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May
05

Foreclosure Rights – What You Need to Know!

By | Featured, Foreclosure Defense Research, Foreclosure Rights, Forensic Loan Audits, Homeowner Resources, Loan Modification

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What you need to know about your Foreclosure Rights

by Lane Houk
May 5, 2009

Did you know that over 98% of all people who are served with a foreclosure suit or notice of default do NOTHING to defend themself in the process? That’s a fact.

If you were sued today by someone for $150,00 would you just ignore the lawsuit? No way! You’d run out, talk to an attorney and defend yourself against the allegations. But this is exactly what most people do when they get sued in foreclosure…NOTHING!

I think this happens because most people just don’t know they have legal rights, foreclosure rights. Yes they owe the money and they know that; and, a legal defense isn’t about denying that the money was borrowed. By now, the “Produce the Note” strategy has become more common knowledge; and, by all measures that’s a great piece of the puzzle but is by no means the entire enchilada in a comprehensive legal defense to foreclosure.

So let me simplify the message… you have Legal Rights in Foreclosure! Claim them! In Florida, if you don’t claim these rights in the first twenty (20) days, you automatically waive them. Ouch! Don’t do that. You also don’t want to waive them by pretending you know what you’re doing and writing your own defense. Pro Se foreclosure defense isn’t what it’s all cracked up to be. What are you going to say to a judge in a Summary Judgment hearing? What answer will you have for the first piece of foreclosure case law opposing counsel throws at you. Hire an expert foreclosure defense attorney. Trust me, it won’t cost you money, it will save you money – if you hire the right one.

Next, hire an expert to complete a forensic loan audit. You’re foreclosure rights are extended when violations of the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), the Home Ownership & Equity Protection Act (HOEPA) and state law violations can be found and quantified in a well structured Forensic Audit Report. Beware of all the folks popping up on the radar doing this. Most of them are only software driven and thus, aren’t “forensic” in any kind of way. Remember a age-old golden rule… “don’t believe everything you hear” and “cheaper isn’t usually better.” A true forensic auditor takes a couple hundred documents and forensically analyzes them, looks for the idiosyncracies, the story if you will, and pieces the violations together to make a case. One a real, practicing attorney can use as evidence in court.

Your foreclosure rights are there… you just have to know what to do, where to go, who to see and why. Trust me, it will save you money, save your home and mitigate your liability.

If you have further questions, contact me.

  MSNBC.com

New foreclosure defense: Prove I owe you Homeowners demand lenders produce original documents – some can’t
The Associated Press updated 3:59 p.m. ET, Tues., Feb. 17, 2009

ZEPHYRHILLS, Fla. – Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.

And just like that, the foreclosure proceedings came to a standstill.

Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.

During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.

Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.

“I’m going to hang on for dear life until they can prove to me it belongs to them,” said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. “I’ll try everything I can because it’s all I have left.”

In interviews with The Associated Press, lawyers, homeowners and advocates outlined the produce-the-note strategy. Exactly how many homeowners have employed it is unknown. Nor is it clear how successful it has been; some judges are more sympathetic than others.

More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes. On Wednesday, President Obama will unveil a plan to spend at least $50 billion to help homeowners fend off foreclosure.

Chris Hoyer, a Tampa lawyer whose Consumer Warning Network Web site offers the free court documents Lovelace used to file her request, has played a major role in promoting the produce-the-note strategy.

“We knew early on that the only relief that would ever come to people would be to the people who were in their houses,” Hoyer said. “Nobody was going to fashion any relief for people who have already lost their houses. So your only hope was to hang on any way you could.”

 

Tom Deutsch, deputy executive director of the American Securitization Forum, a group that represents banks, law firms and investors, dismissed the strategy as merely a stalling tactic, saying homeowners are “making lawyers jump through procedural hoops to delay what’s likely to be inevitable.”

Deutsch said the original note is almost always electronically retained and can eventually be found.

Judges are often willing to accept electronic documentation. And lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan. Still, assembling such documents to a judge’s satisfaction takes time, which to homeowners is the point.

 

Lovelace filed her produce-the-note demand last fall after the bank acknowledged that her original mortgage document had been lost or destroyed. Since then, there has been no activity on the foreclosure – no letters from the lender, no court filings.

The law firm handling the foreclosure for the lender refused to comment.

A University of Iowa study last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.

The first big success of the produce-the-note movement came in 2007 when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.

Michael Silver, a lawyer for two of the families in that case, said at least one eventually lost their home. Still, he considers that a success.

“From the perspective of the person who’s in the home, you may have kept them in the house another 10 or 12 months,” he said. “If I can get a result with economic benefits to a client, then I think I won.”

Democratic Rep. Marcy Kaptur of Ohio endorsed the strategy in a fiery speech on the House floor during debate on the federal bank bailout last month.

 

“Don’t leave your home,” she said. “Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don’t have that mortgage, and you are going to find they can’t find the paper up there on Wall Street.”

April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, said the strategy has been so successful for her that she now travels around the country to train other lawyers in how to use it. She said she has gotten cases delayed for years by demanding that lenders produce paperwork they cannot find.

“This is an army of lawyers getting out there to stop foreclosures so we can get to the serious business of creating solutions,” Charney said. “Nothing good is going to happen as long as we continue to bleed homeowners.”

© Lane A. Houk – 2009– All Rights Reserved

Apr
11

On Founding Principles

By | Featured, Founding Principles

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I don’t know about you but I am beside myself these days. I feel like I’m just watching our country’s greatness get flushed down a toilet. It feels like one of those really sickening, dreadful feelings – coupled with a sense of helplessness.

I know we’re not helpless. We actually have a lot of rights here in the United States because we have the Constitution. Thank God and our Founding Fathers for that… As I watch #44 apologize for our greatness and bow to kings while simultaneously spending our country into a grave of debt, I feel outrage, anger, frustration and responsibility.

I think that those of us who aren’t fanatical rights or lefts, democrat or republican, liberal or conservative but instead patriots have made some crucial mistakes. If you’re like me, you just put your head down each day, work hard and do your best to make a small positive difference in the world each day. You appreciate your freedoms but you’re just damn busy and trying to stay ahead of the curve.

Have you ever watched the news on one story or another and said to yourself, “my God, don’t people have a job? Where do they get the time to carry on with this nonsense?” – I say that to myself every time I watch that crazy woman Cindy Sheehan.

So the mistake  that I’ve made is that I’ve just taken it all for granted too much. I realize this now because I’m watching radical leftist fanatics that have taken power in crucial positions who are now taking  from me the things I treasure – or are attempting to. My constitutional freedoms are being legislated away, bit by bit by bit – and so are yours.

I think the biggest blessing of Obama is that he is trying to do too much, very quickly and it’s awakening the core of our country – who are mostly patriots – to what has been happening for decades… that slow erosion of our freedoms and the crawl toward socialism which is nothing more than a civil disease.

So what we all must do – if we’re patriots – is get off the sidelines. Get more informed and take actions. Yes, that’s plural. It’s not just one-time such as going to a tea party. Sounds great and I can’t wait for the one I’m going to attend but it’s going to be an all-out “war on our home front” folks. It’s going to be a long battle to take back what has been being taken from us for decades.

So I’m starting this new series as I continue to educate myself and react to what I’m seeing, hearing and doing. I’ve started refreshing myself with our nation’s  history and started research into our Constitution, our Founding Fathers and our Founding Principles. Our greatest strength is that we can fall back on our Constitution – our LEGAL rights – and not let what ground we’ve given up go any further. If we stand up now – collectively as patriots – we can stop the erosion of our freedoms by not giving one more inch of what the far left (and sometimes the far right) want to take from us. Enough is enough!

I hope you’ll follow along with me, send me your comments and thoughts and get in the game too. We simply cannot afford to stand by anymore with the excuse of being too damn busy anymore. That will most definitely prove to be the end of “American Greatness!”

Mar
26

Tranche Warfare: MBS Investor Sues American Home Over REO Sales

By | Court Cases, Featured

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By TERI BUHL

 A Greenwich-based hedge fund manager is in a desperate fight to keep his subprime MBS investment strategy alive. HousingWire peeled back the layers to uncover what’s really going on behind the scenes in what has become a vicious battle between the hedge fund and legendary investor Wilbur Ross’ mortgage servicing company, Irving, Tex.-based American Home Mortgage Servicing, Inc.

The lawsuit underscores just how complicated servicing non-agency securitized loans can really be, amid a push by legislators and regulators to put a common set of standards into place to help manage a housing crisis that as of yet shows little signs of slowing down.

Bruce Rose, who runs hedge fund Carrington Investment Partners LP – and who purchased a mortgage servicing platform of his own last year when former subprime high-flier New Century Mortgage went bankrupt – filed a lawsuit last month claiming that American Home Mortgage Servicing, the nation’s largest independent mortgage servicer, had been selling the REO homes it manages at ‘fire sale prices,’ because it needed cash to pay off its warehouse credit facility.

The REO sales push was hurting Rose’s hedge fund, because the loans on the homes are tied to mortgage-backed securities Rose had invested in. According to Carrington investors and sources familiar with Rose’s investment strategy, the hedge fund owns the junior tranches of the deals in question.

Carrington, which leaked a copy of the lawsuit to the Wall Street Journal before the suit had been served to American Home Mortgage and filed in court, alleges in its complaint that AHMSI saw its core credit facilities shrunk, forcing the REO sales. But sources familiar with Irving-based servicer say they’ve never worried about being able to tap the credit market – and say that selling the REOs had nothing to do with paying down an existing credit facility.

Instead, AHMSI’s decision to sell the homes was driven out of a desire to serve the best interests of the trust that represents all investors, sources say – to get the most money they could for the trust, because holding on to properties while home prices remain in a negative freefall costs most bondholders more money than simply getting the properties off the books. Most servicers have a fiduciary duty to a trust to maximize net present value of cash flows to investors, per most traditional pooling and servicing agreements that bind servicer’s activities.

David Friedman, CEO of American Home Mortgage, told HousingWire today, “The financial health of our company is strong. We paid off the original credit facility and replaced it with an AAA-rated facility. In fact, if needed, we can expand our credit limit and others can now invest in our high quality debt.”

So-called ‘tranche warfare’ is something that most investors and servicers have become accustomed to, but the Carrington/AMHSI dispute is unique because of the structure of the specific deals Carrington invested in. According to the complaint, Carrington acquired a 100 percent interest in a unique class of subordinate certificates in various MBS deals during 2005 and 2006, totaling $128.1 million in principal amount.

These subordinate certificates allegedly give Carrington the right to direct the servicer over the management and sale of all REO properties tied to the trust, a right that Carrington asserts in the pleading it had bargained specifically for in structuring the deals – three of the four MBS deals in question were issued directly by Carrington. All four deals were serviced by Option One Mortgage Company until Ross’ AHMSI unit acquired the Option One platform last year from tax giant H&R Block (HRB: 17.42 +2.17%).

