May

I am officially proclaiming the Homeowner’s Bill of Rights in California to be DOA – Dead on Arrival. And… good. I’m glad it didn’t take until June.

In fact, if it wouldn’t be too much to ask, banking lobby… just hang out in Sacramento another week or so and dispatch whatever other bills remain in the California legislature as early as possible… start the recess early this year!

The Big Banks and the FHFA’s Ed DeMarco brought their considerable political muscle to the job of killing the Homeowner Bill of Rights in California, and although technically there’s still some voting to do… trust me… that’s all she wrote.

This makes the third year in a row that the banking lobby has said a resounding no to any sort of change that’s supposed to protect homeowners from abusive foreclosure practices. Why do we keep doing this? Haven’t we learned anything by now?

So, I’m glad it’s over… early. I’ve had a tough year, and I didn’t need to spend any more time on this pipe dream of a proposal.

Okay, sure… our politicians running for office and elected officials did essentially nothing… BUT NEITHER DID WE… so I’m not blaming them. The simple fact is that we don’t deserve to have such laws on the books.

The Homeowner Bill of Rights is the name that’s been given to a collection of six legislative proposals. I’ll give you an overview of each and you decide for yourself how important it would have been to get the bill passed.

1. SB 1470 – The Anti-Dual Tracking Bill

Dual tracking is when the servicer invites a borrower to apply for a loan modification, but proceeds with foreclosure proceedings anyway.

Now, I realize that some people are going to see nothing wrong with that practice, saying that a loan modification is an accommodation granted at the discretion of the bank, and therefore the denial of a modification should not delay a foreclosure. The problem is that as a practical matter, dual tracking violates California’s foreclosure statutes because it deprives the homeowner of the intended time to reinstate the loan.

In California, the law says a homeowner is to receive a Notice of Default, which gives the homeowner 90 days, and then after that they are to get a Notice of Sale, which provides an additional 20 days… and then up until five days before the sale, the borrower has the right to reinstate the loan.

But, if you’re told that you are under consideration for a loan modification, and then you’re told that you’ve been denied… let’s say 10 days before the scheduled sale date… then you can find yourself with a handful of days to reinstate your loan… and that, at the very least, violates the intent of the law.

That’s what happened to Norman Rousseau, who took his own life last week, and that I wrote about HERE. By the time Wells Fargo Bank told Norm that he was being denied for a loan modification, he only had six days to reinstate the loan, and Wells refused to delay the sale. He had the money in his IRA, but by the time it arrived, his home was sold.

SB 1470 would prevent banks from starting the foreclosure process while homeowners are still being considered for a loan modification. The bill would also require servicers to render decisions on loan-modification applications in a more timely manner.

Assembly companion bill is AB 1602.

2. SB 1471 – Single Point of Contact & Fines for Document Fraud

This requires servicers to streamline the foreclosure process by assigning a single point of contact for each borrower. It also imposes a $10,000 fine for any incidence of document fraud.

Assigning a single point of contact shouldn’t be much of an issue, after all the banks have already agreed to do that as part of the OCC’s consent orders, which were issued last April.

And as far as fines for committing fraud or forgery… well, there’s an easy strategy to get out of paying those, right. Just don’t commit fraud or forgery. And I happen to know the strategy works because I’ve been employing it for years and I have yet to pay a single fraud or forgery related fine.

Assembly companion bill is AB 2425.

3. SB 1472 - Fight Neighborhood Blight

Neighborhood blight happens when foreclosed properties are not properly maintained. Among other things, this bill would allow cities to fine purchasers of foreclosed properties that fail to remedy code violations within 60 days. (I believe the Senate committee unanimously approved this bill last Thursday.)

The companion bill is AB 2314.

4. SB 1473 – Renter Protection

This bill simply ensures that renters of foreclosed properties are given at least 90 days before an eviction process is started. Seems pretty reasonable to me.

The companion bill is AB 2610.

5. AB 1950 – File an NOD, Pay $25

This bill would requires servicers to pay a $25 fee for each Notice of Default recorded, which kicks off the formal foreclosure process. The money collected would pay for state-run fraud investigations into the fraudulent practices of servicers.

6. SB 1464 – Special Financial Crimes

This bill would allow the state Attorney General to create a special grand jury to look into special financial crimes that involve multiple victims and I simply cannot believe that this bill isn’t already a law.

The companion bill is AB 1763.

HERE COME THE BANKS… ALL RISE…

In a letter to California legislators, written by the FHFA’s General Counsel, Alfred Pollard, the FHFA said that these laws could “restrict mortgage credit and hamper necessary home seizures.”

The letter also said that the proposed legislation would loosely define robo-signing so that it may include any incomplete mortgage document.

“Such a strict liability approach is punitive, will have a chilling effect on the processing of lawful foreclosures and may lead to reduced credit availability or higher interest rates,” Pollard said.

Pollard didn’t even like the idea that renters should get 90 days before being evicted, saying that the legislation “did not include a ‘bona fide’ lease requirement and could result in property owners gaming the system.”

The FHFA also claimed the new laws could possibly pose “significant risks for the housing markets.”

Good Lord… those would be terrible things to have happen. I’m sure glad he pointed it out before it was too late. Doesn’t anyone check these things out with the bankers before they become legislative proposals? Why do we go to all the trouble to write them and get them into legislative committee, just to have a few bankers show up and make us look like fools for having done so.

I think we should ask the bankers if they wouldn’t mind reviewing all draft pieces of legislation before write and and propose it… I’d bet collectively we’d save a lot of time. I know I would.

Next up were the banking representatives, and I hear they were beautifully dressed by the way.

One of the bankers testifying was Ms. Stephanie Mudick, Executive Vice President, Head of Consumer and Regulatory Affairs, Mortgage Banking, J.P. Morgan Chase. For the most part, she lied her ass off about how wonderful Chase has been when handling loan modifications.

But the one thing that she said I think I’ll remember above all…

“We’re also concerned that the private right of action included in draft legislation will likely impair the housing recovery of California.”

A private right of action means that if someone broke a law, a homeowner would be allowed to go to court and sue whoever it was that broke the law… you know… get a day in court.

But, if homeowners could do THAT, apparently it would IMPAIR the housing recovery in California. Well, I’m sure glad to have learned that… let’s definitely NOT do that. We don’t need anything to impair the recovery of our housing market.

Thanks Steph… for pointing that out and saving us from ourselves.

Mandelman out.

You can read her testimony here:
Mudick, Stephanie VP Chase Testimony 15may2012 PDF FILE

May

Fannie Mae Wants Consequences for Strategic Default

By Mandelman | HAMP, Housing & Economic Research, News for the Patriot

10191Leave a Comment2012-05-21+17%3A11%3A50Mandelman

A few weeks ago, Fannie Mae issued an outright threat to homeowners in this country, creating a new rule that would punish anyone who stops paying their mortgage and walks away from their home, referred to as a “strategic default,” by not allowing those who choose that path to get a Fannie Mae loan for seven years.

They call it their “Seven-Year Lockout Policy for Strategic Defaulters,” and if you haven’t realized it already… look what’s been accomplished here: Homeowners have scared the heck out of industry giant, Fannie Mae. I mean… these guys are shaking like leaves, absolutely running scared. I know homeowners have been feeling like they have no power against the bankers, but this should prove otherwise. It’s like we pushed the bully, and the bully ran home and got his Mom to come lay down a new rule in response.

On Fannie’s Website, Terence Edwards, Executive Vice President for Credit Portfolio Management has the following to say about the new rule:

“Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting.”

Bad for borrowers, Terrence? Really, how so? Are you trying to say that people who walk away from their underwater mortgages are doing it because it’s bad for them? Because I don’t think they think that, Terence. I’m pretty sure that those that choose to walk away from their mortgages do so because they’ve figured out that it’s better for them… in their own best interests, as they say.

Hey Terrence, you disingenuous prick, I understand that my walking away from my mortgage is bad for you, but that’s only because my house is now worth half of what I owe. You wouldn’t mind if I walked away from my mortgage if I had equity, right? So, in other words, you want me to lose the couple hundred grand instead of you, does that about sum up your position here? Yeah, well… I’m sure you do. But I, on the other hand, would prefer that you lose the money instead of me. Sorry about that.

Terrence, last I checked you’re just a giant failed mortgage lender who is as much a part of why we’re in this mess as any, and you’re going to need $1.5 trillion in taxpayer dollars to bail you out.

I’m a taxpayer, Terrence… isn’t that enough of a loss for me to take on your behalf? You want me to contribute my tax dollars and probably my child’s future tax dollars to your $1.5 trillion bailout. And on top of that, you also want me to eat the loss of a couple hundred grand on my house?

Geeze… when are you guys planning to kick in on this? Your CEO gets a $6 million a year salary, I looked it up, and best I can tell he gets paid to say “yes” to just about everything. I don’t know, Terrence, but I’m pretty sure that I could have bankrupted Fannie Mae for a lot less than $1.5 trillion.

Walking away from a $500,000 mortgage on a house that’s now worth $250,000 isn’t bad for the borrower, it’s good for the borrower… it makes all the financial sense in the world, for the borrower. I mean, would you recommend that someone hold onto a stock that’s lost half its value.

Then you say it’s bad for communities, Terrence, why do you think that’s the case? I mean… bad is a relative term, wouldn’t you agree. And, in terms of doing bad things to communities, aren’t you guys at Fannie Mae pretty much the poster children? Like if the Olympic Games had a “Damaging Communities” event, wouldn’t you guys at Fannie be like the Michael Phelps of gold medalists, at the very least?

Yes, I’m afraid you would at that, Terry my boy. You guys are responsible for wiping out more communities than say… I don’t know… Joseph Stalin comes to mind. So does the bubonic plague. So, now you’re all of a sudden so concerned about my community, are you?

Terry, my home appraised at the peak of the insanity at $925,000. Last week, we heard there was a short sale about eight homes down from us. Any guesses, Terry? Well, I doubt you’d come close to $360,000 Mr. Fannie Mae spokesperson and executive VP. I bought this house in 1990 for $340,000 you insensitive jackass. Your incompetence has cost me a fortune.

You and your peers owe me money… or at the very least an apology… or something else, but how dare you attempt to “punish me” should I decide to become a productive member of society sooner by choosing not to take $300,000 and set it on fire. And what would you like me to do, Terrance, if I spend the next twenty or thirty years paying for this house only to find out that I’m still under water by some amount at that time? Any thoughts on that, you housing genius? Maybe, try to do better in my next lifetime, Terrence?

How exactly will my strategic default harm my community? How exactly, Mr. Edwards? Because I’m thinking two things here:

One… If I let the home go into foreclosure, it’ll be an REO and the bank will resell it at the market price, or maybe a little below. But, no one is going to give it away for free, right Terry? The market price is the market price, right you mumbling mathlete?

If I’m allowed to short sale it, maybe it will sell for a little bit more, but then again, it might not sell at all, in which case I’ll still end up in foreclosure, but I won’t be able to stay in the house, saving money as a result of not making payments, while I pay a lawyer to prolong my free stay for as long as possible. By the time I walk away, I’ll have maybe $100,000 saved up, which will make moving and renting an absolute breeze… to say nothing of my mental state, much improved as a result of controlling my destiny and screwing you.

Two… a strategic default only creates a foreclosure, and if you were so concerned about the impact of foreclosures on communities, we wouldn’t be in the situation we’re in today. I hope you’ll forgive me if I laugh at you feigning concern about how foreclosures affect our communities. I’ve been watching quite a few loan modifications up close and personal, and I haven’t seen Fannie Mae lift a finger to help a single homeowner. Banks are abusing homeowners left and right, every single day of the year, with the exception of a few who take Christmas off, and where has Fannie Mae been?

Now that I finally decide to take matters into my own hands, in the best interests of me and my family, now you’re going to try to punish me, you worthless piece of trash, how dare you? Go to hell, Terrence Edwards. You’re an insolent punk for saying what you said, for trying to scare homeowners who are trying to survive this inconceivable catastrophe that you and yours created. You’re an empty suit hiding behind some overpaid government job, nothing more.

You, of all people, claiming that strategic defaults are harming communities is absolutely hysterical. Like cautioning people to take an umbrella when going for a walk into the eye of Hurricane Katrina. Don’t forget your umbrella… you wouldn’t want to get wet. Yeah, thanks for that advice.

Your approach is to “deter the disturbing trend” towards strategic defaulting? Is that what you said? Well, that’s the best damn news I’ve had in at least three years. You and the rest of the self-important louts at Fannie Mae are actually disturbed by something. Well, thank the good Lord, I am glad to know that. Because you certainly haven’t seemed very disturbed at the carnage that’s been destroying the housing markets to-date, Mr. Terrence Edwards.

If strategic defaulting is disturbing you and Fannie Mae in general, well then that’s just about the best reason I could possibly think of for doing it. You talked me into it, Terrence, and God willing quite a few others in this country whose lives have been ruined because of Fannie’s ruinous policies and incompetent management.

And then, as if Mr. Terrence Edwards hadn’t said more than enough, he went on to say:

“On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”

On the flip side? The flip side? I swear, someone needs to give you such a slap. On the flip side, you actually have no idea what you’re talking about, do you? You think people are walking away because they didn’t talk to their servicers? You think, in that distorted little brain of yours, that it’s homeowners who need to act in “good faith” more often?

Well, that’s it for me. I don’t know what to say in response to that, except to say that I can’t believe Terrence Edwards has a management job anywhere, let alone at the world’s largest source of lending. After a statement like that, this guy should be asking women if they’d like to see something in a pump or a loafer.

Homeowners aren’t the ones failing to act in good faith, Mr. Ed. Homeowners would all try to work with their servicers to resolve something in good faith. Homeowners, and I’ve personally talked at length with thousands of them, have “good faith” written all over them. They exude it from their pores. That’s why they didn’t storm the castle when you and the other banksters needed to be bailed out after you guys decimated the global financial system. But… on the flip side… their servicers consistently, and by that I do mean all the damn time and every damn day… continually lie, intimidate, bully, flagrantly break promises, and exhibit a lack of caring that would make Mary Poppins look like Dr. Mengele.

Are you unaware of this, Mr. Ed, you horse’s ass? Has this somehow escaped your attention? Missed it? Busy watching the World Cup or something? Come on, no way… you know exactly what’s going on between servicers and homeowners out there, and if you really don’t, well then you most certainly should.

In the spirit of leaving nothing to chance, allow me to explain how this whole mess happened. We, the taxpayers, sat by and watched our elected representatives bail out Fannie Mae, and every other bankster in the country, we sucked it up and then watched Goldman et al, pay out $120 billion in bonuses last December.

Our President said he had a plan, and that banks would modify loans… there was hope. But there wasn’t, was there, because the banks and servicers proceeded to treat homeowners like something stuck to the bottom of their custom made shoes. They lied all the time, like constantly. They bullied and made people feel badly, and in general they proved beyond any doubt that they could not be trusted.

No one is walking away from their home because they weren’t willing to make a good faith effort to find an alternative resolution by working with their servicer. Never happens, or happened. And if it has started to happen, which I still don’t believe, it’s only in response to the treatment of homeowners by their servicers. And true to form, the Wall Street Journal writes a story about homeowners happy about their decision to strategically default, some other news program interviews someone going to Hawaii as a result of not having to pay a mortgage payment, and you… you don’t bother to find out what’s really going on… you start with the threats.

Here’s what you said on Fannie’s Website:

Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.

Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances.

Oh, so let me get this straight… a Deed in Lieu, a short sale… those are just fine in your mind, but a strategic default is bad for borrowers and bad for communities. Do you hear yourself? How would a Deed in Lieu be better for the community, Mr. Edwards? Never mind… you don’t know.

However, in your top paragraph above, you are saying that you’re going to go after deficiency judgments in states that allow deficiency judgments? Well, goodie for you. But, does that mean that you won’t go after deficiency judgments in states that allow them if the borrower simply attempts, in good faith, to work it out with his or her servicer, but fails? I doubt it, don’t you Terrence?

And you’re going to ask the servicers to “put forth recommendations” as to who should be pursued for a deficiency judgment? The servicers? The group of companies and individuals that have, perhaps more than any group in history, proven that they cannot be trusted to follow rules, keep promises, or tell the truth. I suppose they will also be the final arbiters of whether the homeowners attempted to work it out in “good faith,” as well. Yeah, that’s about right actually. Par for the friggin’ course.

Well, I’ll tell you what, Mr. Terrence Edwards. You think you can threaten millions of American homeowners? Why you would presume to have such authority is beyond me, but I’ll promise you this… you’ve certainly motivated me in a big way. How many homeowners do you suppose I can reach through my 300,000 readers if I try really hard? Because that’s precisely what I now am more committed than ever to doing. Just because of you and your threats.

What was the threat anyway? Oh yeah, those that you or the servicers deem strategic defaulters won’t be allowed to get a Fannie loan for 7 years, but the “good faith” people… which I would guess are those who agree to whatever their servicer demands, might get one in two or three years.

First of all, who cares about getting another loan in 2-3 years? No one I know. But even more to the point, what in the world makes you guys at Fannie Mae think you’ll be around in seven?

Mandelman out.

‘

May

What is Strategic Default? A Moral Dilemma?

By Mandelman | Housing & Economic Research, Loan Modification, News for the Patriot

88162Leave a Comment2012-05-21+12%3A06%3A56Mandelman

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…)

May

What’s wrong with your loan? Jay Patterson on a Mandelman Matters Podcast

By Mandelman | Forensic Loan Audits, HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

87888Leave a Comment2012-05-20+01%3A26%3A40Mandelman

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.

May

What’s wrong with your loan? Jay Patterson on a Mandelman Matters Podcast

By Mandelman | Forensic Loan Audits, HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

87889Leave a Comment2012-05-20+01%3A26%3A40Mandelman

May

Utah Foreclosure News is Based on Garbage Stats

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

87620Leave a Comment2012-05-18+14%3A43%3A31Mandelman

In Utah, foreclosures in March were up 74 percent over February. In New Jersey, foreclosures in in April were up 72 percent over March. In Tampa and Chicago, foreclosures in February were up 64 and 43 percent over January, respectively.

Now, here we are in mid-May and we’re to believe that everything has changed for the better? That was then this is now, is that the idea? Poppycock.

The Mortgage Bankers Association yesterday released a report claiming that the share of Utah’s home loans at least 30 days late dropped to 7.4 percent… from 7.58 percent in the previous three months.

Well, so what and who cares? First of all, that’s just not a statistically significant difference, in fact, it would be well within the margin of error for any legitimate survey of such data. And secondly, it’s an incomplete comparison. One point being compared is presumably the “drop to 7.4 percent.” And the other point against which the dropped 7.4 percent is to be compared, is a three month average of 7.58 percent.

If the last month of the three month average was 7.o percent, then this month’s 7.4 percent was actually an increase.

The Mortgage Bankers Association (MBA”) also claimed that in the first quarter of this year, six percent of loans in Utah were in default — which the association defines being at least 30 days behind on payments.

Now, and you have to read this carefully to see the deception, they’re saying that at the end of the first quarter of this year… “2.5 percent of mortgage loans in Utah were in the foreclosure process.”

What the heck does that tell us? Not a darn thing, although if you like to guess at things, here are a few things it could mean:

Nothing has changed – That’s right, based on those two claims by the MBA, the State of Utah could still have six percent of loans at least 30 days late and 2.5 percent in the foreclosure process.
Things have gotten worse – That’s right, based on those two claims, it’s possible that today there are more than six percent of loans in Utah more than 30 days late, and the 2.5 percent in the foreclosure process could be an increase from prior months.
Servicers are still preparing to comply with DOJ settlement – If the 2.5 percent in the foreclosure process is lower than expected it could be… and moreover likely is, due to servicers getting ready to comply with the DOJ settlement, meaning they have to foreclose without robo-signing and the like.

The point is that reports like this one are a study in obfuscation, which means: “muddying” or “confusing,” or refers to a “smokescreen.” They don’t really tell us anything, but they’re designed to make us think something has changed, when it has not.

Why do I say that? For several reasons…

To begin with, nothing we’re dealing with is going to change that quickly. It was a huge problem yesterday… it’ll be a huge problem tomorrow. If positive trends stay constant over the course of a year… then that will be something to cheer about.

