1. Smith, Hiatt & Diaz Case v ABBY G. LOPEZ | Fraudclosure Involving LPS On Despite Glitch, Confusion
2. OUCH! Judge Dunnigan Just Fined Smith Hiatt & Diaz $49,000 to be paid in 4 days and if not then add $7,000 per day
3. Smith, Hiatt & Diaz Motion to Purge Lender Processing Services’ (LPS) Accidentally Leaked Internal Email

1. Foreclosure Fraud | Guilford County Register of Deeds Jeff Thigpen and Lynn Szymoniak to Hold Press Conference Wednesday at 10 AM
2. Lynn Szymoniak and Jeff Thigpen Video | Mortgage Fraud Investigation in Guilford Co.
3. REJECTED | Robo-signed documents rejected by John O’Brien following 60 Minutes show featuring Lynn Szymoniak

1. MONEY, POWER AND WALL STREET | PBS FRONTLINE FOUR-HOUR INVESTIGATION GOES INSIDE THE EPIC STORY OF THE GLOBAL FINANCIAL CRISIS
2. Loreley Financing v. Citigroup Global Markets | Citigroup Sued for Fraud Over $1 Billion of CDOs
3. DEBT LIMIT – A GUIDE TO AMERICAN FEDERAL DEBT MADE EASY (VIDEO)

1. Federal Reserve’s Independent Foreclosure Review and HAMP Escalations Review
2. Federal Reserve Board releases action plans for three supervised financial institutions to correct deficiencies in residential mortgage loan servicing and foreclosure processing
3. Independent Foreclosure Review | OCC Says Independent Consultants Can’t Contact Borrowers

1. BRAVO! | Acceptance Speech of Charles Ferguson, Oscar Winner of Best Documentary Feature for Inside Job
2. Charles Ferguson Director of the Wall Street Documentary ‘Inside Job’ – Let Them Eat Task Forces
3. Lanny Breuer, Eliot Spitzer, Mary Jo White, & Neil Barofsky | Crooks on the Loose? Did Felons Get a Free Pass in the Financial Crisis? (VIDEO)

1. AFSCME | End Dimon Double Duty – “Jamie Dimon has gone from the ‘Last Man Standing’ to ‘the Most Dangerous Man in America
2. Jamie Dimon: To Fix Housing, Everyone Should Get in a Room and Decide to Do My Bidding
3. JPMorgan CEO Jamie Dimon: Stop Bashing the Rich “Acting like everyone who’s been successful is bad and that everyone who is rich is bad – I just don’t get it”

1. BRYLLAW LITIGATION: First Quiet-Title Order in Virginia Voiding Deed of Trust (by default)
2. Ronald R. Wolfe and Associates (FKA Florida Default Law Group) Under Investigation Over Fake Foreclosure Money
3. Just In | FDIC Sues JPMorgan, Citigroup, BofA Securities, Deutsche Bank

1. U.S. SECURITIES COMMISSION v CITIGROUP GLOBAL MARKETS INC | $285 Million Citi Settlement With SEC Rejected by Judge Jed Rakoff
2. Loreley Financing v. Citigroup Global Markets | Citigroup Sued for Fraud Over $1 Billion of CDOs
3. Morgan Keegan to Pay $200 Million to Settle Fraud Charges Related to Subprime Mortgage-Backed Securities

1. Pimco | $25 Billion Foreclosure Deal to Hit Pensions Harder Than Banks
2. $80.35 Million in Foreclosure Fraud Settlement Funds Now Getting Redirected to State Budgets
3. California | Brown Proposes Clever Raid of Foreclosure Fraud Settlement Funds

1. Elijah Cummings | Oversight Committee Democrats Urge FHFA Director to Produce Documents on Principal Reduction
2. Dexia v. Bear Stearns | “Egregious Fraud” Dexia Sues JPMorgan Over $1.7 Billion in Mortgage Securities
3. Foreclosure Fraud Panel One Hearing Testimony – Robo-Signing, Chain of Title, Loss Mitigation and Other Issues in Mortgage Servicing

I’m not exaggerating one bit when I say this… nary a month goes by that I don’t feel compelled to debunk the happy housing prices statistics that seem to get released immediately following the release of any bad news for the housing market.  As a matter of fact, I just did so a few days ago, HERE.

