Helping Homeowners In Michigan
Archive for March 7th, 2011
State Attorneys General Sell Out Americans To The Banks
March 7th, 2011 | 
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The 27-page fluff-piece is now out where we can see it….
Let’s be blunt: There’s no “there” there.
The entire document is a rehash of what servicers had a legal mandate to do right up front. Accurately apply payments. Respond to inquiries. Operate in good faith. Use a NPV test for HAMP (was in the HAMP program originally.) Document the assignment chain before foreclosing.
There’s exactly one substantive change, in that HAMP did not prohibit “dual-track” (that is, foreclosure while attempting modification.)
Essentially every other item in this 27 pages is something that Servicers already had a legal duty to do, either as a fiduciary to the investor or just through the ordinary covenant of operating in good faith (You know, the original standards that all businesses are held to that aren’t actually racketeering outfits and gangsters? Yes, that.)
There’s no prosecution for all the bad affidavits, despite them being apparent acts of perjury.
Some of this is truly laughable:
You’re kidding, right? This is a NEW requirement?
Thou shalt not perjure! Really! We mean it this time!
Here’s another one:
Servicers have this duty NOW – it is to the investors! They’re required to act in the best interest of the investor when choosing how to handle a defaulted loan. They’re agents for the certificate holders and are not permitted to screw people – they’re acting on the behest of, and for the benefit of, the Trust (and therefore the certificateholders!)
There’s another one. HAMP ALREADY REQUIRES THIS! You make the payments, you’re required to be converted. Of course the banks are not converting in a whole lot of cases. Why not? Well they get to lard on more fees. But that too is against the rules – so why do we need to restate what’s already required?
Here’s a good one:
Balloons eh? Remember how I’ve been talking about Balloon modifications in the context of HAMP? Well, guess what – they’re still there. These are the very loans that blew up in the 1930s and cost huge numbers of Americans their homes. Balloon notes are a complete and total screw-job. The entire purpose of a modification that has a balloon associated with it is to allow the BANK to claim that the loan is “performing” even though it is outrageously underwater or otherwise could not be paid, right up until the inevitable default at the end when the entire loss will wind up occurring.
The only way these notes will not detonate is if we have another housing bubble. That’s not going to happen. Treasury’s willingness to permit these in HAMP in the first place as part of the waterfall process and the allowance by the 50 State AGs to permit these to be included in any form of so-called “mitigation” is an absolute financial rape job served upon the homeowner. These things need to be outlawed as a “mitigation tool” as they are nothing of the sort but are simply a way for banks to claim that they have “good paper” when in fact they do not. They prevent mobility to follow job availability and will, in the end, utterly destroy any homeowner dumb enough to accept one of these things, no matter how disguised.
This is also a joke:
What’s the ratio? Notice how it’s missing? 28/36 was the standard for 50 years. It’s the right standard. That’s a 36% back end ratio and it results in sustainable payments. Exceed it materially and things go to hell – fast. “Consider” tells me nothing.
You have to love things like this:
They already do. When are we going to see enforcement? The implied covenant of good faith exists in all transactions.
Who wrote this pablum?
AGAIN: Who WROTE this crap? Unfair or deceptive practices are always illegal.
And then, finally….
Puff-piece bilge. All of the practices “prohibited” in this document are already a breach of the implied covenant of good faith and fair dealing and subject to prosecution on that basis.
This is what we get from the so-called “50 States” AG investigation?
THIS?
These Attorneys General are not here to help homeowners. They’re blowing the servicers under the table and lying to the citizens in their states. Virtually all of the “shall nots” in this document are already against the law and many of them are already subject to criminal penalty, such as perjury.
If you sit for this, America, you really are stupid.
Posted in Attorneys General, Banks, Corruption, Debt, Economic Crisis, Economy, Financial System, Foreclosuregate, Foreclosures, Fraud, Government, Lawyers, Legal, MERS, Money, Mortgage Electronic Registration Systems, Mortgage Loans, Mortgage Modificaton, Mortgages | 
Tags: Bankers, Banks, Corruption, Criminals, Debt, Fraud, Law, Legal, Money, Mortgage Modifications, Mortgages, State Attorneys General | 
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Financial Arsonists
First an arsonist will start a fire.
Then, when it’s not burning fast enough, he’ll throw another can of gasoline on it – or even use a gasoline-filled hose.
Like, for example, this jackass Lockhart:
“If [the rising price of oil] plays through to the broad economy in a way that portends a recession, I would take a position we would respond with more accommodation,” Lockhart said at the conference.
