When are we going to see law enforcement actually enforce laws?

She died in 1995. Yet her signature later appeared on thousands of affidavits submitted by one of the nation’s largest debt collectors, Portfolio Recovery Associates Inc., in lawsuits filed against borrowers.

Some regulators complain that the use of Ms. Kunkle’s name reflects an epidemic of mass-produced, sloppy and inaccurate documentation in the debt-collection industry.

Complain?  Sloppy?  Inaccurate?

Perjury is a felony!

And using the signature of a dead person sure looks like perjury to me (can’t swear to what you can’t see because you’re dead!) along with “uttering” – that is, forgery. 

It has to be forgery since the person is dead, right?

“When you see corner-cutting like this, it’s alarming,” Minnesota Attorney General Lori Swanson said about the Kunkle case.

Corner-cutting?

The State Attorney General for Minnesota calls this corner-cutting?

I guess robbing a bank in your jurisdiction would be “corner cutting” when it comes to acquisition of money, right?  It’s just an easier way to get money than actually earning it honestly. 

Law enforcement, including attorneys’ general, sucking off banksters and their cohorts in the “debt collection” industry is an outrage.  These are not “cut corners” they’re apparent felonies and must be investigated and prosecuted as exactly that.

What The Attorneys General of this nation at both Federal and State level have proved, beyond any reasonable doubt, over the last three years is this:

There is no longer a rule of law in this nation and there are no longer law-enforcement agencies that will enforce the law when the party harmed is an ordinary citizen.   None.  Neither political party will bring a single felony-level charge against these jackals.

I leave to the reader’s own determination what sort of response is appropriate in light of the continuing documentation that willful and intentional refusal to investigate and prosecute apparent felonious acts is not an isolated incident but rather has become the standard and expected procedure and response by alleged “law enforcement” at the highest levels of our government when it comes to those firms, including but not limited to banks and collection agencies.

Laguna Beach, California – Deception in the financial markets is not always costly, but it is rarely remunerative. Investors cannot afford to ignore this tendency.

Recent disclosures from the Federal Reserve reveal that honesty was one of the earliest casualties of the 2008 financial crisis. These disclosures contain a number of juicy tidbits, like the fact that Goldman Sachs received tens of billions of dollars in direct and indirect succor from the Fed.

Thanks to these spectacularly large taxpayer-funded bailouts, Goldman was able to continue “doing God’s Work” – as CEO Lloyd Blankfein infamously remarked – like the work of producing billion-dollar trading profits without ever suffering a single day of losses.

Thanks to the Fed’s massive, undisclosed assistance, Goldman Sachs managed to project an image of financial well-being, even while accessing tens of billions of dollars of direct assistance from the Federal Reserve.

By repaying its TARP loan, for example, Goldman wriggled out from under the nettlesome compensation limits imposed by TARP, while also conveying an image of financial strength. But this “strength” was illusory. Goldman repaid the TARP loans with funds it procured days earlier from the Federal Reserve. Then, over the ensuing months, Goldman recapitalized its balance sheet by selling tens of billions of dollars of mortgage-backed securities to the Fed.

And the public never knew anything about these activities until two weeks ago, when the Fed was forced to reveal them.

In a free-market economy, certain precepts seem fundamental…and essential:

1) Taxpayers have a right to know who’s spending their money.
2) Dollar-holders have a right to know who’s debasing their money.
3) Investors have a right to know who’s cheating them out of their money…by hiding the truth.

All three camps have a very large and legitimate bone to pick with the Fed’s secret bailouts of 2008 and 2009. But let’s consider only the case of the deceived investor…

Secret bailouts do not merely benefit recipients; they also deceive investors into mistaking fantasy for fact. Such deceptions often punish honest investors, like the honest investors who sold short the shares of insolvent financial institutions early in 2009.

Some of these investors had done enough homework to understand that no private-market remedy could ride to the rescue of certain financial firms. Therefore, these investors sold short the shares of certain ailing institutions and waited for nature to take its course. But the course that nature would take would be shockingly unnatural. We now know why. The Federal Reserve altered the course of nature, and did so without telling anyone.

