Full Article By Michael Olenick, founder and CEO of Legalprise on shadow housing inventory

By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha). You can follow him on Twitter at @michael_olenick“Shadow inventory,” the number of homes that are either in foreclosure or are likely to end up in foreclosure, creates substantial but hidden pressure on housing prices and potential losses to banks and investors. This is a critical figure for policymakers and financial services industry executives, since if the number is manageable, that means waiting for the market to digest the overhang might not be such a terrible option. But if shadow inventory is large, housing prices have a good bit further to go before they hit bottom, which has dire consequences for communities, homeowners, and the broader economy.
Yet estimates of shadow inventory, and even the definition of what constitutes shadow inventory property, vary widely. For example, the Wall Street Journal published a Nov. 11, 2011 article, “How Many Homes Are In Trouble?” where values varied from 1.6 million (CoreLogic), to “about 3 million” (Barclays Capital), to 4 million (LPS Applied Analytic), to 4.3 million (Capital Economics), to LPS Applied Analytics, to between 8.2 million and 10.3 million (Laurie Goodman, Amherst Securities).
Why do these numbers vary so much? Even though CoreLogic is generally considered to have one of the best databases of loans, its estimates of loan performance and odds of default are based on credit scores, which is a badly lagging indicator. Laurie Goodman is seen by many as having the most carefully though out model, even though industry insiders are keen to attack her bearsish-looking forecast.
I have a large database of my own, and am familiar with housing and mortgage information sources. I’ve come up with my own tally of shadow inventory and have also tried to analyze — OK — take a stab at – what I call “shadow liability,” meaning the amount of money taxpayers, investors, banks, will be lose if those homes are liquidated. Assumptions using those terms are also in the attached spreadsheet. My analysis comes up with a total close to that of Goodman’s range, 9.8 million using a narrower definition than Goodman’s of what constitutes shadow inventory.
Put more simply, things are actually worse than any of the prevailing estimates indicates, although Goodman is very close to the mark. Current loss experience suggests that this figure is staggering, easily in the $1 trillion range.
Why aren’t those losses more visible yet? Well, evidence suggests that servicers are stalling the foreclosure process, not taking title to and selling these houses. For the lenders, such delay likely allows them avoid the write-offs of both the negative equity as well as the worthless second liens. More generally, it keeps the trillion dollar losses hidden. Lenders aren’t acknowledging their stall tactics, however. When people notice how slowly foreclosures are progressing from initial steps to resale, lenders point at their foreclosure fraud related dysfunction. Lenders conveniently don’t mention that such dysfunction was self-induced, instead blaming borrowers and courts.
My MethodologyMy data comes from several sources. Default information is from the October, 2011 LPS Mortgage Monitor. Housing information, including the number of houses with mortgages, comes from the US 2010 US Census and the 2009 Statistical Abstract. Median home prices — the likely value of the loans that are either in foreclosure or will be soon, is from the FHFA; specifically the Q2, 2006 state-by-state median home prices, when many of the bubble loans were written. Note: these prices are used to approximate the principal value of the loans, not what the properties are currently worth.
Because not all this data overlaps entirely some extrapolation was necessary; when required to extrapolate I tried to do so conservatively. An example is how I arrived at the number of mortgages in the US, a step on the way to calculating the number of mortgages in default.
The first step was figuring out how many housing units with residential mortgages America has. According to the 2010 census, America is home to 131.7 million housing units. Of these, 76.4 million are owner-occupied, 37.5 million are rental units, and the remaining 17.2 million are vacant, and the remaining 600K are houseboats or other exotic housing. Of the 37.5 million rentals, some are in apartment buildings that would be financed with commercial mortgages, not residential ones. Commercial loans are structured differently than residential loans, and are easier to renegotiate, so they I’ve excluded from this analysis.
To be conservative—to exclude more loans as commercial than actually are, rather than risk leaving commercial loans in the analysis—I’ve assumed that any building with 5 or more housing units is in a building that either has a commercial loan or no mortgage at all.
According to the National Multi-Housing Council, using 2011 Census data, has determined that nationally, 42% of renters live in buildings with 5 or more units. Applying that percentage to the 37.5 million rental units, and subtracting that from total renters, I end up with 21.8 million rental housing units that could have residential mortgages.