Of course the reason oil prices are going up is the speculative premium caused by QE and QE2 in the first place.
Bernanke and others argue that oil prices are going up because of a “strong recovery.” Ok, let’s say I buy that (I don’t.) Then more QE would make it even stronger, and thus make oil prices go even higher!
Pick one folks – whether you believe in the BS or not, the fact remains that more asset purchases will do nothing other than make oil prices go up more.
This might have something to do with all the open interest on the 150 and 170 strike for oil going out a few months. Not that I blame speculators for this – if you have an insane man who starts fires in the price of commodities (more than a 100% increase in the price of basic foodstuffs in Egypt, for example, over the previous 18 months and a 150% increase in total inflation over the last three years) and this ignites civil unrest you can hardly blame people for buying CALLs on oil when the same jackasses say, in effect, “The fire’s burning pretty good, but by God we gotta make sure it doesn’t go out – hand me that gas can Bernanke!”
These people are financial arsonists. They simply don’t care what happens to anyone but their friends the banks and the banksters who skim off billions in bonuses.
And incidentally, $4/gallon gasoline is pretty much baked in the cake. Here’s RBOB:
Now add various sales and excise taxes on gasoline (averaging around 50 cents/gallon) and transportation costs and you’re over $3.50/gallon – about where we are now.
There’s nothing about the timing of the ramp in price on gasoline that happens to coincide with QE2, is there? Oh wait…. there is.
Hmmm…. so Lockhart wants to “respond” to the spike in oil price by making it worse?
Sounds good to me.
Remember who said this when you’re paying $5 and up, and exactly who’s responsible:
The Federal Reserve and their enablers, Barack Obama and the US Congress.
Posted in Economic Crisis, Economy, Federal Reserve, Government, Inflation, Money, oil price, QE, QE-2, quantitative easing |
Tags: Ben Bernanke, Gasoline Prices, Oil Prices, Quantitative Easing |
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The Unanticipated Consequences of MERS
One of the defining motifs of theoclassical economics textbooks is the provision of examples of the unintended consequences of government action. Those consequences are invariably negative. The narrative is the government intended to achieve some goal, e.g., help the poor, and ended up harming the poor. Four counter narratives virtually never appear in these tracts. Theoclassical economists rarely mention: 1. Any governmental program that succeeds in its aims 2. Any governmental program that has unanticipated, positive consequences 3. Any private action that has negative unanticipated consequences 4. Any private action that has negative, intended consequences
A fifth counter narrative sometimes appears in theoclassical accounts – governmental actions that are intended to be harmful by the private parties that corruptly convince public sector actors to aid the private parties at the expense of the public interest. The fifth example reflects poorly on both the public and private sector actors and suggests that the private sector is a source of corruption of the public sector – which fits poorly with theoclassical dogma.
This column focuses on MERS as an example of the first and third types of counter narrative. It will be the first in a series of columns about MERS. A conservative, but not theoclassical economist, Hernando de Soto, is famous for his work on private property. I highly recommend his book: The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. De Soto’s primary point is that private ownership of real property allows even poorer people to mobilize their limited wealth by pledging the real estate as security for loans. The individuals can use those loans as a source of capital to become entrepreneurs. De Soto uses the United States as an exemplar of his thesis, explaining that the colonies that become the U.S. began a system of public recordation of land titles and a system of surveying land. The developing U.S. made these systems a major priority. De Soto argues that these public sector programs were spectacularly successful and helped produce America’s economic success by encouraging entrepreneurial activity.
These two successful government programs (public recordation of land titles and transfers and public land surveys) achieved their intended goals. They made it far easier to pledge real property, which made real property more valuable. Public recordation greatly reduced the risk of fraudulent pledges. Reducing the risk of fraudulent pledges makes lenders more willing to lend and reduces the interest rates on secured lending. Reduced interest rates mean a lower “hurdle” rate for investment, which means that more productive investments will occur and economic growth will increase.
Public recordation in the U.S. became even more effective in spurring growth and efficiency with the development of Article 9 of the Uniform Commercial Code (UCC [2]). Article 9 set out to make it far easier for lenders to access public records of liens by dramatically increasing the degree of uniformity in how and where such records would be kept. Article 9 was not only a governmental program that achieved its aim – it was the brainchild of an academic (Yale Law School’s Professor Grant Gilmore). Article 9 further reduced the risk of fraudulent pledges and greatly increased efficiency. Business, particularly lenders, strongly supported its adoption.
