Tuesday, November 30, 2010

Matt Tiabbi investigating foreclosures

The foreclosure lawyers down in Jacksonville had warned me, but I was skeptical. They told me the state of Florida had created a special super-high-speed housing court with a specific mandate to rubber-stamp the legally dicey foreclosures by corporate mortgage pushers like Deutsche Bank and JP Morgan Chase. This "rocket docket," as it is called in town, is presided over by retired judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and laby­rinthine derivative deals of a type that didn't even exist when most of them were active members of the bench. Their stated mission isn't to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity. They certainly have no incentive to penetrate the profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history — an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me, as taxpayers) in the guise of AAA-rated investments. Selling lead as gold, shit as Chanel No. 5, was the essence of the booming international fraud scheme that created most all of these now-failing home mortgages.
Chris here-  a  part I want to emphasize: 

----judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and laby­rinthine derivative deals of a type that didn't even exist when most of them were active members of the bench.----------

 The financial industry has used new vocabulary terms, new formulas and lack of transparency to to keep people on the outside from knowing what types of risk they were taking on the inside.  It is a long history of manipulation by the industry to allow Wall Street to gamble with other people's money in order to collect millions of dollars in salary and pay out a nominal return to the average investor.  If it is better than the going rate of a Certificate of Deposit, most people are happy if their investment continues to compound year after year.  People have been willing to accept whatever garbage Wall Street throws at them.  In part due to the smoke screen of complexity that financial institutions use so well, and partly due to being brainwashed that the people on Wall Street are just so much smarter than the rest of us. 
Read More Here at More Financial Reality

Interesting developments on foreclosure fraud and bank fraud

"More on Foreclosure Fraud at Naked Capitalism"
I’ve been in contact for over the last six months with attorneys involved in foreclosure defense. Unlike the foreclosure mills, which seem to coin money, the attorneys on this front are either laboring pro bono or making considerably less than they could in other lines of work. They also can back up their views with depositions and trial transcripts.

One thing they stress is that a significant number of their clients facing foreclosure has made every single mortgage payment. . Read that again.

Chris here-Yves Smith at Naked Capitalism really has the inside story on what is going on with the servicers and foreclosures.  The sentence above in bold face type is really shocking.  It is hard to believe that the incompetence of the servicers or just plain neglect on their part, is being used as an excuse to steam roll property rights. 

You can buy Econned and All the Devils are here using this link. 

Monday, November 29, 2010

more links



the daily show video

We are starting to see more and more books coming out explaining the causes of the financial crisis.  Some are very good, some are off the mark.  Econned by Yves Smith is very good. 

Here is a video from the The Daily Show. Stewart interviews the authors of the new book on the financial crisis.

Take this link and see authors of All the Devils are here on The Daily Show 

 ALL THE DEVILS ARE HERE use this link to here the author reading from the book. 


Economic Quackery

Economic quackery.

Economics has allowed economists to turn into the modern day prophets. However, Economists have gone unchallenged for years and have led us to the current bubble and bust cycles. The blindness of economic theory should label economists as for profits rather than as prophets. Mind you, the profit moniker is not because they are serving the greater public good either.

The power of media and the allure to self indulge has led to widely held views that economists are smarter than the rest of the population. For whatever reasons, I do not know but many theorists, model pumping economists remind me more of the likes of Freud and the Freudians who were so wrapped up in their hypothesis that they would not deviate to a different position regardless of the evidence.

We would be better served by a new branch of economics called “common sense economics bases on real world observation”. As it stands now economic theory is light years away from reality and the allegiance to the power brokers has led economics astray.

Academia is great for classrooms but it serves little purpose in predicting or monitoring real world economics. The current recession is “perfect” evidence to the contrary.

How could a Nobel Prize winning economist believe that the ridiculous bubble in oil prices during 2008 was due to supply and demand? It was only possible through the application of text book theory that had nothing to do with the real world. The data led the likes of Paul Krugman and many others to claim there was no abundance of supply and that for some reason the summer of 2008 oil supply had evaporated in a few short months. (reference from Econned: How unenlightened self interest corrupted capitalism, locations 729-35, 735-40,740-45) The book is written by Yves Smith founder of the web site Naked Capitalism .

Buy Econned here Econned

The banks hold the key to a recovery

I just received a comment from some one saying that real estate value is relative. He was referring to an article I wrote discussing the fact that 80% of the home owners in Las Vegas have a mortgage that is worth more than the underlying real estate.