Each time I go through the pointless exercise I tell myself that it will be the last time, that from here on out if someone wants the housing market to have bottomed or being on its way up… or whatever, I’ll just respond b y saying, “Sounds great!,” and leave it at that.

The last time was entirely transparent … while absolutely nothing had changed all of a sudden everything was better… in the mainstream media, anyway.  So, once again I found myself sitting down at my keyboard to strip away the fabrication, manipulation and obfuscation so as to leave only the naked truth of the matter.

Basically, if you’ve been a Realtor out to have a parade over the last few years, then you’ve come to know me as the rain.

Well, today LPS (“Lender Processing Services”) published a report, based on analysis of 40 million loans, and to begin with, the foreclosure pre-sale inventory rate came out at 4.14 percent, which is UNCHANGED whether we’re comparing last month… or last year.  Pre-sale inventory exceeded two million properties.

Not only that, but the mortgage delinquency rate went UP in April by 0.4 percent to 7.12 percent, and the number of properties that are now 30 or more days late, but NOT in foreclosure, passed the three and a half million mark in April.

Florida, Mississippi, New Jersey, Nevada and Illinois were the states with the highest percentage of delinquent loans, which I found quite an interesting list because of the lack of “sand states” listed, Nevada notwithstanding.

Montana, Alaska, South Dakota, Wyoming and North Dakota made the list of states with the fewest delinquent loans, but since no one lives in those states anyway, who really cares?

Bang the Drum Slowly…

Starting last month, I heard from Realtors primarily in Phoenix, but also in Northern California, as they excitedly rambled on about the throngs of investors who had come from Canada and points unknown to bid up distressed property sales, which make up just under 50 percent of all sales for the last three months running.

However, a new study by Campbell/Inside Mortgage Finance shows that even with “all that action,” home prices are not moving higher.  In fact, most homes sold in April, although two or three offers were received, ended up selling below list price.

According to IMF’s HousingPulse, as reported by CNBC’s Diana Olick:

“The average price for non-distressed properties declined 1.5 percent from March to April, while the average price for short sales dipped 1.7 percent. For damaged REO [bank-owned] the average price fell 1.4 percent and for move-in ready REO the average price slipped 0.3 percent.”

So, demand is rising while prices are falling… fascinating.  Perhaps it’s because of a combination of factors, such as incredibly tight credit markets, an ongoing avalanche of foreclosures coming onto the market, a worsening jobs market, higher unemployment, and a market made up of greedy bottom-fishers not out to buy, but rather to steal.

Think I might be onto something there, or no?

Other reports are saying that investors in and around Phoenix are bidding up home prices to such levels that after necessary repairs are completed, the new owner will be underwater once again.

Olick and her crowd on CNBC, who only a week or two ago seemed all but ready to declare a bottom and begin the march back to prosperity, but thid week her tone is decidedly different.  In fact, she’s sounding a bit more like me… you know, were I a ditzy blond who’s chief skill is reading from a teleprompter…

“… depending on monthly financing costs, and the upfront investment, (investors) may not see the kind of returns they originally expected, and they may not be able to sell in the time frame they originally planned.”

Wait a minute, there’s a word for that… darn it, what do they call someone who ends up in that situation in the midst of this larger picture… Oh, yeah… I’ve got it…

SUCKER!

Mandelman out.