In total, then, I have 76.4 million owner-occupied homes, 21.8 million residential rental units, 17.2 million vacant homes (which includes, among other things, vacation homes and abandoned ones) and 16.3 million other, mainly units in commercial properties. All in all I end up with just over 115 million homes that could have a residential mortgage on them. But how many of them? Well, the Census reports that in 2010, 68% of owner-occupied units had at least one mortgage. I used this same 68% for investment (residential rental) properties and vacant (primarily vacation and abandoned single family homes) properties.
I believe this 68% figure is appropriate for two reasons. First, a person who has a mortgage on their own home is unlike to buy a vacation house or an investment property with cash. Indeed, even a homeowner living free and clear in their own home might need a mortgage to buy second property. So assuming the mortgage rate for investment and vacation homes is the same as owner occupied surely understates the number of mortgages. Second, the mortgage rate on abandoned homes surely is nearly 100%; why abandon a home if it’s not in foreclosure?
Using that math, I came up with 78.6 million mortgaged properties. This figure is substantially higher than many other estimates, including Goodman’s Amherst study, though the likely reason is that the census data the analysis relies upon is relatively new. Goodman’s study uses 53.7 million mortgaged homes, though the census reports 52.2 million owner-occupied loans alone, in additional to rental properties, mobile homes, and vacant properties. Given that the census cost $13 billion to produce — an amount no private organization could afford — and 2010 results were not available at this level of granularity until relatively recently, I would not be surprised to see upward revisions to other base housing unit figures in the future.
To estimate shadow inventory, I used the delinquency data from LPS Analytics. They add up loans that are delinquent, loans that are in foreclosure, then come up with a state-by-state percentage of “non-current” — loans that are, or are likely, to end up in foreclosure. There is some ambiguity in LPS’ figures; specifically the definition of “delinquent,” and whether they are counting homes or loans.
To illustrate a potential problem with these assumptions, let’s take a theoretical example of 100 houses. Let’s assume 68% have mortgages, a figure from the census, so 68 houses have mortgages. Then let’s assume these homes are in FL and 22.9%, or 23 houses, are either in foreclosure or likely to end up there soon. I’m assuming this means that 45 houses are current, 23 houses in trouble, and 32 houses paid-off, though I concede that it could mean 12 houses with two mortgages are in trouble, 32 are paid off, and 56 are fine.
This methodology differs from Goodman’s, which relies upon predicting both likely defaults and re-defaults for non-sustainable modifications, as well as a small number of homes likely to strategically default as liquidations begin and home value plummets. Conversely, my model assumes all 90-day delinquent loans will result in foreclosure and liquidation — and I’ve yet to see enough good-faith modifications to assume otherwise — whereas Amherst’s believes the figure is likely to be 80-90%. However, I do not allow for strategic defaults, which more than offsets my skeptical assessment of the mortgage mods now begin offered (my assumption is that when people default suddenly, it is really an anticipatory default: the borrower could see he was going to hit the wall, but defaulted before he was completely broke. Given the job market costs of having a foreclosure or bankruptcy on your credit record, I don’t regard that as a bad assumption). Goodman has three buckets of current loans that she anticipates will produce defaults: badly underwater loans (loan to value ratios of over 120%), moderately underwater loans (LTVs of 100% to 120%) and loans with equity borrowers will default upon anyway (LTVs less than 100%). She estimated those three groups would produce eventual foreclosures of 2.8 to 3.7 million of her total. Thus my somewhat smaller tally is actually more dire, because it consists of borrowers who are having trouble making payments now, as opposed to borrowers who are anticipated to default at some undetermined point in the future.
That being said, except for the lower housing unit loan base Goodman’s analysis seems rock-solid, though it would mushroom if used with my higher base housing unit figures and more pessimistic view of servicer’s ability to mitigate defaults. Together they would paint a devastating picture of the future, so I won’t try to reconcile them .. at least not yet.
Using the assumptions above, and applying the LPS data state-by-state, there are 9,800,000 houses in shadow inventory.
If these loans were taken out for the median value of a state-by-state home price, using data from the FHFA, for Q2, 2006, there is $2.3 trillion of home values at near the market peak. The mortgage balances are going to be lower than that, but given how widespread equity extraction came to be (and it is probably that the most levered homes are hitting the wall), it is not unreasonable to assume LTV ratios relative to peak values of 80%. Loss severities on prime mortgages are running at roughly 50% and are 70% on subprime (note that with more borrowers fighting foreclosures, and given that loss severities on a contested foreclosure can come in at 200% or even higher, so using these assumption is certain to understate actual results). $2.3 trillion x 80% x 50% = $900 billion.