I agree with this statement of course because the appraisal system is for pricing residential property typically relies on the comparable sales method to set value. If you neighbor sold his house yesterday for 200,000 and it is similar in size and detail as yours, you will not be able to sell your home to someone for 300,000 the next day. Unless of course they are willing to pay cash and are ready, willing and able to purchase, you would have no need for an appraisal. If your buyer is financing the property it is a different story.

The mortgage system is set up in such away to protect everyone. It protects everyone if the parts are working correctly to carry out the checks and balances meant to keep unscrupulous sellers and lenders from taking advantage of buyers.

So pricing is relative when you compare with your neighbors and appraise property. However, most people could care less about relative value when the bank holds a note in an amount twice the value of their home. R
Read more on the how the housing crisis has devastated many Americans. 
We are seeing this in many areas of the country, especially in Las Vegas. There will be no speedy recovery as log as so many people are underwater with their homes and burdened with debt that may never be able to be paid back. There is a chance that home prices not get back to 2006 levels for twenty years.

It makes the bailouts for the banks seem even more ridiculous.

Sunday, November 28, 2010

For the good of the country?

How much longer can we put up with the hubris of the government and its officials why they say the are acting for the good of the country? 
A government out of touch.(editorial): An article from: Australian Nursing Journal
I am starting to feel like the government has finally become so detached from he people that it is operating in a different plane.  The officials and their shills they call economists hang their hat on theoretical models that have nothing to do with the real world.  Much like the Wall Street crowd that created the housing meltdown, the government see things in numbers and models.  The theory looks terrific on paper but when it is applied in  the real world in usually is wrong.  There is no way to generate data that is free from the different behaviors people have for the same situation.  One over reaction is usually coupled with someone else's under reaction.  The thought that rational behavior will be present at all times is a major flaw in economic theory.  There is not even a way to define what is rational to one party or irrational to another.  What should  be done for the good of the country?  A few new theories that taken into account imperfect information and irrational behavior.  The models that would work best for the good of the country would be drastically different from most popular of the current day. 

It is as if the government has just been turned into a spin control machine.  The numbers on unemployment have been cooked to look much better than they really are and the rate of inflation is calculated at times not including food and energy. 
More on government Spin here

What is the point of knowing if everything else is inflating or deflating if there is no accounting for what we spend on food and energy?  Would the number be to much for the American people to swallow?  Or is it for the Good of the Country?  

I think we have confused what is good for Washington and Wall Street is at the same time for the good of the country. 

Out of Touch: The Presidency and Public Opinion.(Book Review): An article from: Presidential Studies Quarterly

Saturday, November 27, 2010

Ring around the loan mod

Banks making modifications next to impossible.

This is a great article on how the banks have decided that a foreclosure is better than a loan modification regardless of the numbers.  The banks have lost all common sense and they continue to hold the economy hostage.  You can read more here about how the banks are willing to make poor financial decisions, taking great losses in order to avoid modifications. 

Read a related story on how the banks are will still foreclose even it it costs them more than changing loan terms.

Friday, November 26, 2010

What about the people who did the right thing? How the "structured Depresssion" hurts everyone

One of the untold stories of people counting on real estate can be read here. This story covers a family that had been very successul.  They were able to sell their business and retire.  Now they are struggling to get by as their investments have been crushed. 

They did the right thing, did as advisers said, diversified into stocks and real estate, in different locales but still lost everything. Hopefully stories such as this one seen in the NYT will start get people to realize this crisis originated long before the subprime crisis and the credit lock up of 2007.
This is more than subprime problem. More than an issue with people buying things they couldn't afford. Real estate has been one of the best ways to invest for the future since the depression. It at least was a way to park money that could be used as a nest egg or children's college funds.

But as people continue to chide those who have hit hard times, calling them irresponsible, liars, deadbeats and crooks, hard working, wisely invested Americans have been completely wiped out. The people who have never gotten to the level of living off the income from investments will usually argue that the entire crisis was due to greedy borrowers. This is completely false.
Read a related story here from the Wharton Busines School

If you still have the shallow and simplistic view of this crisis think the too big to fail banks will be our saviors and the "deadbeat" homeowner as the cause you need to get a slice of reality on your next helping of turkey.