Another reason for my skepticism is that none of the underlying fundamentals have changed one bit. In fact, last month’s unemployment data was a nightmare, much worse than expected. How could things have improved so dramatically so quickly when things have otherwise been moving so slowly? Answer: They couldn’t.

And lastly, it’s the report itself. The comparison of loans “in default,” which they defined as being over 30 days late, with loans “in the foreclosure process,” which they do not define, is an attempt to set up a deceptive or fallacious argument.

At the very least it’s an “incomplete or inconsistent comparison,” meaning that either not enough information is provided to make a complete comparison, or where different methods of comparison are used in order to create a false impression of the overall comparison.

The data above also was surrounded by irrelevant comparisons that I removed to show the deceptive structure of the argument being made. In the original presentation of the data, the MBA compared the loans in default to the national average, which they claimed to be 6.9 percent, and loans in foreclosure, which they claimed to be 4.4 percent.

Why should we care about such comparisons by themselves? We shouldn’t. They tell us absolutely nothing. It’s like saying, “In recent coin tossing experiments more coins preferred heads over tails.”

RealtyTrac chimed in with other statistics designed to be both encouraging and misleading:

1. “Foreclosure starts decreased in 41 states and the rate of loans in foreclosures fell in 22 states.”

2. “Foreclosure activity in all the judicial foreclosure states combined jumped 15 percent versus April last year.”

3. “Taken together, non-judicial states saw foreclosure activity fall 29 percent.”

The first one is total junk, it is meaningless… and confusing… in fact, if you study it too long your hair will likely fall out. Foreclosure starts decreasing may just mean that banks decreased the number they started. And the same for the loans in foreclosure garbage.

Banks control how many foreclosures start and how many are in foreclosure process, not borrowers.

The last two are more devious. They are woven throughout stories in the media this week in order to make us believe that it’s the courts that are causing the foreclosure crisis to be prolonged. Bad courts. The clear implication being that if the courts weren’t in the way of the banks, we’d all be much better off, much sooner. Abigail Field wrote a fabulous piece HERE. Among many other things in her article, she wrapped up flawlessly:

Those darn courts, wrecking the housing market by slowing foreclosures and costing all of us more money.

Due Process is the Solution, Not the Problem

See where all this is going? Enough messaging like this and some states may change foreclosure laws more to the bankers’ liking. Short of that, people will target the courts as the problem instead of the bankers.

Whenever you read banker talking points embedded in news like this, remember: our Constitution guarantees Due Process for a reason. Due Process is essential to the rule of law and a fundamental check against the abuse of power. Don’t let the bankers sell you or your representatives into taking it away.

Obviously, the banking lobby would like it much more if they didn’t have to deal with things like… well, you know… like laws, for example. Courts can be a real nuisance, I completely understand.

Look, if you’re doing just fine and you want to buy a house, go for it… I don’t care one way or the other. If you’re planning on living there for a long time and you can afford the payments, what difference does it make if it goes up or down in the next so many years? It’s a house, not a stock. Buy it to live in it, not as an investment you’ll flip out of in five years.

But, of you’re struggling in this economy, at risk of losing a home, and stories like these make you feel like you’re alone in your financial misery, and that everyone is doing better while you’re not… please don’t feel that way because it’s all nothing more than one big pile of steaming freshness. I’m not seeing anything improve anywhere. In fact, I’m only seeing things worsen ahead.

So, just ignore it, and it will go away. It’s like a ghost in your closet… go back to sleep and it’ll be gone in the morning.

Mandelman out.

May

Foreclosure crisis now includes “Irresponsible Churches”

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

87560Leave a Comment2012-05-18+12%3A09%3A55Mandelman

According real estate information company CoStar Group, as of March of this year, 270 churches have been sold after defaulting on their loans. In 2011 alone, banks sold off 138 churches, and that compared with just 24 such sales in 2008, and only a handful in the prior decade.

So, when did our nation’s churches become so incredibly irresponsible?

According to Reuters, analysts are now saying that this surge in church foreclosures represents “a new wave of distressed property seizures,” and that “many banks are no longer willing to grant struggling religious organizations forbearance.”

Well, thank God for that, right? (Pun intended.) Praise the Lord, and please pass the foreclosures, right? We need to get through the foreclosures… clear the market… let it hit bottom… isn’t that what Mitt Romney, Rick Santelli, House Republicans, quite a few Democrats too… and a slew of supposed economists have all been saying?

And for the Rick Santelli fans, please let Rick know that the reason that many of these churches are going into foreclosure is that they took out loans to remodel or refurbish, and since we know all too well that Rick’s Tea Partiers don’t want to pay for anyone’s kitchen remodel, I’m sure they’ll be in favor of throwing these churches out into the street as quickly as possible, right?

Are you listening Rick Santelli?

We can’t do anything about these irresponsible churches being lost to foreclosure because to help them in any way would clearly involve far too much “moral hazard,” isn’t that right?

Apparently, the church foreclosures are occurring regardless of denomination all across the country, although California, Georgia, Florida and Michigan are the hardest hit states. Reuters’ story also pointed out that, as one might expect, small and mid-size churches are falling into foreclosure more than the larger ones. And presumably the larger ones are also the richer ones.

Interestingly, that’s also true when looking at residential foreclosures. I’m pretty sure that studies show that richer people get foreclosed on less frequently than poorer ones.

I know what we need… a new program from the Obama administration. We can call it:

“Making Church Affordable”

Scott Rolfs, who is the managing director of Religious and Education Finance at investment bank Ziegler, told Reuters that, “… banks have not wanted to look like they are being heavy handed with the churches.”

Really, Scott, mister managing director? Is that what it is? Banks are concerned about looking too “heavy handed with churches?” Is that your story? Banks could give a rat’s petute how they look with fathers, mothers and children… you know, we call them “families,” Scott… or “voters.” Why should they care how they look with churches?

In fact, that’s what is so weird about this story. That banks are supposedly concerned about being “heavy handed” with churches. I don’t believe that, do you believe that? I mean… European banks didn’t seem to be too terribly concerned about being heavy handed with Greece… and Greece is an entire country full of churches.

Unless we’re talking about a bank (or American Express Travel Related Services of course), in which case they’re too big to fail and we should do whatever is necessary to bail them out, irresponsible is irresponsible, isn’t that right?

According to Reuters: “The factors leading to the boom in church foreclosures will sound familiar to many private homeowners evicted from their properties in recent years.”

Really? Do tell… (Shhhh… I want to hear this…)

Well, it seems that following the financial crash of 2008, quite a few churchgoers lost their jobs and next thing you know, “donations plunged.” And wouldn’t you know it, “at the same time, so did the value of the church building,” Reuters reported.

So, let’s just see here… financial crash… check. Lost jobs… check. Less money to spend… check. Appraised value of property plunges… and check. Yep, I’d have to say that Reuters was right. Those things do sound at least somewhat familiar to homeowners who were evicted in recent years. And probably to other homeowners as well.

Now, Scott Rolfs also says that church defaults are different from residential foreclosures, because “church loans typically mature after just five years when the full balance becomes due immediately.”

Scott says that in past years banks would simply refinance their balloon payment loans when they came due, but recently, come to find out… banks are “increasingly reluctant to do that.”

According to Scott…

“A lot of these loans were given when the properties were evaluated at a certain level in 2005 or 2006. Banks have had to reappraise the value of these properties, whether it’s a church or a commercial office building. Values have gone down, so the loans cannot continue in the same form.”

Hmmm… correct me if I’m wrong here, Scotty my boy, but that sounds suspiciously similar to a concept with which homeowners have become increasingly familiar of late. It sounds like what you’re trying to say is that the churches can’t refinance because they’re “underwater,” meaning that they owe more than their properties are worth, isn’t that about right?

And not only that, but it also sounds like your saying that the churches took out loans that had enormous balloon payments due in five years. Didn’t these churches know what they were signing, Scotty? That sounds pretty darn irresponsible to me. Reckless gamblers, I’d have to say.

You know what else it sounds like, Scott? Predatory lending. I wonder what would be happening to these churches if they had been offered low interest 30-year fixed rate loans. Do you ever wonder that same thing, Scott?

Well, I’ll answer that question for you, Scott: It sounds to me like they wouldn’t be in foreclosure today, Mr. Scott Rolfs at investment bank Zeigler. What would be your best guess?

Also, if banks were so concerned about churches being foreclosed on, why would they offer them loans with five-year balloon payments in the first place? What would be wrong with a 30-year fixed on a church, for heaven’s sake. (LOL… sorry.)

(By the way, in case you weren’t aware… five-year balloon loans are what fueled the foreclosure crisis that began in 1926, that along with the stock market crash of 1929, led to the Great Depression of the 1930s. So, you’d think that bankers would already know how well they work as far as keeping a lid on foreclosures, right? Or do we have some sort of educational deficiency or learning disability in play here?)

If banks cared about churches, they wouldn’t be putting them into loans that have enormous balloon payments due in five years, right? That’s not the kind of loan you’d put your mother into… is it, banker-people? Oh… or maybe it is. Okay, point taken… bad example.

Well, regardless… it’s not the kind of loan that I’d put my mother into, let’s just say that.

Flat Rock Church in Lithonia, Georgia, was founded back in 1860.

In 2005, the church wanted to build a new 300-seat church so it took out an $850,000 loan from Sun Trust Bank.

The loan came due in May of 2010, but wouldn’t you know it, Flat Rock Church didn’t have $850,000 laying around, and Sun Trust Bank wouldn’t refinance the loan because the church was now underwater.

So, Sun Trust Bank foreclosed. The church’s sale date has already passed.

Pastor Binita Miles said: “The bank has refused to negotiate and to this day I just don’t know why.”

The spokesliar for Sun Trust Bank was quoted as saying:

“We view foreclosure as an action of last resort. We have been working for several years to address the issue with the client in hopes of avoiding foreclosure.”

Is that right, Sun Trust Bank? You guys have been “working for several years to address this issue in the hopes of avoiding foreclosure?”

Several years? And you still couldn’t do it?

After several years working and you failed completely? Several years trying everything that you bankers could think of and still… not a thing could possibly be done? Even after several years working and hoping?

Why that must have been crushing for the bankers who spent several years working on this… HOPING… you did say they were hoping too, right? They were hoping to avoid foreclosure… for several years… as they were working, right?

My Lord… to think of all that working and hoping going on for several years… and then after all that to just fail completely? Wow… what a disappointment that must have been. You guys at Sun Trust must have been crushed. How do you even go on after something like that?

Now, I don’t know who to feel worse for… the church folk, or the bankers at Sun Trust Bank?

Oh, wait a minute… hang on… maybe I do. Here’s what Forbes Magazine had to say about Sun Trust Bank on April 18, 2012:

Leading up to SunTrust Banks‘ (STI) announcement of its first quarter earnings on Monday, April 23, 2012, analysts have become more bullish as expectations have improved over the past month from 29 cents per share to the current projection of earnings of 32 cents per share.

The current estimate reflects a 45.5% increase from a year ago, when the company reported earnings of 22 cents per share. For the year, revenue is projected to roll in at $8.57 billion.

Yeah, that did it for me… I feel worse for Pastor Binita Miles and the church folk that since 1860 have worshipped at Flat Rock Church in Lithonia, Georgia.

Even if they are an irresponsible bunch.

As far as I’m concerned, the Sun Trust bankers can go… forgive me Pastor… straight to hell.

Mandelman out.

May

Wells Fargo gives $22,000 to Suicide Hotline… A gift the bank can use too.

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

87284Leave a Comment2012-05-16+18%3A01%3A07Mandelman

It all started when I saw that this past February, Wells Fargo had donated $22,000 to establish a suicide prevention hotline in Idaho, apparently the state with the fourth highest suicide rate in the nation. I find that statistic a little odd, but what do I know. I’ve never even been to Idaho.

The United Way for Treasure Valley phrased it as follows on their website:

Wells Fargo stepped up Tuesday with a $22,000 gift to help establish an Idaho Suicide Prevention hotline.

“Wells Fargo is pleased to invest in this important community initiative to address a critical need in our state,” said Dana Reddington, Idaho Region president for the banking firm.

Wells Fargo “stepped up” with a $22,000 “gift.” Is that how that should ideally be phrased? I suppose it’s fine. But, having spent the last few days writing and talking about Norm Rousseau, who took his own life this past Sunday after a protracted battle with… no, not cancer… much worse. You know, we can in many cases cure certain kinds of cancer.

Norm’s protracted battle was with Wells Fargo, and no one has even come close to finding a cure for them. So, on Sunday morning, just a few days ago, he lost the will to continue the fight after staying up all night trying in vain to fix the engine in a motorhome he was hoping to house his family in after being evicted on yesterday morning.

Look, I only spoke with Norm once for about an hour, so I shouldn’t really speak for him, but I just wanted to say that I’m pretty sure that he would have gladly traded his battle with Wells for… maybe not pancreatic, but let’s say prostate cancer… for sure. I think so, anyway.

In fact, I’d probably make the same trade at this point were I given the choice. I’m thinking that the cure rate for prostate cancer for a male in his 50s is much higher than the cure rate for a battle with Wells Fargo these days. I don’t know… maybe I’m nuts… it’s not my core point here, so just forget it.

Anyway, I understand Wells Fargo wanting to give a gift that establishes a suicide hotline… it’s a gift the bank can use too. And I do understand giving that sort of gift.

I’ve been married for 22 years, and although I hate to admit what I’m about to say, I’m hoping some of you guys have done it as well. Maybe not the women, I really don’t know.

So, I was thinking about my birthday, it being only a few weeks away, and what I wanted to ask for in the way of a gift.

When my wife and I first got married, I always bought her birthday presents that were clearly hers alone… jewelry, clothes, I don’t know… a new tennis racquet, a mountain bike, golf clubs… those sorts of things. Nothing that I had anything to do with as far as usage went.

But the longer we’ve been married, I’ve noticed that I’ve started drifting towards gifts that aren’t really just hers, but sort of ours… kind of. I’m not entirely certain, but it’s possible that one year for her birthday I may have bought her our new breakfast nook table and chairs set. That wasn’t cool, I thought to myself.

I shouldn’t be doing that sort of thing, right? That’s not the way you stay happily married, or even breathing and walking upright, depending on your spouse’s comfort level with firearms.

It occurred to me that I might just be turning into my father, perish the thought… and that could not be considered anything short of terrifying. Turn on the sirens people… crash positions… we’re going in hot and hard.

Truth be told, I couldn’t even remember what I had bought her last year for her birthday, and that was not giving me a very reassuring feeling. Maybe since we need a new air conditioning unit for the house, maybe that’s what I should want for my birthday this year.

When I was really a young boy, maybe six or seven years old, I remember my father asking me if I wanted to go with him to Sears one evening after dinner.

I jumped at the opportunity of course, after all, a trip to Sears meant two things: A chance to sit on and pretend to drive several different riding lawnmowers… and a bag of hot cashews from the stand that sat in the middle of the store on the bottom level. Good times.

So, we get to Sears, my father and me, and I head straight for the riding lawnmowers. Remember that part of Forrest Gump when even though he’s already a zillionaire, he goes back home and the City Fathers give him “a fine job,” and he’s riding a lawnmower around this field cutting the grass? Yeah, well I understood that part of the movie. I completely agreed… Forrest looked like he did have a fine job there.

So, anyway… after a few minutes when my father had run out of patience with the lawnmower engine sounds I was making with my mouth, he said let’s go and we headed on into the store. The smell of hot cashews used to hit you right as you walked in the door of the Sears where I grew up in Pittsburgh, Pennsylvania, and both my father and I were huge fans of the toasty warm aromatic nuts.

So, we got us a small bag before heading off for the guaranteed-to-be-boring part of the excursion, at least as far as I was concerned. The part when we’d have to actually shop for whatever it was he wanted to find… the reason we were there, you might say.

He explained that we had come to buy my Mom a birthday present, which was the next day.

“Let’s get her a board game, Dad,” was the first thing that came to my young mind. Well, why not… it was something I understood and knew I could get some utility from… and heck, she’d probably have liked it quite a bit too, especially if there was spelling involved. Mom loved to spell anything anytime, and she was darn good at it too.

But, Dad said no. He had something else in mind, as we headed on over to the dreaded, “Housewares” department.

Housewares was the section that had the most things I didn’t understand, and I braced myself and took a deep breath, just as I might have done were I about to be placed into solitary confinement while doing time on Alcatraz.

We got there and I did a 360 to take in my surroundings. Sure enough, I was absolutely surrounded by “Housewares,” and an old man who could have played Santa Claus at Christmas if you spotted him a fake beard and some hair, waddled over to offer his assistance to my father while doing a quick comb through of his thinning hair, completely ignoring me, of course.

This was the 1960s, and I was still to be seen, but not heard in many circles. Unlike today, when we let our 8 year olds pick out the family car.

I heard my father say something about a chair of some kind… but after that it was pretty much just a blur. For a boy my age during The Wonder Years of the 1960s it was genetically impossible to stay attentive during conversations of such banality.

Soon they had focused in on a particular chair. It was metal with yellow vinyl, sort of a highchair with steps that slid out from underneath, a feature my father was saying would be highly valued by Mom, who was only 5’3” and apparently couldn’t reach certain things without a step ladder. I hadn’t known about her shortcomings before that day, as she was plenty tall to reach everything I needed her to reach.

So, it was probably only a few minutes later, although it seemed a good hour or two, and we were paying with Dad’s Sears charge card, and then heading back to our station wagon, a 1963 Plymouth, dressed in a sickly hospital green color that my father said he liked, although I didn’t see how that could be possible.

We pulled around and there was that aging rotund and balding salesman, waddling towards us and carrying a decent size box, inside which, I assumed, would be the chair even though the box didn’t seem large enough to hold the chair. As he was loading the box into the wagon, the man told my father that there would be, “some assembly required,” to which my father replied, “Sure.” Dad actually seemed happy to hear of it.

My Dad owned a small grey metal Craftsman toolbox that he kept in the front hall closet that was strictly off limits as far as I was concerned. He’d pull it out any time those words were spoken, “some assembly required,” or whenever there was some sort of disaster in our hundred year-old home.

Dad faced each job with an air of confidence that said clearly that he was unquestionably capable of handling any job that was thrown his way and he would do so with whatever was in his small grey metal toolbox. It was a toolbox akin to Mary Poppins’ carpetbag, if you remember the movie with Julie Andrews and Dick Van Dyke. It was as if he was expecting to be able to reach in and pull out a belt sander and a table saw.

The problem invariably was that whatever he needed he didn’t have and whatever he thought he could do, he really couldn’t, at least not in the time he had thought that he could. And if hung around too long or stood too close, he’d end up blaming me for whatever wasn’t in his toolbox, growing more frustrated by the minute until he got the job done, which sometimes required a two or three day affair.

After the first couple of hours, there was no talking to him, and when the project had finally been completed he’d sit in front of the fireplace or television and sip what I later learned was Jack Daniels, but what he used to call Dry Sherry.

My father was, after all, a Harvard man. And you can tell a Harvard man… but you can’t tell him much.

So, being a child of above average intelligence, as soon as we walked in our front door, I shot upstairs to my room, claiming homework or a bath was calling, the sort of tasks that I knew would trump helping Dad assemble the chair, or anything else he had in mind… so he went to work in the basement assembling Mom’s birthday surprise.

Yes, my brilliant, PhD, Harvard, college professor father had just thrown down maybe $19 on a metal stepstool/chair in yellow vinyl from Sears. And he was so proud the next evening when, finally assembled after maybe six or seven hours of hard work, he presented it to her after we had finished dinner.

Mom had made cupcakes, as she was prone to do, and she started to light a match in order to light the little candles, one in each cupcake, except for the one that was for my little sister, Karen, who wasn’t even 2 years old at the time, and to my way of thinking, clearly didn’t qualify as any sort of human member of our family. Certainly not one who needed a cupcake.

Mom struck the match but it failed to light and that was all the chances Mom got on things like lighting matches. Dad reached out and took them into his much more capable hands. He struck the match… nothing. Mom smiled and looked away, you could tell she couldn’t have been more pleased at that moment.

Next match was the pressure match and lucky for Dad it was a winner and the candles were soon aglow as we sang…

Happy birthday to you… Happy birthday to you… Happy birthday dear Barbara/Mommy… Happy birthday to you!

I grunted as Mom gave Karen her own cupcake, sans candle. “She can’t eat that, she doesn’t even know what it is,” I said with the sort of superiority only a six year-old older brother can muster.