Carrington argues in the complaint that its interests as a junior bondholder are in line with those of the senior bondholders, as well as trustees including Deutsche Bank (DB: 44.46 +4.07%) and Wells Fargo & Co. (WFC: 15.95 -2.86%) – allegations that are being hotly contested by sources that spoke with HousingWire.

Holding REO hostage?

Rose is currently battling an investor-led lawsuit, filed early last year, for alleged securities fraud and breach of his duties as the manager of the hedge fund; his fund booked a negative 9.75 percent return for 2008, according to an investor letter reviewed by HousingWire. That return is actually amazingly good given the upheaval among most funds investing in private-party MBS – but according to the investors in the lawsuit, Rose is improperly marking the assets in the fund to his own model.

Carrington was also one of the first hedge funds to get investors to vote on an amendment halting redemptions in late 2007; according to the securities lawsuit against the fund, Rose said if he had to sell the subprime-backed mortgage securities he would only get 10 cents on the dollar and would have to shut down the fund. The attorney representing Carrington investors told HousingWire that they anticipate moving for summary judgment shortly after Rose finally answers the original complaint, which is due later this month; such a judgment could invalidate the redemption amendment, and leave Carrington’s fund open to significant redemptions.

Sean O’Shea, an attorney representing Carrington, said that Rose was acting to protect investors by preventing redemptions. “By putting up the gate, Rose acted in the interest of all his investors and upheld his duty to all,” he told HousingWire. O’Shea also stressed that the investors’ claims are baseless. Nonetheless, a Connecticut federal judge ruled last month that the Carrington investors’ complaint had strong enough evidence to move forward with the securities fraud claim.

Rose allegedly told a fellow top hedge fund manager in 2007 that his strategy was to “isolate and hold the credit risk on subprime deals,” a strategy borne out by the unique class of securities Carrington now holds on the AMHSI-serviced loans. A hedge fund manager who knows Rose and spoke on the condition of anonymity told HousingWire, “I’d be amazed if there was actually any money left in the fund.”

How much money is left remains to be seen; but the special rights allegedly given to Carrington as a junior bondholder in the disputed loans have apparently led to some strange behavior, including allegedly attempting to direct AHMSI not to sell its REO properties, or to list them above market value to ensure they do not sell. When a loan in the pool does default, as long as the servicer still holds on to the property as a bank owned asset and marks it at the level of the original loan investment, the junior bond continues to pay out, sources told HousingWire.

In contrast, if the REO property is sold and actual market prices are recognized, the junior tranche would effectively be wiped out while the senior tranches divide up the recovered principal. So by dictating how a servicer can manage the loan, Carrington could control the value of its investment while setting up senior bondholders for a fall they may or may not have expected. Sources familiar with the situation told HousingWire that Rose has been asking AHMSI to book the REO in its deals at a mark-to-model method he prefers, rather than using independent appraisals or other common methods of property valuation.

Sources familiar with the situation also suggested that Rose originally attempted to get the trustees on the deals – Deutsche and Wells Fargo – to fire AHMSI as servicer of record, a move that led the trustees to suggest they poll all other investor classes first. When it became clear that other investors were unwilling to support the move, Rose attempted to purchase the relevant servicing rights himself to have the servicing moved over to his own shop; allegedly, Rose could not secure enough financing to manage such a purchase, and filed suit shortly thereafter.

O’Shea, Carrington’s attorney, says financing wasn’t the issue, and contends that AHMSI didn’t offer terms that were acceptable to Carrington to purchase the servicing. He also says that the hedge fund has ample room in its own credit facility to buy the servicing rights, if it wanted to.

Carrington’s complaint did not peg an alleged monetary damage suffered by the hedge fund, nor did the fund attempt to file an injunction to stop AHMSI from selling further REO properties tied to the contested securities. O’Shea told HousingWire his client has lost $128 million thus far on forced REO sales – all of the original principal amount invested. Of course, whether Carrington would have such broad rights as a junior bondholder to direct both the pricing and disposition methods of REO properties is a matter yet to be sorted out by the courts.

Both sides say they expect a long fight.

O’Shea told HousingWire that he believes according to the pooling and servicing agreement, AHMSI was required to uphold Carrington’s ‘special rights,’ as a responsibility to all investors. “They did it for the first few months, why aren’t they doing it now?” he said.

AHMSI’s Friedman told HousingWire that the servicer plans a fight of its own. “We plan to vigorously defend Carrington’s baseless claims in a court of law,” he said. “The servicer stands by the fact their real responsibility is to not violate its contractual obligations of the trust, and do right by all investors, not just the ones conveniently holding the ‘special rights.’”

Mar
13

The Perfect Crime (almost)

By | Featured, Foreclosure Defense Research

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Article by Neil Garfield from livinglies.wordpress.com

“it follows that the investors are the ONLY parties with standing to make any claim on the mortgage, note or obligation. But they won’t make that claim because of the exposure to risk that could leave them with even more loss than the current loss on their investment. This leaves trillions of dollars in unclaimed proceeds. The question is who should get it. Obviously it was the financially sophisticated intermediaries who were able to step in and bluff the court system and recording offices into accepting fraudulent, fabricated and forged documentation.

98% of the foreclosures end up with these intermediaries getting title to property that they never financed and were handsomely paid for handling at one point or another.

50%-60% of “modifications end up in foreclosure anyway. Even with good payment terms a $300,000 mortgage on a $150,000 piece of property is not appealing to even the least sophisticated borrower.”

Today’s NY Times report on Quants, if you read it carefully, will tell you a lot about how Wall Street almost pulled off the perfect crime. In fact, the complexity of the derivatives they created and the complex structure of personnel involved in their creation and valuation created a level of plausible deniability beyond the reach and beyond the comprehension of the newbie B-School graduates sitting at regulatory agencies, not having the faintest idea what they were looking at. Small wonder, Greenspan admitted that he didn’t understand them either but did nothing in 2005 because he was afraid of a global economic collapse, high unemployment, crashing industries and a general swoon in asset prices from housing to stocks. In hindsight he and everyone else admits we would have been far better off if we had bitten the bullet then than now. By allowing the problem to grow the fall was longer and deeper.

At the heart of the “complexity” (read that “lie”) was the use of computer algorithms that took spreadsheet projections to levels of “sophistication” never seen before. The result was that when a computer spit out a value for mortgage backed securities, it was impossible to audit by hand without perhaps 200 PhD’s spending the better part of a decade working it out in committees. So Wall Street got to create something that was treated as the equivalent of money and the value of this money was whatever Wall Street said. And with a little slight of hand with the rating agencies and false insurance policies from an entity (AIG) that couldn’t make good on the insurance, nobody questioned it because EVERYONE looked like they were making a ton of money.

In truth only the intermediaries were making money. Much like the stockbroker who churns an account making transaction fees until there is nothing left in the account and then moving on to the next victim. The Wall Street firms, whose stocks were traded publicly, had no risk whatsoever. They were essentially capitalized by investors in their stock, investors (Customers) in their financial products and when they found this opportunity, struck the mother load – everyone wanted a higher return and greater safety – at least that its how it was sold.

The Wall Street firms were quick to report their earnings because bonuses and stock options were directly affected and stockholders were happy with rising value of their investments in Wall Street firms. But those profits were in reality the proceeds of fraud and theft. And they were not disclosed to the borrowers contrary to the Truth in Lending Act. In a Machiavellian way, they were brilliant in this strategy – they were not even the issuers of the securities. The issuers were the people at a “loan closing” far away who were executing documentation that turned out to be used as the negotiable instruments that were later sold as unregulated securities. The fact that the notes were rendered non-negotiable and that pooling of the notes resulted in a loss of identity of the note which made the note unsecured, was possibly unknown but definitely irrelevant to the “masters of the universe” on Wall Street.

The end result was that the “borrowers”/issuers did not know what they were doing, who they were dealing with, what their real cost was on the deal (especially with inflated appraisals, much the same as inflated appraisals of the mortgage backed securities), and who was getting paid. It was a securities deal usually coupled with several financial products which takes them out of the realm of any “exemption” from Truth in Lending requirements. Thus the investors, who did not know what they were buying, are left with less than zero just as the borrowers are left with less than zero. Both are underwater and neither will ever completely recoup their investments regardless of any stimulus or quantitative easing from central banks.

Despite the computer driven valuations that were produced, the real value was zero for both investors and “borrowers”/issuers. And now the investors are log-jammed into a place where they either eat the entire loss or find a way to recover from the intermediaries. They can’t actually make a claim against the borrowers because even if they successfully established their status as holders in due course, that would mean they were taking the chance of being hit with all the defenses, claims and counterclaims under TILA, deceptive lending, securities violations, rescission, treble damages, usury and so forth. So investors are not making the claims – even when they are clearly identified as a single hedge fund. They are suing Countrywide or other intermediaries trying to recoup their bad investments from the group (the intermediary servicer, trustee or other interloper) who have no defenses, claims and counterclaims and who have no basis for claiming treble damages, interest, attorney fees and court costs.

This has left a void – the only parties who are actually losing money are the investors and borrowers who are now under water because of the inflated appraisals and tricky mortgage terms that were not disclosed. It goes without saying that under the single transaction doctrine, neither the investor nor the borrower would have ever made their part of the deal if there had been full disclosure of all of the above. That’s called fraud. Since the investors are the only parties who could claim they are losing money from “non-payment” on the note (assuming they were not paid by AIG, Federal bailout, other insurance or cross collateralization) it follows that the investors are the ONLY parties with standing to make any claim on the mortgage, note or obligation. But they won’t make that claim because of the exposure to risk that could leave them with even more loss than the current loss on their investment. This leaves trillions of dollars in unclaimed proceeds. The question is who should get it. Obviously it was the financially sophisticated intermediaries who were able step in and bluff the court system and recording offices into accepting fraudulent, fabricated and forged documentation. And they are getting their way. 98% of the foreclosures end up with these intermediaries getting title to property that they never financed and were handsomely paid for handling at one point or another.

THIS is why “borrower” should stand up and fight. The windfall here is to thieving companies who were already paid. If inequality is largely accepted as being at least partially responsible for the current financial crisis and if these intermediaries are not necessary to the health of the financial system (servicers, trustees etc.) then clearly the correction of that inequality, trillions of dollars, should move to the homeowners who were the victims of fraud and whose identities and signatures were used to create vast amounts of profits off of transactions that were falsely presented to both sides. With equity restored to homeowners and the end of foreclosures and declining home prices, perhaps a deal could be struck between the investors who lost out and then homeowners who now have their houses free and clear, so that the credit system could be restored with trust and confidence.

Mar
06

Why the United States is Bankrupt… the Real Truth

By | Featured

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You think the war in Iraq is costing us too much? Think Again… it’s all propaganda from a liberal media. Have you considered the costs of ILLEGAL IMMIGRATION?