If you will do a minuscule amount of research you can find out how structured financed allowed the Wall Street Players to leverage their clients investment dollars up to a 9 to 1 ratio (See Econned by Yves smith chapter named A Primer in Structured Finance "what this means is that for every million dollars of Cdo's sold as bonds was only backed by 20 % capital.”)

Talk about irresponsible Deadbeats. This amounts to risk so much more dangerous than buying a home with 0 money down. All it takes is a 2% drop value of the collateralized paper and the equity supporting those bonds is wiped out. Therefore as these cdos became nothing more than useless junk that used another new word to cloud the waters: Tranches was the buzzword and the way to increase the rates of return for investors.

They sold these products as if they were solid gold based on the average American’s sense of duty that nothing could be worse then defaulting on a mortgage. However, it was just a ploy by Wall Street in their attempts to figure out how to kill the only Golden Goose left in our country. It wasn't good enough for Wall Street to be able to buy property and use leverage as most home buyers do. The return wasn't great enough for them and they didn't care what it took to ruin the housing market as long as they were paid billions.

The brightest minds behaving as true narcissists would stop at nothing until they had brought real estate to its knees. The regulators failed to protect the people as did the rest of the government, including congress. We have been betrayed by those in leadership whom are elected to protect our rights as Americans.

The housing market, mortgage industry and construction industry is the engine that supported millions of people across the country. Consider how many jobs are related to this sector. 

Related News and Links

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Elizabeth Warren Working battling big banks

robo signing shows massive fraud by Linda Green
GMAC Halts Evictions in Maine

Thursday, November 25, 2010

Countrywide's Mortgage Document Errors May Doom Bank of America - DailyFinance

Countrywide's Mortgage Document Errors May Doom Bank of America - DailyFinance: "Bank of America made at least three attempts to fix its note problem in the context of the Kemp bankruptcy case. To prove it had the right to foreclose on Kemp's house, BofA needed to show that Bank of New York, the trustee for the 2006 securitization, had the right to foreclose. If BoNY had the right to foreclose, BofA could foreclose on its behalf. But for BoNY to have that right, the trust had to have the note and mortgage, which is why Countrywide's hanging on to the notes was a problem."

 Comment by me. Here is another story on the troubles at Bank of America. The only concern I would have for the country is the implied guarantee by Hank Paulson. Ken Lewis stated on more than one occasion that the then Federal Reserve chairman Henry Paulson told Ken Lewis that is was necessary for BofA to complete the transactions and that the fed would back the losses if they were extreme. We are now talking in the extreme.

The testimony in the Countrywide vs. Kemp case has statements under oath referring to CountryWide's common practice to hold the notes themselves rather than transfer them to the trust. If the investigations into the banks are done properly every single loan done by countrywide will have to be reviewed for proper documentation. According to the PSA's, Pooling Service Agreements, that are the documents used to create the trusts, improper transfer, or failure to transfer notes into trusts will nullify the contract. The means that BofA will be required to take back all loans that have not followed or met the standards of the PSA.
Read more on Pooling Service Agreements here.
 We know roughly 30 percent of mortgages in the country are underwater. If we speculate that countrywide's loans would fall in about the same range (which a case could easily be made that their loans may have a higher percentage of negative equity) the minimum loss on thousands of loans will be 30%. This would put Bank of America itself deep underwater.

We can only guess who will be expected to come to rescue. However, who else other then the us taxpayer would be senseless enough to jump into this black hole?

Key Bank foreclosure makes no financial sense

Banking and the business cycle;: A study of the great depression in the United States

Punitive measures taken by banks to reinforce other home owners to keep paying their mortgages are weak arguments at best. Thousands of mortgage modifications were done during the great depression and we don’t hear stories from the self righteous about how we should have let those people live on the street. Nor do we hear that people all decided to stop paying their mortgage because someone else who was in trouble got a loan modification. The problem is much more systemic and continues to pose a major risk to our financial system, modifying loans is one logical step to stop the downward spiral. If you are one of the people who would rather never be able to sell your home keep pushing for a massive foreclosure push by the banks, whether or not they are the legal owners of the defaulting property.
Wake up and smell the 2 x 4s. If we would have not had credit default swaps and other derivative products that were designed to let Wall Street squeeze three times the value out of a mortgage, we would not have seen half of the defaults.

It is absurd that banks would go out of their way to take an even greater loss on a property so they could complete a foreclosure.