“She can lick it,” Mom said smiling at the useless drooling infant that had Zwieback toast crumbs all over her face and in her hair.

I looked at the thing they called my sister thinking, “Later, when no one is looking, I’ll drag you down the stairs head first, you little parasite,” or at least the six year-old version of that sentence.

Karen grabbed the cupcake, squished it a little, mashed it icing side down onto her highchair… and promptly threw it straight onto the floor. Yeah, she was small and didn’t say much, but I knew she had done that just to torture me.

“Maaaaaam,” I yelled out as I jumped for the cupcake, hoping against hope that my mother would at that moment take leave of her senses and allow me to eat it off the floor. No such luck.

“Hand it to me,” she said in that voice. And I did… resistance I knew, was futile.

So, with the festivities now over, we went into the kitchen to examine the gift and there it was… that glorious yellow vinyl and metal, half highchair, half stepstool… sitting poised for action… right in front of the sink.

You see, as I was about to learn, Mom was always standing over that sink washing dishes, and so my father thought the ideal birthday gift would be a chair high enough so that she could sit while washing the dishes, the stepstool functionality being an unanticipated bonus.

Of course, my Mom, being a mom of the mid 1960s, was beyond gracious at all times. It was as if she liked everything. Like, someone could have served her a bowl of dirt, and she’d have said thank you.

“Oh, look at that,” she said.

Now, even at six years old I was sensing something in her voice that felt like danger had just entered the room. I swear, the temperature fell by 12 degrees… all of a sudden you could see your breath in our kitchen.

Dad was oblivious, explaining every single one of the chair’s highly valued features and functions. “And, I bought it at Sears,” he explained as part of his wrap-up. “So, if anything goes wrong, we can return it and they’ll give us a new one.”

Dad absolutely adored that about Sears. He even bought his sport jackets at Sears when they would go on sale, of course, and I grew up assuming it was for the same reason… Sears’ famous return anything anytime policy.

“Isn’t that something,” Mom was saying. She had decided that moment was a good one to start sharpening a giant kitchen knife, but then apparently thought better of it and set it down gingerly.

“Well, thank you Julian,” she said in a voice that I would one day learn to call condescending. “That was very considerate of you.”

And that was it… Mom’s birthday was over for another year. I knew not to ask her how old she was. I ‘d learned the hard way the year before that a young man doesn’t ask a lady that question. So, I just gave her a kiss on her cheek, said Happy Birthday Mom, and ran up to my room to see if I could sneak in a few minutes of black & white T.V. before they yelled up… “Turn off the T.V. please,” after which I’d drift off to sleep dreaming of riding lawnmowers and the like.

Less than a week passed until one day after school, I heard the doorbell, and ran to see who rang it. A large truck was parked right in front of our house, on the side it read, “Sears Appliances,” or something very close.

“Maaaaam,” I called out. It’s a man in a truck from Sears.”

My Mother came out in her apron, admonishing me for yelling for her to come in front of an adult, and then in her adult voice sweet as pie said, “Oh, hello, yes please, come in,” to the man in the Sears uniform.

And two hours later our kitchen had a brand new dishwasher installed… a Kenmore.

I didn’t connect the dots at the time, but inexplicably Mom made cupcakes again that night, highly unusual as it wasn’t anyone’s birthday, and this time she let me have the bowl of icing to lick and scrape on top of it all. She was unusually happy and I was in sugar-induced nirvana.

After desert, we all walked into the kitchen and Mom started explaining all of the features and functionality of the new Kenmore dishwasher.

Dad listened, barely smiling occasionally, and then as I was sensing his patience was running thin he said right in the middle of Mom’s Kenmore demonstration that I was more than happy to watch, “Okay, are you finished? I’ve got some work to do,” and with that he turned and walked towards the stairs.

Mom just kept going on about the Kenmore in a sort of sing-song voice, and as Dad started up the stairs, she was full on singing her words now and kind of dancing after him…

“And it’s from Sears… so if anything goes wrong… we can always return it,” Mom sang as if she were Judy Garland playing the role of a housewife in a movie.

I thought that I recognized the melody… “Home on the Range,” sort of.

Seconds later we could hear the door to Dad’s study close, I thought, perhaps a little harder than usual. Mom walked back towards the kitchen humming, and without any advance notice, as she passed by me on her way to get started loading the new dishwasher, she set a second cupcake topped with icing right in front of me without saying a word.

And somehow I knew as I stared at the icing on my cupcake, there would be no percentage in asking questions.

It would be many years before I had any real appreciation for what had gone on that year… the year my Mom had two birthdays. And the year my father had stared death in the face… and lived.

Yes, he was the Harvard man, the brilliant college professor… the breadwinner of our family… the owner of the tools… who never shirked his duty when “some assembly was required”… the one who always drove… and lit our matches when required… the patriarch.

But, make no mistake… that night Mom had let him live… let him off with a song about a Kenmore dishwasher from Sears… a song that sounded a lot like “Home on the Range.” Now that I’m all grown up and married myself, I fully realize that a blow to the back of the head with a shovel would have been much less painful.

And I can’t quite remember when I noticed it again, but that yellow vinyl and metal chair/stepstool from Sears remained in our basement for the next twenty years… for all I know is still down there today.

Mom was never one to throw important things like that away.

I’m like that too. So, I’m going to remember Wells Fargo’s $22,000 gift to establish a suicide hotline forever, and I hope that not only will you remember it too, but that you’ll also keep forwarding the story of Norm Rousseau to others for years to come, so they can remember what happened too.

Because although I only spoke to Norm for an hour or so… I know for sure that wherever you believe he is right now, he’ll smile through eternity if his battle and his death produced that kind of result.

Over the last two days, more people read Norm Rousseau’s story than anything I’ve ever written on Mandelman Matters. And I wasn’t sure how I felt about that until I realized that maybe if his story spread and wasn’t forgotten, then maybe one day there wouldn’t be other stories like his for me to write.

And I can tell you that it sure would make his wife happy, give her some peace, even. Nothing can change what happened. But, yesterday she said that all she wants is for what happened to Norm never to happen to anyone else.

Here’s the link to NORM’S STORY. Do more. Do everything possible to stop this from ever happening again. Stopping even one… matters a lot.

Do more. Give a gift that keeps on giving.

Mandelman out.

May

A Letter to Brian Stevens at TBWS: We Need More Houses?

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

86920Leave a Comment2012-05-15+13%3A18%3A12Mandelman

BRIAN! Dude… My good friend… Mi amigo de la Hipoteca clase… My favorite lender defender from whom laughs do engender… please don’t take me an offender… but as the message’s sender… a response to you I’ll tender… and my views I’ll therefore render…

Okay, I give in… that TBWS Daily was hysterical. I mean, people say I’m funny, but I can’t hold a candle.

Overall, I loved the show, but, if I may… there were just a couple things…

Just to make sure I understand what you said there… the problem is that there aren’t enough homes for people to buy? We’re having a shortage of houses for sale, are we? Wow… you know, I was sleeping and woke up to today’s video and for a minute there, I thought I must have dozed off for a decade or more.

But seriously… I had no idea that was the problem. Well, alrighty then… I guess I’m going back to work… Mandelman doesn’t matter anymore… our economic problems have been solved. And, thank heavens for that, because I was getting darn tired of writing about… um… well… I guess you could refer to it as… oh, I don’t know… how about… “the truth?”

Get more houses on the market? Seriously? More houses is what we need? Am I on Candid Camera, or is there a rabbit hole around here somewhere that I can’t see?

So, I guess what you’re telling me is that at this point, the banks are actually hoarding them… holding them back for their own heads? Foreclosing on more and more of them every day because they have a plan to corner the deteriorating home market? Or are they just trying to pay us back for bailing them out by offering to pay most of the property taxes in this country going forward? Or, maybe they just have a handyman fetish, so the more vacant homes the better? Nothing turns them on like monitoring property preservation companies?

Why would they be hoarding empty houses? Correct me if I’m wrong, but I was always under the impression that empty homes COST money as a result of their tendency to… what do they call it? Oh yeah… decompose.

Aren’t banks the ones that are always trying to MAKE money? Or have that backwards and banks are the ones that want to have the highest possible costs? I can never keep that one straight… like eating eggs for breakfast… are they good for me or bad for me? I can never remember… so I eat granola.

But, I digress…

Why do you suppose it might be that banks aren’t putting more homes on the market… or in the parlance of the economist… why are they limiting supply… making sure that it remains lower than demand?

Anyone? Anyone? Bueller? Bueller?

Well, it can’t be because they don’t like money, right? Right. Okay, good. I was pretty sure we’d have no argument there.

Could it be that they’re just so busy foreclosing and proprietarily trading credit derivatives for fun and losses, that they just haven’t realized that there are throngs of Californians and Arizonans clamoring to buy the homes they’re holding onto? Again, I’d have to guess that… no, that can’t be it either.

Okay, let’s try this… What happens when the demand for a good exceeds its supply? Oh, now lets not always see the same hands…

Brian? Is that you I see in the back of the room doodling? What’s that a picture of? That’s you sitting at a table refinancing a four-plex for a dentist? Yes, that’s very nice, but we’re trying to hold a class here, so if you wouldn’t mind…

So, what happens when the demand for a good exceeds its supply? Right, Brian! Prices go up… or actually, in this particular case, they don’t go down as quickly.

And just what do you suppose would happen if the banks decided to make a bunch of homes available for sale, as you suggested is the thing to do in today’s TBWS Daily? Do you think prices would tend to go up or down? I’ll give you a hint… the answer is the opposite of “up.”

And, if home prices were to go down even faster than they are as a result of all of the other factors that haven’t changed a lick, except to worsen… you know… like, unemployment, long-term unemployment, foreclosures, average incomes… GDP… the state’s $16 billion budget deficit that’s about to constrict the state’s economy even further as we cut services and raise taxes on the wealthy… those kind of things?

Well, if home prices fell further and faster I’d have to venture a guess that more people would find themselves underwater and/or further underwater… and that would mean what do you suppose? If you guessed further reductions in consumer spending, higher unemployment and more foreclosures… well, you’d be right once again!

And then what about all the people who, having been duped into believing that housing had bottomed, bought homes recently? Would they be gaining equity or losing it? Losing it, right! And assuming an FHA/new-sub-prime loan was involved many would be underwater by Christmas… and you know what that would mean, right?

Even more foreclosures! Maybe that’s why FHA is reporting almost 20 percent defaults on loans made SINCE 2009. It’s kind of funny if you think about it… we’re actually creating foreclosures over at FHA even faster than we can foreclose down the street at Fannie and Freddie. It’s very “Dr. Strangelove – Or, how I learned to stop worrying and love the bomb,” don’t you think?

And I did hear you say that the shortage was “at the low end of the market,” right? I’m sure that’s correct, because that’s the end of the market that’s not only less expensive, but also less experienced. Those are the folks easiest to convince to buy a home because it’s never going to be this cheap or the rates this low again… so, better hurry and get your offer in today… isn’t that about right, Brian?

Of course, I wouldn’t want to leave out my favorite flavor of scumbag, the vulture investors who envision this as a once in a lifetime opportunity to become full fledged slum lords, gouging the unfortunate and credit impaired with top tier rents for at least a decade while they put the absolute minimums into maintenance and scheme to hold onto security deposits in all cases.

No, I wouldn’t want to forget them.

See, it’s not that there aren’t enough homes on the market really, right Brian? It’s that there aren’t enough homes that can be purchased below market value that’s the problem. Realtors don’t really want more inventory… they want more inventory that can be purchased at distressed prices. I’ll be happy to put my home on the market tomorrow, just not at a price at which it would sell any time soon.

Don’t get me wrong… I do understand that the banks dumping homes on the market at distressed prices would make summer fun for Realtors and mortgage brokers… and Lord knows I do like seeing you guys having a good time… after all, you’re always a fun lot to have at a party.

But, since the banks doing what you suggest under today’s circumstances would only push us further into a recession, with housing prices falling even faster than they will otherwise, thus creating even more foreclosures… thus further destroying the housing and credit markets once the fun ends… well, I’d like to humbly suggest that IT’S A TERRIBLE IDEA.

So, if you put it all together… the worsening employment and overall economic conditions (except in the media where it’s an election year), combined with the tightening of the already tight credit markets… and with the unabated flood of foreclosures on the horizon (forecasted to exceed the number of homes lost to-date, by the way)… and the permanently broken private securitization market… CA’s $16 billion and growing state budget deficit… and the need for Washington D.C. to reduce spending going forward…

… to say nothing of the EU’s high wire act, sans net, that’s destined to see one or two countries fall to their deaths sooner than we think, thus causing us to nationalize or bailout several or more of our TBTF banks once again… and then factor in the possibility of Mitt Romney and the GOP actually winning in November… OMG, OMG, OMG… consider all that…

… And you’ll want to eat a gun.

But… STOP! Don’t do that. That is NOT the answer, Brian.

Just like it’s NOT the answer to… “put more homes on the market.”

From your good friend who loves you… and as always I remain…

Most sincerely yours…

Martin

xoxoxoxoxo…

Martin Andelman

Mandelman Matters

P.S. If I’m in town, I think I’m going to come to Anaheim to see you guys… I figure you’re just dying to buy me a beer. And tell Frank to be careful on that bike.

Mandelman out.

Hey, to subscribe to TBWS… CLICK HERE!

May

Attention Homeowners & Lawyers: AG Mortgage Settlement Launches Online Complaint Sites

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

86186Leave a Comment2012-05-11+12%3A02%3A43Mandelman

Finally, there are places online where homeowners, lawyers and other advocates can go to lodge complaints about a mortgage servicer’s handling of mortgage modifications, et al. And all I can say is, it’s about time.

A story by Ben Hallman in the Huffington Post, quoted Joseph Smith, the ex-banking commissioner charged with enforcing the national mortgage settlement…

“This allows me, as monitor, to hear complaints and learn more about advocates’ impressions of how the settlement is working,” he said. “Although I’ll extensively review reports and monitoring from the banks and my own team of auditors, it is still critical for me to receive information from the heart of each community this settlement serves.”

Now, it’s probably at least somewhat important to remember that Smith has no power to investigate individual complaints or help individual homeowners in any way. Here’s what it says on the complaint form in bold…

“Please note that the Monitor cannot intervene with the servicer on behalf of your individual client.”

Of course, I’d also guess that he doesn’t have the manpower to read the hundreds of thousands of complaints the sites would no doubt receive if homeowners and their lawyers were actually to hear about the website. (I’m also betting that there’s not much of an advertising budget with which they’ll be getting the word out across the nation.)

But, so what? There may be another way to view these new online complaint sites.

Sure, there won’t be any action taken based on the complaints filed online, and nothing will likely change as a result. And I realize that if a homeowner is being dual-tracked, can’t get a response from a mortgage servicer for months, or is losing a home to a wrongful foreclosure, these sites may only represent websites effectively dedicated to ignoring complaints online.

But, wait… there may be more. Here’s what it says on the new sites…

“The Monitor and the Office of Mortgage Settlement Oversight can assist you by providing information about the organization in your state that is appropriate for you depending on your situation. By filling out the simple form below, you will open a webpage that has state-specific contact information of various organizations that may be able to help you. The Monitor will use this information to better understand how the servicers are treating their customers and detect any patterns in violation of the agreement.”

So, I really do hope that everyone takes advantage of the new websites should they have problems with their servicers related to the National Mortgage Settlement. Here’s what Mr. Smith says about the two new sites…

“Lawyers, caseworkers and other consumer advocates are the eyes and ears on the ground who will know first, and know intimately, what kind of difference these payments, adjustments and programs are making,” Smith said. “That’s why we’ve created this dedicated tool -– to see what they’re seeing.”

Look, people… the man used to be the banking commissioner in North Carolina, but now Mr. Smith has gone to Washington and he says he needs us to be his “eyes and ears on the ground,” as far as the AG settlement’s effectiveness goes. So, let’s not let him down, okay?

Besides, if you consider the math, the whole thing becomes that much more fun…

Assuming one person can read a complaint in 10 minutes, and they were to read them 6 hours each day, working the standard 2080 hours a year, it would take 1.3 years to read 100,000 complaints.

So, if the same numbers applied and there were a million complaints, it would take 13.3 years for one person… they’d need to hire a thousand people to get it done in 1.3 years. And that assumes everyone is writing fairly short complaints. Stretch those babies out to a 20-minute read and now we’re talking two thousand people to read them in 1.3 years.

So, look… do you want to help create jobs in this country or what? Oh, and don’t forget to attach a large file to your complaint, I’m sure the servers are quite robust, and someone may want to read the details. Like they said back in the 60s… can you dig what I’m saying here?

So, for HOMEOWNERS who want to file a complaint having to do with the National Mortgage Settlement, click here: WHERE CAN I FIND HELP?

For LAWYERS or ADVOCATES. click here: REPORT CLIENT ISSUES HERE.

Here’s a list of topics under which your complaint may fall, as listed on the new sites…

Documentation: Documentation problems with foreclosure, bankruptcy or your loan file

Fees: Improper assessment of fees, including default, foreclosure, bankruptcy, attorney, late, or third party fees.

Loan Modification: Failure to modify or refinance loan.

Customer Service: Poor customer service, including no single point of contact or no customer portal.

Third Party Firms: Failure to properly oversee firms working for servicer on your mortgage.

Military Personnel: Failure to comply with legal protections afforded military personnel.

Bankruptcy: Improper failure to provide relief to homeowners in bankruptcy.

Force Placed Insurance: Required purchase of property insurance unnecessarily or improperly.

Community Blight: Failure to minimize community blight.

Tenant Rights: Violation of the rights of tenants in foreclosed properties.

Other: __________. No issues. I just would like further information

The Huffington Post story also pointed out that the federal government has also made available two other avenues where borrowers can appeal for direct assistance.

1. CFPB

One is the Consumer Financial Protection Bureau (“CFPB”), which you can access here: File a Mortgage Complaint. According to the Huffington Post, the CFPB,

“… promises to forward a grievance to the financial institution, assign it a tracking number and keep borrowers updated on the status.”

So, that’s very exciting, I would think. I mean, if nothing else it sounds like you’ll have your very own individual tracking number, so that’s something right there. I wonder how effective it will be when trying to persuade a judge not to have you evicted?

“But, hold on Your Honor… not so fast… have I showed you my tracking number?”

2. The OCC

And for homeowners who were in foreclosure during 2009 and 2010, don’t forget about the OCC’s infamously dishonest and entirely corrupt, Independent Foreclosure Review, which you can access here: Submit a Request for Review. I visited the site to check out what would be involved and the best part was that right in the middle of the page there’s a warning for homeowners that reads:

“Watch out for scams – There is only one Independent Foreclosure Review.”

So, for parents reading this who have been looking for a really good example with which you could teach your children the meaning of the word “IRONY,” I’d have to say that your search has ended.

The deadline to submit your complaint is July 31^st, so if you’re planning to be condescendingly placated by the equivocation of your claims, you don’t want to put it off. Fewer than three percent of eligible homeowners have submitted their cases for review, so the Obama Administration is no doubt planning to announce that 97 percent of those foreclosed on during those two years were okay with it. I think that’s really taking one for the team, and I, for one, salute you.

And although it would seem that no flaws have been uncovered as yet, that’s no reason not to participate in the process. I mean, look… someone has to win something, right? Like the lottery. Or, maybe not in this case… I really don’t know.

Here’s what the OCC’s site says about the review:

“The Independent Foreclosure Review will determine whether individual borrowers suffered financial injury and should receive compensation or other remedy because of errors or other problems during their home foreclosure process.”

The OCC’s site also STRONGLY WARNS HOMEOWNERS who want to file their case for independent review NOT TO PAY A LAWYER to help them do it under any circumstances.

Good heavens no… who would ever think of doing such a thing? I mean, give us some credit, would you?

I think everybody knows by now that when it comes to authoring a document that alleges the suffering of financial injury for which damages or other remedy may be assessed in conjunction with errors committed by a party purporting to be the holder in due course or to have been assigned the rights of a beneficiary to a deed of trust, and or the substitute trustee who is seeking to enforce said rights as part of a foreclosure or unlawful detainer action… the last thing you’d ever want to do is hire a lawyer.

Sheesh, it’s not like we’re children.