We’re in for terrible times until we Americans (not Democrats or Republicans) demand that politicians STOP the attacks on our constitutional rights, uphold the existing laws in our country about legal and illegal immigration and stop spending our money and money we don’t yet have.

Also included are many of the URL’s for verification of all the following facts…

Consider that:

1. $11 Billion to $22 billion is spent on
welfare to illegal aliens each
year by state governments.

2. $2.2 Billion dollars a
year is spent on food assistance programs such
as food stamps, WIC, and free
school lunches for illegal aliens.
Verify at: http://www.cis.org/articles/2004/fiscalexec.html

3.  $2.5 Billion dollars a year is spent on Medicaid for illegal aliens.
Verify at: http://www.cis.org/articles/2004/fiscalexec.html

4.  $12 Billion dollars a year is spent on primary and secondary school
education for children here illegally and they cannot speak a word
of English!
Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html

5.  $17 Billion dollars a year is spent for education for the
American-born children of illegal aliens, known as anchor babies.
Verify at http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html

6.   $320Million Dollars a DAY is spent to incarcerate illegal aliens.
Verify at:
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html

7.   30% percent of all Federal Prison inmates are illegal aliens.
Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html

8.   $90 Billion Dollars a year is spent on illegal aliens for Welfare
& social services by the American taxpayers.
Verify at: http://premium.cnn.com/TRANSCIPTS/0610/29/ldt.01.html

9.   $200 Billion dollars a year in suppressed American wages are caused
by the illegal aliens.Verify at:
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html

10.   The illegal aliens in the United States have a crime rate that’s two
and a half times that of white non-illegal aliens. In particular, their
children, are going to make a huge additional crime problem in the US .
Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0606/12/ldt.01.html

11.   During the year of 2005 there were 4 to 10 MILLION illegal aliens
that crossed our Southern Border also, as many as 19,500 illegal aliens
from Terrorist Countries. Millions of pounds of drugs, cocaine, meth,
heroin and marijuana, crossed into the U. S from the Southern border.
Source: Homeland Security

12. The National policy Institute, estimated that the total cost of mass
deportation would be between $206 and $230 billion or an average cost of
between $41 and $46 billion annually over a five year period.’
Verify at: http://www.nationalpolicyinstitute.org/publications/?b=deportation
13.   In 2006 illegal aliens sent home $45 BILLION in remittances to
their countries of origin. Verify at:
http://www.rense.com/general75/niht.htm

14.  The Dark Side of Illegal Immigration: Nearly One million sex crimes
Committed by Illegal Immigrants In The United States .’
Verify at: http://www.drdsk.com/articles.html#Illegals

 The total cost is a whopping $ 338.3 BILLION DOLLARS A YEAR!

Nice. Mr. Obama and Co. stop spending money. Uphold the immigration laws already in effect and secure our borders. You’ll have a nicely balanced budget and a natural stimulus to our nation’s economy without having to tax us and the next 3-4 generations.

Feb
19

Brace Yourself for the Next Wave of Fraud: FORECLOSURE FRAUD

By | Featured, Foreclosure Defense Research

4 Comments

 

It’s actually been happening for a year or more in large numbers. Why the media hasn’t picked up on this story is a good question to ask…

I don’t think anyone realizes how big this area of fraud actually is or could believe that it’s truly happening. The biggest reason is probably because the judicial system is a player in this area of fraud. Not as an active participant but more as a guilty bystander. In about half of the states in the Union, foreclosures must be brought in a lawsuit in court, otherwise called judicial states. One would think that in non-judicial states, it would be much easier to get away with the fraud because the courts are not involved usually. Sorry to say but it might even be easier to commit Foreclosure Fraud in judicial states because no one’s really asking any questions in these foreclosure cases as I think that just about anyone would automatically assume that the Judicial System would exert much more quality control to prevent such massive fraud to work its way through the system. Guess again…

Statistically speaking, 98% of all foreclosure cases, judicial or non-judicial, go uncontested by the borrower. In other words, the borrower does nothing whatsoever to defend themselves in the foreclosure process. In a judicial state, an uncontested foreclosure complaint results in a Default Judgment against the borrower/defendant. Essentially, any and all claims made by the Plaintiff is accepted as true and legitimate at face value. The presiding judges, at least here in Florida, are doing practically nothing to inspect the merits of the case based on the documents produced – which, by the way, is very little – or the actual authenticity of the documents that are produced. Yes, they are slammed and overrun with foreclosure cases. No, it’s no excuse to deny citizens due process.

Here in Florida, 80-90% of the cases are being filed without any evidence of the debt, which is the original Promissory Note, not some early copy of it. Take a sampling of any 10 or 100 cases filed in court and you’ll find this to be true. In other words, a company/institution is coming into court, suing a borrower and alleging that the borrower owes them $_______. Yes, really fill in the blank… and they are producing NO DOCUMENTARY EVIDENCE that this allegation has any truth to it.

Oh, but it gets better. They are alleging that they lost the Note (or it was destroyed). Hmmm… if I gave you a $1000 check, would you lose it? How about if I gave you a $50,000 check? How would you treat that little piece of paper? But lo and behold, these institutions are saying that in 80-90% of the cases they have Lost the Notes! Now, let’s put this in perspective… in January 2009, Lee County, FL alone had about 2200 foreclosure cases filed. So let’s do the math together, shall we? That would put us at over 1700 cases where the Notes were mysteriously LOST! And that’s just one month’s worth folks. Now anyone with just a bit of common sense would say, something’s fishy with this. No? But most judges seem to have taken no issue with this. I mean, doesn’t this very fact make you, the reader, say to yourself, “this is not right, something’s up here, there should be an investigation into this.” But no, our judicial system seems to have no problem with this or even ask the deeper question as to “why?”

But it gets better… not only have they “lost” the notes, but the mortgages that were “recorded” in public records after closing (to declare to the public of who has a lawful lien on this property) are in someone else’s name. Let’s call them “ABC Lender.” So ABC Lender is the “mortgagee” of record in the public records. But ABC Lender is not the Plaintiff suing for Foreclosure! No, it’s XYZ Lender who is the Plaintiff; and in XYZ Lender’s Foreclosure Complaint, they allege that they are the owner and holder of the Note (that was lost) and the mortgage was assigned to them. Problem is (besides no note of course) is that there’s no Assignment of Mortgage recorded in Public Records; oh and no Lost Note Affidavit either, which by the way is supposed to be required.

Public records still show ABC Lender as the mortgagee. More than that, XYZ Lender/Plaintiff produces that very mortgage (which they can print online from the Clerk of Court’s website) in their Foreclosure Complaint and then simply states, for the record, that the Mortgage (in ABC Lender’s name) was assigned to them. But no assignment is recorded NOR is an assignment even produced in the foreclosure case in at least 50% of the cases. And when we do see an Assignment produced, lo and behold, you know who drafted that Assignment of Mortgage? Allow me to answer that… it’s the law firm that filed the foreclosure complaint for the Plaintiff. How about that, so you’re telling me that now foreclosure law firms are also in the business of transferring mortgages and notes? I think not. But this is exactly what is happening folks. Sure as my fingers are typing this post.

Oh, but I’ll do you one better… but before I do, all of what I just stated above is enough for XYZ Lender to be granted foreclosure in 98% of the cases because these ALLEGATIONS by XYZ Lender are never even challenged by the borrower/defendant. So the court places the proverbial RUBBER STAMP on this fraud and away you go… “NEXT” as most Florida Judges would say… all in about 15 seconds in their self-proclaimed ROCKET DOCKETS. Nice.

So back to doing one better… in these 2% of cases where the borrower does even a little something to defend themselves or better, has a competent attorney represent them against this FRAUD, we would ask the Plaintiff to actually prove their case. You know, “excuse me but I don’t think your claims are true Mr. XYZ Lender. Yes, I borrowed and owe the money to someone, but I have no idea at all who YOU are and I don’t think I owe the money to you and I don’t think that you have any right whatsoever to be here in this court suing me and trying to take my home away from me.” That’s how I would say it at least but attorneys are little more verbose than me…

So guess what these Plaintiff/XYZ Lender’s come back with to that request… you’re going to love this… “If it will please the court, your honor, these requests are out of line and merely meant to ‘stall’ the process. The defendant hasn’t paid their mortgage in ____ months your honor; and this request for us to disclose who the real owner of the mortgage and note is proprietary information and we are not required to disclose that information.” Oh, I’m sorry, I thought you alleged in your original complaint that YOU were the owner and holder… now someone else is but you can’t tell us? Hmmm. By the way, 15 U.S.C. 1641(f)(2) says that the Servicers are under federal obligation to disclose the true owner of the obligation. Read the federal law here! Scroll down to paragraph “F” part 2.

Yep, you’re tracking with me now…. it gets even better. Somehow, by some miracle of St. Mary, mother of Jesus, in some of these cases, the Note magically appears! Oh, thank heaven, the Note has appeared. So XYZ Lender puts the court and everyone else on notice with a “Notice of Filing Original Documents” in the court record. To the unsuspecting citizen, this Note, purportedly a copy of the Original Note, sure does look the part. Nevermind that one of these Notes can be re-created out of thin air. Have we Alzheimer’s this bad folks? I mean, what gives? Have we not been talking and ranting and raving as a country about all the FRAUD that occurred in the mortgage industry and WALL STREET these past 7-8 years? Does no one think that these Notes aren’t really being re-created. I mean, XYZ Lender did swear before the court that the Note was Lost. Was that a lie or is the Note they are now producing a fraud? I mean, which one is it? Or is our judicial system going to let them do both… Lie and commit Fraud that is.

But you see, I have a little more knowledge about this whole “SECURITIZATION THING” than the unsuspecting homeowner and probably even these foreclosure attorneys representing these financial institutions. You see, since the mid-80′s when the Secondary Mortgage Market Enhancement Reform Act of 1984 was enacted, 99% of all residential mortgages have been securitized. The opposite of a Securitized Loan is what we call a Portfolio Loan. These are our 2 options folks… it’s either a Portfolio Loan or it was a Securitized Loan. Your honor, it’s either Option A or Option B. Not BOTH.

So let me break this down into byte sized pieces. A Portfolio loan is a loan where ABC Lender makes the loan (ie. lends the money) and keeps that loan in their “portfolio” for the life of the loan. ABC Lender is going to keep the loan, service the loan and manage it until it is paid off. This “portfolio lending” thing is a DINOSAUR folks. This is a bona fide fact.

So, Option B, your honor, is this thing we call “Securitization.” And yes, your honor, I expect that we all take the time to UNDERSTAND IT because these thousands of CASES before your court involve PEOPLE, human beings (the same people who elected you by the way) and their lives, and their credit and their liability if this ‘aint done right.