These losses will be distributed across the GSEs (meaning taxpayers), banks that have second liens (with the biggest losers being Bank of America, Citibank, JP Morgan, and Wells Fargo), investors in private label (non GSE) mortgage securities, and other US and foreign banks. Balanced against this liability is some amount figure for the underlying asset, the house. Given that servicer advances, foreclosure costs and servicer fees come close to and even exceed the value of the property, comparatively little of this $2.3 trillion will be recovered in property liquidations.
It is unclear where the money from these write-offs will come from, or whether they losses have been adequately budgeted. Obvious sources are Fannie Mae, Freddie Mac, European and US banks, none of which have reported anywhere near this level of reserves. We know that the Federal Reserve has been buying up MBS and related instruments in bulk; maybe the central bank plans to print more money to cover the losses and enable the foreclosures. Printing this much money, for this purpose, in this political environment, in secret, seems unlikely.
In support of the conclusion that banks cannot afford to recognize this shadow liability is the sharp decrease of foreclosure filings in 2011 and the seeming unwillingness of banks to move foreclosures through the system. They file foreclosures, then let them linger, not taking homes even when every possible borrower defense is exhausted. Some of this slowdown may be due to more scrutiny of foreclosure documentation, particularly in judicial foreclosure states, but there is clearly more at work. In the most obvious example, servicers are reluctance of banks to take title to the homes after obtaining a judgment; even after the judgment is a year old and cannot be challenged.
For example, filing volume in Palm Beach County, FL, started to increase towards the end of 2010 but judgments remained flat and certificates of title — where a bank actually takes title to a house, recognizing the underlying financial loss and evicting the family — actually slowed down despite an enormous backlog of judgments. This contrasts to the banks incessant complaints of a broken court system, because a judgment more than one year old in FL cannot be challenged for fraud. This leads to the conclusion that it is the banks — who are unwilling or unable to absorb the losses — rather than the courts or homeowners that are actually slowing down liquidations.
Let’s walk through these figures. In Palm Beach County, the number of Certificates of Title issued for Q1-4, 2011, was 1,594, 1,886, 1,413, and 1,299 respectively; the number of judgments was 289, 480, 281, and 367 respectively. Let’s compare that to 2010, when there were 3,105, 9,704, 7,259, 1,033 judgments in Q1-4 respectively and 1,534, 2,207, 3,065, and 2,738 titles transferred.
Many of these cases are uncontested; yet it is not uncommon in foreclosure court to see bank lawyers arguing vehemently for delays with nobody on the other side.
Let’s review more figures: in Palm Beach County there are 10,794 more final judgments of foreclosure that are at least a year old than there are certificates of title issued. Again, there is nothing anybody can do to challenge a judgment after one year. Servicers appear to be milking ongoing costs and fees from investors. Cross-referencing that to a softer data point I’m reminded of a worker, in my home state of FL, sent by a company I hired to perform a home repair. He’s a young man who said he purchased a condo, lost a prior job that paid better, and stopped paying for his condo for which, he noted, similar models were selling for at a 80% discount to what he owed. He filed no defense to his foreclosure whatsoever — he was positively clueless about the judicial system and did not hire a lawyer — but he ran to his truck to show me a Notice of Voluntary Dismissal of his foreclosure, asking what it meant. It’s clear that while some homeowners do their best to avoid the auction block, even those who do nothing all have a statistically good chance of staying put.
There is other anecdotal evidence suggesting banks do not want these houses or, more accurately, do not want the write-offs that actually taking the houses would force:
• Foreclosure defense lawyers have clients who have not paid their mortgage in years, but face neither a foreclosure nor even a negative mark on their credit report. I recently received a call from a man who said he had not paid his $1.6 million mortgage in two years but his servicer has not foreclosed, and he faces no derogatory information on his credit report; he was frustrated because he is retired and just wants to move to a cottage. This phenomenon, which apparently isn’t rare, might explain why shadow inventory reports that rely on credit reports to extrapolate shadow inventory are often dramatically lower than these calculations.
• Every year the Republican dominated Florida legislature introduces legislation to speed along foreclosures, and every year the legislation fails. I personally believe this legislation to be both immoral and arguably illegal. However, it is impossible to believe this bank beholden governmental body is willing to repeatedly bite the hand that feeds them .. unless their master makes it quietly clear that they do not actually wish to accelerate liquidations but cannot publicly admit as much.