MERS (Mortgage Electronic Registration Systems) sought to privatize key aspects of the public title system. The primary purpose was to avoid recordation fees when interests in real property were assigned or transferred. MERS’ founders read like a who’s who of the entities who caused the recent financial crisis, so some scholars view its creation as an example of a private sector action intended to harm the public. This column assumes that MERS’ harms were, originally, unintended. It focuses on the insanity – from the standpoint of honest lenders and investors – of MERS’ devastation of a public system of recordation that had served business, particularly lenders and investors, brilliantly.
MERS’ problems are legion, but they are also inherent in its structure. This column addresses only one aspect of its “agency” problem. MERS is set up in a bizarre fashion designed to minimize costs. It has only a trivial number of real employees. It has no ability to check its members’ initial or continuing quality or integrity. MERS appoints its members’ personnel as MERS officers and exercises no meaningful oversight over their actions.
As I have explained in prior articles, MERS’ members have endemic, severe problems with mortgage documentation. They originated, purchased, or agreed to service loans and collateralized debt obligations (CDOs) without the underlying mortgage note. Fraud begets fraud. The exceptional incidence of underlying mortgage origination fraud led to widespread failure to prepare and maintain proper documentation – and that was before the mortgage originators failed. When the mortgage originators failed, as they did by the hundreds, mortgage documents were frequently thrown away. Mortgage documentation became particularly defective because originators could sell mortgages without the purchaser even checking whether the seller was delivering the original note.
The secondary market in nonprime mortgages operated under the financial version of “don’t ask; don’t tell.” The incidence of fraud and defective documentation in nonprime loans was so large that the purchaser faced an inescapable dilemma. If it did competent underwriting it would detect widespread fraud and missing notes and document that it knew that the nonprime loan portfolio it was purchasing (and then reselling them as the collateral for CDOs) was fraudulent. Documenting that one is selling CDOs one knows to be backed by fraudulent loans that often lacked the underlying note is an excellent strategy for going to prison and being sued by every CDO purchaser. The alternative was not to do any meaningful underwriting when purchasing nonprime loans. The no meaningful underwriting alternative, however, maximized the already perverse incentives to originate and sell fraudulent loans lacking essential documentation.
MERS’ members, therefore, had overwhelming incentives to engage in foreclosure fraud. The loans they were seeking to foreclose on often lacked essential documentation and were induced by defrauding the borrower. They had no legal right to foreclose, but that result was unacceptable to the senior officers controlling the loan servicers. They insisted on results, and did not monitor compliance with the law. The result was tens of thousands of felonies – monthly – by some of the largest financial institutions in the world. Filing false affidavits became business as usual. No one senior in the Justice Department or administration appears to be seriously upset about this. These felonies were committed by, or at the direction of, MERS “officers” – and MERS does not appear to be seriously upset about fraudulently foreclosing on the homes of tens of thousands of Americans. I study fraud by elites, and even I am stunned by the frequency and nature of the frauds and felonies and the lack of prosecutions and the overall blasé attitude by CEOs to the fraud and felonies.
Bill Black is the author of The Best Way to Rob a Bank is to Own One [3] and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.
Bill writes a column for Benzinga every Monday. His other academic articles, congressional testimony, and musings about the financial crisis can be found at his Social Science Research Network author page [4] and at the blog New Economic Perspectives
Posted in Banks, Corruption, Debt, Economic Crisis, Economy, Financial System, Foreclosuregate, Foreclosures, Fraud, Government, MERS, Money, Mortgage Electronic Registration Systems, William Black |
Tags: Corruption, Foreclosures, Fraud, MERS, Mortgage Electronic Registration Systems |
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For How Long Will You Believe?
That which cannot work – and which isn’t working.
The entire premise of the alleged “recovery” is that “growth” will return as a consequence of debt increases. That velocity will increase.
How are they doing?
Or, if you prefer, MZM velocity….
For how long will you believe? QE, QE2, more printing, more goading, more borrowing by the government.
For how long will you believe, as the ship fills with water, that it will not sink?
We entered the 2007 downturn because people could no longer pay their debts.
That’s why it happened folks. You know, I know it, we all know it. That’s not speculation, it’s fact.
The entire premise of a so-called “recovery” is that we can, somehow, restart credit creation – that is, people taking more and more debt once again.
How?
All of these programs – nearly four years worth of them now – haven’t done it.