Sorry about that, as you might guess, I am perturbed with the “pleading ignorance” of the courts or worse “I just don’t care” judges who’s pat answer is that “the borrower/defendant hasn’t paid their mortgage in 6 months so throw justice and matters of law aside because they’re all a bunch of deadbeats. I read the Wall Street Journal article on Feb. 18, 2009. We can all read between the lines your honor…  Now let me say this real quick before I give a quick overview of securitization and the applicability of it to foreclosure cases… Not all judges are created equal. There are some very good one’s out there who care about the law and due process and making sure that the law is actually followed. For those judges out there who aren’t letting these issues just get swept under the rug because it’s so damn “inconvenient” - all these foreclosure cases, -we thank you and we hope you’ll see to it that more of your peers adopt the same position.

By the way, the question that the judges referred to in the Wall Street Journal story asked, “Are you paying your mortgage and are you living in your  home?” – these 2 questions are completely inappropriate and immaterial to the case and matters of law. If I’m a homeowner and I don’t know who the heck owns my mortgage and my inquiries into this fact go unanswered, then I’m not paying ANYONE until I figure this out already! So if I”m before that judge my answer is very clear, “Excuse me your honor but that question is completely immaterial to my case before you. I owe the money to someone but I dispute the assertion by the Plaintiff that I owe the money to them. I have asked them to provide valid and authentic documentation that I in fact owe them the money and they have failed to provide that documentation. The documenation that they have provided appears to be a complete fraud on this court and therefore I would humbly request your honor look into the material facts in this case, not whether or not I’m paying someone I don’t know even exists or if I’m living in a home that I have valid title to.” – and Judge G. Keith Cary, the Chief Judge in Lee County said, “A guy hasn’t paid his mortgage in a year, what’s there to talk about?” – well your honor, I believe I’ve presented plenty to talk about. If not, let me continue…

Ok, securitization and how it applies to a judicial foreclosure case. In securitization there are specific entities who are the “players” in this process. Not all entities are created the same because they have different ROLES in the securitization process. Roles: Originator, Sponsor, Master Servicer, Depositor, Issuer, Trustee and Custodian are the main ones. We also might see a “Special Servicer” in the mix here and there. The Originator is ABC Lender in the above fictitious case I mentioned. XYZ Lender from above is the Sponsor who usually serves as the Servicer as well.

Folks in 99.9% of these loans, the Trust owns the loan. The Trust is comprised of several to several hundred investors who own a “piece” of the loan. But more than that… EVERY loan including the specific loan in our fictitious case above has been bought and sold NO LESS THAN 3-4 times. When a Note is sold/transferred (and it is a true sale by the way), the Note MUST be endorsed, just like a check. From one payee to the next. IF the loan was securitized and it is very safe to assume that every loan is/was, there will be NO LESS THAN 3 endorsements on the actual, ORIGINAL note which has the borrower/defendant’s wet signature on it.

So when XYZ Lender produces the “Original” Note for the court and it has NO endorsements on it, it’s what we call a FRAUD folks – one way or another, it is NOT the original nor is it a copy of the original note OR, in the alternative, XYZ Lender lied to the SEC, the Securities and Exchange Commission AND the IRS. You see, in securitization, all of this activity MUST be disclosed. No, it’s not proprietary or confidential, it’s PUBLIC DISCLOSURE. These documents filed with the SEC are very specific. The players involved are all disclosed. Their ROLES are disclosed, the CHAIN OF OWNERSHIP of the loans in the Asset Pool is disclosed. The governing  or operative document for this loan pool is the Pooling and Servicing Agreement, and it is disclosed. These Trusts are electing to be treated as a REMIC (short for Real Estate Mortgage Investment Conduit), which provides Pass-Through Taxation on the pool cash-flow, so that the Trust avoids double-taxation. That’s disclosed and strict guidelines of the chain of ownership AND timelines of ownership must be adhered to OR the REMIC status will be/can be revoked by the IRS.

So when XYZ Lender comes into a court of law and throws all these allegations of ownership, produces nothing to speak of, and expects to take Mrs. Smith’s home from her, I suggest that our judicial system do something more than turn a blind eye and claim that is their job to “efficiently dispose” of the case – all in about 15 seconds – or worse, ask completely inappropriate questions  of that homeowner. I also suggest that Mrs. Smith defend herself and I highly suggest our local and national media do more to expose what you can now call “FORECLOSURE FRAUD” because it’s happening ladies and gentleman. The SAME INSTITUTIONS that created this global meltdown through greed and fraud, who have received hundreds of BILLIONS of taxpayer dollars to bail them out of their gross (and greedy) mismanagement are NOW stealing citizen’s homes from them like a thief in the night to boot. The FBI should be investigating, prosecuting and sending these fraudsters to jail – both the bank reps/employees AND their law firms colluding with them on this massive fraud!

To conclude: Give me any foreclosure case, any one. 80% or more of the cases filed with these courts, I can/will prove that FRAUD exists in that case. All we have to do is pull the actual SEC documents filed and compare what they disclosed in that documentation to what they’ve stated and alleged in the foreclosure case. This is really quite simple actually.

Someone’s gotta BLOW THE WHISTLE… I’m your Huckleberry.

Feb
15

Fraudulent Foreclosure Filings Happening Every Day

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I’m outraged at what’s happening every day in courtrooms all over this country, especially here in Lee County, Florida. The Civil Rights of Homeowners are being violated regularly. This is truth and I can prove it. Because I’m heavily involved in helping people in foreclosure, among other things, I get the opportunity to look at the legal paperwork. Between my 8 years of banking and real estate experience and over 1000 hours of legal research into the foreclosure crisis, I know what to look for.

Our court systems are in bed with Corporate Banking Institutions. They may not be being paid off to ignore the violations but I describe being “in bed” with these fraudsters as simply “allowing them to get away with outright fraud and extortion.”

Let me illustrate my point with a Hypothetical Scenario: I create a company called “Countywide Home Loans.” I find a homeowner who is 90 days behind on their mortgage (this is easy because I can buy that list of people from the Credit Reporting Agencies like Equifax or Experian).

Countywide Home Loans files a foreclosure complaint against Jose and Maria Sanchez (my fictitious homeowners).
In our foreclosure complaint we allege and state the following to the Court:

  1. Countywide Home Loans owns and holds the mortgage and note;
  2. The Mortgage we attach to the Foreclosure Complaint has the Mortgagee listed as America’s Wholesale Lender on it, NOT Countywide Home Loans (but oh well);
  3. We allege that the Mortgage has been assigned to Countywide Home Loans by America’s Wholesale Lender; but we do not include that purported assignment of mortgage in our Complaint;
  4. We allege that the Note has been lost and we are seeking to re-establish the Lost Note under Florida Statute 673.3091; we were in possession of the Note when it was lost; we had the right to enforce it when it was lost; the loss was NOT the result of a transfer and we cannot reasonably obtain the Note because its whereabouts cannot be determined (these are the elements required to actually re-create a Note out of thin air in Florida)
  5. We state that the borrower is in Default on the loan and owes us $223,191.65 according to the Note that they executed which we own and had the right to enforce when the Note was lost;
  6. We therefore ask the court for final judgment of foreclosure based on the “facts”stated in our Complaint.

This is exactly what happens about 2000+ times per month in Lee County, Florida. The filings of Plaintiffs (institutions) look exactly like this, more or less, in every case. The case above, if I filed it, could be rushed through the court system in about 90 days with a 98% probability of success.

If the borrower/homeowner did not contest the allegations by Responding to the Foreclosure Complaint that I filed and served them with, I would gain a Default Judgment against them within 30 days. I could Motion for Summary Judgment and file the necessary Affidavits and get a hearing in about 30 more days. I would be granted Summary Judgment guaranteed as the Judges presiding over these cases DO NOT even lift an eye of caution or inspection as to the validity of any of these allegations by the Plaintiffs. I would literally be granted Final Judgment on the case within about 45 days from the granting of Summary Judgment. A Foreclosure Sale would be granted and take place at which point Certificate of Title would be issued to Countywide Home Loans.

Voila! Countywide Home Loans, Inc. just took a home from a Homeowner! No questions asked. The allegations in my complaint were patently false. The judicial system did not ask even one question or inspect the truthfulness of my allegations. The foreclosure is slammed through the system at record paces through the so-called “ROCKET DOCKETS” our judges here in Lee County call them.

Folks, this is it. This is no sensationalist story. There is no exaggeration here. This is happening thousands of times each month in our court systems! Only, the homeowners are real, the institutions are real and they are illegally seizing and evicting homeowners. These Institutions (like Wells Fargo, Bank of America, Lasalle Bank, Deutsche Bank, Countrywide, Citimortgage, Wachovia, etc.) DO NOT own these loans or mortgages in 9 out of 10 cases (maybe higher), yet they are alleging they do own the Note and Mortgage and have the right to foreclose. The Court Systems are NOT requiring them to prove it with valid documentation and worse, the Courts are completely ignoring clear cases of outright FRAUD by these institutions! When they do produce some documentation, it is fabricated and lacks authenticity most of the time. This can be quantified and proven. Fact.

 

Here’s an article written by Gretchen Morgenson from the NY Times to give further context:

December 28, 2008
Fair Game

A Mortgage Paper Trail Often Leads to Nowhere

By GRETCHEN MORGENSON

WITH home prices in free fall and mortgage delinquencies mounting, pressure to modify troubled loans is ratcheting up.

But lawyers who represent candidates for modifications say the programs are hobbled by the complexity of securitization pools that hold the loans, as well as uncertainty about who actually owns the notes underlying the mortgages.

Problems often emerge because these notes — which are written promises to repay the full amount of a mortgage — weren’t recorded properly when they were bundled by Wall Street into pools or were subsequently transferred to other holders.

How can a loan be modified, these lawyers ask, if the lender cannot prove that it actually owns the note? More and more judges are asking the same thing about lenders trying to foreclose on borrowers.

And here is another hurdle: Most loan servicers — the folks responsible for handling all the paperwork surrounding monthly mortgage payments — aren’t set up to handle all of the details involved in a modification.

Loan servicing operations are intended to receive borrowers’ payments; producing loan histories and verifying that payments were received or junk fees were not applied is considerably more labor intensive. This cuts into profits.

“These servicers are not staffed up and they don’t have a chance in the world to do the stuff they are supposed to do,” said April Charney, a consumer lawyer at Jacksonville Legal Aid. Many servicers continue to stonewall troubled borrowers who ask for a history of their loan payments and fees, she said.

“This is your biggest, hugest expense — your home — and when you ask for a life-of-loan history your servicer tells you to get lost,” she said. “And when you ask for a list of charges in the loan history that’s not going to happen.”

So even if loan modifications were to rise rapidly, it is unclear that borrowers can trust what lenders tell them about what they owe.

Consider a federal bankruptcy court case in Colorado. It involves two borrowers who got into trouble on their loan but agreed, under a bankruptcy plan, to make revised mortgage payments to get back on track.

The lender in the case is Wells Fargo, and last Monday the judge overseeing the matter took a tough stance on the bank’s recordkeeping and billing practices.

In June 2004, Brandon M. Burrier and Denon A. Burrier received a $183,126 loan for a property in Arvada, Colo. The note was later transferred to Wells Fargo, court filings show.