After all, we handled getting our mortgages all by ourselves, initialing and signing all those contractual pages containing 3 point type about how our snapping turtle, spring loaded mortgage might result in payments that exceed our monthly income by three-fold at a time when the credit markets would require a 780 FICO and 30 percent equity to refinance.

And if we can competently handle that sort of complicated transaction, surely we all know not to pay a lawyer a nickel for something as simple as filing a complaint with the Office of the Comptroller of the Currency.

Look, even if the OCC finds nothing was wrong with the foreclosures in 2009 or 2010, I think we’ll all be able to join in a giant collective sigh of relief. At least we’ll know that no one “suffered financial injury” because of errors in the foreclosure process during those two years, and we can finally move from insult to injury as we close the chapter on the unnecessary destruction of some two million family’s lives.

It reminds me of the stress tests they use with the banks… you know, the ones where every bank always passes. Like something from a Monty Python skit. Aren’t those the best?

Move along people, there’s nothing to see here.

Mandelman out.

May

Attention Homeowners & Lawyers: AG Mortgage Settlement Launches Online Complaint Sites

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

86185Leave a Comment2012-05-11+12%3A02%3A43Mandelman

A story by Ben Hallman in the Huffington Post, quoted Joseph Smith, the ex-banking commissioner charged with enforcing the national mortgage settlement…

“This allows me, as monitor, to hear complaints and learn more about advocates’ impressions of how the settlement is working,” he said. “Although I’ll extensively review reports and monitoring from the banks and my own team of auditors, it is still critical for me to receive information from the heart of each community this settlement serves.”

“Please note that the Monitor cannot intervene with the servicer on behalf of your individual client.”

But, so what? Sure, there won’t be any action taken based on the complaints filed online, and nothing will likely change as a result. But, at least now, if a homeowner is being dual-tracked, can’t get a response from a mortgage servicer for months, or is losing a home to a wrongful foreclosure, there’s a website effectively dedicated to ignoring complaints online.

Very cool, don’t you think?

I for one am glad to see that this country is finally taking the foreclosure crisis seriously and that my tax dollars are being put to good use, and I really do hope that everyone take advantage of the new websites. Here’s what Mr. Smith says about the two new sites…

“Lawyers, caseworkers and other consumer advocates are the eyes and ears on the ground who will know first, and know intimately, what kind of difference these payments, adjustments and programs are making,” Smith said. “That’s why we’ve created this dedicated tool -– to see what they’re seeing.”

Consider the math, and the whole thing becomes much more fun…

Assuming one person can read a complaint in 10 minutes, and they were to read them 6 hours each day, working the standard 2080 hours a year, it would take 1.3 years to read 100,000 complaints.

So, for HOMEOWNERS who want to file a complaint having to do with the National Mortgage Settlement, click here: WHERE CAN I FIND HELP?

For LAWYERS or ADVOCATES. click here: REPORT CLIENT ISSUES HERE.

The Huffington Post story also pointed out that the federal government has also made available two other avenues where borrowers can appeal for direct assistance.

One is the Consumer Financial Protection Bureau (“CFPB”), which you can access here: File a Mortgage Complaint. According to the Huffington Post, the CFPB,

“… promises to forward a grievance to the financial institution, assign it a tracking number and keep borrowers updated on the status.”

“But, hold on Your Honor… not so fast… have I showed you my tracking number?”

“Watch out for scams – There is only one Independent Foreclosure Review.”

Here’s what the OCC’s site says about the review:

“The Independent Foreclosure Review will determine whether individual borrowers suffered financial injury and should receive compensation or other remedy because of errors or other problems during their home foreclosure process.”

The OCC’s site also STRONGLY WARNS HOMEOWNERS who want to file their case for independent review NOT TO PAY A LAWYER to help them do it under any circumstances.

Good heavens no… who would ever think of doing such a thing? I mean, give us some credit, would you?

Sheesh, it’s not like we’re children.

It reminds me of the stress tests they use with the banks… you know, the ones where every bank always passes. Like something from a Monty Python skit. Aren’t those the best?

Move along people, there’s nothing to see here.

Mandelman out.

May

Finally, Jamie Dimon and I Agree on Something

By Mandelman | Housing & Economic Research, Loan Modification, News for the Patriot

86184Leave a Comment2012-05-11+08%3A03%3A20Mandelman

JPMorgan Chase’s CEO, Jamie Dimon, says he doesn’t want to make excuses, but his bank’s $2 billion losses in the last 45 days were due to errors, sloppiness, terrible execution, bad judgment and strategy, and the mark-to-market environment.

Want to know something? Those are exactly the same things that I would have guessed caused the loss of $2 billion in 45 days. I have no trouble imagining that those things could contribute to some fairly significant losses.

Dimon also told analysts that in hindsight he should have paid more attention to “trading losses and… newspapers”?

Okay, that shocked me. I mean, $2 billion is a lot of money to lose in 45 days when it could have been prevented just by noticing the losses and paying attention to newspapers.

I think I’m going to go ahead and send Mr. Dimon a one-year subscription to the New York Times. I know he has the money to buy his own subscription… or the entire newspaper for that matter, but he must be terribly busy because he lost $2 billion in 45 days for want to newspapers so it seems the least I can do.

And I sure am glad he didn’t want to make any excuses. I hate CEOs that lose billions and then come out making all sorts of excuses, don’t you?

According to CNN/Money…

“The group that suffered the losses is part of the bank’s so-called corporate unit, and had been making trades designed to hedge against risk.”

Wait a minute… they were trying to hedge AGAINST RISK? And they LOST $2 BILLION? Now, that must be frustrating… I hate it when that happens. Like, when I’m eating really carefully and I stick a fork right through my cheek. Don’t you hate that?

CNN/Money also had the following to say…

“Last month, rumors swirled around a JPMorgan employee based in London who had, according to the Wall Street Journal, been taking large positions in credit default swaps. The employee was said to work in the bank’s Chief Investment Office.”

So, according to the WSJ on April 6, 2012, the guy had been “dubbed the London whale,” and was a “French-born J.P. Morgan Chase & Co. employee named Bruno Michel Iksil.”

“Mr. Iksil has taken large positions for the bank in insurance-like products called credit-default swaps. Lately, partly in reaction to market movements possibly resulting from Mr. Iksil’s trades, some hedge funds and others have made heavy opposing bets…”

Oh, good Lord. We’re still doing this sort of thing, huh? Some guy at JPMorgan Chase in London was gambling with credit default swaps, no one was watching, and next thing you know the bank was down $2 billion?

And this came as a surprise to Jamie? I guess there’s no system in place at JPMorgan Chase that might of caught the losses at $1 billion, is that right? Well, now there’s an idea for a new product that I would think would sell like hot cakes. Someone should make a $1 Billion Lost Alarm. You know, after you’ve lost a billion… the bell rings.

And since this seems to happen in London most of the time, here’s what the UK version could look like…

And we don’t need the Volker Rule? The rule that would prevent banks from placing outrageous bets with their own money, and place limits on the amount of capital they can invest in risky things like hedge funds and swaps, to name but two. The rule that’s part of Dodd-Frank’s financial reforms… the ones that are being fought tooth and nail by the financial services industry lobbyists and bank CEO, including Dimon.

According to the Washington Post on May 2nd…

“The warning from Daniel Tarullo, a Federal Reserve governor, comes as banks are putting up stiff resistance to new oversight and financial regulations — including at a private meeting Wednesday between Tarullo and the heads of Goldman Sachs, JPMorgan Chase and other Wall Street firms, according to the Fed.”

“Among the major new regulations that has been delayed is the Volcker Rule, which would seek to prevent banks from taking excessive risks by curtailing their ability to speculate with their own money — rather than on behalf of clients.”

Well, I can certainly understand why no one would want to rush into the Volker Rule, especially with JPMorgan Chase losing $2 billion in 45 days… actually fewer than 45 days.

I guess it’s really none of our business though, right? I mean, it’s not OUR bank. If JPMorgan Chase wants to take on the kind if risk involved in buying credit default swaps and the like, it’s on them. It’s not like we’re on the hook if they bankrupt themselves… right?

Please say I’m right…

Mandelman out.

May

California Homeowner in Foreclosure Wins Quiet Title – It’s a Free House!

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

85549Leave a Comment2012-05-07+12%3A11%3A16Mandelman

Well, just when I thought I’d seen everything…

A Riverside, California homeowner, Denise Saluto, who was in foreclosure filed for quiet title against Deutsche Bank National Trust, as trustee for Long Beach Mortgage, and its successors and/or assigns, and Washington Mutual Bank, successor in interest to Long Beach Mortgage Company… and won by default. (And Washington Mutual, turned into JPMorgan Chase.)

That’s right… neither Deutsche Bank nor JPMorgan Chase responded to the lawsuit.

When this happens, the Plaintiff still has to present his or her case, but it’s unopposed so it’s not exactly the highest of hurdles. After considering the evidence presented by the Plaintiff, the court entered judgment in favor of Plaintiff and against the Defendants, thereby voiding her Trustee Sale and the Deed of Trust. So, presto-change-o… no more mortgage… as in… it’s a free and clear house! Ms. Saluto may still owe the debt, but the mortgage company is now like Visa or Mastercard, insecure because they’re unsecured. And no one wants to be unsecured, especially in bankruptcy court.

Now, some will say that Deutsche Bank/JPMorgan Chase didn’t respond because they just forgot or whatever, but I don’t know whether that’s the case or not. In fact, when their lawyer tried using this excuse, the judge was quick to point out that the file had been with the lawyer for NINE MONTHS before any efforts were made to get the default judgment set aside.

When a party loses by default like that, assuming it was an oversight of some kind, they usually appeal the decision as soon as they’re notified of the judgment by coming back into court to ask the judge to set aside the default judgment, claiming they weren’t properly served or something like that. And depending on the reason they defaulted, and almost certainly in the case of a bank and a foreclosure, the judge will set aside the default judgment and let the case start over.

As a matter of fact, if it’s within six months of the default, and the lawyer takes the blame, the court MUST vacate the default judgment. It’s actually the only time you ever get to see a lawyer willingly accept blame for anything.

So, in this case, as one would think, Deutsche Bank did appeal the decision, but the thing is, they waited almost a year to do so, in legalese… the bank, “failed to establish diligence in bringing their motion for relief.”

“On February 5, 2009, Saluto filed a complaint against JPMorgan Chase Bank and Deutsche Bank to set aside a trustee sale for violations of title 15 of the United States Code section 1601 et seq. and 12 Code of Federal Regulations part 226.1 et seq., to cancel the trustee deed upon sale, and for quiet title.

Defendants failed to respond to the complaint, and on March 16, 2009, Saluto served a request for entry of default on defendants. The next day, Saluto filed the proofs of service and the request for default with the trial court. The trial court entered default on each defendant on March 17, 2009.” An entry of default just means that the defendant cannot file a response. The Plaintiff still must file a “default judgment package,” which contains evidence supporting their claims.

In July 2009, Saluto filed a request for entry of default judgment, and on December 15, 2009, default judgments were entered.

Then… a year went by before…

“On June 15, 2010, defendants filed a motion to set aside the defaults and default judgments under section 473, subdivision (b), which allows relief from an action taken against a party through mistake, inadvertence, surprise, or excusable neglect when the motion for relief is made “within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.”

To support the motion, defendants filed the declarations of their attorney, Jenny L. Merris; a vice-president of Deutsche Bank, Ronaldo Reyes; and a research analyst of JPMorgan Chase Bank, Harold Galo. The declarations stated that defendants had no record of receiving service and were not aware of the lawsuit until March 2010.”

So, on October 28, 2010, Judge Mark E. Johnson heard the banks’ motion.

At the hearing, Judge Johnson stated:

“I’m going to deny the motion. I do believe that I am outside of the six-month limit. . . . I also don’t see the due diligence. So if you want to re-bring it under [section] 473.5, I will look at that, but at least as to this ground I have before me, [section] 473 subdivision (b), I’m denying the motion.

On December 3, 2010, defendants filed a motion to set aside the defaults under section 473.5. Defendants submitted new declarations of Reyes, Galo, and Merris in support of the motion.”

Deutsche Bank claimed the bank had “no actual knowledge of this action until in or around early April 2010 when JPMorgan Chase Bank’s counsel informed it that Plaintiff had recorded the Default Court Judgment against this property.” Deutsche Bank’s declaration claimed, “This was the first time that Deutsche Bank became aware of the existence of this action.”

JPMorgan Chase claimed that it “had no actual knowledge of this action until on or around March 2010 when JPMorgan was informed that Plaintiff was seeking to refinance the property . . . and that Plaintiff had recorded the Default Court Judgment against this property.”

This time, Commissioner Barkley granted the motion brought by the banks thereby vacating the default judgment the Plaintiff had obtained about a year earlier. Saluto then appealed the decision to California’s Court of Appeals, Fourth District, Division Two, contending that the defendants’ motion under section 473.5 was, in essence, a motion for reconsideration, and defendants failed to comply with the procedural requirements of section 1008. (Don’t worry about section 1008 for a moment.) Saluto also argued that Commissioner Barkley simply got it wrong, and that the default judgment should have been upheld.

Now, this gets kind of technical, but Section 473.5 says that when service of a summons fails to result in actual notice to a defendant in time to defend the action… and therefore a default or default judgment is entered… the defendant may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action.

Section 473.5 says that the notice of motion has to be served and filed within a reasonable time, but not exceeding the earlier of two years after entry if a default judgment, or 180 days after service of a written notice that the default or default judgment has been entered.

Basically, because JPMorgan Chase Bank said it discovered the default in March 2010 and Deutsche Bank said it discovered the default in early April 2010, but they didn’t file their motion under section 473.5 until December 2010, the appeals court found no evidence that the two banks acted “diligently” in bringing their motion for relief under section 473.5, and therefore the trial court should not have granted the motion that set aside the default judgment.

As far as complying with the procedural requirements of section 1008, mentioned above, the court said the following…

“Because we have found reversible error based on defendants‟ failure to establish diligence in bringing their motion for relief, Saluto’s additional contentions are moot.”

So, that’s that for Denise Saluto… she won, quieted her title and now she has no mortgage on her home. She may still owe the money to some entity, but the debt is unsecured… like credit card debt… whatever she owes it’s no longer tied to her home.

Pretty amazing, right? If you would have asked me last week, I would have said there’s absolutely no chance that filing for quiet title will result in your loan being unsecured. And I would have been entirely wrong because Denise Saluto just did it.

And again… did it happen because Deutsche Bank and JPMorgan Chase somehow let this slip through the cracks? Maybe. Or, was it that the banks weren’t prepared to defend the quiet title action… as in, they couldn’t find the note, or the assignment was a forged and fraudulent mess.

Honestly, I have no idea what happened here, and I don’t think anyone else can know for sure either. All we can know is what happened.

So, what could happen next?

I started thinking about what could happen from here for Denise Saluto. Would she simply walk away with her free and clear home and that would be it? Or, would the banks have another move on the chessboard that would reverse the decision and cost Denise her home?

I called around to various lawyers and other experts, asking if the banks could somehow get the decision reversed? The answer: No. The decision by the Court of Appeal is essentially final. Sure, the California Supreme Court could overturn a decision by this court, but I’m told that the chances of that happening are so remote that it’s not worth considering.

So, there are no legal maneuvers that will change what’s happened, but I can’t believe that the bankers are just going to give up and go home on this either. Maybe they will, but maybe they won’t, right? So, what else could happen next to threaten the title to Denise’s home?

Ooops, we forgot… we sold it to someone else?

I’m not saying this is going to happen, but it occurred to me that a “new owner” of Denise’s note could show up on the scene with paperwork showing they bought it from the prior owner, either Deutsche Bank or JPMorgan Chase, before all this transpired.

You know, like a surprise owner that just happens to have appropriately dated paperwork showing that they are the owners of Denise’s loan and therefore the quiet title doesn’t apply… she’s behind on her payments, and therefore they are moving to foreclose.

Would this be fraud? I would certainly think so. Would that stop the bankers from doing it? I would certainly think not. And would it work and cause Denise to lose her home?

The lawyers, however, all tell me the answer is no. None of that would happen… it simply wouldn’t work.

So, Denise Saluto does now own her home free and clear. However, it seems very likely that she still owes the amount of her mortgage as an unsecured debt. Lawyers have told me that she could potentially have the debt discharged in a Chapter 7 bankruptcy, but it would depend on a few things lining up just right, including the value of her home being less than the homestead exemption.

In general, a judgment creditor cannot force the sale of your home unless your home can be sold for an amount that would satisfy all superior liens PLUS the amount of your homestead exemption. It looks to me like equity of up to $75,000 is exempt if you’re under 65 years of age, and $150,000 if over 65, and if you’re married it’s higher still.

But, as with everything having to do with the law, there are plenty of caveats, limitations and nuances. I found many of them in the California Code of Civil Procedure Section 704.730, but as always, check with an attorney before assuming anything because my experience has been that just because it says one thing doesn’t mean that it doesn’t mean another.

Okay, so what does this mean to me?

Well, in my opinion… that’s an interesting question.

For one thing, filing quiet title did work out well for Denise Saluto, and since I would never have predicted it happening in her case, I’m certainly not going to tell you it won’t happen again in yours, because as I said earlier… I don’t know why it happened. It might have slipped through cracks, or might have been caused by other factors.

Ever since yesterday when I started reading the decision by the California Court of Appeal, I’ve been trying to come up with a reason not to file one myself.

The lawyers I spoke with all told me that you have to have legitimate doubt about who holds title to your home, or else you’d be filing fraudulently, but I don’t see that as being a problem for me or anyone else in this country whose been paying attention to the news these last few years.

I mean, since I do know that Mickey Mouse has been signing the Assignment of the Deed of Trust in most cases, and Donald Duck has been notarizing it, and since the President of the United States recently told the country that there have been thousands of fraudulent foreclosures, and with countless lawsuits alleging that Mortgage-backed securities are in fact, less filling, as opposed to tasting great… let’s just say that I would not want to be asked under oath who owns my note.

As far as my having legitimate doubts as to the holder of title to my home, I could assure any court under oath that when it comes to my hizzle, my doubt is rizzle… it’s legit. Word.

(That was me trying to be “hip,” but let’s not tell my daughter because she will be so embarrassed.)

This decision got me thinking about all sorts of possibilities, truth be told. Like, what if many thousands of people all filed for quiet title around the same time… like maybe a million homeowners… LOL. I would definitely have to go pay-per-view to see that shiznit go down.

If JPMorgan Chase and Deutsche were caught bo janglin in Denise’s case, I’d have to wager that many thousands of quiet title filings would leave them in a tizzle. (Oops, I did it again.)

So, realizing that I wouldn’t be the only one thinking this way, I went online to see how many sites there were offering to teach homeowners how to file quiet title, or represent homeowners who want to file for quiet title… and not surprisingly, there were plenty of them… some want thousands of dollars for their services, and some want anywhere from many hundreds to a couple thousand dollars for a kit that claims to help you do it yourself.

And because, even though I think it’s a long shot, I don’t think it’s more of a long shot than winning the lottery or having a slot machine pay off, so I got together with some lawyers and other experts and am putting together a comprehensive guide to filing quiet title, which won’t cost more than $100, and will offer everything the more expensive versions have to offer, and probably even more.

Will it work? I have no idea, and I’d have to guess that the answer will be no a lot more often than it’ll be yes. But, if you’ve decided to try it, at least this way you won’t have to spend a lot of money doing so. For a hundred bucks, you can spin the wheel and if it doesn’t work… oh well. And if it does… well, then… Woohoo!

(Look for the new site in the next few days at www.filequiettitle.com and www.quiettitlecalifornia.com)

If you want more information on the Mandelman Guide to Filing Quiet Title, email me at mandelman@mac.com and I’ll send you an email response with more details. The guide will be packed with easy to understand insight and instructions, tricks and tips, rules and limitations, and even sample templates to make it easy to file your own complaint with the court.

It will help you do it right… do it cheap… and do it safely. And I’ll be consulting with lawyers in each state, so I’ll have the specifics for your state included, if applicable.

I’m not saying you should do it… and after Denise Saluto’s outcome, I’m sure as heck not saying you shouldn’t. All I am saying is that I’m going to make sure that you don’t need to spend a bunch of money trying it. And it shouldn’t become the primary strategy to keep your home, because no one knows why it worked in the Saluto case… or whether it will work for you.