The facts are what they are.
Was the stock market too pessimistic at SPX 666, were the banks really not about to fail, if we cannot actually afford to take on more debt?
No.
All those numbers and facts were not only appropriate, they were optimistic.
We should have forced all the big banks into receivership in 2007.
We still must.
Bernanke and the government have failed to restart the credit-creation cycle – there is no more absorption available in the broad economy.
We must stop this idiocy while there is still an economy and a government to save.
Posted in Banks, Corruption, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, Fraud, Government, Lies, Monetary Policy, Monetization, Money, QE, QE-2, quantitative easing, Recovery |
Tags: Ben Bernanke, Fail, Lies, Monetary Policy, Quantitative Easing, Recovery |
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Is It Time For Pitchforks In Ireland?
The Fine Gael/Labour coalition Government is to implement in detail the outgoing Government’s four-year austerity plan as approved by the EU-IMF, the Sunday Independent can reveal.
In what will amount to the most barefaced breach of election promises ever perpetrated by an incoming Government, the coalition partners’ programme for government will cause uproar when it is published today.
While an attempt will be made to dress up the programme as a new plan by a new Government, when it is analysed it will be seen for what it is — the continuation of the economic policies of Fianna Fail and the Greens, virtually in minute detail, as laid down by the EU-IMF.
We shall see if the Irish stand for this.
The decision is theirs, of course. But one is compelled to ask what recourse is left when the ballot box fails?
Certainly, the acts of Congress in the United States in 2008 were outrageous. But just weeks later we had an election, and we returned to office most of the scoundrels. Wise or foolish, the people spoke.
Now, in 2010, the people saw that their election of “The Chosen One”, Barack-is-gonna-pay-my-mortgage Obama, didn’t get them what they were told they were going to get. They tossed the Demoncrats out nearly en-masse, and elected a whole new crop of alleged saviors, this time Rethuglicans.
But the Rethuglicans who they elected, even those so-called “radicals” in the Tea Party, have gone on record saying that entitlements cannot be cut.
Yet that’s where the budget problem is.
These same Rethuglicans are now sitting on their hands and chuckling as Mexican trucks are being allowed en-masse into the United States. Why is this important? Because the next act is opening a seaport in Baja – in Mexico – just south of our border.
The Port of Long Beach is
as soon as this is completed.
The Mexicans, in addition to not complying with our safety standards, also have subsidized fuel. The government of course will make sure those trucks have extra large fuel tanks and will be full when they cross into America. They will run up through the heartland, operating without US Safety Standards, without US rules on number of hours one can drive, without US CDLs and qualifications thereof, and without paying US fuel prices.
What’s left of the American trucking industry will likewise be
All this in the name of cheap Chinese imports and “free trade”, otherwise known as robbing the hell out of America’s job market.
But heh, we’re still voting for it.
What happened in Ireland, however, was different. Fianna Fail was tossed on their ear over their accession to the Banksters in Berlin. The people spoke.
And now Fine Gael has intentionally misled and screwed the Irish people.
There remain only two options for Ireland. One legal, one not. The “not” one is of course the one that nobody (in Ireland) can advocate – revolution.
The legal one anyone can advocate: Refuse to labor, refuse to produce, refuse to fund.
The Egyptian model. Refuse to work. Stand and shout, wave your pitchforks and torches. Not to loot and burn, but rather to defend your right to refuse commerce – that is, to refuse the intercourse of labor and product.
Force the government to do what you sent them to Parliament to do - tell the Berlin Banksters to pound sand.
Will Ireland choose to labor as slaves, to revolt or to peacefully refuse to submit?
That’s the question before us today.
And soon, right here in America, it will be before us as well.
Posted in Banks, Corruption, Debt, Economic Crisis, Economy, Financial System, Fraud, Government, Ireland, Money, political hypocrisy, politicans, Politics |
Tags: Bankers, Banking, Corruption, Fraud, Government, Ireland, Lies, Politics |
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The New Face Of Poverty: Homeless Children
This aired on 60 Minutes Sunday, March 7, 2011.
Posted in Debt, Economic Crisis, Economy, Foreclosures, Money, Poverty, Unemployment |
Tags: Children, Foreclosures, Homelessness, Income, Poverty, Unemployment |
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proudly supports:
Bill Still For President
for Congress
Michigan 11th District
By Bill Still
There is only one answer for the world economic situation; monetary reform.
1. No More National Debt
2. No More Fractional Lending
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