• It is common for foreclosure mill lawyers to argue for delays in selling a home when nobody is representing a borrower. Judges, who want to clear their dockets, will rail at bank lawyers about the age of the case even while bank lawyers argue for yet another delay, while the other table — where the borrower, the defendant, is supposed to sit — is empty.
• Bank-instituted delay tactics are not limited to Florida. Not long ago I spent the day with Sean O’Toole, CEO of foreclosureradar.com. Sean knows the foreclosure world and his data is, literally, the best in the Western states he covers. He noted the same effect in CA; lender-initiated delay after delay after delay selling a home. In CA, after three delays both parties must approve a further delay but Sean said banks routinely file stipulated delays when, in fact, borrowers just want to literally move on.
• There is the well-known tendency of servicers to “lose” paperwork, where borrowers beg for mortgage modifications, short-sales, or deeds-in-lieu. These delay tactics — rather than just answering “no” to a request — make sense in this context because leaving a house in foreclosure limbo, forever, is the only solution that delays the inevitable balance sheet busting write-offs.
• Lastly is the unwillingness of banks to agree to principal reductions, or even modifications with principal balloon payments, which would yield more long-term money than a foreclosure. Servicers appear to want these homes in the higher-yielding default status, even if they are reluctant to actually push the homes to liquidation, to take title on behalf of investors.
We’ve written relentlessly about servicer abuses, but we’ve almost always contextualized these abuses through their effect on borrowers. Staring through data, especially data at this scale, complexity, and with strong economic ramifications, is like looking through a dirty window. But as we wipe away layer after layer of schmutz the picture is becoming clearer. Yes, servicers continue to prey upon ordinary Americans. But evidence suggests that they’re also preying on investors. Individual American families do not deserve to suffer these behaviors, that increase the losses while delaying the uncertainty, and neither do pension funds, European villages, municipalities, or other unsuspecting entities who actually funded these loans.
Few people are going to complain when they’re not paying their mortgage that there is no mark on their credit-report nor a foreclosure; a few of the more perplexed ones — or those that want to bring a bad mortgage to resolution — may speak out, but most remain silent.
Similarly, many investors, and surely the banks themselves, know about these figures. But as both sides spin their wheels, the problem continues to spiral out of control.
Finally, there is government behavior that makes no sense, especially from the Obama Administration. We have repeatedly seen federal intervention when it is inappropriate and unwelcome, and we’ve seen no intervention when it is warranted. For example, the Administration has actively intervened in the multistate Attorney General settlement talks even though this is, by definition, a state issue. However, they have done nothing to prosecute overt and clearly proven interstate crimes surrounding document forgery.
There is a strong argument that campaign donations are at work, but given the lopsided donations from the financial services industry to Republicans one would think Obama would send a message by taking firm control over the FHFA, the FDIC, the SEC, the OCC, the Treasury, the Justice Department, and strong-arming the Federal Reserve into offering substantive help to borrowers and investors. Yet, at every level, the President has failed ordinary Americans. Even the most egregious behavior results in dead silence .. we don’t even get a yawn. Every program has been an unmitigated disaster, especially HAMP. When Administration figures do intervene their influence is overtly skewed in favor of the banks.
Surely Obama and his advisers realize these problems. It seems inevitable that we will soon face either widespread bank failures and a staggering loss in home values (although arguably an increase in middle-class liquidity), or another much larger bailout; a fraud bailout. Either option is likely to sink President Obama’s popularity rating in much the same way it is likely to sink individual home values. Despite this, the president continues to play Kick the Can, presumably hoping these problems won’t be widely recognized prior to the election in November, while the banks continue to kick everybody else.
Market manipulation used to be illegal, especially in cases where there was asymmetrical information or unequal bargaining power. Pundits use the term “heads we win, tails you lose,” but that actually understates the problem because it implies that there still exists individual parties and counter-parties. Our more modern arrangement looks more like an aristocracy, where there isn’t a genuine market at all but rather a pseudo-market operating like a private ancient tax collector, demanding the increasingly poor peasants feed the monarchs and his cronies rather than feeding their own children.