The Burriers fell behind on their loan and in February 2007, they filed a Chapter 13 bankruptcy, agreeing to pay $12,000 that Wells Fargo said they owed. Chapter 13 bankruptcies allow debtors to retain their property and work out a repayment plan based on their income and the level of their indebtedness.

The Burriers’ payment plan was confirmed by the bankruptcy court in August 2007; last December, a second plan requiring higher payments was approved by the court.

Two months later, Wells Fargo told the court that the Burriers had failed to make four of their payments and that it should be allowed to begin foreclosure proceedings.

The Burriers denied that they had missed payments, but in April, to keep their home, they agreed to make double payments to cover the ones Wells Fargo claimed they had missed.

If the borrowers could prove that the mortgage checks were submitted, Wells Fargo said, their account would be credited and they would no longer have to make up the payments. The proof required by Wells Fargo and approved by the court was “valid, accurate and true copies” of the front and back of the checks the borrowers sent in.

Last August, the parties were back in court, with Wells Fargo stating that the borrowers had failed to comply with the deal. Ms. Burrier testified that she had asked her local bank repeatedly for proof of the payments made to Wells Fargo, but had had no luck. The payments to Wells Fargo were processed electronically, she learned, and that meant it did not return the checks to her bank.

The borrowers did produce bank statements showing that the checks Wells said were missing were actually cashed by “WFHM,” an entity that they assumed was Wells Fargo Home Mortgage.

But Tara E. Gaschler, the lawyer representing the borrowers, said that Wells Fargo continued to maintain that it hadn’t received the money.

The bank flew in an expert to testify that all checks received by Wells Fargo from borrowers in Chapter 13 cases were processed by hand, Ms. Gaschler said. “Even when presented with bank statements, they told the court there must be some mistake,” she added.

Finally, Wells Fargo demanded that the Burriers provide the routing number of the account at Wells Fargo that their money went into. If they could not, the bank said, they would have to keep making extra payments.

But Sidney B. Brooks, the judge overseeing the case, was clearly dismayed by the bank’s performance.

In his opinion, he fumed that Wells Fargo had asked the borrowers for canceled checks as proof of payment, even though such checks were often not available. Wells Fargo’s request for canceled checks was especially troubling, the judge said, given that the bank was a proponent of the 2003 law that allowed banks to stop returning canceled checks to customers.

The only institution that could have the original checks is Wells Fargo, he concluded.

“The payments have, evidently, been lost in a black hole of the creditor’s organization or through accounting mismanagement,” the judge wrote. “This is a major lender/mortgage loan servicer where the left hand does not know what the right hand is doing — the collection department does not know what the check processing and accounting departments are doing.”

Because this is not the first time the judge has encountered problems in Wells Fargo’s operations, he is considering sanctions on the bank.

“This dispute might portend a widespread abuse of collection practices or creditor overreaching,” he wrote, “demanding of debtors what it, the creditor itself, is unable to provide: accurate and reliable record keeping and billing practices.”

A spokesman for Wells Fargo said: “We are currently reviewing the court’s opinion to determine whether or not an appeal is appropriate. The Burrier case is quite factually specific, and we disagree with the court’s conclusions. We are confident that our payment processing practices are accurate and sound.”

Ms. Gaschler says that this kind of dispute is becoming more common in her practice and that borrowers wind up losing too often.

“A lot of times clients don’t keep canceled checks or maybe their bank account was closed and they can’t go and get the proof,” she said. “The bank gets that extra money for as long as the debtor can keep it up and when they can’t they are pushed out of their homes.”

While judges are starting to see how flawed loan servicers’ systems can be, those rushing to modify loans may not be as aware of the problems.

In the interests of fairness, modification programs should require life-of-loan histories from servicers and a justification of each entry. New loans, especially ones backed by taxpayers, are no place to bury dubious fees or extra borrower payments to cover those that were allegedly, but not actually, missed.

Feb
10

What a REMIC is and Why You Should Care…

By | Featured, Foreclosure Defense Research

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A REMIC (Real Estate Mortgage Investment Conduit) is a corporation, trust, partnership or a segregated pool of assets that qualifies for special tax treatment under the Internal Revenue Code of 1986 (as amended, the “IRC”).

The principal advantage of forming a REMIC’s for the sale of mortgage-backed securities is that REMIC’s are treated as pass-through vehicles for tax purposes helping avoid double-taxation. For instance, in most mortgage-backed securitizations, the owner of a pool of mortgage loans (the Sponsor or Master Servicer usually) sells and transfers such loans to a special purpose entity, usually a trust, that is designed specifically to qualify as a REMIC, and, simultaneously, the special purpose entity issues securities that are backed by cash flows generated from the transferred assets to investors in order to pay for the loans along with a certain return. If the special purpose entity or the assets transferred qualify as a REMIC, then any income of the REMIC is “passed through” and taxable to the holders of the REMIC Regular Interests and Residual Interests.

First of all, one should understand that just one Trust might usuallly have anywhere from 2000-5000 loans in the asset pool. This is millions of dollars in cash flow payments each MONTH from a Servicer (receiving payments from borrowers) to a REMIC (Trust) with the cash flow ”passing through” the Trust (REMIC) without taxation to the investors. The investors have to pay taxes on the cash flow payments from their interests just for the record. But imagine the taxes a Trust would have to pay on $30, 50 or 100 million dollars per year if this “pass through” taxation benefit didn’t exist? Worse, what would be if a Trust that was organized in February 2005 were found to have violated the REMIC guidelines outlined in the Internal Revenue Code? At $4 million per month in cash flow, we’re talking about around $190 Million in now, TAXABLE income. Hmmmm… let me think of a word… Armageddon comes to mind.

If a Trust – or a Servicer or Trustee acting on behalf of the Trust - were found to have violated these very strict REMIC guidelines to qualify as a REMIC, the taxable status of the REMIC can be revoked; the equivalent of financial Armageddon for the Trust and its investors.

Folks, I’m clueing in you in to some major, major insights in the ‘War on the Home Front’ and some very, very potent weapons that can be used to fight this war.

 

In order for the Trust to qualify as a REMIC, all steps in the “contribution” and transfer process (of the notes) must be true and complete sales between the parties and within the three month time limit from the Startup Day. Therefore, every transfer of the Note(s) must be a true purchase and sale, and, consequently the Note must be endorsed from one entity to another. Any mortgage note/asset identified for inclusion in a Trust seeking a REMIC status MUST be deposited into the Trust within the three month time period calculated from the official Startup Day of the REMIC as per Section 860 of the Internal Revenue Code. 

But what if the Notes weren’t actually true sales? What if the Notes weren’t in fact transferred and sold to the Depositor from the Servicer? Or from the Depositor to the Trust? What if the Notes weren’t actually sold and deposited into the Trust within the three month time limit? Oh boy… big problem. 

So what’s the deal with all these Notes mysteriously being lost in all these foreclosure cases? Hmmm. Gotta be something to that. Why is it that nearly 100% of every Note I’ve ever seen in a foreclosure case lacks the proper endorsements evidencing the chain of ownership AS DISCLOSED TO THE SEC AND IRS?

I’ll leave it at that for now… things to think about. If you need help or have questions about this, I have a lot more to this story. Just give me a shout. Until then, fight the good fight. Don’t let anyone take your home unless they prove through PROPER documentation that it’s theirs to foreclose and take.

Jan
29

Porky Pig’s Stimulus Bill

By | Featured, Government Actions, News for the Patriot

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The term pork barrel politics usually refers to spending that is intended to benefit constituents of a politician in return for their political support, either in the form of campaign contributions or votes. Typically, “pork” involves funding for government programs whose economic or service benefits are concentrated in a particular area but whose costs are spread among all taxpayers. [Source: Wikipedia]

“That’s all folks!”

This is exactly what you can say if the American people allow Congress and Pres. Obama to pass this “stimulus” bill. What a joke… this has nothing to do with stimulus and everything to do with PORK! Any politician that votes “yes” on this bill will assume the title of “PIG.”

So, here’s how the World’s Biggest Pork Chop is cut up…

• $819 billion total (as of 1/28/09)
• $550 billion in new spending, described as thoughtful and carefully targeted priority investments with unprecedented accountability measures built in.
• $275 billion in tax relief ($1,000 tax cut for families, $500 tax cut for individuals through SS payroll deductions)
• $ 90 billion for infrastructure
• $ 87 billion Medicaid aid to states
• $ 79 billion school districts/public colleges to prevent cutbacks
• $ 54 billion to encourage energy production from renewable sources
• $ 41 billion for additional school funding ($14 billion for school modernizations and repairs, $13 billion for Title I, $13 billion for IDEA special education funding, $1 billion for education technology)
• $ 24 billion for “health information technology to prevent medical mistakes, provide better care to patients and introduce cost-saving efficiencies” and “to provide for preventative care and to evaluate the most effective healthcare treatments.”
• $ 16 billion for science/technology ($10 billion for science facilities, research, and instrumentation; $6 billion to expand broadband to rural areas)
• $ 15 billion to increase Pell grants by $500
• $ 6 billion for the ambiguous “higher education modernization.”

[Source: Committee on Appropriations: January 15, 2009]

Doesn’t sound so bad, right? That’s why they just bullet point these BILLIONS in the broad strokes. But…

Here is a further breakdown of the Porky Package:

  • $1.1$ Billion to SAVE AMTRAK
  • $600 Million to purchase vehicles for the federal government
  • $400 Million for Global Warming Research
  • $2.4 Billion for Carbon Capture and Sequestration Technology Demonstration Projects
  • $350 Million for Research into using Renewable Energy to power weapons systems and military bases
  • $500 Million for Energy Efficient Manufacturing Demonstration Projects
  • $3 Billion to the National Science Foundation
  • $1.9 Billion to the Department of Energy for basic research into the physical sciences
  • $600 Million to NASA
  • $650 Million to help households convert to Digital TV
  • $400 Million for NOAA Habitat Restoration
  • $500 Million to the Bureau of Indian Affairs to address maintenance backlogs at public facilities

When is the money being is going to be spent, and on what?

The government wouldn’t be able to spend at least one-fourth of a proposed $825 billion economic stimulus plan until after 2010 (oh yeah, there’s the stimulus we need! let’s wait for 2 years to see how bad this thing can get!), according to a preliminary report by the Congressional Business Office that suggests it may take longer than expected to boost the economy. The government would spend about $26 billion of the money this year and $110 billion more next year, the report said. About $103 billion would be spent in 2011, while $53 billion would be spent in 2012 and $63 billion between 2013 and 2019 (What the hell are these flippin politicians smoking? This is unreal. Is it just me or do you ask yourself the same things? I mean, really… what reality do these guys live in?)

• Less than $5 billion of the $30 billion set aside for highway spending would be spent within the next two years, the CBO said.

• Only $26 billion out of $274 billion in infrastructure spending would be delivered into the economy by the Sept. 30 end of the budget year, just 7 percent.