We have let these people, those in charge at the banks, have free reign with billions of tax payer dollars. Most of the bankers still have their jobs. Clearly something is wrong this picture.

Wednesday, November 24, 2010

edited repost from 2009 applies today. Home owner left to shoulder burden of crisis alone

I hear it at least once a day that people should not have taken out loans they couldn't pay for when purchasing a new home. But I rarely hear anything to address the fact that many people that have real estate are making a financial decision not to pay. I don't think it is realistic to say that people making this choice are irresponsible or unreliable. Anyone who says that these people are of less character and integrity than the average American is revealing their myopia.

The truth is that a lot of people made prudent investments based on a lot of very plausible assumptions.

1. Real estate typically goes up in value or stays stagnate except in a few areas of the country that tend to have more boom and bust cycles as in Los Angeles, Texas or Florida.

2. There are significant tax benefits to owning real estate even as a second home or investment or income property.

3. Real estate financing has been one of the few ways left for the little guy to build wealth and to live and work as an entrepreneur starting with very little cash.

4. The sub prime market was much smaller a few years ago and there was less likelihood that foreclosures would saturate and drive down the market and few people knew of or understood how the Credit Default Swaps were over leveraging the RMBS players, putting the financial system perilously close to collapse.

5. Banks and lenders held an implied duty that they would reasonably attempt to qualify buyers

6. Politicians were assumed to be looking out for American citizens and would not allow the corruption at Fannie Mae and Freddie Mac, and to have some regulatory authority over the convoluted credit default swap market and to not allow the banks and investment banks to mix good quality loans in packages with poor quality loans.

These assumptions are not wild and crazy. They are very reasonable based on the date over the past 60 or 70 years. But now the entire economy is suffering from lack of oversight from congress and the pillaging of the housing market by Wall Street.

Now that real estate values have plummeted --through no fault of the borrower-- why are we expecting the individual home owner to shoulder the entire responsibility for the crisis. IE. By being the only party involved in the RMBS debacle that has to take losses without a bail out and be the only principal in the crisis forced to mark their property to market. The banks have been given a free pass and allowed to mark-to-model, covering up their dire capital positions.

read more on mark to market accounting here

Don't forget the banks willingly took property as collateral that is now worth half of its original appraised value.  It is crazy to burden the home owner with an undewater mortgage.  If you want to have a free market, then have a free market.  Let the banks fail and let the home owner fend for themselves.  The free market is only applied when it benefits the bankers and when it would put them out of business the free market is totally forgotten. 

Regulators and Government still afraid to step on the toes of the big banks

Is the government really stepping up to hold banks accountable? The PR campaign is underway.

It is clear that their has been little pressure on the banks to clean up their act over the past year.  The government has lost its teeth and is in dire need of new dentures.  The teeth of our government came in the form of laws, rules and regulations that were to be enforced diligently to protect the people.  The attorneys general for all states was also given power to enforce laws against fraud and conflict of interests.  The past several years we have seen a melding of government and financial industry.  There is no longer the separation between the two that allows for proper enforcement of law and regulation. 

It has little to do with either political party or which of those hold power in the congress.  It is about the state/government becoming accomplices to the financial industry and their unscrupulous power grab.  It sometimes looks like it is the government being dictated by the banking industry, which is true, but there are plenty of parties from both sides working to blur the separation lines between State and Bank.  Though it was never addressed in the Constitution one could make a case that it is equally as important as the separation of church and state. 

It could be argued that at this point in our history we are at an extremely critical point that has crossed well over the line that used to separate the government from the self interested financial institutions.  The line was blurred psychologically years prior to the recent investments of Tarp funds into the too big to fail banks.  The Tarp just laid it out on the table for all those who had any doubt that the big money players were ruling the country.  The statement that money rules the world would apply to the US government at this juncture. 

I was hesitant to think it was so clear until recently.  The Tarp was an eye opener that showed just how vulnerable our government was to the TBTF banks.  They held the country hostage while they had their hand out looking for aid to get them out of their own mess.  Our institution of Congress took a dive, never giving much a of fight, when the realized elections and recess were around the corner. 

The argument that the world financial system was going to collapse could be made on the side of Congress but it wasn't true.  There is no evidence that world would have caved in had we not bailed out the big banks.  The government could have just as easily paid the country parties with the Tarp and cleaned out the top managers of the banks to get to the bottom of this debacle. 