1. Lee Camp | Occupy Congress – Live Performance In The Belly Of The Beast
2. #AGOs TWEET | AG Coakley to hold press conference at 1pm regarding a major lawsuit against 5 national banks
3. CNBC Tweet | New York AG Schneiderman Expected To Join Multi-State Mortgage Settlement-New York AG Schneiderman To Hold Media Call At 6pm ET

1. BofA’s Moynihan said of his $5 debit card fee that, “banks have a right to make a profit” NOW I SEE WHERE HE GOT HIS ADVICE!
2. In re: ANTHONY TARANTOLA – Given the Deficient and Misleading Nature of Deutsche’s Filings, the Court Seriously Considered Issuing an Order to Show Cause as to Why Sanctions Should Not be Imposed
3. Prostitution Ring for Wall Street Clients Busted

1. COMPLAINT | PLYMOUTH COUNTY, IOWA v MORTGAGE ELECTRONIC REGISTRATION SYSTEMS – Plymouth County Sues MERS Over Mortgage Recording Practices
2. LPS AMENDED CLASS ACTION COMPLAINT | CITY OF ST. CLAIR SHORES GENERAL EMPLOYEES’ RETIREMENT SYSTEM v. LENDER PROCESSING SERVICES, INC.
3. MERS | All in One Basket – The Bankruptcy Risk of a National Agent-Based Mortgage Recording System

1. Bank of America Moves to Evict 90-Year-Old Woman by Breaking a Federal Law – The Protecting Tenants at Foreclosure Act
2. Woman Who Called Ex 65,000 Times in One Year Is Less Annoying Than Bank of America
3. Family with Newborn Illegally Evicted Despite Law Protecting Tenants From Landlord’s Foreclosure

1. Strategic Default – The Banksters Keep Stealing – Why Keep Paying?
2. Devil’s Bargain: Wall St. & the Martin Act | Wherein BANKSTERS cry their rights to “due process” are being violated
3. Die Banker Die by J Glenn Lowe – A Tribute to Wall Street Banksters and Fraudgate

1. Deutsche Bank to Pay $32.5 Million to Settle Mortgage Suit – Massachusetts Bricklayers and Masons Trust Funds v. Deutsche Alt-A Securities
2. Federal Home Loan Bank of San Francisco v Deutsche Bank Securities Inc Et Al
3. KABOOM – JPMorgan Chase, Credit Suisse, Bank of America, Barclays, Citigroup, Countrywide, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley, UBS et al Sued For FRAUD

1. Screw You Chase! JPMorgan Chase Takes $50,000 from Homeowner to Stop Foreclosure Two Days Before Denying Permanant Loan Mod
2. Homeowner Suffers Horrific Injustice at the Hands of JPMorgan Chase
3. FLORIDA (UN)FAIR FORECLOSURE ACT HR 213 LIVE IN COMMITTEE THIS MORNING VIDEO HERE

1. Ally (GMAC) Puts Mortgage Unit Into Bankruptcy
2. And Then There Was Five – Connecticut Attorney General Investigating Defective GMAC/Ally Foreclosure Docs, Demands Halt To Its CT Foreclosures
3. Mortgage Unit Troubles Ally (GMAC) Financial

1. Chris Whalen on Radio Free Dylan | A 30 minute podcast of Chris Whalen and Dylan Ratigan on Bank of America
2. Foreclosuregate Video – Bloomberg Interview of Chris Whalen “Foreclosure Issue is a Cancer”
3. Chris Hayes | Lobbying Firm’s Memo Spells Out Plan to Undermine Occupy Wall Street (VIDEO)

1. Pics and Video | Robin Hoods Storm Mortgage Banksters Conference in Chicago
2. The Moat Crossing Robin Hoods Return in Chicago to Invade the Mortgage Bankers Association Conference
3. I Can’t Wait to See More! | Robin Hoods Storm Mortgage Bankster’s Association Conference – This Time by Kayaking Down the Chicago River

1. The American Dream Film – Do Not Watch, Unless You Want to Know How You’ve Been Scammed by the Most Basic Elements of Our Government
2. Short Film | Danny Schechter – INSIDE OCCUPY WALL ST: HOW Occupy Wall Street Operates
3. Making Margin Call: An Interview with Writer/Director J.C. Chandor

Lately, the question is: what is a strategic defaults, or as the mortgage banking industry would call them “ruthless defaults”.  These are foreclosures that happen on purpose.  People find themselves owing significantly more than their property is worth and they decide to walk away from their indebtedness instead of spending the next 20 years paying hundreds of thousands more than the property is worth.  Crazy, huh?  Go figure.