• Just one in seven dollars of a huge $18.5 billion investment in energy efficiency and renewable energy programs would be spent within a year and a half.

• About $907 million of a $6 billion plan to expand broadband access in rural and other underserved areas would be spent by 2011, CBO said.

• Just one-fourth of clean drinking water projects can be completed by October of next year.

• $275 billion worth of tax cuts to 95 percent of filers and a huge infusion of help for state governments is to be distributed into the economy more quickly.

[Note: The CBO's analysis applied only to 40 percent of the overall stimulus bill, and doesn't cover tax cuts or efforts; a CBO report outlining all of its costs is expected in the next week or so.]

• The Obama administration said $3 of every $4 in the package should be spent within 18 months to have maximum impact on jobs and taxpayers; if House or Senate versions of the bill do not spend the money as quickly, the White House will work with lawmakers to achieve the goal of spending 75% of the overall package over the next year and a half.

[Source: AP: Three-quarters of stimulus to go in 18 months; January 22, 2009; Bloomberg News: Much of Stimulus Wont Be Spent Before 2011, CBO Says; January 20, 2009; link]

Now that you have had your fill of Pork, what do you say we all go PIG OUT? -  I think we deserve it because the politicians sure seem to be ‘eatin good these days.

Jan
28

The House You Save… Could Be Your Own

By | Featured, Foreclosure Defense Research

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“Luis Molina is not a lawyer and he has never played one on TV.

But that didn’t stop him from putting on his best suit, marching into a Miami courtroom this month and going up against an attorney with 30 years of experience to stop a foreclosure proceeding against his family’s home. Molina did such a good job of representing himself that the judge in the case thought he was a lawyer and punctuated his ruling in Molina’s favor by tearing up the other side’s motion for summary judgment and throwing it over his shoulder.

“I felt like a million dollars,” Molina told msnbc.com, describing his day in Judge David C. Miller’s courtroom in Florida’s 11th Judicial Circuit Court. “I felt like if there was anything in my life that I had done correctly, it had to be that. Every single lawyer after the fight came over and shook my hand.” – By Mike Starkey, MSNBC

 

CLICK HERE to read the Full Story…

 

LUIS GETS MY VOTE FOR A PROMOTION IN THE ARMY… WE’RE FIGHTING A WAR. BE A SOLIDER, NOT A BYSTANDER.

Don’t let these instituitions just take your home from you. Are you kidding? Here’s exactly what they fraudsters do!

These guys hire an attorney and make some allegations on paper that they own your Note and Mortgage and they have the right to foreclose on you. Yadda, yadda, yadda…

How would you feel if I was that institution? I just make up a company called Countywide Home Loans (notice the spelling) and I hire a slick attorney and I file a complaint against you alleging that you have defaulted in your payments and I own the mortgage and note and are seeking a foreclosure. I also allege to the court in my complaint that I don’t have the original Note but I want to “Re-establish the lost Note” under a certain state statute (in Florida it’s F.S. 673.3091) which means Iin layman’s terms that I want the court to give me the right to re-create the Note out of thin air and make up the terms as I go. Oh, and I attach the original mortgage to my complaint which is in the name of a different lender but my but my explanation for that is that they assigned the mortgage to me and now I am the owner and holder of that mortgage and note. Oh and by the way, the assignment of that mortgage hasn’t been recorded yet.

Then I go to Fidelity National Financial out of Jacksonville, FL (or my attorney) and I have them create that assignment of mortgage for me and back date it pre-filing of the foreclosure and BOOM! I am now the assignee of your mortgage, the owner of a new Note created out of thin air and I get to take your home from you.

Some reading this might say, “Lane, you’re ridiculous, this isn’t happening. You’re exaggerating and being a little dramatic, eh?” Ha! I wish I was. This is EXACTLY what is happening in over 90% of all foreclosures being filed right now in Florida. I can’t speak to what’s happening in other states but I hear through the channels that it’s the same.

Man, I could go on and on and on about this one. I simply cannot believe that our ELECTED JUDGES are having any of this!! This is outright criminal, but oh, it’s not, it’s supposedly completely legal and ok to be able to allege something that is patently false. I hear that’s called “fraud on the court” and should result in sanctions and possibly criminal proceedings against the institutions but no, nothing’s happening. You know why folks… this is easy. It’s because 98% of all homeowners that get served foreclosure papers or notice of default do NOTHING. That’s right, they let the bank/institution walk all over them, allege anything and take ‘em to the cleaners.

Because they do nothing, the court checks nothing. Does no quality control or fact checking to make sure that “Countywide Home Loans” is truly the owner of Luis Molina’s Mortgage and Note. They rubber stamp the lawsuit with a BIG, FAT DEFAULT on it and get on with it.

I met with the Chief Administrative Judge in Lee County, FL today as a representative of the Lee County Foreclosure Task Force. What stuck out to me was that he said the court’s job is to “dispose of these cases as quickly and efficiently as possible.”

You know what, he’s right! He’s doing nothing wrong. It’s up to the homeowner to FIGHT! Or hire a damn good attorney who knows what they’re doing to fight for them (which I highly recommend by the way).

This is the ultimate War on the Home Front. Get out your rusty sword, polish it up, sharpen it and get in the game. Fight for your home and find some inspiration in Luis Molina!! AWESOME! Luis, you’re a hero. Way to go. Now get after it…

Jan
26

Loan Modification Efforts in Opposition to Securitization Trusts

By | Bankruptcy, Featured, Loan Modification

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The major issue affecting/preventing voluntary loan modification is “securitization”. Nearly all residential loans since the late 1990′s have been securitized. Understanding the securitization process is key to understanding why  most efforts at mortgage modification will inevitably fail and why the  proposed bankruptcy modification presents the only sure method of preventing foreclosures for those homeowners that can afford a reasonable monthly payment still.

Securitization transactions are technical, complex deals, but the crux of the process is simple. A financial institution owns a pool of mortgage loans, which it either funded itself or purchased from other institutions or mortgage banking companies. Rather than hold these mortgages (ie. loans) (and the affiliated risk) on its own books, it sells them to a specially created entity, called a Special Purpose Vehicle (SPV), which is typically a trust . The trust pays for the mortgage loans by issuing bonds. The bonds are collateralized (backed) by the loans now owned by the trust. These bonds are so-called mortgage¬backed securities (MBS).

Because the trust is simply a “vehicle” to hold the loans and put them beyond the reach of the financial institution’s creditors, a third-party must be brought in to manage the loans. This third-party is called a Master Servicer or servicer. The servicer manages the loans for the benefit of the MBS holders. The servicer performs the day-to-day tasks related to the mortgages owned by the SPV, such as collecting mortgage and escrow payments, disbursing payments for taxes and insurance, handling paperwork, foreclosing, and selling foreclosed properties. These servicers are the entities that actually consider loan modification requests. They are the ones a customer calls when they have a question about their loan. They do not own the loans, they simply “service” the loan as an agent for the SPV. 

One thing that confuses the consumer/homeowner is that the servicer is often, but not always, a corporate affiliate of originator; most of the major servicers are subsidiaries of bank holding companies: Countrywide Home Loans (Bank of America); CitiMortgage and CitiFinancial (Citigroup); Select Portfolio Servicing (Credit Suisse); Litton Loan Servicing LP (Goldman Sachs); Chase Home Finance and EMC Mortgage (JPMorgan Chase); Wilshire Credit (Merrill Lynch); Wells Fargo Home Mortgage and Homeq Servicing (Wells Fargo).

“Securitization creates numerous obstacles to voluntary loan modifications, but they may be reduced to three broad categories: contractual, practical, and economic.

Securitization Creates Contractual Limitations on Private Mortgage Modification

These limitations cannot be bypassed except through bankruptcy modification or a taking of MBS holders’ property rights.

Servicers carry out their duties according to what is specified in their contract with the SPV. This contract is known as a “pooling and servicing agreement” or PSA. Although the decision to modify mortgages held by an SPV sits with the servicer, and servicers are instructed to manage loans as if for their own account, PSAs often place restrictions on servicers’ ability to modify mortgages. Almost all PSAs restrict modifications to loans that are in default or where default is imminent or reasonably foreseeable in order to protect the SPV’s pass-thru REMIC tax and off-balance sheet accounting status.

PSAs often further restrict modifications: sometimes the modification is forbidden outright, sometimes only certain types of modifications are permitted, and sometimes the total number of loans that can be modified is capped (typically at 5% of the pool). Additionally, servicers are frequently required to purchase any loans they modify at the face value outstanding (or even with a premium). This functions as an anti¬modification provision.

No one has a firm sense of the frequency of contractual limitations to modification for residential MBS (RMBS). A small and unrepresentative sampling by Credit Suisse indicates that almost 40% of RMBS PSAs have limitations on loan modification beyond a near universal requirement that the loan be in default or imminently defaulting before it may be modified. The Credit Suisse study, however, did not track all types of modification restrictions, such as face-value repurchase provisions, so the true number of restrictive PSAs is likely higher. Nonetheless, there are still a large number of homeowners whose mortgages are held by securitization trusts with restrictive PSAs. This includes both private-label securitizations and GSE securitizations; some Fannie Mae securitizations, for example, prohibit any reductions in either principal or interest rates.

It is virtually impossible to change the terms of a restrictive PSA in order to allow the servicer greater freedom to engage in modifications. The PSA is part of the indenture under which the MBS are issued. Under the Trust Indenture Act of 1939, the consent of 100% of the MBS holders is needed in order to alter the PSA in a manner that would affects the MBS’ cashflow, as any change to the PSA’s modification rules would.

Practically speaking, it is impossible to gather up 100% of any MBS issue. There can be thousands of MBS certificates from a single pool and these certificate holders might be dispersed world-wide. The problem is exacerbated by collateralized mortgage obligations (CMOs), second mortgages, and mortgage insurance. MBS issued by an SPV are typically tranched-divided into different payment priority tiers, each of which will have a different dividend rate and a different credit rating. Because the riskier tranches are not investment grade, they cannot be sold to entities like pension plans and mutual funds. Therefore, they are often resecuritized into what are known as CMOs. A CMO is a securitization in which the assets backing the securities are themselves mortgage¬backed securities rather than the underlying mortgages. CMOs are themselves then tranched, and the senior tranches can receive investment grade ratings, making it possible to sell them to major institutional investors. The non-investment grade components of CMOs can themselves be resecuritized once again into what are known as CM02s. This process can be repeated, of course, an endless number of times.

The upshot of this financial alchemy is that to control 100% of an MBS issuance in order to alter a PSA, one would also have to own 100% of multiple CMOs to alter the
CMOs’ PSAs and of multiple CMOs to alter the CMO’s PSAs. .