I’m often told that people don’t care about deadbeats who haven’t paid their mortgages. But people fail to realize that this affects everybody. Ordinary Americans see the effects of this manipulation every day; it affects them profoundly, even if they don’t understand it. All but the most irresponsible aristocrats throughout history realized there were boundaries. Their motivations may have differed — some cared about the well-being of the peasantry while others feared the guillotine — but for millennia all but the stupidest acknowledged and avoided pushing the populace too far. If we’re going to live under an American Nuevo-Feudal system, the least we deserve are overlords at least as smart as the despots they’re trying to imitate.

Bill Black: What if the SEC investigated Banks the way it is investigating Mutual Funds? « naked capitalism

 Interesting article by Bill Black published at Naked Capitalism. 

The Wall Street Journal ran a story yesterday (12/27/11) entitled “SEC Ups Its Game to Identify Rogue Firms.” “Rogue” is an interesting word with a range of definitions. When it is used as an adjective its meaning is: “a playfully mischievous person; scamp.” The trivialization of the most destructive elite frauds is one of the most common forms of what criminologists call “neutralization” of the moral content of wrong doing. Neutralization increases crime.The actual story makes it clear that the criminals that the SEC was identifying were not “rogues.” They were the CEOs of seemingly legitimate firms. The SEC is identifying “accounting control frauds” – the frauds that cause greater financial losses than all other forms of property crime combined. The SEC is not identifying a few rotten apples, but roughly 100 hedge funds likely to have engaged in accounting fraud. The WSJ describes the SEC’s identification system:

read the full article by following the link below.  

Bill Black: What if the SEC investigated Banks the way it is investigating Mutual Funds? « naked capitalism

The Mortgage Lending and Banking industries are out of control and full of Hubris

It still is making me shake my head every time I hear someone berating the Occupy protestors or calling anyone who has said their bank had screwed them royally.  What I really don't understand is how people can willingly be so blind to the state of the mortgage and banking business and be stupid enough to think it is fine.  Everyone is getting screwed by the criminal behavior of the banks and lenders.  The system used to created and securitize mortgages is a criminal enterprise and the following article taken in part from the Wall Street Journal and in part from Naked Capitalism reveals just how arrogant the too big to fail banks have become and it shows how they continue to act in violation of many laws without fear of consequence. 

People are missing the point of all of the protests and all of the complaints by home owners who have been done wrong by the banks.  It is funny that people have become so righteous  and are willing to actually let banks work as an enterprise that is criminal from top to bottom.  Most people seem to think they are not affected by the bank issues if they are not missing a payment on their home.  There is so much more at stake than people realize and the right to proper ownership may be on the verge of disappearing. 




From the Wall Street Journal:

GMAC Mortgage, the mortgage lender of Ally Financial Inc., is exiting the vast majority of its lending in Massachusetts a day after the state sued it over its foreclosure practices.
The nation’s fifth-largest mortgage originator said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,” ratcheting up the high-stakes mortgage fight there….
GMAC Mortgage will stop purchasing loans from correspondent lenders and wholesale brokers, which makes up the majority of the company’s business. The lender said it was “disappointed” but that “it has an obligation to manage risks and deploy capital in an appropriate manner and in a way that protects the investment of the U.S. taxpayer.”