Many of the investors who sold short ailing financial firms in 2009 were alert to the possibility that bailouts by the Federal Reserve could change the calculus. In other words, the Fed could make the bearish case less bearish…at least temporarily. Therefore, many of these investors studied the Federal Reserve’s disclosures, as well as corporate press releases, in order to quantify the Fed’s influence.

Based on all available public disclosures, the story remained fairly grim into the spring of 2009. Accordingly, the short interest – i.e., number of shares sold short – on Goldman Sachs common stock hit a record 16.3 million shares on May 15, 2009 – about 3.3% of the public float. But over the ensuing six months, Goldman’s stock soared more than 30% – producing roughly $500 million in losses for those investors who had sold short its stock. Not surprisingly, the total short interest during that timeframe plummeted to less than 6 million shares, as short-sellers closed out their losing positions.

Was it just bad luck? Or was something more nefarious at work here?

Let the reader decide. But before deciding, let the reader carefully examine the chart below, while also carefully considering a selection of public announcements from Goldman Sachs during this timeframe.

Based upon contemporaneous public disclosures, Goldman Sachs was “forced” by the Federal Reserve to accept a $10 billion loan from the TARP facility in October 2008. But Goldman’s top officers repeatedly – and very publically – bristled under the compensation limits the TARP loan imposed.

Therefore, as early as February 5, 2009, Goldman’s chief financial officer, David Viniar, remarked, “Operating our business without the government capital would be an easier thing to do. We’d be under less scrutiny…” And on February 11, 2009, CEO Blankfein magnanimously remarked, “We look forward to paying back the government’s investment so that money can be used elsewhere to support our economy.”

But at that exact moment, we now know, Goldman was operating its business with at least $25 billion of undisclosed “government capital.”

In April, 2009, The Wall Street Journal observed, “Goldman Sachs group Inc., frustrated at federally mandated pay caps, has been plotting for months to get out from under the government’s thumb… Goldman’s managers have a big incentive to escape the state’s clutches. Last year, 953 Goldman employees – nearly one in 30 – were paid in excess of $1 million apiece… But tight federal restrictions connected to the financial-sector bailout have severely crimp the Wall Street firm’s ability to offer such lavish pay this year.”

On May 7, 2009, a Goldman press release states: “We are pleased that the Federal Reserve’s Supervisory Capital Assessment Program has been completed… With respect to Goldman Sachs, the tests determined that the firm does not require further capital… We will soon repay the government’s investment from the TARP’s Capital Purchase Program.”

On June 17, 2009, Goldman finally got its wish, thanks to some timely, undisclosed assistance from the Federal Reserve. Goldman repaid its $10 billion TARP loan. But just six days before this announcement, Goldman sold $11 billion of MBS to the Fed. In other words, Goldman “repaid” the Treasury by secretly selling illiquid assets to the Fed.

One month later, Goldman’s CEO Lloyd Blankfein beamed, “We are grateful for the government efforts and are pleased that [the monies we repaid] can be used by the government to revitalize the economy, a priority in which we all have a common stake.”

As it turns out, the government continued to “revitalize” that small sliver of the economy known as Goldman Sachs. During the three months following Goldman’s re-payment of its $10 billion TARP loan, the Fed purchased $27 billion of MBS from Goldman. In all, the Fed would purchase more than $100 billion of MBS from Goldman during the 12 months that followed Goldman’s TARP re-payment.

Did private investors not have the right to know that the Federal Reserve was secretly recapitalizing Goldman’s balance sheet during this period? Did they not deserve to know that the Fed’s MBS buying was producing Goldman’s “perfect” trading record during this timeframe?

Yes, would seem to be the obvious answer.

“There’s a saying in poker: If you don’t know who the patsy is at the table, it’s you,” observes Henry Blodget, the once and again stock market analyst, “Next time you feel like bellying up to the Wall Street poker table, therefore, ask yourself again who the sucker is.”