The impossibility of modifying PSAs to permit modification on a wide scale is further complicated because many homeowners have more than one mortgage. Even if the mortgages are from the same lender, they are often securitized separately. If a homeowner is in default on two or three mortgages it is not enough to reassemble the MBS pieces to permit a modification of one of the mortgages. Modification of the senior mortgage alone only helps the junior mortgage holders, not the homeowner. In order for a loan modification to be effective for the first mortgage, it is necessary to also modify the junior mortgages, which means going through the same process. This process is complicated because senior lenders frequently do not know about the existence of the junior lien on the property.

A further complication comes from insurance. An SPV’s income can exceed the coupons it must pay certificate holders. The residual value of the SPV after the certificate holders are paid is called the Net Interest Margin (NIM). The NIM is typically resecuritized separately into an NIM security (NIMS), and the NIMS is insured by a financial institution. This NIMS insurer holds a position similar to an equity holder for the SPV. The NIMS insurer’s consent is thus typically required both for modifications to PSAs and modifications to the underlying mortgages beyond limited thresholds. NIMS insurers’ financial positions are very similar to out-of-the-money junior mortgagees¬they are unlikely to cooperate absent a payout because they have nothing to lose.

Thus, the contractual structure of securitization creates insurmountable obstacles to voluntary, private modifications of distressed and defaulted mortgages, even if that would be the most efficient outcome.”

Part of this post comes from the Testimony of Adam J. Levitin
Professor Georgetown University Law Center
“Helping Families Save Their Homes: The Role of Bankruptcy Law”
Senate Judiciary Committee, November 19, 2008

Jan
25

Loan Modification: It’s All About “Leverage”

By | Featured, Loan Modification, Truth in Lending

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Leverage: the power or ability to act or to influence people, events, decisions, etc.; sway; to exert power or influence on.

We all know by now that the lenders and loan servicers are acting in bad faith with borrowers. What’s new? Many of these loans were given to un-suspecting borrowers in bad faith to begin with. It always was, and is, about money with the root being greed. I am working with a borrower right now, a pastor and his wife, who were given a refinance loan back in 2006. They were looking for some cash out on a fixed rate loan. Unknowingly they were put into a “Pick a Payment, Option ARM” loan. A loan that adjusts monthly but has a “fixed payment” option. The broker who sold them loan sold it to them as a fixed “payment” loan – they were looking for a fixed rate.

Should they have read the loan closing documents more carefully? Sure, hindsight being 20-20. But they trusted this individual and the integrity of his company. Have you ever read every document in a closing package? I have. But most mortgage brokers and closing agents haven’t even done that… a typical borrower is reading a foreign language -practically speaking.

So, back to the word “leverage.” I have found that there’s only ONE WAY TO DEAL WITH A LENDER OR SERVICER… with the gloves off. Meaning you have to treat them as an adversary and deal with them the way they are truly dealing with you. Don’t believe what you are hearing from some voice on the other end of the 800# you called. Folks, it’s just this simple: they don’t care one iota about you. Their only motivation is money and they do NOT deal in good faith.

So what’s this issue of Leverage? I have found one thing to be true in dealing with these institutions… the little guy needs leverage to win. They hold the cards until you start putting some in your hand. Shifting the deck simply takes a methodical and strategic approach to dismantling their case – in other words, building leverage. Gaining the “ability” to influence or “sway” their decisions (on your loan).

So, if you want a “workout” of your loan, a loan modification, you need to gain this ability to influence and sway their decision making process. How you ask? Find all the holes in their case, find all the violations of state and federal laws and put them to task. They will fail most of the time because they don’t think that it matters. Why? Because they don’t think you have what it takes to take them on? They don’t think you belong at the same poker table.

The question that really matters? Are they right or wrong?

I start with a very sophisticated Qualified Written Request – QWR. They have very strict timelines to adhere to on a QWR and must answer your bona fide questions of fact. Next I go after the loan closing and disclosure documentation. 8 out of 10 or more loans have violations. Let’s start itemizing those violations, 1, 2, 3, 4… and so on. These are federal violations and usually one can find some state law violations such as Unfair and Deceptive Trade Practices. Look for a fraudulent appraisal, look for kickbacks to other settlement providers. Every violation is a shift of the deck. Leverage.

If you want help modifying your loan…  if you want help shifting the deck…  if you want to find the violations and put them to task, email me. “I’m your Huckleberry.”

Jan
22

More corruption in the TARP Fund Management

By | Featured, News for the Patriot

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Surprise, surprise, surprise. Right. Well, more information is surfacing today that political interference and lobbyists are steering bailout money to their “favorite” banks. TARP funds were to be used to inject money into “viable” banks to get them lending again by creating stability and liquidity. I’ve already reported on the fact that banks have been using this TAXPAYER MONEY to buy other banks instead of lend. Click Here to read that post.

Now we have a new report that these funds are also being used to save “non-viable” banks from complete collapse and failure. How you say? Easy, corruption at the highest levels. Favoritism and the power of lobby.

According to the Wall Street Journal, “in December OneUnited Bank [in Boston] got a $12 million injection from the Treasury’s Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee. Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection.”

WSJ’s report continues by saying, “Treasury Secretary nominee Timothy Geithner, testifying Wednesday at his Senate confirmation hearing, acknowledged “there are serious concerns about transparency and accountability…confusion about the goals of the program, and a deep skepticism about whether we are using the taxpayers’ money wisely.”

Oh yeah, serious concerns… how about complete and total outrage! We’re talking hundreds of BILLIONS of dollars! If I were to go and steal $1000 I’d be convicted for sure but here we have Senators and Congressman and folks at the Federal Reserve stealing millions and billions in taxpayer money to help their “buddies” out at certain banks.

This sort of news is surfacing daily yet the American people continue to pretty much accept this. The phones in your US Senator’s office should be lighting up! Their website forms should be over-taxed (pun intended) by millions of us screaming about this stuff. If you don’t know how to contact them, go to my Weapons/Resources page and the shortcuts are there for you.

Jan
22

Farewell to “W”

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President George Bush, “Farewell. I wish you all the best in your endeavors as a citizen and I thank you for your eight years of service to our country. I cannot imagine the weight that you have felt over the last 6 years. 9/11 dealt you a blow that no President would ever want to deal with. You became the fall guy of faulty intelligence and bi-partisan Congressional decisions to take our country to war with Iraq. You made mistakes… I know of no President or any leader in our nation’s history that hasn’t. The far-left media gave you no slack and fueled a political divide our country hasn’t seen since the Civil War.  History will need time to to distance itself from the absurdity of the moment and to judge your record fairly. Regardless of the result, it is evident that you remained true to your convictions, not the popular emotion of the moment. I applaud you for your steadfast convictions. Right or wrong, it is a tribute to your leadership and I wish you and your family well. Thank you for your honorable service to our country.”

Folks, right or wrong, I feel a sickening feeling and have so for some time. I believe that our country has digressed. I see that as a whole, we don’t respect our President’s anymore. Yes, I understand why we are tempted to do so and I am tempted to do same at times. I started as a staunch supporter of George Bush and ended up conflicted about his presidency. Near the end I became more oppositional than anything… however, the other night I saw Sean Hannity’s Oval Office interview of George W. Bush and I immediately became a fan, again. I was left with a feeling of pride for him. His strength was his unwielding conviction to “go with his gut” and stikc

Jan
21

$150 Million Inauguration Price Tag

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Could have fed 30 million starving people a killer meal. Wow. What a flippin waste. It’s over, the money is gone and nothing in our world is different today than it was yesterday. Nice values. Truly historic(al) waste.
 
Yes, our new President is black. For that, I am thankful that our country has grown where this could be possible. The hate still exists however. Reference Jay Z’s wonderful comments about our outgoing President George W. Bush. One step forward for electing a black president. Two steps back because he and just about our entire country’s political leadership structure is out to lunch and have lost any semblance of true American values.  Yes, both Republican and Democrat. The failure of leadership knows no boundaries.
 
I hope for change. Yes Pecan!
Jan
19

Word of Today – “Disenfranchisement”

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On this Martin Luther King Jr. holiday, one word kept ringing in my ears…

“Disenfranchisement” [Definition]  – the revocation of the right of suffrage  (the right to vote) to a person or group of people, or rendering a person’s vote less effective, or ineffective.

This accurately describes the reality of EVERY United States citizen today who is NOT an elected official. In every sense of the words, our vote is “less effective or ineffective.”  When’s the last time you were approached (by your US Senator or State Representative) for your no BS opinion on a real issue? On any issue? On the issue of the bailouts… NO ONE I talk to and I mean NO ONE thinks this is right. Even the media is in agreement with this and it’s hard to find an issue where I agree with media or vice versa.

So, if the masses are truly against the bailouts and the MASSIVE spending approach to dealing with a recession, how is that our elected officials are voting FOR these bailouts? That, my friends, is “disenfranchisement.”

The regular guy’s vote doesn’t count. Let’s face it. No one’s asking mine or your opinion… our elected officials have come to believe that THEIR vote is OUR vote; and somehow, we’ll all just go along with it because we’re not smart enough to understand the issues and the “details.”

Disenfranchisement, in any of its forms, is unconstitutional. Your vote and my vote needs to be effective. In order for it to be effective, it must be asked for and it must bear weight.

Think on these things… I don’t have any magic solution in the moment but I do think we all need to figure out how our voice can be heard and our vote, especially on these major issues affecting not only us but our children and grandchildren, MUST be counted. No one called me to vote on these bailouts of corporate America and I was given no forum to place my vote. Were you?

To read the United States Constitution, CLICK HERE.

Jan
18

Why Wall Street ALWAYS Blows It…

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The article below I read on theAtlantic.com. It is written by Henry Blodget. It is so good, I’m going to post a fair amount of it verbatim, at the bottom of this post, if you want to continue reading it, the link to the full article is there for you. Folks, this is a great article… take the time to read it.

[BEGIN]
“The magnitude of the current bust seems almost unfathomable—and it was unfathomable, to even the most sophisticated financial professionals, until the moment the bubble popped. How could this happen? And what’s to stop it from happening again? A former Wall Street insider explains how the financial industry got it so badly wrong, why it always will—and why all of us are to blame.

by Henry Blodget

Why Wall Street Always Blows It

Well, we did it again. Only eight years after the last big financial boom ended in disaster, we’re now in the migraine hangover of an even bigger one—a global housing and debt bubble whose bursting has wiped out tens of trillions of dollars of wealth and brought the world to the edge of a second Great Depression.

Millions have lost their houses. Millions more have lost their retirement savings. Tens of millions have had their portfolios smashed. And the carnage in the “real economy” has only just begun.

What the hell happened? After decades of increasing financial sophistication, weren’t we supposed to be done with these things? Weren’t we supposed to know better?

Yes, of course. Every time this happens, we think it will be the last time. But it never will be.

First things first: for better and worse, I have had more professional experience with financial bubbles than I would ever wish on anyone. During the dot-com episode, as you may unfortunately recall, I was a famous tech-stock analyst at Merrill Lynch. I was famous because I was on the right side of the boom through the late 1990s, when stocks were storming to record-high prices every year—Internet stocks, especially. By late 1998, I was cautioning clients that “what looks like a bubble probably is,” but this didn’t save me. Fifteen months later, I missed the top and drove my clients right over the cliff.