What have we gotten for our gracious gift of Tarp funds?  Banks that still using deceptive practices to try and stay afloat. 
2. Banks that still have the many of the people in charge of creating this wonder system at the helm.
3.  Banks still milking the treasury for help and using the cheap money at the discount window to create shadow profits, trying to convince the world they were on sound footing. 
oh yes and of course no problems that a few more billion of tax payer dollars could not easily solve. 

Tuesday, November 23, 2010

The MBS plot thickens as investors hire fraud detectives

The MBS plot thickens as investors hire fraud detectives to scrutinize loan documents. 
The story in WSJ covers a former Wells Fargo employee who is now working for the other side.  Sounds a little like the former revenue agent starting a company to do battle with the government.  It signals to me that if the former employees are even going into business to profit from the mistakes of banks, the problem is for real. 

The evidence continues coming out revealing that the banks have dug themselves a deep hole and have yet to see any reason to not keep pushing forward aggressively in spite of their fraudulent activity.

Who in their right mind would start a company to do such tedious work if they didn't have a reasonable idea it would bring a nice payoff?  A person who knows the business and has seen things from the inside. 

Here is the open to the story by Ruth Simon

URBANDALE, Iowa—In two squat, suburban office-park buildings here, Richard Barrent is digging through loan files that could help decide who pays for the mortgage-paperwork debacle.
Kindle DX Wireless Reading Device, Free 3G, 9.7" Display, Graphite, 3G Works Globally – Latest Generation
The former Wells Fargo & Co. quality-assurance manager's two-year-old company is part of a cottage industry of loan detectives obsessed with detecting fraud, misrepresentations and violations of underwriting guidelines. Such discoveries can be used as ammunition to force banks and other lenders to buy back loans from bond insurers, holders of mortgage-backed securities and other customers of forensic loan-review firms.
Kindle Wireless Reading Device, Wi-Fi, 6" Display - with New E Ink (Pearl) Technology
"There is a growing interest across the board" for such reviews, says Charles Cacici, managing member of Risk Management Group, a Brooklyn, N.Y., company that also scours mortgage files for problems. Competitors include Digital Risk, Clayton Holdings and Allonhill.

The full story is posted here on More financial Reality. 

yes it is true, plenty of "smart" people can behave very "stupidly"

Adam Levitin asks some important questions in this article
From Credit Slips, questioning how "smart" are the "smart" people ?

posted by Adam Levitin

In relation to the chain of title argument on securitization, I have been repeatedly confronted (often unsolicited) with an argument that there's no way there were massive screw-ups because thousands of top Wall Street legal minds were working on securitization deals. Yes, and there's no way the underwriting was lousy on the mortgages themselves because thousands were being done. I tend to get this argument from people with a large financial stake in ensuring that securitizations don't fail. This is a really bad argument, so let me just debunk it now (and hopefully never hear it again):

Continue Reading here

Oral arugments from CountryWide Vs Kemp tell incredible story

We are now just seeing the extent of the cover up the banks have participating in regarding their failure to abide by the pooling service agreements. This transcript is from January 7, 2010.  It is clear that the banks were well aware of the issues going on during the past few years and had little regard for the damage they were inflicting on the economy.  It is amazing that people are still coming on national television and saying that the issues is putting people into homes they could not afford. 

These are the professionals running financial institutions on Wall Street.  They seem destined to never take any responsibility for the creation of a MBS system that would take down the country. 

There are a few great parts to the transcript and the Lawyer representing the banks is asked a few questions that he can not answer.  The judge would not let him dance around the issues or put forth the argument that his client had the right to the property because that was the intention of all parties at the time of closing.  It appears that the banks went ahead and created their shell company of Mers with the belief they they could circumvent the law.  The judge in this case put everyone on notice that it wasn't that simple. 
Essentials of Business Ethics: Creating an Organization of High Integrity and Superior Performance (Essentials Series)
Hard to believe we heard little of this story the first 6-8 months of the year as banks foreclosed on thousands and thousands of homes.  The implications may be reach far greater than any one imagined.  

Transcript of Oral Arguments for Countrywide v Kemp

Tom Adams uncovers several issues with Country Wide and Pooling Service Agreements

Monday, November 22, 2010

Congress feeling pressure to get to the bottom of housing crisis. No more bailouts!