But, it does prove one thing fo’ shizzle… when it comes to the foreclosure crisis, no one knows what will happen tomorrow, because the only thing that’s consistent about this mess is its glaring and scandalous inconsistencies.

Mandelman out.

May

Debt Forgiveness – The IMF, Iceland, and the U.S. of the 1930s all say it works

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

85538Leave a Comment2012-05-07+11%3A25%3A50Mandelman

The International Monetary Fund (“IMF”), in its latest World Economic Outlook, stated quite clearly that mortgage write-downs, among other forms of debt forgiveness, can deliver significant economic benefits by substantially mitigating the negative impact of deleveraging on a nation’s economic activity.

The report points out that our recession is being driven by households forced to reduce their debt leading to reduced consumer spending, which in turn drives us deeper into recession.

Daniel Leigh, the report’s author, made the concept simple for anyone, except perhaps Ed DeMarco of the FHFA, to understand…

“Because debt is acting as a brake on economic growth, it is important to unstick the brake.”

I love this guy… he’s like the Forrest Gump of the economics set. Now get this…

“The IMF has studied the response of a number of countries to situations where large parts of the population are burdened with high mortgage debt in a recession, and finds that such programs can help prevent self-reinforcing cycles of falling house prices and lower aggregate demand.”

That sounds suspiciously familiar… which country would fall into that category? Oh yeah… ours. The report’s conclusions go on to give me goose bumps…

“Such policies are particularly relevant for economies with limited scope for expansionary macroeconomic policies and in which the financial sector has already received government support.”

The report focused in on the household debt reduction program implemented in the U.S. during the 1930′s… and in Iceland in our current crisis, which it said can…

“… significantly reduce the number of household defaults and foreclosures and substantially reduce debt repayment burdens.”

The report also contrasted those successes with examples of failures to effectively deal with the fallout of an economic crisis… “such as the current response to the crisis in the U.S.”

Oh, dear Lord people… what do we need a ton of bricks to fall on our heads? Because if we keep doing what we’ve been doing to-date, that’s at least metaphorically exactly what is going to happen.

The report also said that programs must be designed with incentives for BOTH banks and borrowers to participate, “notably by offering a viable alternative to default and foreclosure.”

The IMF also pointed out that…

“The friction caused by such redistribution may be one reason why such policies have rarely been used in the past, except when the magnitude of the problem was substantial and the ensuing social and political pressures considerable.”

I’m starting to feel a little nauseous over here… is any of this ringing any bells for anyone? Who is it that keeps talking about the need for…considerable social and political pressures? Me, right?

The report also cited a study which found that, “political systems tend to become more polarized in the wake of financial crises,” and as a result led to problems generating collective actions… like DOERS, comes to mind. Specifically, the report said that, “distressed mortgage borrowers may be less politically organized than banks – and this can hamper efforts to implement household debt restructuring.”

I think I’m going to need to lie down soon… but first I think I’ll go out to my driveway and slam my hand in my car door… in an effort to make the pain go away.

Join me in the Way Back Machine…

It’s the U.S. during The Great Depression of the 1930′s and FDR has just introduced the Home Owners Loan Corporation or HOLC.

HOLC will be using government bonds that offer federal guarantees on principal and interest to buy up distressed mortgages from banks. The purchases will represent 8.4 percent of our country’s GDP in 1933.

HOLC will then be restructuring these mortgages to make them more affordable to homeowners. The result will be that 80 percent of these restructured loans, roughly 800,000, will be protected from foreclosure.

Primarily, HOLC will extend the term of the mortgages, in some cases doubling the term, and converting the loans from variable to fixed rate loans, but HOLC also wrote off principal in many instances so that no loans exceeded 80 percent of the current appraised value.

Over the next twenty years or so these mortgages will be sold and the government will even make a profit by the time the program ends in 1951.

Referring to the HOLC program, the IMF’s report said…

“A key feature of the HOLC was the effective transfer of funds to credit constrained households with distressed balance sheets and a high marginal propensity to consume, which mitigated the negative effects on aggregate demand, which was caused by the recession and need for household deleveraging.”

In other words, it worked. Well, I’ll be Bernanke’s Uncle. Isn’t Ben supposed to be an expert on The Great Depression? I could have sworn…

But wait… there’s more…

Apparently, this year Iceland has been forgiving mortgage debt for its citizens in an effort to stimulate economic growth and guess what?

It’s working there too!

The Icelandic government and the reconstructed Icelandic banks worked together to develop, “a template to be used in case by case restructuring discussions between borrowers and lenders.”

“The templates facilitated substantial debt write-downs designed to align secured debt with the supporting collateral,” or in other words, reduce the loan in line with the current value of the home, and make sure that the terms are such that the homeowner has the ability to repay the loan.

Brilliant! What are they putting in their Cheerios over there? We need some, whatever it is.

“The IMF found that such case by case negotiations safeguard property rights and reduced moral hazard.”

No kidding. Do tell.

Then only problem was that the process was time consuming because as of January of this year, only 35 percent of the restructuring applications were processed. Here in the U.S. we’ve been knocking our politically divided heads against the wall for four years now, and we’re nowhere close to having processed 35 percent of anything.

But, Iceland is obviously a country with advanced critical thinking skills, likely the result of not having CNBC or Fox News channels, so it has introduced a debt forgiveness plan which writes down seriously underwater mortgages to 110 percent of the current value of the given property.

Iceland’s officials did say that before debt write-downs really took off, it took the announcement of “… a comprehensive framework and clear expiration date for relief measure.”

See, that leaves the U.S. out, right there. Name one thing we’ve done since 2006 that you’d describe as being either comprehensive or clear? Go ahead… I’m waiting. Okay, I’ll make it even easier… what have we done that’s been somewhat comprehensive and reasonably clear?

Right… that’s what I thought you’d say. The only way we’ll be able to make this Iceland strategy work over here is if we can succeed by developing something that’s “narrow and muddy.” Comprehensive and clear seem entirely out of reach for us.

So… how’s it going, Ice, Ice Baby?

“As of January 2012, 15 to 20 percent of all Icelandic mortgages have been or are in the process of being written down.”

Of course, as an intuitive economist once said, and I’m paraphrasing here…

“If you want to create the much-admired Danish model, you’re going to need some Danes.”

Iceland’s mortgage write-down program happened as a result of thousands of its citizens taking to the streets demanding that something be done about the debts the people had incurred buying homes during the bubble at what turned out to be wildly inflated prices. At one point, they surrounded the country’s parliament building and started throwing rocks.

(And people laughed at me last year when I suggested that we form a group called, “People in Favor of Hitting Politicians with Sticks,” or PIFOHPWS… for short.)

Of course, in our country, there’s no way that would ever happen because we’re all way too ashamed to be seen on CNN in what would be called, “The March of the Deadbeats.” Which is why I suggested the DOERS idea… stay home, send emails and other clever things through the mail. Occupy without leaving your house, if you will.

Even though, you would think that by now more people would be figuring out that if home values fall by 60 percent or more… and unemployment soars past the 20 percent mark… there are going to be an awful lot of people that may look, “irresponsible,” but are purely innocent victims of a global credit crisis.

Are you listening, Rick Santelli, you odious, insufferable, unenlightened and ill-bred jackass? I doubt it. I think it’s abundantly clear that you haven’t been able to listen to anything but the droning that goes on incessantly between your pinned back ears.

So, how come the whole debt forgiveness thing is working so well over in Iceland, but if the issue even comes up for discussion over here, we can’t stop a parade of badly behaved adult children from whining about how they’re paying their mortgage payments and therefore would rather see the country mired in a 40-year economic funk than lift a finger that could potentially benefit someone who took out a second to remodel a bathroom?

Who are these people, and more to the point, who are their parents? Because when the revolution comes, I’m taking them out first. Our new society simply cannot be allowed to start with their sort of genetic defect. Or, like the man said… you can’t fix stupid or petty.

Brendan Keenan, writing in the Independent.ie, had the following to say on the topic of the Iceland debt forgiveness strategy…

“It will probably be necessary in the end to do something of the kind in this country, but any government trying should tread very, very warily. We may not be Greeks, but nor are we Icelanders.”

That’s true… but what are we in the eyes of the rest of the world these days?

A spoiled, drunk 15 year-old waving a gun in their face?

Mandelman out.

May

Bar Defense Atty David Carr Exposes the CA Bar on Scammers and SB 94 – A MM Podcast

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

84722Leave a Comment2012-05-02+06%3A40%3A36Mandelman

FASCINATING! SHOCKING! SCANDALOUS!

INVALUABLE INFORMATION AND INSIGHT FOR LAWYERS… REAL ESTATE LICENSEES… AND ANYONE INVOLVED IN THE FORECLOSURE CRISIS IN CALIFORNIA AND ELSEWHERE.

David Cameron Carr has been in private practice representing California attorneys and applicants since 2001, but before that, between 1989 and 2001, he was a staff attorney at the California State Bar Association, and from 1999 and 2001 he was Manager, Los Angeles General Trials Unit. From 1992-1999, he was a State Bar Discipline Prosecutor, and from 1989-1992, he worked as a Staff attorney, handling Complaint Audit & Review.

David graduated in 1986 from Loyola Law School, Los Angeles, and was admitted to the State Bar of California in December of that same year. He’s admitted to Southern, Central and Northern US District Courts for California. He;s a Member of the San Diego County Bar Association’s Legal Ethics Committee, a Member of the Association of Professional Responsibility Lawyers (APRL), a Member of the American Bar Association and ABA Center for Professional Responsibility.

He also serves as President of the Association of Discipline Defense Counsel.

Okay, now that we’ve got that out of the way…

I can tell you that I’ve gotten to know David Carr pretty well over the last few years, we’ve worked together in a way, as I’ve been intimately involved in the travesty related to lawyers and loan modifications that was created in 2009, when California Senate Bill 94, which was sponsored by Senate Banking Committee Chair, Rom Calderon was signed into law by the Governor on October 12, that year.

The law created by SB 94 is the Crown Prince of unintended consequences. Created in the hopes of to protecting California’s distressed homeowners at risk of foreclosure from unscrupulous scammers by prohibiting advance fees in conjunction with providing loan modification services. The law hasn’t come anywhere near achieving its objective. Even Suzan Anderson, who is the Supervisor of the State Bar’s Special Team on Loan Modification Fraud, speaking last December to David Streitfeld of The New York Times said: “I wish the law had worked.”

What SB 94 has done in the hands of the California State Bar is create so much confusion in the legal community that hundreds or perhaps thousands of legitimate attorneys have stopped offering to help homeowners get their loans modified, while the scammers have continued to proliferate as if nothing changed.

HOW DID THIS HAPPEN?

David Cameron Carr knows what’s really happened and continues to happen in California since SB 94 became law in 2009. And he knows the situation from the perspective of the State Bar, and from the perspective of the ethical lawyers caught up in the confusion.

If you’re a lawyer or real estate licensee that has been involved in helping homeowners save their homes from foreclosure over the last few years, or a homeowner struggling to understand the crisisat hand…

I PROMISE… YOU DO NOT WANT TO MISS THIS…

Mandelman Matters Podcast with David Cameron Carr

Mandelman out.

May

White Powder in Envelopes Mailed to Wells Fargo in NYC – Idiots happy it’s not toxic

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

84561Leave a Comment2012-05-01+15%3A21%3A01Mandelman

Well, here we go. In our race to the bottom… our attempt to see how far we can push it before we break something… our desire to see chaos American style… ABC News reported yesterday that at least seven locations in Manhattan, “primarily Wells Fargo Banks,” according to the story, received envelopes in the mail containing “suspicious white powder,” police officials said.

Well, thank heaven it wasn’t the non-suspicious form of white powder… you know, the kind we’re all used to getting in our mail every day.

The message that arrived in the envelopes read as follows:

“This is a reminder that you are not in control. Just in case you needed a little incentive to stop working we have a little surprise for you. Think fast you have seconds.”

AP reported that the powder in the envelopes caused evacuations at bank branches, but no injuries, as if that last part mattered in the least. Idiots appear to be happy that the powder was found to be cornstarch… as opposed to Anthrax, I suppose.

Gee, now that’s certainly a relief. Whew, I guess we dodged a bullet there, didn’t we?

Manhattan police, about ready to round up the usual suspects and get a rope, initially suggested based on absolutely nothing that the envelopes could have been mailed by “militants from within the Occupy Wall Street movement.”

Luckily, a spokesperson for Occupy Wall Street denied any connection to the mailings… and that seemed to accomplish what exactly? I guess the NYPD said, “Oh, okay… sorry about accusing you guys of potentially mailing Anthrax to banks in Manhattan? Our bad.”

The police say they thought that Wells Fargo was the target of the mailings because it’s based in San Francisco, and what they described as “about half of a key dozen Occupy Wall Street members have backgrounds in Oakland, San Francisco and Berkeley… and SIMILAR INCIDENTS OCCURRED IN CALIFORNIA EARLIER THIS WEEK, police sources said.”

“A key dozen Occupy Wall Street members?” So, now there are probably a few hundred who are convinced that phrase was referring to them… perfect. And what exactly was similar about the incidents that occurred in California that no one seems to have heard anything about until now? Was it the cornstarch… the mailings… the scary message inside? How similar were these events exactly and why were they mentioned before now?

Another theory I just made up is that Wells Fargo was targeted because it’s stage coach logo is reminiscent of the old West, when Native Americans were the victims of genocide, so the FBI is said to be investigating Indian casinos in several states.

What? My theory makes every bit as much sense as theirs does.

Others on the list of potential suspects include any number of the 8 million Americans whose lives have been destroyed by the foreclosure crisis, or any of the hundred million or so that are beyond pissed over bailing out banks with trillions while leaving the country’s working class to die on the proverbial vine.

Or the commies, it could always be the commies. And let’s not forget the Jews, al-Qaeda, ex-military wackos, or a prankish band of Ivy League college students, saddled by student loans and out to have some fun. Or foreigners, don’t forget foreigners.

In other words, police had no idea whatsoever who sent the mailings.

Embarrassingly, ABC reported that the Manhattan mailings, “mainly appear to have reached low-level workers.” And New York police spokesman Deputy Commissioner Paul Browne incoherently blathered to ABC News:

“Apparently, the message was aimed at the mail room workers among the 99 percent.”

The police are saying that the mailings were intended for May Day delivery, but arrived a day early. One official, according to ABC News, inexplicably said…

”They underestimated the efficiency of the U.S. Postal Service.”

Ha! So, the joke’s really on them after all, right? Didn’t think the USPS could foil your plans with their efficient inner city delivery, now did you? Ha! So there.

I’m reporting, however, that regardless of who the mailings appear to have reached, senior executive seat cushions at Wells Fargo and other banks are all being replaced today after being soiled as the news of the mailings and their enclosed powdery substance spread through the executive ranks.

I’m also reporting that I have instructed my wife and daughter not to go inside the bank for any reason, and instead only use the ATM after hours. And I’m not kidding about that in the least.

No one should be the least bit surprised that this is happening, and it’s nothing to take lightly or brush off as nothing to be worried about… it’s scary as all hell because it’s a certainty, in my opinion, that it’s only a matter of time before people are killed in one way or the other as a result of what this country has allowed to happen to untold millions.

“This is a reminder that you are not in control. Just in case you needed a little incentive to stop working we have a little surprise for you. Think fast you have seconds.”

There’s a word for that sort of message, it’s “terrorism.” And it can strike without warning and claim the lives of thousands… and there’s no way to stop it, and no one who cares about being punished for it after the fact.

The Oklahoma City bombing, April 19, 1995, claimed 168 lives, including 19 children under the age of 6 years old. More than 680 were injured. The bomb destroyed or damaged 324 buildings in a 16-block radius, destroyed or burned 86 cars, and shattered glass in 258 buildings nearby.

Timothy McVeigh believed that the bombing had a positive impact on government policy. And what angered him then is nothing compared to the potential for rage that exists today.

During the 1930s, after the attack and attempted lynching of a judge (who was signing eviction orders) by 200 Iowa farmers who stormed into Judge Bradley’s courtroom in April 1933, the Governor of Iowa placed the state under martial law.

In Minnesota, similar degrees of civil unrest and the threat of violence led Chief Justice Hughes to declare a moratorium on foreclosures.

Expressing frank understanding that the nation’s economic catastrophe threatened political stability, Hughes remarked, “the policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worthwhile.”

Hughes found that the mortgage crisis in Minnesota justified the stay of “immediate and literal enforcement of contractual obligations” insofar as the emergency was real and no mere legislative subterfuge; the statute was designed for the benefit of society as a whole rather than particular individuals; and the legislation was temporary and no broader than necessary to accomplish its purpose. Hughes also denied that the statute violated due process or equal protection.

A foreclosure moratorium is not what we need… it is a last resort.

What we need is a fairer and more compassionate process through which we can get through the foreclosure crisis. The way in which foreclosures have been handled to-date has been wrong to the point of being barbaric, and we will continue to deny and ignore this truth at our peril.

Mandelman out.

May

DOER UPDATE: Patricia Martin v. Wells Fargo – Court Grants Injunction, Injustice on Trial Ahead

By Mandelman | Foreclosure Fraud, HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

84535Leave a Comment2012-05-01+13%3A06%3A04Mandelman

What you’re about to read about should never be allowed to happen in this country, and what is particularly troubling is that Wells Fargo Bank could have very easily prevented it by simply communicating with its customer honestly or competently.

And the law firm employed by Wells Fargo to wrongfully foreclose on this 73 year-old widow’s home of 43 years, Anglin, Flewelling, Rasmussen, Campbell & Trytten, LLP of Pasadena, California, could have stopped this travesty of justice as well, but these lawyers can’t even be bothered to actually appear in the courtroom, choosing instead to phone in their odious nuggets of legal claptrap, entirely devoid of common sense, because that’s how they roll.

As it stands, and as a result of Wells Fargo’s handling of the matter, a 73 year-old woman is at risk of losing a home that she has owned for 43 years… and all because she fell behind on her mortgage by $104.27.

That’s right… we’re talking about a hundred bucks and change here. You want some offensive stupidity? Wells you’ve certainly come to the right fargo.

A Personal Note to Laurie Maggiano at Treasury… I just wanted you to know that I was sincere when I told you that I’m trying to suppress my aggressive tendencies and stop being so snarky all the time, but are you following this case at all? Because as long as the Obama Administration continues to ignore this sort of thing, you could be the Michelangelo of Home Preservation and it won’t matter because your ceiling’s being covered in a Navajo White semi-gloss with a stipple effect. I’m just saying…

Remember Patricia Martin’s foreclosure situation with Wells Fargo?

I wrote about it on February 20^th of this year, and if you didn’t see it, I’d suggest that you continue reading what follows and then if you think it necessary, you can click DOER ALERT to read the original article.

Patricia Martin’s DOER ALERT, by the way, was the only one that did not succeed. Although Wells Fargo had responded to a DOER ALERT in the past, this time they completely ignored our pleas for the bank to do the right thing and stop her eviction.

She was not evicted, however, as her attorney, Mark Zanides (who happens to be a good friend of mine), drove a few hundred miles to appear in court on her behalf and successfully stopped the eviction.

And this past week, Mark won in court again, with the court granting the preliminary injunction… so at this point… Patricia Martin will be remaining in her home as the case proceeds to trial… a jury trial, by the way. (You can read Patricia’s declaration HERE.)

You can call me naïve, but I just can’t believe that even Wells Fargo, the bank that appears committed to being the worst the servicing industry has to offer, wants to do this.

Zanides estimates that the bank has spent a significant amount already on legal fees and now is certain to spend a whole lot more. Patricia Martin’s home is worth no more than $275,000. How can it be worth it to spend $50,000 or more to take her home, when she wasn’t even late… didn’t want a loan modification… and could have simply continued making her payments… as she has for the last 43 years?

How can anyone want this to happen?

Memo to Wells Fargo: If you’ll just have someone contact me to explain the reasoning behind this situation, I promise to explain it from your perspective and stop calling your bank disparaging names.

But, until then, and absent any information to the contrary, what am I or anyone else to think other than that you are the epitome of the worst sort of corporate citizen… the sort of bank that is not to be trusted… a bank that we should all warn our children about… a bank that should reasonably be despised for its behavior.