Apparently, there are some people that think such a decision involves some sort of moral dilemma.  Isn’t that just adorable?  A moral dilemma… there’s something immoral about walking away from your mortgage?  Okay, so I have questions.  Is it less or more immoral than say… gay marriage?  Or what about flag burning?  How does walking away from your mortgage compare with flag burning on the morality scale?  If you’re even thinking about trying to answer that question… give it a rest.

I understand why people want to keep their home.  I understand why they don’t want to lose it to foreclosure.  I even understand why some people choose to stay in a home that’s seriously underwater… for a while, anyway.  But, if I were underwater in a property by hundreds of thousands of dollars with no hope of ever having any equity of which to speak, I’d walk away in a New York minute without feeling the least bit immoral for having done so.  It’s a mortgage, for heaven’s sake.  What’s moral or immoral about a mortgage?

When I take out a mortgage I take on a certain amount of risk.  And the investor funding my mortgage takes on a certain amount of risk.  And we both hope the risks we’re taking pan out.  If they don’t, for either party, well… that’s the way the cookie crumbles.  The investor may decide he wants out of the deal for whatever reason and decide to sell the mortgage to another investor.  And I may decide that it’s not working out for me, and if I do… and I can’t sell the property… well, I may walk away.  The investor gets the property and I get the foreclosure on my credit report.  I don’t even see where morality enters into the equation.

Let us say that you owed $600,000 and the house appraised for $400,000.  Here’s how today’s strategic default might work out:

A. You stop paying your mortgage payment, which is $3500 a month, and your property taxes, which are $8,000 a year.  Savings in 12 months: $50,000.

B. One year is how long you can easily stay in the house before they actually kick you out, and you may be able to get 18 or even 24 months, you never know.

C. Keep all other payments current… car loans, credit cards.  You only want to let your mortgage payment lapse, nothing else.  That way all of your other credit lines will remain intact.

D. Go rent a house down the street or wherever you want.  Rents are way down essentially everywhere.

E. Two years later start shopping for another house.  Pay $300,000 for the same house you owed $600,000 on before walking away, and start building equity immediately, because you’ve saved $100,000 to put down over the last three years.  Aren’t you happy now…

These days, it occurs to me, there would be even less morality involved in the decision to walk away from a mortgage.  I can’t believe anyone actually feels morally obligated to a bank today.  Why would anyone possibly feel that way?  About a bank?  You’ve got to be kidding me.

I mean, what type of business would be considered less moral than a bank?  I think I’d feel more morally obligated to a drug king pin than a bank… maybe about the same… hard to say.  It would depend on the dealer, I suppose.

I bank at Citibank and if I ever come out even a nickel ahead in our dealings, I’m having a damn party.  Heck, every time I go into Citi with a friend, we try to carry out the furniture or whatever “art” is hanging on the wall.  The manager hates me.  He chased after me once when I was trying to carry one of the bank’s potted plants to my car.  What’s the big deal?  We, the taxpayers, have given Citi something like $400 billion in fabulous cash and prizes for bankrupting themselves.  Why shouldn’t I be able to take home one lousy plant?

Morgan Stanley obviously doesn’t feel morally obligated to the bank that was financing their mortgages, and we’re not talking about a $189,900 three bedroom/2 bath in Palmdale here.  Bloomberg ran the story just two weeks ago under the headline: Morgan Stanley to Give Up 5 San Francisco Towers Bought at Peak.  Here’s how the story starts off… you’re going to love this…

Dec. 17 (Bloomberg) — Morgan Stanley, the securities firm that spent more than $8 billion on commercial property in 2007, plans to relinquish five San Francisco office buildings to its lender two years after purchasing them from Blackstone Group LP near the top of the market.

The bank has been negotiating an “orderly transfer” of the towers since earlier this year, Alyson Barnes, a Morgan Stanley spokeswoman, said yesterday in a telephone interview. AREA Property Partners will take over the buildings. Barnes declined to say when the transfer will occur.

“This isn’t a default or foreclosure situation,” Barnes said. “We are going to give them the properties to get out of the loan obligation.”