NY Times story on agreement between states and banks

“The large banks say they are doing everything they can to avoid foreclosure, but that is not the reality on the ground,” said Patrick Madigan, an assistant attorney general in Iowa who is a lead figure in the investigation. “The question is, Why?”
Mr. Madigan mentioned some theories, saying any or all could be true: “Is it the fact that the current servicing system was not designed to do large numbers of loan modifications, is it being understaffed, incompetence or the servicers having the wrong financial incentives?”
The major lenders are scheduled to appear on Capitol Hill on Thursday for the second hearing this week on their foreclosure procedures. The pressure to reach a settlement with the attorneys general will likely intensify after the hearing, which will be led by Representative Maxine Waters, a Democrat from California and outspoken critic of the mortgage lending industry.
But quick fixes are not likely, the attorneys general said. Richard Cordray, the Ohio attorney general who lost his bid for re-election this month, was hesitant to predict a significant outcome.

“Something will come of this, no question,” Mr. Cordray said of the inquiry. “The question is whether it will be a meaningful resolution that will make a real difference or a missed opportunity. It’s not entirely clear at this point.”

Some experts were willing to go even further, saying the lenders were impervious to change. For 18 months, the Obama administration has promoted modifications that would keep families in their homes over foreclosures that would kick them out. The programs have had some success but ultimately have done little to stem the tide.

“The banks’ act was to put their tail between their legs, act contrite before Congress and change nothing,” said Adam Levitin, an associate profesor of law at Georgetown University who testified before Congress on Tuesday and will testify again on Thursday.

More on the PR effort from the lenders here in The banks continue to play victim in crisis

The banks hope to buy off the attorneys general with money, perhaps to establish a compensation fund for victims, Mr. Levitin said. That, he said, would prevent attorneys general from “digging deeper and uncovering more rot in the mortgage system. My fear is that the banks’ calculus is correct.”

There were fresh reports on Wednesday that the foreclosure situation was deteriorating. Another 35,000 households entered foreclosure in October, the data company Lender Processing Service said, despite freezes instituted by lenders as they reviewed their practices. About 4.3 million households are either in serious default or in foreclosure.

The housing market also showed fresh signs of trouble. CoreLogic, a data company, said Wednesday that home prices fell 2.8 percent in the last year. Earlier this week, another information company, DataQuick, said sales in the Southern California market had dropped 24 percent in October from last year.

“We agree with the attorneys general that a housing market recovery is vital to restoring economic growth, and the sooner we resolve the outstanding issues, the better,” said Lawrence Di Rita, a Bank of America spokesman.

For the banks, the immediate cost of halting foreclosure is not significant. Brian Moynihan, the chief executive of Bank of America, said it totaled $10 million to $20 million a month. Bank of America has frozen foreclosures in 27 states.

A far greater threat to the broader financial system is the possibility that investors will force financial institutions to buy back hundreds of billions of dollars in soured mortgages, according to a Congressional Research Service report prepared for Thursday’s hearing and obtained by The New York Times.
Loan buybacks could shift $425 billion in losses on mortgage-backed securities from the investors that owned them to the banks that helped originate or assemble the securities, according to the report, far more than most estimates floated on Wall Street.

Full Story here awaiting comments.

Mortgage industry and banks trying to play victim in foreclosuregate

Here is an example of the banks PR campaign.  They continually try to say they are the victims in the entire process in an effort to sway public opinion and to steer clear of their insolvency  questions.  Here is more on the NY Times Story with commentary from Yves Smith at http://www.nakedcapitalsm.com/

This time, the “woman who humanizes a supposedly misunderstood industry” ploy goes downscale with tonight’s New York Times piece, “Voices of Foreclosure Speak Daily About Desperation and Misery.” The article’s central actor is Bank of America servicier call center operator Brenda Seymore, who is presented as saving a single borrower from foreclosure, at least for now. Wow! What a cause for celebration

This pure and simple lie is worked early on into an otherwise lightweight piece:

She finds herself caught between frustrated, anxious homeowners many months behind on their mortgage payments, and investors who hold mortgages and do not necessarily want to modify the loans, or reduce the amount of money homeowners owe.

