The Market Ticker – Weekend Roundup: Foreclosuregate Status

The Market Ticker – Weekend Roundup: Foreclosuregate Status

There is a very important audio interview on KOH that you need to listen to.

It’s two hours, and that’s a lot.  But it’s important.

In particular, listen to the couple of minutes starting at 12:30 in.  Then listen to 6:30, and 42:30, right around 50:00 and then again at 70:00 and finally, at 78:00 in.

Pay attention to what’s being said here.

First: The assertion is made that the lenders and holders of the notes were paid in full. That is, they have no economic damage from the default (!) due to the way they structured the deals.

Second: The assertion is made that there was fraud in the inducement in all of these loans, in that there is an implied duty of dealing in good faith in all contracts that was violated by the banks that made knowingly bad loans – which we now have sworn testimony on. While this is not settled by any means, there is currently pending litigation on this point, and if this approach wins, well, then you go – those contracts are voidable.

Third: The allegation is made that the banks were not stupid – they knew the mathematics (as we all do now) and intentionally crashed the market. That just compounds the second point.

Fourth: MERS has given sworn testimony that they have no economic interest and have nothing to transfer. Oh wait a second….. then how the hell do they transfer a deed they don’t have (even though they’re listed as Mortgagee) to someone who then forecloses – or alternatively, forecloses themselves on behalf of someone else?

Incidentally, FDN has picked up on this tooDon’t expect the entire “fraud in the inducement” line of inquiry to remain quiet for very long, and again, if this wins at trial – even once – you’re gonna get this:

smiley

The MERS problem is also outlined in a rather long and exhaustive paper in the Cincinnati Law Review. The salient point is here:

With these services on offer, the mortgage finance industry quickly and wholeheartedly embraced recording and foreclosing its mortgage loans in MERS’s name, rather than the actual parties in interest. Instead of legislation or a landmark court ruling, mortgage industry insiders report that the key development in the acceptance of MERS was the endorsement of credit rating agencies such as Moody’s, Standard and Poor’s, and Fitch Investment. 71 For example, in 1999-before any significant appellate judicial opinion on the subject-Moody’s Investors Services issued a report concluding that MERS’s mechanism to put creditors on notice of a mortgage would not be harmed. 72 Moody’s concluded without citation to any court opinion, or even to any state recording statute, that “subsequent creditors of the entity selling the mortgages to the MBS [mortgage backed securities] transactions [sic] should not be able to contest the conveyance of the mortgages based on lack of notice. 73

Got that?

The agencies concluded without any legal justification whatsoever that this was all ok.

Since when does a ratings agency trump State Law?

There’s been an awful lot of flip-flopping on many of these points in the last week.  In particular, you’ve got people who were all over the fraud side of this that suddenly got very quiet.

One wonders why – and note, it’s not that they’re repudiating what they formerly said, it’s that they’re saying nothing at all, and some are now trying to throw this back on the borrowers, making all sorts of claims of “unethical” behavior on their part.

Let me be clear on my position: This entire bubble was predicated on fraud – up and down the line.  I’ll simply quote Bill Black, since he’s more concise than I can be:

Nothing short of removing all senior officers who directed, committed, or acquiesced in fraud can be effective against control fraud. We repeat: Foreclosure fraud is the necessary outcome of the epidemic of mortgage fraud that began early this decade. The banks that are foreclosing on fraudulently originated mortgages frequently cannot produce legitimate documents and have committed “fraud in the inducement.” Now, only fraud will let them take the homes. Many of the required documents do not exist, and those that do exist would provide proof of the fraud that was involved in loan origination, securitization, and marketing. This in turn would allow investors to force the banks to buy-back the fraudulent securities. In other words, to keep the investors at bay the foreclosing banks must manufacture fake documents. If the original documents do not exist the securities might be ruled no good. If the original docs do exist they will demonstrate that proper underwriting was not done — so the securities might be no good. Foreclosure fraud is the only thing standing between the banks and Armageddon.

There’s only one solution to all of this: Take all of the big banks into receivership.

Force these securities to be examined, those with fraudulent originations beyond their specifications to be unwound and put back on the securitizers.