Now you see… that’s exactly what I was going to say.  Alyson and I see things exactly the same way.  It’s not a default or foreclosure situation… they’re just giving the bank the properties back in order to get out of the loan.  What’s wrong with that?  There’s nothing immoral about that, right?  Morgan Stanley certainly doesn’t think so, so why would anyone else?  Where this whole moral dilemma thing coming from anyway?

What a crock of crap that is.  What Morgan Stanley is doing is called a “strategic default,” simple as that.  You can dress it up and make it sound like it came directly from the Board of Directors, but at the end of the proverbial day, Morgan wants out because the property is worth half what they paid for it, and they know it will be many years, and probably decades before the price comes back to the previous level.

And guess what… it’s not even the first time Morgan Stanley has walked away this year.  According to the Bloomberg story, this is the second time the mega-bank has defaulted on its obligations… no, that’s the wrong way to say it… it’s the second time the mega-bank has negotiated to surrender property it had previously purchased and was now underwater.  Here’s how Bloomberg described it:

The San Francisco transfer would mark the second real estate deal to unravel this year for Morgan Stanley, which bet big on the property markets as prices were rising. The firm last month agreed to surrender 17 million square feet of office buildings to Barclays Capital after acquiring them for $6.5 billion in 2007 from Crescent Real Estate Equities. U.S. commercial real estate prices have dropped 43 percent from October 2007’s peak, Moody’s Investors Service said last month.

“It’s not surprising this deal ran into trouble,” Michael Knott, senior analyst at Green Street Advisors in Newport Beach, California, said in an interview. “It was eye-opening among a group of eye-opening deals. There was almost no price too high in 2007 for office space in top gateway markets.”

The Morgan Stanley buildings may have lost as much as 50 percent since the purchase, he estimated.

Morgan Stanley bought 10 San Francisco buildings in the city’s financial district as part of a $2.5 billion purchase from Blackstone Group in May 2007. The buildings were formerly owned by billionaire investor Sam Zell’s Equity Office Properties and acquired by Blackstone in its $39 billion buyout of the real estate firm earlier that year.

Well, obviously Mrogan Stanley was under the impression that real estate prices would go up forever.  And it looks like they bit off more than they could chew.  I bet they bought jet skis and Hummers too.  Probably used their office buildings like ATMs… well, maybe not.  They didn’t need to, I suppose.  After all, they turned into a commercial bank over night in order to get TARP funds and countless other taxpayer funded freebies that have allowed the bank to have a record year this year, along with everyone else on Wall Street for that matter.  So, technically they used us as their ATM, but it’s the same idea.

The Bloomberg story doesn’t bother to mention who the bank is that’s eating Morgan’s default… I mean orderly transfer of the property back to the bank that funded their mortgage.  Kind of weird… I mean, they must be very unhappy at having to take a billion dollar loss.

Oh, but wait… they don’t have to take any loss at all, do they?  Thanks to Uncle Timmy, and the myriad of others in the Banker’s Party, the bank doesn’t have to recognize the losses caused by a decline in the underlying value of commercial property at the momeny, so whew… dodged a bullet there, I’d say.  That was close.  Thank God for these new pretending rules, or we might be in serious trouble.  Tim is always thinking, I’ll say that for him.

I like this pretending stuff… it’s cool.  I don’t know why no one has ever thought of it before.  Why did we have that whole dot-com meltdown anyway?  Couldn’t we have just put some pretending rules in place?  If we had, maybe Pets.com would still be delivering 100-pound bags of kibble across the country overnight for free.  It was a great service; you’ve got to admit.  What would you like to bet George W. is watching this and thinking: “Pretending.  Of course, pretending.  Why the heck didn’t we think of that?  Laura, come in here, you’re gonna’ just love this.”

The Agonist, a blog I’ve been reading lately and like a lot, says it so well, it’s just not worth trying to write any better:

The investment banks are winning at this game. Very few mortgages are being renegotiated to allow the homeowners to keep their home, and this despite all the programs of the federal and state governments trying to force renegotiations on to the financial firms. One of the reasons the investment banks are winning is that there is a conscious, deliberate effort by the financial industry, the press, and the government to prevent homeowners from entering into strategic defaults.