To be continued…

Regards,

Eric Fry for The Daily Reckoning

In a series of pieces I have argued that MERS, a creation of the mortgage banking industry, has effectively destroyed the institution of private property in America. See here. Ironically, MERS was created to facilitate quick and easy and cheap securitization of mortgages—what are called mortgage-backed securities. In fact, what it did was to eliminate any backing of the securities by mortgages. Of the total securitized asset universe, something like $7 trillion are (supposedly) backed by residential mortgages. However, MERS helped to delink the securities from the mortgages. At best, they are unsecured debt—there is no property backing the securities. What this means is that foreclosure is not permitted. As I have said before, it is likely that most or even all foreclosures occurring in the US are illegal seizures of property—home thefts. We are talking about 100,000 completed home thefts per month, with another 250,000 new foreclosures started to steal homes every month. Projections are that 13 million homes will have been “foreclosed” (read: stolen) by 2012.

Worse, from the perspective of the banks, they’ve got to take back all the fraudulent MBSs, most of which are toxic.

In what follows I want to present the most favorable case for the mortgage industry. That is to say, I will ignore fraud and criminal conspiracies. Let us look at the current predicament as if it resulted from a series of monumental errors. With that in mind, what is the best-case scenario? First a caveat: I am not a lawyer nor am I an investigative reporter. I have relied on my perusal of reported evidence, plus a discussion with James McGuire who has put together an entirely convincing argument that the securitizations of mortgages resulted in securities that are not backed by mortgages. I urge interested readers to go to his website.

With that caveat, let us work through the problems now facing the banks.

1. A valid “mortgage” requires a (“wet signature”) note and a security instrument; these must be kept together, and any subsequent transfer of lien rights to the security instrument must be recorded at the appropriate public office. The mortgage note must be properly indorsed each time the mortgage is transferred. In the era of securitized mortgages this can be a dozen times or more. If ever presented for foreclosure, endorsements should demonstrate a clear chain of title, from origination through to foreclosure; and this should match the records at the public office.

2. MERS intended to provide an electronic registry of all mortgages. By appointing a “vice president” in every financial firm, it believed that all transfers of lien rights among these firms were “in house”. Hence it operated on the belief that no subsequent public recording was necessary, and no further endorsement of the mortgage note was necessary for in-house transfers of the payment intangible as it kept a record of transfers of the mortgage. It claimed to be a nominee of these firms (purported to hold the mortgage) but also to be the holder of the mortgages including the “Unidentified Indorsees In Blank”—mortgages that were never properly endorsed over to purchasers. We know, however, that MERS recommended that mortgage servicers retain notes, so MERS’s claim to be the holder rests on its claim that appointed VPs are employees. But these employees are not an agent/employee of the “Unidentified Indorsee In Blank”, nor are they paid by MERS or in any way supervised by MERS.

3. This practice is in violation of numerous laws. Property law requires filing sales in the public record. Notes must be affixed (permanently) to the security instrument—a mortgage without the note has been ruled a “nullity” by the Supreme Court. MERS’s recommended business practice (with the servicer retaining the note) would make the mortgages a “nullity”. A complete chain of title is required to foreclose on property—every sale of a mortgage must be endorsed over to the purchaser, and properly recorded. Without this, it is illegal to foreclose on property—no matter how many payments the homeowner has missed.

4. However, if the notes can be found and if MERS can provide records, it is possible that the mortgages can be made valid (“proved up”) for purposes of collecting upon the indebtedness, but foreclosure would not be possible without a valid continuous perfected mortgage showing a chain of title from origination through to the current party trying to enforce the mortgage note. Any break in the chain of indorsements along with any break in the chain of title renders the Power of Sale clause in the security instrument to be a nullity and therefore no party can foreclose on the real property. So long as there is no fraud affecting the mortgage note, then rights to enforce the indebtedness can be further negotiated. If there is no break in the chain, when fraud is shown affecting the security instrument (such as robosigners, etc), this does not affect the rights to enforce the mortgage note–but such fraud will affect the validity of the security instrument perhaps making foreclosure impossible. Fraud affecting the mortgage note would affect the right to foreclose.

5. If the notes cannot be found and a Lost Note Affidavit can not reestablish the indebtedness, then foreclosure is not possible and collecting of the indebtedness is also not possible. Homeowners still can be sued for collection of owed moneys upon a “proved up” note or lost note affidavit but a current perfected lien is required to foreclose.

6. However since the mortgage-backed securities are governed by PSAs (pooling and service agreements), the practices above make the securities unsecured debt and there is no solution. The securities are no good. (This would be a Representation & Warrant violation as the MBSs stated that a secured indebtedness was to be purchased, but since the Trustees of the securitization would not have the notes, the securities cannot be “secured”.)