This will detonate them.  Since they’re in receivership, their stockholders will wind up wiped out and their bondholders will take the hit as they are crammed down into equity.

Where intentional fraud is found in the inducement, as has been alleged by Citibank’s former chief underwriter in over 80% of production for 2007, people need to go to prison.  A lot of people.  And while this does not necessarily mean “free houses” it sure does mean recission of the deal – and if that winds up forcing renegotiation of the terms (including principal), then so be it.

The more time goes on the deeper this rabbit hole gets and the more fraud we find evidence of.  Contrary to the professed claims in the media, this is not getting clearer and headed more toward “clerical errors” – it is headed more toward the entire financial system being one gigantic pyramid of fraudulent transactions layered upon each other, none of which were unwound during the so-called “bailouts.”

Instead, it appears that government decided to attempt to perpetuate the debt and fraud ponzi schemes – likely because, arithmetic or not, they knew that letting it all into the light of day would mean incalculable and insatiable demands for prosecution – at least figurative if not literal heads on pikes.

If you think the idiocy and downplaying of reality is limited to the bankster apologists on CNBS, you’re wrong.  We also can look to Housingwire, which put forth a pure fantasy piece that included the following:

The real fact is that the ‘robo-signing’ scandal is a procedural one, albeit one that offends the very nature of due process.

….

The injured parties from this gross abuse of process are limited to the court, who has seen its rule of law mocked; and potentially investors, who must ultimately pay for the added time and expense of re-filing.

Forgery is not a “procedural issue.”  It’s a felony act of perjury.  Mocking the rule of law is not a procedural matter – it goes to the very heart of our legal system, not to mention The Constitution. There is this pesky thing called The 5th Amendment.  I know that the mortgage and housing industries think that such matters lack substance in this case but I’m quite sure that if the people decided to start stringing up lenders, bankers, and builders from lampposts en-masse, they’d change their tune about “procedural issues” and due process rights in a big damn hurry.

Within minutes of the ‘robo-signing’ scandal, seemingly, commentators were giving credence to long-standing claims regarding the validity of MERS as a foreclosing party, who really owns the note, as well as highlighting put-back risks — a span of issues that are distinctly and utterly separate from the procedural challenges encompassed by ‘robo-signing.’

Nonsense.  The entire “robo-signing” thing is part and parcel of the industry’s inability to produce factual documentation right up front. There are only two reasons not to produce the original paperwork, properly endorsed, instead of all this robo garbage:

  1. You don’t have it because you never got it, and you’re trying to cover that up. 

  2. You don’t have it because you intentionally destroyed it or are hiding it, as producing it would document that you did something fraudulent earlier on in the process (like at origination, for instance), and you’re trying to cover that up.

In short, there is no other explanation.  A few lost pieces of paper here and there?  Sure.  A system that can’t produce any of the paperwork, properly endorsed over?  That’s not accident – it’s an intentional act.  Period.

In other words: massive GSE putbacks? Yes. Massive private-label putbacks? Eh, probably not so much. In either case, however, hardly does this seem to be the sort of end-of-the-world scenario that so many have painted recently.

Really?  Remember, Lehman wasn’t so much the end of the world for Lehman per-se, as it wasn’t that big a firm.  Rather it was the cascading credit default exposure that everyone was worried about.

Does anyone recall us actually fixing that by forcing it all onto regulated exchanges, where margin was maintained on a nightly basis so we know that everyone’s good for the crap they’re holding?  Oh, I seem to remember that didn’t happen.

Funny how everyone forgets that the nuclear device that started all this crap is still sitting on the board room table, it’s still ticking, and someone still has tape over the timer window so nobody can see how many more “ticks” we’ve got.

The real brewing issue in the markets currently — and quietly — is one of investor confidence, borne most lately of horrible remittance reporting. Investors have had it with inaccurate reports from servicers, and some are threatening to ditch MBS markets altogether.