Seymore is most assuredly not under any pressure from investors, either directly or indirectly. The only people pressuring her not to facilitate mods is her management


Saturday, November 20, 2010

More links on housing crisis and banks





Representative Miller speaks out against the Treasury attempts at keeping banks solvent here

Representative Miller speaks out against the Treasury attempts at keeping banks solvent here.  I first heard of the story on Naked Capitalism

The banks and servicers would not being doing anything if they were not making money. They are cash machines. Anytime you can charge a million accounts 40 $ a month it can add up.
I don't think it is uncommon for large companies to try to hit customers with modest fees that often go unchallenged because of the time it takes to get through to complain or because these fees are seen more as a nuisance rather than actual steeling.
Imagine a cell phone company adding .99 on every customer's bill. Many people wouldn't notice and those who did notice will often just let it go.

This could generate 5 or 10 million extra dollars a month. I am sure the servicers have a similar tactic.
It is another smoke screen by banks to avoid having more toxic assets on their books with no chance of return. Or most simply put, it is to avoid talk of insolvency. Once foreclosure is complete, the cost of holding a property skyrockets for the bank. The longer they allow it to be occupied the longer they can wait to take on management, which is extremely expensive just to comply with local ordinances and codes. Imagine just hiring yard service to keep the lawns cut on a 100,000 homes.... and in winter....most cities have ordinances that say the sidewalk has to be cleaned after every snow storm......

The banks would be so much farther ahead to do principal write downs and loan modification.  The losses just on REO properties will be in the millions and maybe more.

The banks are in a unsustainable position regardless of whether they are held accountable for the other issues or not.  They will need more bailout, more changes in the laws or both in order to continue avoiding the question of solvency.  As housing prices continue to decline, the problems can not be fixed by waiting for a rebound in housing.  There are so many properties that have not even hit the market yet and they will be taking prices down further. 
I was pleasantly surprised by the comments by Rep.  Miller.  He definitely seems have saught wise council on the foreclosure issues.  It is nice to hear the voice of reason from the normaly outrageous politicians. 

Read the complete letter from the Financial Stability Oversite committee here. 

Friday, November 19, 2010

minyanville story by david stockman shredding Oracle of Omaha

"But no taxpayer can be grateful. There never was a crisis on Main Street. The panic was in the US Treasury Department where the clueless Hank Paulson was swamped with calls from his crony capitalist buddies like Immelt and his counterparts up and down Wall Street, but especially at Goldman Sachs (GS). When Goldman’s stock price ticked $65 in the days after Lehman, Mr. Market was desperately trying to purge the reckless speculation and leveraged rot that had been building up in the nation’s financial system ever since the Fed discovered in the 1990s that it could print endless dollars and that they would be obligingly accumulated by the mercantilist overlords of China and East Asia.

Thanks to the Geithner/ Paulson/ Bernanke claque, the needed financial cleansing and purge never happened. Instead, we've just drifted deeper into a statist regime in which Uncle Sam backstops, stimulates, underwrites, and meddles with every aspect of our broken capitalist machine. Uncle Sam wasn't our savior in September 2008. By the panicked actions of a few desperate men occupying high offices, he was empowered to become our destroyer. Thanking Uncle Sam is fatuous under any circumstance. But to thank the men who brought on TARP, bailouts, and the lunacy of ZIRP and QE is pure humbug."

Stockman's conclusion is very telling. The government failed to do its duty in protecting the rights of citizens as it fell for the manipulations of Wall Street.

I am sure plenty of Americans would be doing just fine had they gotten easy money loans and a virtual government guarantee of their debt. But we can't all forget the government is here first to help the big banks because it is for the good of the country rather then enforce laws to protect the consumer. 

We are seeing how well that is working. 

The Best Way to Rob a Bank Is to Own One How Corporate Executives and Politicians Looted the S&L Industry - 2005 publication.

Thursday, November 18, 2010

creation of a society indebted to creditors. By design?

Stoller: A Debtcropper Society

By Matt Stoller, a blogger-turned Congressional staffer. He was a policy advisor to Rep. Alan Grayson on financial policy issues. Cross posted from New Deal 2.0.

From the Article published at Naked Capitalism  "A lot of people forget that having debt you can’t pay back really sucks. Debt is not just a credit instrument, it is an instrument of political and economic control."