Americans still view a deliberate default as immoral and a sign of personal failure.

Morgan Stanley doesn’t look at it that way, not when it comes to its own behavior. It only expects you, the consumer and homeowner, to have moral attitudes about financial decisions. With the corporations, morality doesn’t enter into it; it’s just business. That is why it is very, very important for strategic defaults by firms like Morgan Stanley to be dressed up as something different – as a negotiation done voluntarily for mutual agreement. And after all, Morgan Stanley itself isn’t going bankrupt, just the subsidiary that bought these properties is acting like it’s bankrupt.

The last thing the financial industry and our worthy government leaders want is for American consumers to act as irresponsibly and amorally as our corporations do.  If most Americans acted like that, not one major US financial firm would be left standing.

Did everyone catch that last line? If we acted like our corporations, not one major US financial firm would be left standing.  Yeah, well make a mental note of that.  It’s the kind of thing that could come in handy down the road a piece.

Morgan Stanley doesn’t have to walk away from the buildings they purchased during the bubble.  They’re doing great as a result of being loaded with taxpayer funded cash, and not having to recognize losses, but they want out because they’re underwater to such a degree they know it makes no financial sense to continue paying what they’re obligated to pay.  If you or I did that, we be getting foreclosed on, our bank would be calling seven times a day and sending us the nastiest letters on the planet trying to scare us into paying way more than we have to for the property.  But when Morgan Stanley does it, they’re working to negotiate something amicable in order to ensure a smooth transition, or some such nonsense.

Our government seems just hunky dory with the whole deal too.  It’s fine for Morgan to stop paying a mortgage when it’s too far underwater, but not for a homeowner to do the same thing for the same reason?  Well, alrighty then… fair enough.  Whatever they say.

Listen… I can’t tell anyone what to do, nor would I want to, but let’s just make sure we’re all thinking a little more corporately as this battle continues, shall we?  Food for thought… food for thought… I report, you decide… ( walks away whistling…)

1. BofA Lawsuit to Stay in State Court | State of Arizona vs. Countrywide, Bank of America, et al
2. Dutcher, Ferguson, Ahlers v. Recontrust, BAC, Bank of America | New Lawsuit Alledges Thousands of ILLEGAL Utah Foreclosures
3. Pot, Meet Kettle | Bank of America Sues HOA’s, Trustees and Collection Agencies Over Foreclosure Fees

1. Mitt Romney Talks With Florida Foreclosure Victims, Encourages Strategic Defaults and Principle Reductions
2. NY Times Editorial | Mitt Romney on Fraudclosures
3. Mitt Romney on Fraudclosures | Do Like Bondi Does and “Prosecute the institutions where there has been fraud”

Certified Fraud Examiner and forensic accounting epert, Jay Patterson, a member of the faculty at Max Gardner’s Boot Camp training programs for lawyers.  In that photo above, Max is all the way on the left and just to the right of Max is Jay.

Jay Patterson teaches lawyers how to use the SEC Edgar database, among others, in order to find out who owns a loan.  How to identify the trust a loan is in and find the Pooling and Servicing Agreement. how to figure out whether a trust is modifying loans and what the characteristics of the modifications are… and he can take apart the accounting of a loan to show where just about every nickel went.

Jay knows loans and what can go wrong with them, and in a field where scams are far too common, Jay Patterson is one of the most respected names in the industry nationwide.  In 30 minutes, Jay and I talk about what homeowners should and shouldn’t do related to loan audits, securitization audits, and why accounting is an important, but often overlooked issue when fighting foreclosure.

Turn up your speakers and click the PLAY button below, and listen to one of the top loan and securitization auditors and forensic accounting experts in the country, Jay Patterson… on this Mandelman Matters Podcast.

1. Thank Attorney General Schneiderman for Standing Up for the Victims of Wall St. Crooks
2. What Does Wall Street Do for You? (Harm IMHO) Perhaps the best way to really appreciate what Wall Street does is to imagine life without it.
3. “Stunned” | AG Eric Schneiderman Opposes Fraudclosure Deal