What does all this mean? In plain simple language, the banks are royally screwed. They cannot foreclose on the properties. Holders of the “mortgage-backed” securities can turn them back to the banks because they are actually unsecured debt. In previous pieces I have also explained why MERS’s recommended practice also violates US tax code—so back taxes are owed. And we know that the mortgages stuffed into the securities did not meet the “reps” of the PSAs.

So, in short, banks have got to take the whole lot of toxic waste securities back. Trillions of dollars worth. The banks are toast. There is no cooking of the books that will turn this blackened toast back to bread.

About the author:  L. Randall Wray is a Professor of Economics, University of Missouri—Kansas City. A student of Hyman Minsky, his research focuses on monetary and fiscal policy as well as unemployment and job creation. He writes a weekly column for Benzinga every Thursday.

He also blogs at New Economic Perspectives, and is a BrainTruster at New Deal 2.0. He is a senior scholar at the Levy Economics Institute, and has been a visiting professor at the University of Rome (La Sapienza), UNAM (Mexico City), University of Paris (South), and the University of Bologna (Italy).

BenZingA

Secondly, the homeowner can also file a civil suit against the banks for fraud, and make them prove they are the rightful owner of the note who is authorized to foreclose on the homeowner’s property.

The storyline being sold to the American public by the White House and the corporate mainstream media is that the economy is growing, jobs are being created, corporations are generating record profits, consumers are spending and all will be well in 2011. The 2% payroll tax cut, stolen from future generations to be spent in 2011, will jumpstart a sound economic recovery. Joseph Goebbels would be proud.

      PROPAGANDA MINISTERS

It was another wise old man named Ben Franklin who captured the essence of what those in control are peddling:

“Half a truth is often a great lie.”

The economy is growing due to unprecedented deficit spending by the government, fraudulent accounting by the Wall Street banks, the Federal Reserve buying $1.5 trillion of toxic mortgage “assets” from their Wall Street owners, various home buyer and auto tax credits and gimmick programs, and Fannie, Freddie, and the FHA accumulating taxpayer loses so morons can continue to purchase houses. Jobs are being created. According to the BLS, we’ve added 951,000 jobs since December 2009, an average of 79,000 per month. Of course, the population of the US is growing at 175,000 per month. It seems that there are millions of jobs being created, just not here as shown on these graphs from the NYT.

The storyline of corporate profits is true. As a percentage of national income, corporate profits are 9.5%. They have only topped 9% twice in history – in 2006 and 1929. When you see the paid Wall Street shills parade on CNBC every day proclaiming the huge corporate profit growth ahead, keep these data points in mind. Do profits generally rise dramatically from all time peaks? 

You might ask yourself, if corporations are doing so well how come real unemployment exceeds 20%? The answer lies in who is generating the profits and how they are doing it. It seems that the fantastic profits are not being generated by domestic non-financial companies employing middle class Americans producing goods. Pre-tax domestic nonfinancial corporate profits are not close to record levels as a share of national income. They exceeded 15% of national income once in the late 1940s, and repeatedly topped 12% in the 1950s and 1960s; in the third quarter of this year, they were 7.03% of national income. I wonder who is making the profits.

According to BEA data, financial industry profits and “rest of world” profits — that is, the money U.S.-based corporations make overseas — are relatively much higher now than they were in the 1950s or 1960s. And the taxes paid by corporations are much lower now than they were then, as a share of national income. The reason that corporate profits are near their all-time highs is that Wall Street corporations and mega multinational corporations are making gobs of loot and paying less of it out in taxes. Isn’t that delightful for the CEOs and top executives of these companies?

The profits are being generated on Wall Street through collusion with the Federal Reserve, as the insolvent Wall Street banks accept free money from the Federal Reserve to generate speculative profits at the expense of senior citizens earning .20% on their CDs. The mega-multinationals are ”earning” their profits by continuing to ship American jobs overseas at a record pace. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute’s senior international economist. “There’s a huge difference between what is good for American companies versus what is good for the American economy,” says Scott. The hollowing out of the American economy has been going on for decades and despite the usual rhetoric out of Washington DC, it continues unabated today.