Get a load of the sanctimoniousness. Since when do the interests of investors trump the rule of law? In fact, the logic is backwards, since investors are not well protected in a regime where laws are not respected. Does anyone want to invest in, say, Somalia?
Reader MBS Guy notes by e-mail:

Ally will stop lending in the state. Now litigation costs are too high in Massachusetts, according to Ally Bank, which is 74% owned by the US Treasury.
This is a bit funny, since the lawsuit involves issues with loans which were originated and, generally foreclosed, in the past. Ally has said that they have fixed all of their robo-signing issues, so it shouldn’t be a problem for newly originated loans.
Given its ownership structure, is this a pissy message to Massachusetts from Ally itself, or from its majority shareholder for tanking the AG Task Force?

And get a load of this part by an industry mouthpiece:

“It also sends a signal to Massachusetts and other states that if you make it difficult for lenders to act they will take their business elsewhere,” Mr. [Guy] Cecala of Inside Mortgage Finance said of GMAC’s decision. “There is no law you have to operate in all 50 states.”

Kotlikoff | World on brink: As central bankers run out of ammo, the need for alternative models has never been more urgent - Business Exchange

 This story is from Ian Fraser at business week. It is worth a read. 

Kotlikoff: financial system is a Ponzi scheme that could collapse at any time

A leading professor of economics has warned that the global economy is a giant Ponzi scheme that could collapse at any time.
Speaking at a pensions summit in the Netherlands, Professor Laurence Kotlikoff of Boston University told delegates that the global financial system – which remains largely unreconstructed despite near implosion following the collapse of Lehman Brothers two years ago – is a massive con trick, characterised by lack of transparency, and largely made up of fraudulent guarantees and financial promises that cannot be kept.
Kotlikoff, also known as Larry, is the author of Jimmy Stewart Is Dead: Ending the World's Ongoing Financial Plague with Limited Purpose Banking, a book endorsed by Mervyn King, governor of the Bank of England. He served as senior economist with president Ronald Reagan's council of economic advisers in 1981-82 and has advised the IMF, World Bank, OECD and scores of national governments around the world.
Kotlikoff believes that government bailouts of financial institutions did little to address underlying problems of our financial system and that, in fact, they made things worse. He said:

"AIG insured the uninsurable, and now the US government has taken over that role. But managing the crisis by taking on promises you can't deliver is not a fix to systemic risk. It is itself systemic risk."

He added that, if the United States didn't use "bogus" accounting to keep unfunded liabilities off its balance sheet, it would be in worse shape than Greece: "To cover all those liabilities, federal taxes would have to be raised by 64%, or expenses would have to be cut by 40% – and that is an optimistic estimate."
He said that if the US doesn't take steps to reduce its deficits, its fiscal problems could trigger a second financial crisis worse than we've seen seen so far.

"Once people figure out the government can't actually deliver what it has promised, other than by printing huge amounts of money, this may trigger a bank run. Pimco has already said it will buy no more US Treasuries, which is not a good sign."

Since Kotlikoff spoke in the Netherlands, Standard & Poor’s has lowered its outlook on the long-term rating of US sovereign debt to negative, citing a "material risk" that policymakers may fail to reach an agreement on proposals to trim its massive budget deficit. This, coupled with renewed fears about the eurozone, triggered an immediate fall in US share prices on Monday.
In Kotlikoff's view the financial system is inherently fraudulent because financial institutions insure the uninsurable and take on liabilities they cannot honor, while these institutions and their managers take on only limited liability and pass the buck to the taxpayer when things go pear-shaped. In short, it's what Jeffrey Sachs, in a review of Jimmy Stewart is Dead, has described as "a system in which bankers make promises they can't keep in order to collect outsized earnings unrelated to real productivity."
Kotlikoff believes the only way to fix this is to introduce the "limited purpose banking", the old-fashioned know-your-customer type banking practised by the Bailey Building and Loan Association in Frank Capra's 1947 movie It's a Wonderful Life. Kotlikoff said this

"takes the multifaceted fraud out of our financial system by turning all banks, insurance companies, hedge funds, etc. into fully transparent mutual fund companies. Limited purpose banking also abolishes over 115 federal and state regulatory authorities and replaces them with the Federal Financial Authority, which verifies, fully and immediately discloses, and independently rates and appraises all securities held by the mutual funds. In a nutshell, limited purpose banking makes Wall Street safe for Main Street."