Here’s an in-a-nutshell type recap with quotes from the declarations of those involved:

Patricia Martin’s daughter, Nicole Ortega (who lives in the home with her husband and her mother) went into a Wells Fargo branch on September 27, 2010 and asked how much was owed to satisfy the August and September payments. She then paid the amount that Wells Fargo said she owed, $3238.30, which she thought represented a monthly payment of $1619.15.

She didn’t know it for several months, but the amount she was paying was $104.27 short of the required amount. In her own words, from her declaration…

“I had previously been told by Wells Fargo Bank’s agents that the bank does not take partial payments. The fact that the bank took these payments confirmed to me that I had made a full payment. Had I known that the full payment for September 15 was supposed to be $1723.41, I was ready willing and able to pay it. In no way would I ever jeopardize our family’s home to save $104.27, that is, the difference between the amount paid and what was apparently the amount owed.”

Yes, and we certainly believe you. In fact, I think it’s safe to say that every single human being with a fully developed adult brain on the planet believes you… okay, except maybe Larry Summers and Ed DeMarco… and the fact that you had to write a declaration stating this fact so that it could be used in court is absolutely emblematic of the insanity American homeowners continue to face today.

Roughly five years into the financial and resulting foreclosure crises, and this story, instead of shocking every ear who hears it, is starting to sound like meatloaf and mashed potatoes.

Wells Fargo’s employee, Michael Dolan, states in his declaration that he is an Operations Analyst in Wells Fargo’s Mortgage Lending Operations, located at 4101 Wiseman Blvd. in San Antonio, Texas.

Prior to his current position, he states he was a Vice President in the Portfolio Retention Department at Wachovia Mortgage, FSB, and prior to that he says he was Vice President of Loan Services at World Savings Bank, FSB. He also mentions that he started at World Savings in 1984, so he was at World and Wachovia for a combined 23 years. So, I’m going to go ahead and assume that he knows how to read a calendar and mail a letter.

Here’s what Patricia Martin’s daughter’s declaration says about a statement made in Mr. Dolan’s declaration…

“The Dolan declaration states that ‘on or about September 29, 2010, the Bank sent the borrower a letter informing her that the loan was due for September 15, 2010 loan payment, and that $1619.15 had not been applied to the loan because it was not enough to cover the balance due.’ (The letter is marked Exhibit Q.) I am aware that my mother did receive this letter dated September 29, 2010. However, we did not receive this letter until early June 2011, when it arrived in an envelope postmarked May 30, 2011. I have attached this letter and the envelope in which it came. I remember this letter specifically because it arrived so far after the letter itself was dated. I thought that was significant, so I saved the envelope in which it arrived.”

Now, you see Mr. Michael Dolan… that makes you a lying piece of itinerant trash, because not only did you lie in your declaration, but you also figured you could cover the lie and your worthless ass by sticking a backdated letter in the mail more than eight months later.

And why not?

I mean, what are the chances that anyone would have kept a certain blue dress around all that time without sending it to the cleaners, right Mikey?

If this were the first time that Wells Fargo was ever accused of such behavior, I’d have the tendency to say… maybe it was an error. If it were the second time… okay, what the heck. But since no one can even count how many similar things Wells has not only been accused of doing, but in fact has been proven to have done… well, there’s no benefit of the doubt due here. The mere suggestion is utterly laughable.

Patricia’s daughter continues in her declaration to state what anyone would have to agree is the obvious. (You can read the Plaintiff’s Evidentiary Objections to Dolan’s Declaration HERE.)

“I did not know the September payment whose amount had been given to me by the bank employee and which had been paid on September 27 had not been credited. Had I received Exhibit Q in early October, it would have explained what happened and I would have asked how I could pay the remaining balance of $104 or so and made arrangements to pay the late fees.”

Yes, that’s right because that’s what ANYONE would have done under the same circumstances. She continues…

“Had I received Exhibit Q, I would not have had to make all of the calls to the bank seeking clarification that I made later on in December when I learned the September payment had not been credited. Nor would I have needed to write the letter in December seeking explanation of why the September payment had not been credited.” (Her letter is marked “First Ortega Dec. Exhibit A.”)

And again… she is making complete sense. The question is why is any of this being questioned and who is the imbecile questioning it? She continues…

In early October, I received a letter dated October 5, 2010, stating that the September payment had not been made. (Marked “Dolan Exhibit R.”) The letter states that ‘if this payment has already been made, then please disregard this notice.’ Since I knew that I had made the September payment, I disregarded the notice, as the bank’s letter invited the borrower to do.”

Yep, that’s what I would have done as well.

Okay, look… this tale goes on and on and as it does, it gets worse and worse.

The homeowner received another letter late in October saying that the last two payments had not been received, and that the loan was now in default. Another letter arrived a few days later saying basically the same thing. Again, the homeowner assumed that the letters were wrong, as in their mind the September payment had definitely been made, so they did the next logical thing… they called Wells Fargo at the number provided on the letters.

The homeowner’s daughter told the bank that they were aware that they owed the October and November payments, explaining that her mother, Patricia Martin, had been hospitalized and there were other hardships involved… but that the September payment had been made.

They asked the bank if it would be okay to make the October and November payments on December 3, 2010… and Wells Fargo representative stated that by doing so, “you will be fine,” with the exception that the December payment would be due later that month.

The Wells agent then said that she would notate the account to that effect.

During that same call, the Wells Fargo representative uttered the words that would make a bad situation far worse, she suggested that the borrower should apply for a Map2 modification, and then transferred the call to a Ms. Leffert.

Patricia Martin’s daughter spoke with Ms. Leffert and gave her some of the information she requested. She didn’t have all of the information, however, and told Ms. Leffert that she would have to speak with her mother before going further. Subsequently, she called Ms. Leffert to provide the missing information, and in late November Ms. Leffert stated that “you qualify” and that “you’ll be ahead of the game since the late payments will be added to the modified loan.”

And then things got even worse. A letter dated November 18, 2010, but not received until the end of that month, now said that the note was delinquent and would need to be reinstated by paying $4829.96 by November 30^th. Patricia’s daughter immediately contacted Wells Fargo to find out what was wrong with their system and records, as she had already made arrangements to pay October and November payments on December 3^rd.

She spoke with a representative named Jason who told her that there were some unapplied funds in the amount of $1619.15 that it looked like something was happening with, also saying that it may be applied to October’s payment.

Jason was told that September’s payment had been made, and he said he couldn’t tell her why September was not credited, but he suggested that she wait and let the bank finish whatever they were doing and it would clear things up.

Patricia’s daughter then states in her declaration…

“Had I been told by the bank’s representative that we were required to make a payment of $4829.96 by November 30 or lose our home, we could and would have done so.”

And again, all I can say is… OF COURSE YOU WOULD HAVE. Your mother has lived in the home for 43 years… good Lord, when did our world lose its common sense and critical thinking skills?

So, of course, when she goes into branch on December 3^rd to make her two delinquent payments as she had arranged that she would do… the bank won’t accept the payments, as they were due by November 30^th.

Does everyone realize how many billions in delinquent and defaulted loans Wells Fargo has on its books… to say nothing of the untold billions in worthless garbage that exists off the bank’s balance sheet? You do, right?

And does everyone realize that the President of the United States, the U.S. Attorney General and the Secretary of Housing and Urban Development have all made it abundantly clear that unnecessary foreclosures are to be avoided as they are not in our national interests?

So, what possible difference does it make whether a homeowner is paying on November 30^th or December 3^rd? Wells Fargo… are you stupid, irrational and incompetent… or are you just plain evil and sadistic?

And don’t start blaming anything on “the investor,” Fannie Mae, or the mystery trust that thinks it holds this loan because this beauty of a loan is one of those fabulous pick-a-pay jobs made popular by World Savings, so it’s on you, Wells Fargo, all the way. And should I even ask who might be responsible for such a loan being sold to a 68 year-old widow?

I’ve never been a great speller, so maybe someone at the bank could help me out here… how many “Wells” are there in “predatory shithead?”

By January Wells Fargo says they won’t fix it, won’t accept payments, and months later when loan modification is denied, house goes to foreclosure sale and is taken back by the bank.

The modification, by the way, is denied months later because Wells Fargo says they won’t consider Patricia’s son-in-law’s income. He lives in the house with his wife… her daughter… ever since Patricia, whose husband passed on a few years ago, started having some serious medical problems. Oh, and he’s a police officer… a sergeant on the local police force… someone who protects and serves his community.

Writing this article, I had to wonder… on how many other occasions has Wells Fargo improperly credited amounts paid by borrowers? Luckily, I didn’t have to wonder for very long, as I remembered the article I wrote a little over a week ago about a case in Louisiana involving Wells Fargo and in front of Federal Bankruptcy Court Judge Elizabeth Magner. If you haven’t read it, I highly recommend that you do.

In Judge Magner’s own words, after describing Wells Fargo’s behavior as being, “highly reprehensible,” she went on to say…

“Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed, but perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods.”

So, is what has happened to Patricia Martin yet another example of Wells Fargo’s systemic misapplication of funds in order to repossess homes?

I would imagine that Wells Fargo would answer “No,” to that question.

So, fine… then you’d have me believe what? That it’s a fluke? An aberration? Some sort of inexplicable, unfortunate deviation from the norm perhaps?

HORSE PUCKY.

For all of you legal eagle types… You can read Wells Fargo’s Opposition to the Preliminary Injunction HERE, Wells Fargo’s Appendix to Opposition to Preliminary Injunction HERE, and the Plaintiff’s Reply to Wells Fargo’s Objection to Preliminary Injunction HERE.

Mandelman out.

HEY DOERS… Looking for Something to DO?

Wells Fargo’s CEO, John Stumpf “earned” $19.8 million last year, according to the Wall Street Journal and documents filed with the SEC in March of this year.

If you’d like to congratulate him, you can try reaching him by email:

john.g.stumpf@wellsfargo.com

Or, by phone: (415) 396-7018 or (866) 878-5865

Or, if you want to have some fun, since I know this physical address is correct, why not grab an envelope, buy a stamp and reach out to him via regular mail. For extra smiles, consider throwing old keys in with your letter, or I’ve always enjoyed tossing a small handful of sunflower seeds in before sealing…

John G. Stumpf

Chief Executive Officer

Wells Fargo Bank

420 Montgomery St.

San Francisco, CA 94163

###

You’ll also be happy to hear that Wells has just launched its new business unit, Abbot Downing, which is dedicated to caring for the wealth of the super rich… its clients have more than $50 million in investable assets. Only recently launched, Abbot has already recruited about $33 billion in investable assets under management. So, very well done there. (And I heard that one of their clients holds the patent on the color “blue.”)

Apr

An Important Message about 2012 for both President Obama & Mitt Romney

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

84364Leave a Comment2012-04-30+13%3A15%3A33Mandelman

I realize you’re both very busy and were it not important, I would not presume to take up any of your time, or the time of your advisers, but it has long since become clear that neither of your campaigns understands several of the key dynamics that will have a major impact on which one of you wins in November of 2012.

The dynamics I’m referring to have to do with the foreclosure crisis, a topic which, for a variety of reasons, some shared and others divergent, neither of you wants to talk much about, but it is the topic that will continue to destabilize either of your chances to win the upcoming election.

That this is the case, should not be hard to accept… in 2012, the road to the White House runs directly through the states hardest hit by the foreclosure crisis, most notably Ohio and Florida, but also Michigan, Nevada, and North Carolina, et al. For the Obama campaign, I would say that this issue alone would normally be enough to cost you the election, but as luck would have it, you’re the frying pan running against the fire.

In 2008, the Obama campaign won the election by roughly eight million votes. By this coming November, we will have lost roughly that same number of homes to foreclosure. If you assume two voters per household, then there are 16 million that don’t want to vote for you. I didn’t say they wouldn’t vote for you, the alternative being voting for fire, but rest assured, they don’t want to vote for you.

There are another four million plus in foreclosure or seriously delinquent today, so at two per household, that’s another eight million, bringing the total to 24 million. And forecasts by Amherst Securities show 9.5 million foreclosures coming soon to a neighborhood near you, so soon enough there will be about the same number of people directly affected by foreclosure than voted in the presidential election in 2008.

The point is that the number of Americans seriously harmed by the mishandling of the foreclosure crisis are now more than enough to sway a national election.

These people are not merely upset about losing a home to foreclosure, they are enraged over having been misled, deceived and entirely abandoned, as the Obama administration ultimately stood by and did essentially nothing while their servicer tortured them as they lost their homes to foreclosure.

And, I can assure you that my description is not hyperbole to those in this unfortunate group. In fact, many would call it understatement.

It’s interesting to realize that neither of you wants to bring up the situation related to housing and foreclosures in your campaigning. I say that because, although it’s easy to see why the Obama campaign would avoid the topic, but one would think that the Romney campaign would be exploiting such an obvious weakness of the opposition to garner support. And yet, the Romney campaign doesn’t want to talk about housing and foreclosures any more than the Obama campaign does.

In fact, Mr. Romney, this past year while campaigning in Nevada of all places, quite shockingly, you decided to answer a question about foreclosures by saying that what’s needed is a faster foreclosure process… in Nevada… a faster foreclosure process.

Basically, after being asked the only question certain to have tens of thousands of Nevada voters paying close attention, your response gave the Obama Administration credit for programs that successfully delayed or prevented some significant number of foreclosures in a state that’s been devastated by foreclosures more so than any other.

For a moment, all I could think was that you were trying to help Obama win Nevada in 2012, but I’ve since realized that its far more likely that you were caught off guard and didn’t know what else to say at that moment, because since then you’ve adopted the Obama campaign’s approach to the issue: Pretend it doesn’t exist.

I’m quite sure both of your campaigns have people monitoring the Internet, so you must know how ridiculous the absence of any meaningful discussion on foreclosures appears to millions of voters. Therefore, it must be that you’re both so deathly afraid of the Tea Partiers and Rick Santelli that your campaign managers figure mums the word is your only viable option.

Well, since I see no other explanation for your mutual silence on the subject, I thought I’d offer both of you some insight and advice about your respective 2012 campaigns. I may not know enough to be President of the United States, but I know the people of the foreclosure crisis as well as anyone could… to use the hip vernacular of a few years back… they’re my peeps.

First, to President Obama:

Okay, I understand you’ll probably win staying silent on the issue.

For one thing, Mitt Romney isn’t likely to mention the subject of foreclosures either, and if he does, it’s fairly likely that he’ll say something stupid, as he did in Nevada.

Secondly, your campaign strategists probably figure that by next fall, if asked, you’ll be able to tout your administration accomplishments related to housing and foreclosures, which, however inadequate they may be, are still heads and shoulders better than anything the GOP has suggested since 2008. So, as I said, you’ll be running on the premise that people will vote frying pan when the alternative is fire.

Thirdly, I’m sure your people have realized that a significant number of the independents you’ve lost AND many of the Republicans who are disgusted with the economic situation have moved into the Ron Paul camp, which may very well give the Paul campaign a double digit election outcome, and lock in a loss for Romney in a replay of Clinton-Bush-Perot, 1992. (Clinton-43%, Bush-37.5%, Perot-18.9%.)

Lastly, it’s no secret that the Republicans in both the House and Senate, since day one of your presidency, have been practicing a bizarre sort of obstructionist politics, voting in unison against anything you’ve proposed, as our nation-on-fire has continued to burn, economically speaking.

In fact, the only thing you’ve done that Republicans have not opposed was the pumping of untold trillions into TBTF financial institutions. To everything else, they’ve very clearly said “NO,” and bringing up this track record will make it near impossible for anyone concerned about foreclosures to vote for anyone on that side of the aisle.

It all makes sense, and could be right… but you’ll be biting your nails right into the wee hours of election night, because you’ll remember what happened in the 2010 mid-terms when far too many voting Democrats, furious with you for letting them down, closed the curtains in their voting booths and chose Republican candidates out of spite.

If you want to ensure your second term, stop listening to Tim Geithner’s Moral Hazard Band, and anyone who’s ever met Larry Summers, and follow your instincts.

I know you have them because I heard you talking about how you and Michelle only paid off your student loans less than a decade ago. I also heard your speech announcing the settlement between state attorneys general and the five largest mortgage servicers, and you said we need to do more to help Americans losing homes due to no fault of their own… and how we “have each others’ backs” in this country.

Those were smart things to say, but stopping there won’t carry you to November, you need to seal the deal and start telling the American people the truth… that we need to stop pretending that 20 million Americans all became irresponsible at the same time, buying homes they couldn’t afford, blah, blah, blah.

Our financial crisis and economic downturn took out all the investment banks on Wall Street, caused over a thousand smaller banks to become insolvent so far, crippled small and large businesses alike leading to unemployment that will take a decade to improve if we’re lucky, and threw the EU into financial chaos that may still bring an end to the union and its currency. That’s the truth, so stop pandering to the Tea Party types, they’re short on facts, long on crazy… and won’t be voting for you in 2012 anyway.

What the American people want is an economy that doesn’t feel like the United States of Quicksand. Surely by now you’ve started to suspect that you could double down on pumping money into the banks over the next four years and still no recovery would come.

How many quantitative easings do we need to try before we diversify our approach to include America’s middle class… QE-1 didn’t do it… QE-2 didn’t either… and don’t even get me started on the “operation twist” nonsense, which is Bernanke’s only idea to spark consumption by getting credit flowing to consumers. Should we wait until we’ve tried QE-7… QE-12… QE-18… should we try “twisting” the decade away?

Surely you can see that the desired results of these programs haven’t occurred yet, and even if you want to think they will someday, isn’t it time to add a few other strategies to the mix? Interest rates are simply not the problem, Mr. President, they’re low and they’ve been low… so what and who cares?

Remember last June, Mr. President? It was Bernanke’s second post-FOMC press conference. The Fed Chief admitted that he had no idea what was causing the economy’s so-called “soft patch,” he only knew that it would persist. The FOMC statement blamed everything outside the United States… something about Japan along with rising food and oil prices. He was humble, candid, and relieved that QE 1&2 had reduced the threat of deflation for the moment anyway. But as to what wasn’t happening in our economy, he didn’t have a clue.

And yet, you’re doing nothing but bemoaning the fact that Republicans won’t pass your jobs bill even on a stand-alone basis, and following the Fed Chief’s admitted unknowing lead?

Our housing market is either double or triple dipping, whichever you’d prefer, but recovering? Not even close. Truth be told, it’s been in the same downward slide for almost six years, with slight interruptions caused by a fleeting combination of hype, tax incentives and the transformation of the FHA into the new sub-prime, which is now reporting defaults approaching 20 percent on loans made SINCE 2009.

I understand that American consumers are being forced to deleverage, just as the banks will have to do soon. I understand that the credit markets are broken for the foreseeable future and that there’s nothing you can do about that. And I understand that Europe’s economy will ultimately come crashing down into ours, causing all sorts of pain and anguish from coast-to-coast. These things we should hold as being self-evident.

But, if you allow the housing markets to continue to fall, and foreclosures to continue to rise, you will be setting our country up to be hit hard while it’s too far down, and there will be no recovering from such a blow at such a time. Your legacy will be such that you’ll wish Mitt Romney had won in 2012.

You’ve got the opening, or will certainly have it very soon… everything is getting worse, and it won’t be long before the Bureau of Economic Analysis will be reluctantly announcing the “R” word once again. At that point you can reinvent yourself… and do it differently this time… the way you wanted to last time.

Be the man of the people… inspire hope and deliver change. The only real moral hazards you have to worry about are named Geithner and DeMarco.

Take them out, save the economic day, and go down in history a hero. This time do more than anyone says is needed… remind everyone of their obvious propensity for underdoing everything… and if it’s the Republicans that cause you to fail, then let us see you go down fighting.

Now, to presumed GOP candidate, Mitt Romney…

Okay, so I realize that you’re not the right-wing nutcase you pretended to be during the primaries… fair enough. And I also realize that you’ll try to move to the center, without alienating the crazy factor that considers itself the GOP’s base.

But, if you’re banking, pun intended, on Reagan-esque lofty speeches and loudly criticizing the Obama Administration’s first term over things like spending and health care, your creating a situation in which your shot at winning the election in 2012 will depend purely on the vote-against-Obama-turnout… assuming that no one in Florida or Ohio brings up foreclosures, that is.

In other words, you could be anyone running… you’re doing essentially nothing to help yourself win. Election night will be something like watching the results of a poll come in where the choices were “Anonymous Republican v. Obama.”

