closed, the DNC apparently changed its privacy policy – it appears they may have effectively pledged their donor and contact lists without the consent of most of the people on them!

The DNC loan agreement as posted online by the Federal Election Commission (FEC) and signed by former Virginia Governor Tim Kaine (D) on September 16, 2010, says the loan collateral included: “All electronic mail (‘E-mail’) addresses and other contact lists, records and other Information (electronic or otherwise) relating to contributors, supporters and subscribers owned by any of the Borrowers.” The borrowers in this case were the DNC and the DNC Services Corporation.

The loan agreement further stipulates that if the Democrats defaulted, Bank of America would be entitled to “proceeds from any fundraising activity, refunds, reimbursements, or proceeds from the rental or sale of mailing, contact or subscription lists or Information (electronic or otherwise).”

WHAT?!

More to the point, are those lists worth anywhere near the amount of these loans?

Because if they’re not, then the loan could be ruled a DONATION to the DNC, and that, coming from the bank, would be black-letter illegal.

Gee, given that Bank of America is accused of serious due process violations related to foreclosures, and has admitted to 102,000 “robosigned” documents which can be argued is an admission of the commission of 102,000 counts of perjury, do we have an appearance of bribery to go with the appearance of an illegitimate “campaign donation”?

BAC, incidentally, denies this is an improper transaction.  Of course with The Democrats running the Administration, what do you think the odds are of an impartial look at this from the FEC?

Despite examples of the success of restructuring with F and even General Motors, the invidious cowards who inhabit Washington are unwilling to restructure the largest banks and GSEs. The reluctance comes partly from what truths restructuring will reveal.

Indeed.  Were we to actually open the box and have a look inside, we would find chocolate-covered dog turds.  Lots of them.  We would discover that they were intentionally brokered and sold to investors worldwide, and that just like Citibank, the GSEs knew by 2006 that huge percentages of the production through the entire financial system was fraudulent. 

The sad part is that the truth is now actually out there in the record, under oath, in the form of testimony before the FCIC.  Pretending at this point is a waste of time and effort – there is nothing that can be done to avoid reality showing up.  Obama and friends are now fighting a rear-guard action, and the inevitable flanking attack is going to come.  When it does, the pretense will vanish in a puff of smoke.

As a result, these same large zombie banks and the U.S. economy will continue to shrink under the weight of bad debt, public and private. Remember that the Dodd-Frank legislation was not so much about financial reform as protecting the housing GSEs.

Indeed.

Because President Barack Obama and the leaders of both political parties are unwilling to address the housing crisis and the wasting effects on the largest banks, there will be no growth and no net job creation in the U.S. for the next several years. And because the Obama White House is content to ignore the crisis facing millions of American homeowners, who are deep underwater and will eventually default on their loans, the efforts by the Fed to reflate the U.S. economy and particularly consumer spending will be futile. As Alan Meltzer noted to Tom Keene on Bloomberg Radio earlier this year: “This is not a monetary problem.”

Barack Obama, just as with John McCain and both political parties, do not give a damn about the American public.  They do not care about the massive frauds perpetrated on them.  They could care less, so long as their banking cronies get bailed out and can continue to pretend they have “good assets”, even though what they really have on their balance sheets is rotting fish.  The underlying fraud in these “products” is being ignored because to do otherwise would be to admit that the banking system committed millions of chargeable felonies – and that would require that each and every one of these firms be shut down and their executives imprisoned.

Forget Treasury Secretary Tim Geithner lying about the relatively small losses at American International Group (AIG), the fraud and obfuscation now underway in Washinton to protect the TBTF banks and GSEs totals into the trillions of dollars and rises to the level of treason. And the sad part is that all of the temporizing and excuses by the Fed and the White House will be for naught. The zombie banks and GSEs alike will muddle along until the operational cost of servicing bad loans engulfs them. Then they will be bailed out — again — or restructured.

But who will charge Treason?  Nobody.  The people are watching Bristol Palin on Dancing with the Stars and NFL Monday Night. 

It’s truly amazing to watch someone get financially raped on a daily basis and then argue over whether we should have prayer in the schools.  The last time I checked, if you’re homeless and penniless, all these other political issues are rather immaterial to your life. 

Idiocracy has nothing on the average American.  We simply don’t want to sit down with a pencil and paper and figure this stuff out.  You can’t borrow your way to prosperity – all you do with borrowing is spend tomorrow’s earnings today.  That’s it. 

But when tomorrow comes you already spent the money.  Now you wind up having to do it again, or you must pull back.  So you do it again.  But that borrowing comes with an interest cost too, which means you always enjoy a lower standard of living over time by borrowing – always. 

But now the larger lenders are sinking under the weight of rising servicing costs, falling asset returns and other problems linked to mortgage securitizations. So while the Fed continues to try to revive the largest banks via massive monetary ease, the FOMC is at the same time preparing to do further damage to solvent lenders, insurers and other investors via QE2.

The IRA has spoken to a number of executives in banks and life insurance companies about the impact of QE and Fed zero interest rate policy on their income statements and balance sheets. The universal message: If rates do not return to “normal” levels by year-end, the pain in terms of reduced earnings on assets and the resultant negative cash flow will start to become so apparent that the financial markets will actually notice. In particular, we have been told that by year end several of the largest publicly traded banks and life insurers could show significant declines in net interest earnings due to QE — declines driven by falling net interest income that may provoke ratings downgrades. And when this next systemic crisis comes — whether in December or later in 2011 — the full blame will belong to the members of the Bernanke Fed and the Obama Administration.

That’s a polite way of saying that insurance companies and pension funds are going to start getting screwed in ways they can no longer hide.

This has been part of my message since Bernanke started with his “easing” – “easy money” always screws the saver.  And while people chortle that the money “forced into the market” helps GDP (because it is spent) and thus will allegedly pump the stock market it is inherently damaging to pension funds and insurance companies, because those institutions rely on the ability to grow money via safe interest payments to meet their obligations – and those obligations are to YOU.

Thus the pump in the market is short term, and is eventually followed by the realization that these institutions cannot pay out what was promised.  When that realization comes to the fore the collapse in valuations is immense, simply as reversion to reality.

There’s more in here, and you should read it.  In particular, the issue of mortgage insurers – you know, the old monolines that have been on a tear in the market of late?  Yeah, those guys.  The guys who apparently, if IRA is correct, are not paying claims even though the GSEs force you to buy their product if you’re not putting 20% down.  Instead of simply refusing to write business with less than 20% down, they’re instead funneling your money to keep the artifice afloat, even though claims aren’t being paid out – and it is a near-certainty you, in fact, are buying nothing.

As Chris says:

In each case the substance of the transaction is to falsify the financial statements of the participants. And in each case, the acts are arguably criminal fraud. And in the case of the zombie banks, the GSEs and the MIs, the fraud is being actively concealed by Congress, the White House and agencies of the U.S. government led by the Federal Reserve Board. Is this not tyranny?

Of course it is.

But heh, Dancing With The Stars is on, even if we’re all broke in America.

So instead of doing what we should – demanding of politicians that they take these organizations into receivership and their executives into custody, we instead will go searching for another stick for our teeth – because we bit through the last one yesterday.