He also believes the pensions system must be reformed so that employers are removed from the picture since "companies have their own interest at heart", and those interests rarely coincide with providing their employees with a good income after retirement. Instead Kotlikoff believes the government should introduce mandatory savings of about 8% of salaries, to be invested collectively in a globally diversified index fund at virtually zero cost, he said.
He told delegates at the conference that he hoped his views would resonate in the Netherlands and inspire measures to overhaul a broken financial system that is living on borrowed time. "Don't expect the US to take the lead in this," he said. "We are the ones who created this mess in the first place."

Fraud being uncovered in some states regarding foreclosures and big banks

  from FDN web site

This month, FDN attorneys have been successful in both Oregon and New Jersey in compelling, by court Order and over objection of the “bank’s” attorneys, the production of PSAs, trust formation documents, trust prospectuses, and documents as to the alleged authority of MERS. FDN attorneys Jeff Barnes, Esq. and Philip Anderson, Esq. in Oregon, and Jeff Barnes, Esq. and Michael Jacobson, Esq. in New Jersey, have obtained court rulings compelling this critical discovery. In other cases where Mr. Barnes was able to obtain this discovery by court order, it has been revealed that the purported assignment to a trust years after the trust closed violated the very requirements of Mortgage Loan Conveyance provisions of the PSA. Thus and in conformity with Weisband, the loan never made it into the trust. The resultant lack of standing, lack of chain of title, and lack of real party in interest issues are scheduled to be argued by Mr. Barnes before various courts in February, and a trustee in a bankruptcy case in Mississippi has filed an adversary proceeding based on evidence that the purported assignment of the loan, which was done years after the trust closed, was ineffective as it violated the restrictions of the PSA.










Make big money in penny stocks today

Banking and mortgage industry has not changed, regulators hide out afraid to cross the TBTF companies

Image by Getty Images via @daylifeThese two stories are evidence that nothing has changed in the banking world and the bankers are walking away with bonuses in hand ready to gamble another day.  We have seen months of criminal activity that can be uncontested for the most part yet the bankers are living the high life. 

It has been a long few years of investigation and discovery for the those interested in finding the out the true cause of the housing meltdown.  Brilliant bloggers at nakedcapitalism, credit slips, 4clousurehamlet, Washington's blog, the big picture and many other excellent blogs that should also be given credit for uncovering the root causes of the massive wealth transfer from middle class America, have uncovered the depth of the fraud and malfeasance but it appears to be viewed as a pesky Nat zipping around the head of bank executives.  Find links to the above mentioned blogs here.


At least the truth is out for all to see even if many are making the choice to look the other way in order to not bite the hand that feeds them or because they hope to take advantage of others misfortune whether the banks behaved illegally or by the letter of the law. 

http://www.huffingtonpost.com/arianna-huffington/why-are-bankers-still-bei_b_194242.html

http://www.huffingtonpost.com/ann-pettifor/america-the-bank-owned-st_b_189043.html

Related articles

• C&L Opening Bell: Legalizing fraud (crooksandliars.com)
• Bankers Expect a 7% Drop in Bonuses (dailyfinance.com)

Key Lessons From the Financial Meltdown

key lesson from the meltdown “was that liquidity is critical to financial institutions,

This line was taken from the article in Wharton Knowledge that seems make a case for the obvious.  I think we were well aware of the issues that could occur when banks and brokers are allowed to leverage themselves 9 to 1.

The article goes on further to state that the the stress tests were a major factor in  stabilizing the banking system.  Ruth Porat, soon to be new CFO at Morgan Stanly has the similar line to all the banks and politicians that want to prop up the banks at the expense of the tax payer. Porat seems to think that the financial institutions are solvent with capital reserves adequate enough to cover the increasing defaults and foreclosures. 
Liquidity, Interest Rates and Banking (Financial Institutions and Services)
The more likely truth is that the banks are not solvent and as defaults continue to grow the hold and hope for recovery option no longer applies.  The recent video here on CNBC references the shadow inventory, or inventory yet to come on the market from defaults, to be nearly twice what we are seeing now.  The number of foreclosures this year was 4 million, the claim was made on the network that there it is possible some 7 plus million defaults are yet to hit the books of the banks.  The cost of holding and managing these defaults is astronomical and could pull anyone of the "too big to fail" banks under.