If you don’t accept that, just consider the two clowns you just beat in the primaries. Santorum, who described condoms as a “grievous moral wrong,” and said that “huge moral failings” were causing our economic problems… and good old Newt Gingrich, who attempted to make a serious case for repealing child labor laws in order to put 9 year olds from poor families to work cleaning schools after school… oh, and who promised a “moon base by 2020.” And those two were the GOP’s saner candidates… the even crazier contenders left the stage earlier.

Oh yeah… and then there’s Mitt… the former Governor of Massachusetts and a Republican centrist with a JD/MBA from Harvard who was the first in the nation to reform health care into something near-universal in his home state… who turned around Bain & Company as its CEO, who led the committee that made the 2002 Winter Olympics a financial success… and whose father who was CEO of American Motors, Governor of Michigan, and U.S. Secretary of Housing and Urban Development.

Mr. Romney, you managed to beat out a perennial alter boy obsessed with anything of a sexual nature, and an ex-Speaker of the House who was forced by his own party to resign after countless ethics violations, including misleading the House Ethics Committee and ultimately earning the distinction of being the first Speaker to be disciplined, (the vote was 395 to 28), for an ethics violation including being fined $300,000.

Okay, so congratulations… I suppose.

So, your advisors are obviously telling you that slamming Obama is the ticket to the Oval Office, and largely because the president has failed to mitigate the damage being caused by the foreclosure crisis, they could be right… but probably aren’t.

Exclusively slamming Obama in order to win in 2012 would be a strategy much more likely succeed if, in addition to ignoring foreclosures as an issue, you didn’t also have to run on a GOP-friendly platform that favors cutting such things as food stamps, child tax credits and Social Service Block Grants, while carrying states like Florida and Ohio that continue to be destroyed by the economic collapse and specifically the foreclosure crisis.

In other words, you’ll be trying to win a national election on a platform that only the one percent… or others in the insensitive class… could love.

Social Services Block Grant (SSBG) funds enable States to provide things like daycare for children or adults, protective services for children or adults, special services to persons with disabilities, health-related services, foster care for children, substance abuse, housing, home-delivered meals… you know… luxuries.

Oh, and what are you worth, by the way… a quarter of a billion and change? And you’re going to cut food stamps? Screw the working poor and long-term unemployed? You’ll redefine “fat cat” and make Herbert Hoover look like FDR in your first 100 days in office if you do what the Republicans expect you to do.

We’ve got 46.4 million people on food stamps in this country. One in four children are eating based on food stamps right now in any given month. The average monthly benefit comes out to be about $8 per household, per day… roughly $2.67 per day for food assuming a three person household. That’s the program that House Budget Committee Chairman, Republican Paul Ryan wants to cut, calling it a “comfortable hammock” instead of a “safety net.”

(By the way, Ryan and his Republican cohorts have helped me as a writer by providing me with a much better understanding of when it’s most appropriate to use the word “asshole,” and for that I suppose I should thank them.)

In Florida alone, there are 3.29 million people on food stamps as of this year, a number that’s doubled since 2008, although the dollar value of the benefits has nearly tripled to $5.15 billion as more families have been forced to seek assistance from the program. Under the Republican budget proposal, estimates show that 234,000 Florida households will lose their food stamps benefit

So, you’re basically planning on winning Florida by ignoring foreclosures, reducing the availability of food, and saying how bad Obama has been? It’s possible, I guess… but I’d stop way short of considering it a sure thing, that’s for sure.

I also have to say that running this way is insane, because even if you somehow pulled it off and won, you’d spend the next four years either doing the GOP’s bidding while watching civil unrest be redefined American style, or you’d resist such asinine policies and soon find yourself abandoned by your own party, shunned by Wall Street, branded a liberal… and all but certain to be back home in four years.

You look pretty darn good for your age now, but under those conditions, you’d start your presidency looking like Michael Douglas and head back home four years later looking like Kirk Douglas.

Mr. Romney, I don’t believe you’re not a smart guy… you have to be a smart guy. So, can you honestly tell me that tax cuts for business and the recently branded “job creators,” combined with reduced government spending is anything but sheer idiocy during times like these?

You must know that American companies have oodles of cash and Treasury securities in their coffers, but no one is going to invest and expand when there is no demand for what they’d produce. American consumers both can’t and won’t spend more than they are today… and consumer spending today is anemic compared to what it was in let’s say 2005.

American consumers have seen their access to credit slashed and their home equity stripped to essentially nothing. And, as if that weren’t enough, inflation and higher oil and food prices are sure to wipe out what little discretionary spending has survived the collapse.

Our first quarter GDP number should say it all, not only because at 2.2 percent it came in below expectations, but also because had it been calculated using the Consumer Price Index, instead of whatever B.S. number was used, the actual GDP was ZERO. Yes, indeed… now that’s what I call a recovery, right Mitt?

Here’s the deal… if you want to win the presidential election this fall, you need to stop pretending foreclosures are helping someone, because clearly they are not, and as long as you have nothing to say on the subject, you might as well stop concerning yourself with figuring out how many ways you can call Obama a socialist, because he may be the frying pan, but you’ll be the fire.

What you really need to do is figure out how to become the transformational leader that leads his party to success, instead of one who allows his party’s offensive ideologies to drag our nation further towards utter ruin.

President Obama has already taken care of those at the top. If you want to ensure a victory for the Romney campaign this November, you need to start at the bottom.

That’s all I have to say about that…

Okay, that’s all I wanted to say. I’m pretty darn sure that you’ll both ignore what I’ve said and proceed with your what-you-ignore-can’t-hurt-you strategy. So, good luck this summer on the campaign trail.

And, Mr. President… we all know that four years ago you were dealt the lousiest of hands, but once your second term begins… know that it’s all on you, sir.

Mandelman out.

Apr

30 Minutes of Talking: Has Housing or Our GDP Hit Bottom?

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

84239Leave a Comment2012-04-29+07%3A49%3A57Mandelman

MINUTES OF TALKING

(I understand that last week’s edition of 30 MINUTES OF TALKING had a few audio problems. I apologize for that, and they should be all fixed for this week’s show. I hope you’ll give it another try… it’s getting better all the time.)

Has the Housing Market Hit Bottom?

Or, was that our GDP that just sunk to nothing?

This week on 30 MINUTES OF TALKING I’m looking at the contradictions that are being thrown at us almost every day now… this past week it was the housing market that hit bottom, according to quite a few. But did it? The Case Schiller Index certainly doesn’t think so.

I’ll also be looking at the indications that tell us that we’re headed for another official recession, just like Spain, and the rest of Europe. GDP came in a little light, if you use their nonsense numbers… but in real life… our GDP was ZERO.

And I call homeowners all over the country to ask them to help our Fed Chief Ben Bernanke with his puzzling questions about unemployment and what to do about it. As it turns out, Ben is just not speaking our language.

And that’s not all… so, click play below and get ready to hear the truth, the whole truth and nothing but the truth on 30 MINUTES OF TALKING FOR APRIL 28, 2012.

Mandelman out.

Apr

Troubled Asset Relief Program (TARP) Disbursements (INFOGRAPHIC)

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

83282Leave a Comment2012-04-24+18%3A38%3A354closureFraud

Browse more infographics. ~ 4closureFraud.org TweetRelated posts: Congressional Oversight Panel Releases Final Report on the Troubled Asset Relief Program New Foreclosure Relief Program, H.E.M.P. is HIGHLY Ineffective Desert Underwater Part 6: North Las Vegas Program Targets Blighted Homes Related posts:

Apr

Troubled Asset Relief Program (TARP) Disbursements (INFOGRAPHIC)

By 4closureFraud | Bankruptcy, Foreclosure Fraud, News for the Patriot

83281Leave a Comment2012-04-24+18%3A38%3A354closureFraud

Apr

We know they’re not evil, because they’re simply not smart enough to be evil.

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

83110Leave a Comment2012-04-23+19%3A06%3A38Mandelman

In Hollywood movies, we’ve been introduced to villains that have real game. In the Harry Potter films, for example, there’s “Voldermort… The Dark Lord… He Who Shoud Not Be Named.” In the movie, “Star Wars,” we were introduced to the infamous and intergalactic, “Darth Vader.” And few will ever forget “Dr. Hannibal Lecture,” telling Clarice that he was “having an old friend over for dinner,” in “The Silence of the Lambs.”

Most everyone, I would think, has at one time or another, seen a “James Bond” movie, maybe it was “Goldfinger,” a story with a villain whose elaborate plan to use nerve gas to rob Fort Knox and ultimately steal the world’s gold, was first released in 1964. Or perhaps it was, “Live and Let Die,” in which a villain attempts to hatch an ingenious scheme to addict the world’s population to heroin, after seizing control of the drug’s world-wide production and distribution.

In real life, we’ve never had to worry about such evil actually destroying our world, because throughout our collective history, we’ve never seen a villain show up with that kind of game.

Adolf Hitler was looking somewhat promising for a few years during the 1930s, but after the Battle of Stalingrad ended in a disaster for the German troops in the early part of 1943, he was little more than a screaming lunatic with bad hair and genocidal tendencies. We’ve had our share of “empires” that for a time, appeared capable of dominating our planet, but regardless of whether we’re talking Roman, Ottoman or British… they all ultimately fell like flan.

And, although I realize that at the moment, we’re very concerned about our TBTF financial institutions having the power to destroy our nation forever, it occurs to me that it’s probably not the case, even if it does seem like it at certain moments. As far as our corporate dynasties go, if history is any sort of guide, they’ve proven to have shorter lifespans that some MLB player careers.

Don’t get me wrong, I’m not at all happy about how our government seems set on providing us with tangible evidence of its ineffectiveness on at least a monthly basis. But, it does remind me that it’s at least reasonably likely that the TBTF problem will be overwhelmed by the general incompetence of man, long before it destroys our world or way of life.

Like, it’s not at all inconceivable that five years from now we could be laughing at how we were so worried about Goldman Sachs… before the investment-bank-turned-bank-holding-company in 2008, quietly filed for bankruptcy in 2015. Remember Lloyd Blankfein, someone would say? And someone else would reply, “Was he the bald one?”

I can remember when the Vietnam War was never going to end… and then it did. I can recall a time when drugs were sure to be on the verge of destroying our country’s youth, and then they didn’t. Without an Equal Rights Amendment we would never survive as a great nation, or maybe we would. Our hostages would all die in Iran, unless they wouldn’t. And the crash of ’87, which soon morphed into the S&L crisis, was reported so severely at the time, that I never even questioned but that it would be my grandchildren that would be worrying about paying its astronomical bill… until that wasn’t the case anymore.

After that, the Internet was going to change absolutely everything… even replacing our old economy with a “new one,” or not. AOL bought Time Warner… for a year. And Enron was the corporate Titanic, that along with Tyco, HealthSouth, Adelphia, WorldCom, Arthur Andersen and a myriad of others, had led us to Sarbanes Oxley, a bill that was sure to signal the end of American business… until it didn’t.

Years ago, the Sears Catalog was a permanent institution in this country, and so was the airline, TWA… and bicycle maker, Schwinn… or camera-maker, Polaroid… and we bought albums, 8-tracks and CDs, but always at Tower Records. And yet they’re all gone today.

Remember when we might not survive Y2K, and when the president said he didn’t have sexual relations with that woman, and when Larry Craig said he had a wide stance, and when we knew there were weapons of mass destruction… even though we didn’t know for sure, but it didn’t matter because that’s not why we went into Iraq anyway, and besides al-Qaeda had cells around the world that would end our lives soon enough anyway?

Remember when Wall Street had investment banks on it, and Fannie Mae and Freddie Mac stood for fairness? When membership had its privileges, when the Catholic Church and Penn State were both safe places for boys to be, when you could press five to increase your credit limit and there were things called usury laws that made charging more than a certain amount of interest illegal?

I still remember when there was an impenetrable Iron curtain across Europe, and on its other side lived the people who wanted to kill us with their collective thinking. They’re gone now, replaced by a smaller, nuttier guy in a Members Only jacket that makes him much harder to fear.

I can remember when none of those things were thought of as fleeting… like the blips on an ever-changing landscape that time would flip, shake and erase like an Etch-a-Sketch whenever we turned our backs to enjoy a moment.

The Worst Economic Crisis Since the Great Depression…

We are now six years since the end of a real estate boom that was only around for some four years anyway, and we’re going on four years since Hank Paulson said that he needed $700 billion in unmarked small bills by morning or our gig would be up.

Since then, we’ve all watched as Secretary Geithner… his trusted ward, Lawrence of Summers, and the Professor sans MaryAnn, all ran about shoveling trillions around Wall Street, while engaging in crazy tea party inspired chatter about how, as far as U.S. homeowners were concerned, there was too much “moral hazard” involved to consider offering them any real help.

Obviously, their thinking was that by bailing out the deadbeats who borrowed the money for houses that they had now lost trillions on, collectively speaking, they would rush out and do the same thing again thinking they’d be bailed out again. And don’t laugh… that’s pretty much what they thought… and still think for that matter.
So, the announcement went out across the land in so many words. For America’s homeowners… the beatings would continue. And so they have.

The Rich Getting Richer…

About a week ago, a study showed that 93 percent of the gains since President Obama took office went to the top one percent.

By anyone’s standards, that statistic is alarming… no one can be in favor of that continuing, not even the top one percent. It’s not like it’s debatable to say that enormous income disparity between rich and poor is a problem in any society.

The question, I suppose, is whether all that’s occurred since 2007 has been part of some nefarious plot perpetrated by evil villains that might have starred in a James Bond movie, or whether the guys in charge have simply been wrong… you know, handled things badly.

Well, I think the picture is becoming ever clearer that what we have are over-confident leaders who think certain things based on what they’ve been taught and learned in the past… but they’re wrong. What they view as precedent isn’t applicable to the economic situation we’re facing today.

It’s not like the administration wouldn’t have preferred to have created more jobs and stopped more foreclosures, right?

To those in charge it’s a duck because it looks like a duck, walks like a duck and talks like a duck… but it isn’t a duck… it’s a goose, and a flightless one at that. In the parlance of business books, it’s a “black swan.”

The Geithner/Summers/Bernanke clan believed (and continue to delude themselves into believing) that by pumping trillions into the financial system and into the TBTF banks, two things would result:

The banking system would stabilize.
The economy would start to grow again, as measured by GDP.

The funny thing is… and by funny I mean inconceivably sad… that you could argue that neither outcome materialized, or you could say that the first objective was achieved, in an accounting-rules-don’t-matter sort of way. But, no one could argue that the second goal was reached in the least.

Basically, Geithner and Bernanke thought that lowering rates pumping liquidity into the financial system would stimulate growth because it has in the past. They sacrificed homeowners thinking that once the financial system was stable again, the rest of the economy would be pulled out by the health of the financial system.

So, here we are… the growth they counted on failed to materialize, as I’m sure they would phrase it, but of course what truly failed to materialize were their critical thinking skills because there was no chance that their plan was going to work in terms of creating real growth.

It’s simple really.

There are fewer of us working, so we’re producing less and therefore we’re earning less… and so we’re spending less. And that means we’re paying less in taxes to both state and federal coffers, which means the states are spending less, and lower state spending means reduced GDP… do you see the dynamic at work here?

Take a quick peek at what’s happening in Spain today and you’ll see clearly the fallacious nature of banker-think.

Unemployment in Spain is now 25 percent… among the country’s youth, it’s 50 percent, but the European banks to which Spain owes money are demanding that Spain reduce its deficit spending by 5.5 percent over the next two years. Now guess why.

They want Spain to do that so that the country will have enough money to make its payments to the bankers of course.

But, you might ask… if Spain reduces its GDP by 5.5 percent over the next two years, which is the same as reducing its spending by 5.5 percent, won’t that cause unemployment to rise even higher?

Well, of course it will… and very well done there indeed.

And if the country’s unemployment goes even higher, won’t that reduce the country’s GDP, as fewer people will be working, and won’t that also reduce the revenues that go into the country’s coffers?

Yes, that’s right again!

But, won’t fewer people working result in property values falling even further causing more people to go underwater and into foreclosure driven by fewer able or ready to buy homes?

Very good, right yet again. This is so exciting…

And if property values fall, and more people default, won’t that cause further harm to the Spanish banks that made the loans that are increasingly defaulting?

Yes, yes, yes… keep going…

Well, the more the Spanish banks lose as a result of property values falling, and while unemployment rises, the less credit the banks will provide, and won’t that also reduce GDP even further?

I think you’ve got it… now bring it all home for me…

… and won’t all of that combined actually reduce the amounts that Spain will have to make payments to the central and EU bankers who are the ones demanding the 5.5 percent reduction in government spending in the first place?

Thank you, Lord! Why yes, I would have to say that would be the case.

Do you see ANY OTHER OUTCOME that was POSSIBLE?

Please… take your time… the answer is NO, NO, NO.

So, why are the EU bankers doing this? Isn’t it stupid?

Yep. It’s stupid.

So, why are they doing it? Are they evil? Do they have a nefarious plan?

No, it’s just stupid. But the EU bankers are just like Geithner, Summers and Bernanke, they are forecasting Spain to have GDP growth this coming year because they are being bailed out.

But the bailout funds are only to repay the EU bankers that are lending them in the first place.

That’s correct.

So, how can Spain grow its GDP as bankers are forecasting they will?

We already covered this point… THEY CAN’T… and wont.

And we’re doing the same thing here at home, the only difference being we can print money… or rather the Federal Reserve can… and then it can lend it to us and charge us interest, albeit a small amount of interest… it’s still interest.

That printing and lending to the U.S. government machine is what gets called “quantitative easing,” or a “twist,” or whatever new not-in-the-Scrabble-dictionary type word they come up with next. It has a tendency to prop up the stock market, which is why the rich are getting richer as the rest of us die on the proverbial vine.

And just like the EU bankers, Geithner and Bernanke are forecasting GDP growth once again for the U.S. but once again none of us will feel it because we’re not rich and making trillions as the stock market remains artificially propped up by the Fed’s money creation and lending scheme.

The best part is that, all the while, foreclosures will accelerate and continue unabated… actually much faster than before, now that the banks have their settlement and to large degree can’t be prosecuted for their foreclosure related improprieties… not that such prosecutions were going on anyway.

The European bankers are no different than is the FHFA, which is led by Ed DeMarco, the guy stopping Fannie and Freddie from reducing principal balances of mortgages. He says he won’t do it because his job is to return Fannie and Freddie to profitability, and all that means is that in his forecasts… even if principal is not reduced… we’ll all still pay off the debts, or at least enough of us will that it’s not worth writing down the amounts owed.

Translation: He’s forecasting growth in future years, just as the European bankers are for Spain and elsewhere. He’s wrong, and so are they. He won’t share his assumptions used in his forecasts, but if he was forecasting that more and more will default if principals aren’t reduced, then he’d be concluding that they should be.

So, you might ask… what should we do?

Well, for one thing, I’d suggest yelling out: “Look out below! We’re coming down… and coming down fast,” in order to avoid hurting those below us on the economic ladder… you know, the poorer people.

It’s not that they can actually do anything to get out of the way, so they’ll still get crushed by our fall, but I still think it’s rude not to yell. “Look out below!”

But, that wasn’t my point…

What I wanted to say is that we shouldn’t despair. We should keep up and even intensify the fight because if you understood what’s going on, then one thing should be clear…

They’re not evil… they’re wrong. And we can know they’re not evil, because they’re simply not smart enough to be evil.

Mandelman out.

Apr

Phoenix Officers Who Shot Homeowner Needed Better Training

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

82431Leave a Comment2012-04-18+08%3A15%3A42Mandelman

I originally wrote this piece on October 3, 2009. And that’s all I have to say about that.

Well, I know I’m going to take some flak for this one, but Phoenix Police Officers that gunned down the homeowner who had just had his home sold out from under him as a result of the economic catastrophe created by our banking industry needed to be better trained. And the department had better do something about the situation or tragedies like this one are going to happen again… and again.

First of all, I realize that I wasn’t there. And I understand that the guy had a beer in one hand and a gun in the other. But he was obviously thinking pretty clearly… after all, a couple of jackasses that had just showed up all giddy about having stolen his home out from under him had just pulled up and told him to get out of their house… so, he went inside and got his gun and started shooting at them.