Getting lied to repeatedly has a way of doing that.  You know, things like Clayton being revealed to have done diligence on these loans and finding them bogus, but then having them shoved into the securities anyway – without disclosure to the buyers. Or Citibank’s chief underwriter stating under oath that eighty percent of production violated reps and warranties in 2007.  Eighty percent?! Then you add stiff-arming to this by the securitizers for the original loan data.  Gee, I wonder why they wouldn’t want anyone to look after their own people testified that they packaged up loans they knew were dogcrap and sold them on to investors!

The third real issue facing mortgage markets today, quite frankly, is that political reality is allowed to subsume actual reality. This is the outcome that sees the mortgage industry eat its own, if it comes to pass.

In a word, bull****.

The “industry” should eat its own.  What integrity does a fraud-laced process have?  What sort of weight does someone who refuses to disclose what they did earlier on to a buyer command with a new buyer?  Zero, that’s what.  Getting rooked once is a bad thing.  If you get rooked twice it’s your own fault for trusting someone who has proved, through their own conduct, that they will **** you as long and as hard as they think they can get away with. That is, buyers of these securities appear to now know for a fact that they were sold crap on purpose without proper disclosure.

None of these banks has any reason to expect that any of these buyers would ever do business with them again under any set of terms or conditions.  In fact, this alone ought to be enough to put them all out of business – permanently.

The reality here is that what we have is a bunch of piranhas in a tank that have been feasting on Americans for two decades.  Now the Americans are down to bare femurs, tibia, fibula and ribcages – they’re out of assets to strip and out of payments to poach.

So now we get to the fun part, where the ravenous piranha, devoid of any sense of ethics and willing to eat literally anything, turn on their buddies and start tearing them apart.

After seeing Americans stripped like a turkey leg, I’m looking forward to this part of the show.

View with responses

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Tips anyone?


I sure could use some…

Comments
12 Responses to “The Market Ticker – Weekend Roundup: Foreclosuregate Status”
  1. RAMONA says:

    Now we know why all the big wigs were all walking away with millions of dollars … money to keep the mouth shut would you say? So now we know why they hire those people for millions of dollars …

  2. housemanrob says:

    People, On sixty minutes tonight, they featured a story on todays jobless, including all of the highly skilled and educated people out of work over 99 weeks in the silicon valley!! This is scary shitttt………IT MUST STOP NOW!! PRESIDENT OBAMA…..WHERE ARE YOU??

    • J Glenn Lowe says:

      Obama has a well documented history of abandoning everyone and every group that ever helped him on his path to the top. Expect for the Banksters of course. Quit depending on these shallow bastards that line their pockets with the blood money that comes from selling the souls and future tax base of you children just to get a nice house on the hill. Take local action. The FED is soon to be DEAD. All we ever had to do is just take care of each other and stop asking for the government to do it for us. The government as we know has proven itself time and time again to do the opposite that we ask of it. So bypass them and let’s do it right without them. A child could run a better society. Let’s just ignore them and start doing what we know is right. When “The People” realize that they are the authority all of these massive problems will go away in a blink of an eye.

  3. kravitz says:

    Dubious signatures, missing, inaccurate paperwork halt 4,450 city foreclosures
    http://www.nydailynews.com/ny_local/2010/10/24/2010-10-24_dubious_signautures_missing_innacurate_paperwork_halt_4450_city_foreclosures_.html
    Thousands of foreclosures across the city are in question because paperwork used to justify the seizure of homes is riddled with flaws, a Daily News probe has found.

  4. John R. says:

    Aaaahhhhh…. the show’s gettin good! I recommend……………….. popcorn! A Cool refreshing drink. A big easy chair…. a fast internet connection… and a nearby paper bag…. that’s to breathe into when you can’t quit the hiccups you get from the uncontrollable laughter…. I can’t hardly wait till it get’s to the part where they lose THEIR electricity!