But consumer spending has surged, so the recovery must be solid and self-sustaining say the brainless twits on CNBC. Consumer spending is rising because the top 1% wealthiest Americans are doing splendidly as they are now reaping 20% of the income in the country, levels last seen in 1929. The Haves have more, the Have Nots have less. The top 10% wealthiest Americans own 98.5% of all the stocks in the country. They feel richer because Ben Bernanke has propped up the stock market with trillions of borrowed money from future generations. The other 90% of Americans have stagnant or non-existent wages, rising costs for fuel and food, falling home prices, rising debt levels and little hope for the future. They have been thrown a bone of extended unemployment bennies, a temporary payroll tax cut, and extended tax cuts. Any spending they are doing is on credit cards as the austerity deleveraging storyline is another big lie by the MSM.

Greater Depression 

The figure of 15 million unemployed reported by the government and regurgitated by the corporate media is one of the biggest lies in the history of lies. The real figure is 30 million and I will prove it using the government’s own data. I created the chart below from BLS data (ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt) to prove that we are in the midst of a Greater Depression and no amount of spin by politicians and the media can wish it away. When we look at jobs in America across the decades, a picture of a country in decline, captured by financial elites, reveals itself. In 1970, America still produced goods, ran trade surpluses, and paid wages that allowed families to thrive with only one parent working. Only 34.6% of the population was employed, with a third of these workers producing goods. 

Whether it was due to the woman’s movement of the 1970s or due to financial necessity, the percentage of the population employed grew relentlessly until it reached 46.8% in the year 2000. The level of 46.8% meant that when the opportunity to be employed was available, this percentage of Americans wanted a job. Since 2000 the population of the U.S. has grown by 28.9 million people. The labor force between the ages of 18 and 64 has grown by 26.1 million people since 2000. The government insists that millions of Americans have chosen to “leave the workforce” and should not be considered unemployed. This is laughable. Why would people choose to leave the workforce when wages are stagnant, retirement looms, prices relentlessly rise, and they are drowning in debt? The truth is that at least 46.8% of the population wants to be employed. That means that 145.2 million Americans would be working if they had the chance. Only 130.5 million are currently employed. This means that there are really 30 million Americans unemployed versus the 15 million reported by the government and MSM.

Not only is the country short 30 million jobs, but the type of jobs reveal a country of paper pushers, consultants, temp workers, government drones, waitresses, and clerks. The chart below shows the distribution of jobs through the decades. 

In 1970, jobs in the goods producing industries made up 31.2% of all jobs. Today, they account for 13.8% of all jobs. The apologists will proclaim that corporate America just got phenomenally more efficient and productive. That is another falsehood. In 1970, we were a net exporter, consumer expenditures accounted for 62.4% of GDP, and private investment accounted for 14.7% of GDP. Today, we consistently run $500 billion to $700 billion annual trade deficits, consumer expenditures account for 71% of GDP, and private fixed investment is a pitiful 11.5% of GDP. We’ve degenerated from a productive goods producing society to a consumption based, debt fueled society. This is a classic late stage trait of declining empires. Rome and Britain before us experienced similar declines.  

The most damning facts that can be garnered from the BLS data relate to how we’ve become a nation of bankers, real estate agents, accountants, lawyers, tax specialists, and fast food fry cooks. Manufacturing jobs have dropped from 25% of all jobs in 1970 to less than 9% today. Jobs in the spreadsheet generating, credit default swap creating, subprime mortgage pushing, frivolous lawsuit filing, tax evasion sector of the economy went from 12% in 1970 to 19% today.

The misinformation and lies will continue. The MSM keeps repeating that jobs are coming back. You don’t hear which jobs. Hysterically, the four fastest growing job categories according to the BLS are:

1. Administrative and support services
2. Food services and drinking places
3. Couriers and messengers
4. Performing arts and spectator sports

The well paying goods producing jobs are never coming back. American manufacturing jobs have been shifted overseas for more than two decades by corporate America. Now those jobs have become more sophisticated, like semiconductors, software and even medical and finance.  The American middle class is relegated to being McDonalds fry cooks, Wal-Mart greeters, and temp workers. What has happened to the American middle class was not an accident. The wealth of the country has been pillaged by an elite group at the very top of the economic food chain, who were able to reap the rewards of globalization (outsourcing American jobs), manipulate the debt based financial system through synthetic fraud products, and avoid taxes by hiring thousands of lawyers, accountants and tax consultants. When you hear that the rich need lower taxes, corporate taxes are too high and increased productivity is great for America, remember what they have done to the country since 1970. If corporate America and its leaders continue to reap obscene profits while the middle class falls further into the abyss, societal unrest will beckon.