Risk and Liquidity (Clarendon Lectures in Finance)

Dylan Ratigan Show Video on foreclosure gate

Dylan hits the nail on the head in his analysis of foreclosuregate and bank fraud. 

Visit msnbc.com for breaking news, world news, and news about the economy

The Foreclosure Survival Guide: Keep Your House or Walk Away With Money in Your Pocket

The WSJ published a story that reveals the governments lack of will and fortitude when it comes to prosecuting the worst offenders from the financial crisis.  The headline mentions take down of 500 offenders but the reality is they have not done a thing to anyone of the major players on Wall Street.  Wall Street was ground zero for this crisis and the government is afraid to cross Wall Street or the big banks.  They keep asking for the bankers to come to hearings and give there testimony instead of putting them on trial.  It is ridiculous that they have gotten away with pillaging the entire system and no one has been held accountable.  Wall Street has just continued to give out billions in bonuses as the banks stall for time and try to turn the fight for the truth in to a fight of attrition.  The big players like to win battles this way because they have the most resources and the backing of cheap funds from the fed.  
There is no plan the banks are initiating to help stem the foreclosure crisis.  They are fine with letting everyone suffer while they get to ride in limos and private jets.  The screwed the entire system by using far more leverage than necessary on the RMBS products and exploited the CDS market for their benefit. 
Seeing this story today makes me even more certain that the government is so deep in the pockets of the big banks that we will have the same bank run government for years. 
Read the full story in the Wall Street Journal here.  Government attempts to placate Americans calling for the prosecution of the offenders in the financial crisis.

Trading Stock Options: Basic Option Trading Strategies And How I've Used Them To Profit In Any Market

Trading Stock Options: Basic Option Trading Strategies and How to Use Them to Profit in Any Market

Treasury says possibility of lower housing prices at congressional hearing

The treasury seemed to be the first in the administration to try send out a test balloon before the public actually finds out the truth about the banks their part in "foreclosuregate".  The Bush and Obama administrations, the banks and the main stream media have all had a hand in trying to hide the real causes of the housing meltdown.  It seems like many people are getting a little nervous now thousands of fraudulent transactions have been put in the spotlight. 
The full article can be found at this link:

http://www.nytimes.com/2010/10/28/business/28housing.html?_r=1&ref=todayspaper

--Revelations about paperwork shortcuts and so-called robo-signed affidavits, as well as the likelihood of protracted legal battles by homeowners and inquiries by state and federal officials, will hinder foreclosure proceedings and discourage prospective buyers, a Treasury Department official said.
“Together, these two factors may exert downward pressure on overall housing prices both in the short and long run,” said the official, Phyllis R. Caldwell, chief of the home ownership preservation office at the Treasury"---
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It is become more and more clear that they government and the banks were on a mission to change the rules to favor the financial institutions regardless of the law.  It has been going on for a few years now.  The banks have been in total control of policy since the Tarp.  The banks set up a scenario that struck fear into congress, who were willing to do anything to keep the banks on their side or to buy votes. 

The banks fooled them all into giving up billions of dollars that was supposed to save the world banking system and our country from the 2nd great depression.  All that really happened with the billions of dollars was to keep the banks functioning.  It actually took a few accounting tricks, billions of dollars and the media unwilling to out the banks,  to give the an appearance of solvency for the financial institutions.

There is still little direct talk of holding the banks accountable for the mess they have created and now added to by their lack of honesty.  They all wanted to push the foreclosures through as quickly as they could and try to get housing values back up.  They seemed to think that it was ok to break the law as long as it would turn the economy around.  It might have been true if they hadn't created a system that was destined to collapse. 

Maybe the  too big to fail banks will be held accountable for their behavior now that people are seeing the gravity of the situation. 
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