  5. sonya Brewer says:

    I have the info to prove securities fraud, I have a sworn affidavit from the servicer which was also the seller into the Bear Stearns Asset Backed Securities that they say although they sold the Note to the trustee it appears that a written assignment was never prepared. Well that is all good because the seller couldn’t sell directly to the trust! The seller sold to the depositor and the depositor sold to the trust, so in my case they was never a sale into the securities. So the successor trustee that is foreclosing on me is not and will never be able to be owner and holder of the note, the depositor either. As for the seller/servicer all they could give was a lost Note affidavit and no where in that document is an assignment or transfer of right, title,or interest. Mers, the Trustee,the successor trustee and the servicer upon information and belief has conspired together. the servicer said they sold the Note but they didn’t, then the successor trustee filed an assignment in the ROD stating Mers hereby assigns, set over transfers all it’s interest in the NOTE and mortgage. Two things in my case , 1: Mers said that they acting in the name of the corporation which was my original lender that is defunct since 2005. And #2 the most important part of this sham , The original lender deactivated the MIN # and removed the loan from the MERS system in 2002! The unlawful and fraudulent assignment was filed in 2009. A robo -signer signed that document from MERS.My PSA says cut off date was 6/1/2003, prospectus says the closing date was 6/30/2003 can’t go back and fix it now.

  6. J Glenn Lowe says:

    So, when a second bankster, or anyone else that you’ve never heard of, says to you that you owe them money, you say to them, “Show me the legal document, signed and notarized by you and me that says I owe you money. I know that there is no such note because I’ve never signed one and I’ve never acknowledged that I owe you anything, verbally or in writing. Judge Boyko has ruled on this, saying that any legal contract must be in writing, and you don’t have one. I no longer owe the original note holder anything because you’ve paid off my original note, thank you very much. I now owe nobody anything. You’ve been sold a pig in a poke and I now own my house free and clear.

    “The reasons you paid off my note are immaterial and of no interest to me. I don’t care why, but I’m glad that you did. Again, thank you very much.”

    You don’t even have to be in foreclosure to do this. This is the position you take anytime your original bankster sells your note to another bankster and he tries to collect, even if it”s only one month since you made the original note. No matter what state your mortgage is in, no matter how long you’ve had it, get a contract lawyer and sue the original bankster for the return of your paid off note and the title to your house. You’ve got a good case because your note has been paid off and there’s nobody anywhere who can prove you owe them anything.

    The reason for this is that the banksters got arrogant and sloppy and screwed up, badly, according to Judge Boyko. And you get a free house out of it.

    That’s contract law at work.

  7. lou durante says:

    Who’s going to cover up for whom? I say let Wall St and the bankers throw each other under the bus. They’ve been doing this time and time again when pinched. How come no one went to jail? Pick and choose by the Fed’s m ad nauseum.

  8. Capt. Jack says:

    The fraudulent property appraisers will be fraudulently protected by the fraudulent underwriters.

    The fraudulent title insurers will be fraudulently protected by the fraudulent originators.

    The fraudulent GSEs will use our tax dollars as a fraudulent backstop for fraudulent Wall Street behavior.

    Then the fraudulent GSEs will use our tax dollars to pay their fraudulent attorneys.

    If it’s possible to get the message through the fraudulent media it’s hard not to reach the conclusion our entire economy is based on fraud.

    If I told you I had all the answers I would be making a fraudulent claim.

    The fraudulent foreclosure mills and their fraudulent attorneys who’ve engaged in fraudulent foreclosures may have no escape. I guess that’s the only silver lining in this fraudulent cloud.

  9. Michael says:

    So first the rating agencies took sub-prime MBS’s and rated them AAA: safe as US debt (which, at this point, they probably are but that’s only because US debt is junk itself). Then they notched it up a step and took the paper rated BBB — lousy — and said if you add enough of it together a bundle of BBB paper magically turns into AAA. They based all this on math models that were not only untested, and assumed the MBS makers were even following those models. All this led to a bubble and how’d they adjust their ratings?

    So what do we do? We keep relying on the same people. Zandi from Moody’s is still mouthing off garbage about the awful things that will happen if foreclosures stay low (kinda’ ignoring that home prices actually quickly stopped dropping) and Obama listens to him.

    How’d we get to a place where incompetence brings nothing but rewards, dishonesty is bailed out while honest mistakes (like, um, buying a home you thought you could afford) are treated as criminal, and we’re willing to eviscerate the market to stop the downside losses from the parties to private contracts who knew exactly what they were getting into, at the expense of the other party?

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