The Burning Platform

All I can say is “yep, yep and yep.”

With all of the press robo-signing has gotten, it is a bit surprising that everyone is having such a hard time concluding whether these practices effect California foreclosures. My assistant even said to me today, “but the banks say that it doesn’t matter because California is non judicial.”

Because the topic has not gotten the treatment it deserves, I will gladly do the job. The following are by no means a complete list, but are the most clear LEGAL reasons (setting aside pure moral questions and the U.S. Constitution) that the Robo-Signer Controversy will lead to massive litigation in California.

In short, Robo Signers are illegal in California because good title cannot be based on fraud, robo signed non judicial foreclosure sales are void as a matter of law, the documents are not able to be recorded in California if they are not notarized, which we know was often not done properly, and finally, because they robo signed forgeries ARE intended for judicial proceedings, including evictions and bankruptcy relief from stay motions.

Mr. Rooney, the author, is a real lawyer who works in this area.  His analysis (as a matter of fact and law) matches mine as a non-lawyer – that is, you can’t base something on a fraud, and thus that which flows from that fraud is legally void as if it never happened.

If I sell you something and you “pay” me with counterfeit currency the sale is void as you never gave actual consideration.  Not only did you commit a felony passing the bad currency but as a matter of basic contract law since you never provided the consideration you promised in the original bargain passage of ownership of the thing you bought never happened.  You may have physical possession but you obtained through a fraudulent artifice and as such the conveyance is void.

I am regularly surprised at how many people of otherwise-reasonable intelligence and understanding keep professing that all this robosigning and bogosity in various documents are “no big deal”, especially in non-judicial states.  In point of fact while the foreclosure may be non-judicial if there’s someone in the house you still need a writ or other judicial act, even if perfunctory, to evict the current resident.  Since the “robosigned” (or just plain bogus) documents are used as the predicate of that proceeding they are in fact used in a court proceeding and thus still constitute knowingly-false swearing before a court – the definition of perjury – as well.

For those who live in a non-Judicial state and thus think they have no recourse, they’re wrong.  You do.

What I’d really like to see is more attorneys like Mr. Rooney start digging into the conveyance aspect of things, because I continue to assert (as I have since this all began four years ago) that the real problems lie there.

We will only clear the market, and resolve the problems with land titles and lending, when these deals are all fraud-audited and we find out who has the paper, what was and what was not delivered as required by the PSAs in these deals, and thus, who currently in legal and actual fact is owed money at this point in time.

If these investigations disclose that the securitizer or originator still has the loan but was paid for it in full then the MBS buyers have every right and reason to force the unwind of the transaction.  What they don’t have the right to is the cash flows, including payments and recovery during foreclosure, on a note they don’t actually own!

Again, this does not result in a “Free House” lottery.  Someone is owed money.  The loan may be unsecured or the holder may not have “holder in due course” protections as a consequence of the willful and intentional acts during and after the closing of that loan but the money is, in fact, owed.  But until we re-join the ownership of the note with the lending of the capital, which in my opinion is likely to require the unwinding of many of these deals, there is no way to know for any particular loan what its status is in terms of security interest, whether holder-in-due-course protections apply or not, and whether the best option for the actual entity that owns the paper and is owed money is to modify the loan (perhaps including a writedown of principal), a short-sale the property, an unsecured debt collection action (which may include bankruptcy for the borrower) or foreclosure.

Such a determination cannot be made without first establishing who holds the actual paper and what their actual economic interest is in that paper, which means we must begin with fraud audits on all of these deals. Before we foreclose on anyone we must demand conclusive proof that the transfers of the loan are in order in accordance with the PSA governing the deal (for a securitized mortgage) and that the flow of capital allegedly given in exchange for that paper actually occurred.