"Today, we are in the midst of creating a second sharecropper society. I first heard the term “slaves to the bank” from a constituent fighting a fraudulent foreclosure.......... we should recognize that what the creditor class wants is what they’ve always wanted: total dominance of our culture." Find the complete Article Here

Stoler makes some very interesting points.  It is very true that creditors have always wanted to your personal finances at stake any time you take a loan.  We are seeing the perfect example now as we go through the foreclosure crisis.  People have always been forced take out loans in there name rather than in a business name or LLC.  This has been the banks way of locking borrowers in for life, regardless of changes in the economy or employment. 

Today we have millions of Americans underwater with there mortgages with little hope of ever having the home regain its original value.  The large too big to fail banks and insurers have already been bailed out and were given opportunities to "write down" their debt.  The home owner, however, has not only lost their nest egg for retirement, possibly their home, and credit score because the banks are looking to cash in again on this mortgages.  They seem to feel entitled to treat borrows with contempt because they have punitive powers that will take away the rights of citizens. 

What would a creditor do if they had take a major loss because of an economic downturn?  Consider something other than the usual response of milking tax payers to pay their debt.  They would file bankruptcy and restructure, hold their head high, be treated as responsible business people who just hit a rough patch.  The would not be shamed or berated by the media, politicians or the public.  They would likely survive the downturn with out losing any of their personal assets.  Donald Trump has filed bankruptcy for his businesses on more than one occasion but we never hear any say he is "deadbeat" or that he brought it on himself by "buying what he couldn't afford". 

Read more on  how lenders manipulated social views so much that people have been brainwashed into thinking it is much more shameful to default on your home loan than it is to default on a loan or your business.

Main stream media finally beginning to cover bank servicer abuses

Main stream media finally picking up the ball and actually covering some of the egregious actions by the bank servicers. Watch the video here.

For months most of the MSM has been falling in step with the righteous banks due to fear of reprisals. No one has yet to openly speak of how outrageous things have become continually taking the shallow view that there could never be a mistaken foreclosure.
The MSM, like the banks, have been forced to go with a new approach thanks to strong efforts by bloggers such as Yves Smith of Naked Capitalism. The diligence and tenacity of bloggers and lawyers defending home owners has created a challenge to the status quo that banks rule the world and are operating in the best interest of all.

Wednesday, November 17, 2010

Full spin ahead for the bank propaganda machine

The effort to spin the foreclosure problems in the banks favor is gaining speed not that banks have realized their trial balloons did nothing to sway the public.  The spin started a long time ago but the heavy artillery is coming out now.  The banks are now strapped in two ways:
1.   Strapped for cash as home values continue to decline and they play accounting games revealing their hubris and sense that they are above the law. 
2.  The are loaded for bear with the heavy weapons.  They have not given in and are spending millions, if not more on propaganda and attorneys to try and cover up there indiscretions that have cause the melt down in housing. 
Another great story at 4closure defense nationwide click this link for more information on foreclosure gate. 

Tuesday, November 16, 2010

The banks love escrow fees: so much that they may not be using them to pay insurance carriers

The banks and servicers love those escrow fees....seems like they must make some money off of all the escrows that sit in accounts for an entire year or 6 months before payment. I am assuming banks have figured out a way to profit from the escrows, since many loans are approved only if the borrower agrees to escrow for taxes and insurance.

Evidence has come out that banks and servicers are not paying the insurance bills and taxes in a timely manner even if the borrowers are up to date with there payments.  This could be a sign of significant cash flow problems.  The banks are hiding the truth about the situation and refusing to help the recovery by insisting they get paid 2 or 3 times over when it comes to mortgages.  They have had one bailout, but the possibility of  another bailout is not out of the question. 

The idea of not paying insurance on property is just a flying red flag that something is very wrong in the mortgage and housing industry.  The banks would never allow a home to go uninsured for any length of time because they were protecting their investment.  The property was their savior and if their was a fire and the home destroyed, the banks would insist on being paid off first from the insurance. 

Invisible Bankers: Everything the Insurance Industry Never Wanted You To Know

Now they are getting a taste of what it is like to be underwater.  If the home is not any where near worth the value of the mortgage there is much less incentive to care about insurance on the property.  There will soon be major issues regarding insurance payments and appraisals if we keep heading downward with home prices.  Read more here regarding the next shoe to drop in housing. 

This may be a sign of cash flow problems but it may also just be more evidence at their willingness (the banks)to break their own agreement that says they will pay the taxes and insurance when due. Seems like it is another case of following laws only when they benefit the banks.

Monday, November 15, 2010

Las Vegas: Underwater in the Desert, real estate is the anchor