Later, in the smoldering aftermath, as you may also unfortunately recall, I was accused by Eliot Spitzer, then New York’s attorney general, of having hung on too long in order to curry favor with the companies I was analyzing, some of which were also Merrill banking clients. This allegation led to my banishment from the industry, though it didn’t explain why I had followed my own advice and blown my own portfolio to smithereens (more on this later).

I experienced the next bubble differently—as a journalist and homeowner. Having already learned the most obvious lesson about bubbles, which is that you don’t want to get out too late, I now discovered something nearly as obvious: you don’t want to get out too early. Figuring that the roaring housing market was just another tech-stock bubble in the making, I rushed to sell my house in 2003—only to watch its price nearly double over the next three years. I also predicted the demise of the Manhattan real-estate market on the cover of New York magazine in 2005. Prices are finally falling now, in 2008, but they’re still well above where they were then.

Live through enough bubbles, though, and you do eventually learn something of value. For example, I’ve learned that although getting out too early hurts, it hurts less than getting out too late. More important, I’ve learned that most of the common wisdom about financial bubbles is wrong.

Who’s to blame for the current crisis? As usually happens after a crash, the search for scapegoats has been intense, and many contenders have emerged: Wall Street swindled us; predatory lenders sold us loans we couldn’t afford; the Securities and Exchange Commission fell asleep at the switch; Alan Greenspan kept interest rates low for too long; short-sellers spread negative rumors; “experts” gave us bad advice. More-introspective folks will add other explanations: we got greedy; we went nuts; we heard what we wanted to hear.

All of these explanations have some truth to them. Predatory lenders did bamboozle some people into loans and houses they couldn’t afford. The SEC and other regulators did miss opportunities to curb some of the more egregious behavior. Alan Greenspan did keep interest rates too low for too long (and if you’re looking for the single biggest cause of the housing bubble, this is it). Some short-sellers did spread negative rumors. And, Lord knows, many of us got greedy, checked our brains at the door, and heard what we wanted to hear.

But most bubbles are the product of more than just bad faith, or incompetence, or rank stupidity; the interaction of human psychology with a market economy practically ensures that they will form. In this sense, bubbles are perfectly rational—or at least they’re a rational and unavoidable by-product of capitalism (which, as Winston Churchill might have said, is the worst economic system on the planet except for all the others). Technology and circumstances change, but the human animal doesn’t. And markets are ultimately about people.

To understand why bubble participants make the decisions they do, let’s roll back the clock to 2002. The stock­-market crash has crushed our portfolios and left us feeling vulnerable, foolish, and poor. We’re not wiped out, thankfully, but we’re chastened, and we’re certainly not going to go blow our extra money on Cisco Systems again. So where should we put it? What’s safe? How about a house?

House prices, we are told by our helpful neighborhood real-estate agent, almost never go down. This sounds right, and they certainly didn’t go down in the stock-market crash. In fact, for as long as we can remember—about 10 years, in most cases—house prices haven’t gone down. (Wait, maybe there was a slight dip, after the 1987 stock-market crash, but looming larger in our memories is what’s happened since; everyone we know who’s bought a house since the early 1990s has made gobs of money.)

We consider following our agent’s advice, but then we decide against it. House prices have doubled since the mid-1990s; we’re not going to get burned again by buying at the top. So we decide to just stay in our rent-stabilized rabbit warren and wait for house prices to collapse.

Unfortunately, they don’t. A year later, they’ve risen at least another 10 percent. By 2006, we’re walking past neighborhood houses that we could have bought for about half as much four years ago; we wave to happy new neighbors who are already deep in the money. One neighbor has “unlocked the value in his house” by taking out a cheap home-equity loan, and he’s using the proceeds to build a swimming pool. He is also doing well, along with two visionary friends, by buying and flipping other houses—so well, in fact, that he’s considering quitting his job and becoming a full-time real-estate developer. After four years of resistance, we finally concede—houses might be a good investment after all—and call our neighborhood real-estate agent. She’s jammed (and driving a new BMW), but she agrees to fit us in.

We see five houses: two were on the market two years ago for 30 percent less (we just can’t handle the pain of that); two are dumps; and the fifth, which we love, is listed at a positively ridiculous price. The agent tells us to hurry—if we don’t bid now, we’ll lose the house. But we’re still hesitant: last week, we read an article in which some economist was predicting a housing crash, and that made us nervous. (Our agent counters that Greenspan says the housing market’s in good shape, and he isn’t known as “The Maestro” for nothing.)

When we get home, we call our neighborhood mortgage broker, who gives us a surprisingly reasonable quote—with a surprisingly small down payment. It’s a new kind of loan, he says, called an adjustable-rate mortgage, which is the same kind our neighbor has. The payments will “reset” in three years, but, as the mortgage broker suggests, we’ll probably have moved up to a bigger house by then. We discuss the house during dinner and breakfast. We review our finances to make sure we can afford it. Then, the next afternoon, we call the agent to place a bid. And the house is already gone—at 10 percent above the asking price.

By the spring of 2007, we’ve finally caught up to the market reality, and our luck finally changes: We make an instant, aggressive bid on a huge house, with almost no money down. And we get it! We’re finally members of the ownership society.

You know the rest. Eighteen months later, our down payment has been wiped out and we owe more on the house than it’s worth. We’re still able to make the payments, but our mortgage rate is about to reset. And we’ve already heard rumors about coming layoffs at our jobs. How on Earth did we get into this mess?

CLICK HERE to link to the full article on theAtlantic.com

Jan
18

When will “they” get it?

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The question? When will the government and Congress truly get it? While they are concerned with who’s going to pay for their next election bid (ie. big corporate lobby, banks, insurance companies, etc.) the foreclosure crisis continues to escalate.

Are they really this ignorant? Really? I mean  it seems like everyone I talk to is in agreement, you don’t turn this ship around until you stop foreclosures. This isn’t brain surgery but then again you gotta have a brain to be eligible for the surgery too…

Folks, foreclosures continue to rise, the tax basis continues to fall, jobs continue to be lost, less money is being spent because there’s less out there to be spent and the cycle starts all over again. This cycle won’t stop until there’s a pro-active solution put in place to force it to stop.

Foreclosures in U.S. Rose 81%, Topping 2.3 Million Last Year. No typo guys… 2.3 million foreclosures. 81% increase year over year. “The nation lost more than 2.6 million jobs last year, the most since 1945, and U.S. stocks had their worst performance since the Great Depression” says Dan Levy of Bloomberg.com. President-elect Barack Obama has said the country needs to prevent foreclosures to revive the housing market and economy.

No kidding. Wow, that’s a moment of genius. Makes me think of that string of commercials by Bud Light, “Real Men of Genius.” Someone oughtta do a series of commercials like this featuring our men of genius in Congress. While they continue to bail out the idiots in corporate America and Wall Street that are greedy beyond recognition, the regular, hard-working American struggles to keep hope alive.

All I can do is encourage you, the regular guy/gal, to get off the sidelines and get in the fight. Let your Congressman/woman know that they are on borrowed time. Tell them plainly what you expect them to do. Don’t shrug it off by saying to yourself that your voice doesn’t count. I guarantee that if you get in the fight and start demanding action things will change; and, if they don’t, I guarantee that you will vote differently next go around.

If you want to read a full story by Dan Levy at Bloomberg.com, CLICK HERE to link to that story.

Make it happen. Fight this War on the Home Front.

Jan
17

Stimulating our Country to Rock Bottom

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Rep. Ron Paul (R-TX) writes: “According to many politicians, we got here by not spending enough, not consuming enough, and not regulating enough. Now government, like some mythical white knight, is going to ride in to save the day by blanketing the economy with dollars, hiring an army of new bureaucrats, creating make-work jobs, and sending everyone some form of a bailout check. The debate seems to focus on whether this will cost enough to save the economy, or if this is just a “down payment” with much more government spending to come. Talk like that would be comical, if the results weren’t going to be so tragic.

The results will be worsening economic woes until we learn our lesson. But instead Congress is behaving like drug addicts who must hit rock bottom before they are ready to face reality. They are playing foolish games with the economy now because they are thinking only of political expedience.”
[END]

I couldn’t agree more. Since when does spending more help a broke person? Folks, our country is broke. We just don’t want to say it and accept it. A business is broke when it can’t fund operations any more because bills/expenses outpace revenue, month after month, year after year. At some point that business owner has to face the music and “hang it up.” This usually happens when the business is unable to continue borrowing to float. At some point, the banks or investors look at that business and say, “you’re not viable and lending to you anymore is way too risky.” At that point, it’s over.

It’s the same with the American family. If you’re spending more than you make, any responsible person would say that you’re being irresponsible and you need to reign in your spending. We should spend no more than 90% of what we make/have. If you spend 110% of what you make you won’t last long.

Our government has been spending more than it has for decades. We as Americans have known it too. We commonly refer to it as the “federal deficit.” Our government is on drugs folks. Really, they’re addicted to a spending drug. We spend more than we have. Period. The only reason the government can do it when a family can’t is because the government can print more money to neutralize it’s irresponsible, addict behavior. The government has fostered this “consumerism” and “materialistic” society we live in today. Everyone of us enjoyed the “high” of 2004-2007.” We are all collectively guilty. We must all take responsibility. We should do it now. The worst thing we can do is keep spending.

But that is exactly what our government is doing. We all know it deep down… this bailout stuff is more than wrong. It’s grossly irresponsible and selfish. We are damaging our country that may go to the level of being irreparable. Our kids and grandkids are really in trouble.

The American taxpayer has become the “bank” for our government. We are literally lending our money to Congress and they are spending it irresponsibly. What power we would all have collectively if millions of Americans and businesses decided on one common day that we would no longer fund this government. There’s our vote and the power of it. Remember folks, they work for us, not the other way around but the roles have been switched because we’ve been lulled into a materialistic high. Because it “feels so good” we haven’t done anything.

The crisis isn’t bad enough yet. We’re still pointing fingers. Some think that they’re not respsonsible… Some still think that printing money and letting corrupt politicians who are “on the take” with big corporate America have a blank check will actually rescue our economy.

I predict that we will wake up, as a country, WHEN the crisis becomes dire. Our biggest threat isn’t terrorism. It’s complacency on the home front. Our biggest threat is our own government. We are killing ourselves.
I’m a patriot and I love this country. I love what America is about – traditionally that is. I believe in the convictions of our Founding Fathers. I believe deeply in freedom – freedom of speech, the right to bear arms, etc. I truly believe that the majority of you reading this feel almost exactly the same.

When the crisis reaches the tipping point, our journey as a country, back to greatness will begin. But, as Ron Paul said, we will have to hit the proverbial bottom first; and we ‘aint there yet. Unfortunately.

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