Okay, so there’s nothing irrational about that so far, right? Right. At this point I think the guy’s making complete sense. I’m not saying I’d do the same thing, but I’m really not positive about that so let that be understood right now. It could happen. Guess it would depend on my mood at the time. I know one thing for sure… I wouldn’t be inviting the guys inside for milk and cookies, how’s that?

Okay, so then the cops pull up. SWAT Team. I can only imagine… a bunch of cars, flashing lights… all crouched down behind car doors, guns all aimed at him, like a scene out of NYPD Blue or something.

Okay, stop the scene right there. Wrong approach already. What that situation needed was Andy Griffith from Mayberry RFD, not a bunch of cops doing an imitation of something they saw in The Untouchables.

Get a friend of his to talk to him… maybe his wife is home… tell the neighbors to go inside… talk to him… tell him you totally understand shooting the guys that pulled up to say they owned his house, but no one else needs to get hurt. Don’t shoot. Duck. Stay down. Keep talking. He’ll calm down.

Call someone who does loan modifications or maybe a lawyer who might still be able to reverse the sale, or even better talk to him about living so he can sue the bank. And after that, maybe he can kill a couple of bankers. Hell, it’s Arizona… that might not even be illegal in the near future.

I understand the man had children. Their father is dead now. Because he cared very deeply about having put a roof over their heads. He didn’t want them to look at him as a failure. He’s a husband. A provider. He couldn’t stand the thought of those assholes buying his home. He had already bought his home. And it was his tax dollars that had enabled the bank to foreclose on it. It sucks what’s happening to millions of American homeowners and no one seems to care. Not the president. Not the congress… and certainly not the banks.

I’m sure the police that felt they had to return fire aren’t feeling so great about now either. Chances are more than one of them is losing his home too. And chances are at least one already has.

Right now… tonight… there are thousands of fathers sitting up alone wondering in the private recesses of their minds whether their life insurance policies will pay off after suicide.

And for the most part, nobody cares.

Mandelman out.

Apr

An Insider’s View of an Actual RMBS Securitization at Mandelman U.

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

79408Leave a Comment2012-04-02+13%3A15%3A18Mandelman

So, do you remember the article I posted the other day about accounting for a pool of loans and how values are based on assumptions about the performance of the pool into the future? It was really Part 1 … meaning you should read it first… and it was called…

“If We owned a pool of loans, would WE allow principal reductions?“

Well, think of this as Securitization Accounting, Part 2… at Mandelman U.

It’s complexity we eschew, and everyone’s welcome at Mandelman U.

I thought it might be exciting if I showed you something very few people have ever seen… an honest to goodness peek behind the curtain, if you will.

What follows below are slides from an actual presentation of a Residential Mortgage-backed Securities – RMBS/REMIC deal… but NOT the slides from a “road show” presentation to potential investors… what you’re about to see are slides from an INTERNAL meeting that was actually held back in February of 2006 when WMC Mortgage’s management presented the company’s second RMBS securitization deal to the management from parent company, GE.

And it’s not a proposal being presented to GE’s management… it’s an explanation of a deal WMC had already closed back in late 2005, the mortgage subsidiary’s second such deal… “GE-WMC 2005-2.”

By the way… WMC’s history is fascinating squared. Want to know it? Okay, follow me…

Weyerheuser Lumber Company had a finance company they called Weyerheuser Mortgage Company, or WMC… and they sold it in 1997 or 1998 for $192 million to a company called Apollo Global Management, which was founded by Leon Black in 1990, and today manages an estimated $100 billion in assets. And although you’ll never find it in print, much less prove it in court… the rumor on The Street has always been that Leon’s “silent partner” in Apollo… none other than Michael Milken.

If you’re old enough to remember the first bubble that wiped out your retirement savings, then you’re old enough to remember Leon… he was the Managing Director – of Mergers & Acquisitions at Drexel, Burnham & Lambert… although he didn’t make a stop in federal prison as did Mr. Milken, before getting into the mortgage business and going on to become a billionaire several times over. By the way, it might interest you to know that Mike Milken’s son, Lance Milken, still works at Apollo. Perhaps it was decided that young Lance needed some mentoring, and who better than Leon to make sure his career went swimmingly?

(And I’m not beating up on Mr. Milken, I’m just jealous of Lance. What? Yeah, like you’re not.)

Okay, here’s my favorite part of the story… Leon’s net worth reportedly fell to just $1 billion after the 2008 market meltdown, but before you shed any tears… in the BOOM years since then… he’s done quite well and by 2011, was reportedly right back up to a net worth of $3.5 billion… proving that you just cannot keep a good man down.

So… after Apollo Management acquired WMC, they started adding value primarily by mandating the liberal use of GE-inspired-jargon and redecorating their offices with Six-Sigma-drapes and other window dressings, purchased after a three-hour presentation using a 450 slide deck of Power Point slides… with a corroborating opinion from McKinsey, of course.

And wouldn’t you know it, in 2004, Apollo had no trouble selling WMC to GE for $650 million, thus giving the mortgage company access to the virtually unlimited capital of Wall Street’s darling-of-those-days, the triple A rated… GE, then under the leadership of Jeffery Immelt. You’ll notice when you look at the cover slide of the presentation below, that the name of this securitization deal is “GE-WMC 2005-2,” and WMC Mortgage called itself, “A GE Money Company.”

Back then, if you didn’t already know, GE was a BIG deal… one of only 7 companies in the country with an AAA credit rating. It’s interesting, because if you go back to the early 1970s, there were 60 US companies rated AAA… fast forward a decade to 1982, and that number had been cut in half to 30. By the early 1990s, we were down to just 20 AAAs, and at the dawn of our new millennium you could count America’s AAA-rated companies on two hands even if you’d lost a finger… only 9 remained.

A precious 7 of our AAAs managed to make it to 2009… when the list bade farewell to two companies that no one ever thought would go… Warren Buffet’s Berkshire Hathaway and the venerable GE itself… were both downgraded to a relatively disgraceful… AA.

Yes… Tommy Edison’s electric candle company, that had been the first to bring good things to light… one of the original 12 companies that made up the Dow Jones Industrial Average, and the only one of those 12 still part of the Dow today… along with the Oracle of Omaha’s private mutual fund they call Berkshire Hathaway… yes, they both fell from grace at the hands of irresponsible sub-prime borrowers during the housing bubble.

(In case you’re wondering, the remaining five are Microsoft, Pfizer, Exxon-Mobil, Johnson & Johnson and ADP.)

When GE purchased WMC in 2004, all that WMC did was “whole loan sales,” meaning that it would loan out money for mortgages, and then sell the loans to Wall Street investment banks, who would package and securitize those loans.

So, basically, with GE’s essentially unlimited and AAA-rated access to cheap cash, each month WMC would get, let’s just say, $100,000 from GE, which it would loan out on a mortgage, and then sell that loan to Wall Street. In the beginning anyway, that $100,000 loan would sell for $106,000… then later for $105,000… and then for $104,000… $103,000… $102,000… $101,000. Near the end… before such loans couldn’t be sold to Wall Street at any price and WMC shut its doors during the Spring of 2007… it went all the way down to 25¢ on a hundred dollars, which I think would make the sale of a $100,000 loan… $100,025.

Okay, so you want to see how this sort of thing happens? Follow me and I’ll show you.

Leon Black received his undergraduate degree from Dartmouth College in 1973. Jeffrey Immelt graduated from Dartmouth College too… but five years later in 1978. No reason to think they knew each other back then, five years is a big difference at that age. Leon then got his MBA at Harvard Business School in 1975. Jeff got his MBA from HBS too… but seven years later in 1982. No reason to think they knew each other at that time either… seven years difference is a long time. I have no idea, for example, who graduated from one of my alma maters seven years before or after I did.

But then, in 2000, Jeff Immelt became GE’s CEO, after the legendary Jack Welch stepped down. That’s a BIG JOB to be named CEO of GE… especially to follow the larger-than-life, Jack Welch… awfully large shoes to be filled there. In 2000, to be named CEO of GE… well, you might as well have been named King of American Conglomerate-land.

Interesting though… that in 2002… Leon Black became a member of the Board of Trustees for… wait for it… oh yes… Dartmouth College.

Now, in case you have never considered the job description for members of the Board of Trustees at a college or university… you can be sure there’s some fund raising involved… not let’s hold a raffle fund raising… I’m talking BIG TIME fundraising… the kind of fundraising one does by calling on alums who have made it to the top. And nothing says, “the top,” like the C-suite at GE.

And it’s just two years after Leon joins Dartmouth’s Board… and Leon’s company, Apollo starts dressing in Six Sigma garb, that WMC is acquired by GE for $650 million. And you don’t have to be Inspector Clouseau to figure out what went on there, do you?

(Leon… you totally rock… I am not worthy.)

GE – Imagination at Work…

If you imagine WMC selling just one of those $100,000 loans to Wall Street every month for one year… for let’s just say $106,000… you’ll quickly see why the mortgage origination business became Wall Street’s version of a Cash Call Payday Loan. Do the math… $6,000 a month… equals $72,000 a year… by loaning the same $100,000 twelve times and selling all twelve loans to Wall Street bankers.

I know, I’m over-simplifying, but I’m also correct when I describe that as making 72 percent on your money with no appreciable risk. Of course, WMC also had to keep the lights on, no pun intended… but we haven’t even talked about loan origination fees and other “closing costs,” that always find their way into a mortgage transaction.

The first slide is to show you the overall structure of the deal… remember the one I was describing in the last article on pool accounting I said was an over-simplification? So, now you’ll see what happens when some complexity is added…
GE-WMC 2005-2 Deal Summary Remic Chart

Okay, next we’ll take a look at how the deal was rated by Moody’s, Standard & Poor’s and Fitch, related to its “tranches,” which is French for “slices,” in case you’d forgotten. This deal had 17 tranches, by the way, so on this slide they’ve been condensed… in a minute you’ll see them in an expanded view.

Follow my directions, and I’ll point out and explain in simple terms, everything of importance on each slide.

Start on the left side of the slide. Look at the first line of the chart and you’ll see that between 75.4 and 77.5 percent of the deal is rated AAA (S&P) and Aaa (Moody’s). I looked it up here and this means that roughly three-quarters of the RMBS certificates in this deal were supposed to have a .52 percent chance of defaulting. That’s about a one-half of one percent chance of default, which admittedly would have to be considered a pretty darn safe investment, but it also highlights one of the many fallacies at work in these deals. U.S. Treasuries are also rated AAA, but U.S. Treasuries are treated as “cash,” with essentially no chance for default. So, how can anything less be rated the same?

From there, scan down and you’ll see AA+/Aa1. AA+/Aa2 and so on… and all the way down past the BB+/Ba2 you’ll find a line identified as being O/C… and that stands for “Over Collateralization,” and if you recall, at the end of my article on how we valued loans in a pool based on expectations, over collateralization consists of things like extra loans in the pool, and/or cash, and was done to make triple A investors feel that much more secure that they still wouldn’t incur losses even if loan defaults turned out to be higher, or happen sooner than expected.

And you know why, right? Investors don’t receive the amounts designated as O/C, nor are they paying for the amounts of O/C when they buy their certificates. The over collateralization amounts are purely there to absorb first losses, especially those that occur in the first two years that could easily be the result of fraudulent reps and warranties about underwriting standards. If all loans pay as agreed, the O/C amounts will be returned to the issuer, in this case… GE-WMC.

Now look at the right-hand side of the slide and you’ll see the first bullet… “Higher O/C equals less up-front cash and higher back-end residual,” and that sentence is telling GE’s management that because of the over-collateralization in this deal, GE will receive less cash from selling certificates to investors, but in exchange can expect a larger back-end payout.

Just so everyone understands… and this is REALLY IMPORTANT to your education here at Mandelman U...

I realize that on the last slide, you might have noticed indications that millions in cash payments were going here and there, but you’d never be able to figure out much of anything from trying to follow the amounts and arrows on that diagram.

So, I can tell you that in this specific deal there was $46 million in O/C cash, which initially represented 3.25 percent of the deal. But that doesn’t mean that WMC or GE wrote a check for $46 million.

The $46 million in O/C could be some cash… it could also be generated by some extra loans in the pool. But, it could also be handled as a claim against excess interest that’s been built into the deal’s assumptions… remember the “assumptions about the future of the loans” from my last article on valuing loans in a pool? Well, if you change a few assumptions, you’re financials would show some excess interest payments and you could consider those amounts when calculating the amount of O/C as well… get it? Just lower an assumption about loan prepayments for the pool… or lower the number of expected defaults, or reduce the loss severity associated with defaults… reduce the amount of any of those forecasts and presto… extra cash in the deal that can be classified as O/C.

See… isn’t accounting fun?

This specific deal was structured so that during the first two years there would be a relatively higher amount of O/C than after the first two years had passed. Ostensibly, that was done to create the appearance that the triple A investors were being protected from the sort of early loan defaults that would have to be the result of shoddy underwriting or even fraud. You know… like in case WMC was lying in their representations and warranties about the underwriting of the loans.

So, with the high O/C during the first two years, I’m sure investors felt safe as far as being protected from WMC just packing this deal with loans that would never make a payment or default in year one or two. After two years of making payments, one could no longer blame a loan that defaults on its originator. Loans that default after two years, result from life events and other factors that are beyond what a loan’s underwriting could reasonably foresee or prevent.

To illustrate all of this, this deal provided that GE would receive $28.5 million from the O/C at month 26, assuming no “triggers” had already required that money to be used to absorb early losses.

The next bullet states that WMC believes that they’ve made some progress convincing Moody’s that their loans were of such high quality, that in the future they wouldn’t need as much O/C to get the ratings they needed to make the deal attractive… which was obviously included to please GE management about the potential for future deals to require less cash.

The next heading is telling GE management that it’s the same process that they’ve used successfully in the past when they only sold whole loans, and again this is included as a warm and fuzzy for GE management.

And lastly, on that slide… there are a couple of points about split ratings.

A split rating occurs when the same bond is rated differently by rating agencies. For example, a bond could be rated AAA by one agency and AA or A, by another. This can occur because one rating agency places a different amount of emphasis on certain variables, or because one agency views something about the issuer differently than another… perhaps a recent acquisition by the issuer is seen more or less favorably.

Split ratings also occur simply because the different ratings agencies each handle ratings differently… S&P ratings are said to measure the probability of default… Moody’s, on the other hand is said to be measuring the amount of the expected loss in the event of default.

(Think car insurance for a moment… S&P would rate me as a driver with emphasis placed on the probability of me having an accident… while Moody’s would base my rating primarily on the cost of the car I was driving.)

It’s a slightly different perspective on what’s most important in a rating, and you can see why investors want to trade based on Moody’s… they’re concerned with how much they might lose. The Basel Accord, by the way, is seeking to mandate that BOTH perspectives be provided to investors… leave it to the Europeans (who originated Basel), to introduce common sense to Wall Street.

In this deal, and remember this is referring only to the non-investment grade bottom tranches, rated BBB- and below… it says that the “tranches trade at Moody’s rating,” but the second bullet says that these tranches have already been priced as if the ratings were dropped, which appears to protect the investors.
GE TRANCHES

The next slide shows you all of the different investors that bought pieces of this deal, and because this presentation was used by WMC to show its parent company, GE, just how fabulous everything was… the slide’s title reads: “Strong Investor Demand.”

The column on the left shows who bought the AAA/Aaa tranches, in the middle you can see who who bought the “Mezzanine tranches,” which those in “the biz” would just call “the mez.” The column on the right shows investors in the various ‘B’ rated tranches, and below that is a list of those that bought the unrated “NIM,” or some would say, the “equity tranche.”

The “NIM” refers to the securitization of the excess or residual cash flows from one or more mortgage-backed or asset-backed security, which mostly come from the spread that exists between the interest rate on the mortgage-backed security… and the interest rate on the underlying pool of mortgages… the amounts that are not needed to absorb losses or increase the amount of credit enhancement in the underlying deal or deals.

Years ago, those issuing mortgage-backed securities earned this excess interest as the mortgages aged over time, but we should all know by now that Wall Street hates waiting for anything, least of all money that might otherwise be pocketed today. So, once again, thanks to “financial innovation” and/or “market efficiencies,” issuers discovered that they could securitize their residual interests and sell them to investors… and the NIM… or “Net Interest Margin” bond was born.

NIMs became a fast growing sector in the home equity and mortgage market because they traded at much higher yields than bonds with similar ratings… back in 2002, we’re talking 8-9 percent.

One reason NIM bonds could be sold to investors was that companies like Radian Group Inc. started providing “credit enhancement” for NIM bonds. In 2005, for example, Radian’s 10-K showed the company had written $99 million of default insurance risk on NIMs. (Radian’s peers include PMI, MGIC, Ambac, et al.)

NIMS in the 1990s v. after 2000…

Because the cash flows into NIMs are subordinated to the needs of the deal… meaning that NIMs take the first losses, or that the excess cash generated may be needed to increase the amount of credit enhancement in the deal… the volatility of prepayments that could occur when interest rates fell, and/or the timing and severity of losses resulting from defaulting loans, often had a huge impact on a NIM’s performance. (Now do you see why prepayment penalties were invented? To protect bond holders, but especially the NIM bond holders because they take the first loss.)

Certain “triggers” were written into these deals that would change how cash flows would be allocated and therefore impact the amount of excess spread that would be allocated to the residual holder. The two most common cash flow triggers used were a “delinquency trigger,” and a “cumulative loss trigger.”

Such triggers might require an increase in the targeted amount of O/C (over collateralization, remember?) These were known as “step-up” events. Or, a trigger could prevent a release of O/C… in which case it would be called a “step down” event.

Some triggers are considered to be “NIM friendly” triggers because they don’t allow for an increase… or “step-up” in O/C, above whatever initial amount of O/C was in the deal, and/or because they didn’t come into play until the step-down date. But other deals had more onerous triggers that could cut off cash flows to the NIM by prohibiting any decrease… or “step-down” in the amount of O/C, or by requiring an increase in the amount of O/C once triggers were hit.

Now, don’t get overwhelmed by this stuff… it isn’t hard to get… read it again slowly if you’re feeling overwhelmed. The concepts are simple, it’s the terminology that takes some getting used to, I understand.

The financial services industry, and especially the bond market in my opinion, goes out of its way to make things sound like you need one of their experts to decipher a secret code in order to participate in the race to riches. But the truth is… it’s all about debt. Someone is loaning money, someone is borrowing money… maybe someone else is insuring that something will happen, or betting that it won’t… and several different someones are setting up the deal, managing the deal, or selling the deal.

It’s like my favorite line from the movie “Bull Durham.”

“This is a very simple game. You hit the ball, you catch the ball, you throw the ball. Sometimes you win, somethings you lose, and sometimes it rains. Think about that for a while.”

The Investors in this Deal…

This slide is going to be fun, I promise…

Start top left… under the heading “Investor.” See it… FHLMC… Federal Home Loan Mortgage Company… otherwise known as good old Freddie Mac. Out of roughly $1.4 billion… Freddie bought $319.3 million of the Aaa-2yr, and by the way… the FHFA is currently suing GE, and all the GE companies, Morgan Stanley (the deal’s ‘adviser’), Credit Suisse (co-manager and underwriter), et al.

Just so you know… as a result of the FHFA’s suit… the U.S. Attorney for the Northern District of California convened a Grand Jury, and the FBI is currently investigating to determine whether a crime has been committed. So, now… with these slides… you can follow along and play the Mortgage Securitization Fraud Game at home.

Then we’ve got other investors you’ve heard of… Chase, PIMCO, BGI, the Agricultural Bank of China… HSBC London… Alaska Perm Fund… and just keep reading down the list and you’ll find BofA, JPMIM is a JPMorganChase… Societe General (don’t try to pronounce it, you’ll only butcher it… just say “Sock Gen.”) and then Fortis, Wharton… and it’s not “Robobank,” it’s “Rabobank,” although calling it “Robobank” is much funnier. And remember… the amounts shown are in millions.

Then go down the middle column and see who’s there… Munich RE is an re-insurance company… Teachers, is the Teachers pension plan… Hyperion, which is a hedge fund… Hartford, insurance again… Highland Capital is another hedge fund… towards the bottom of the middle column, see “FIDAC- Annaly?” Yeah, well they have a bunch of brand names, but they packaged and sold Collateralized Debt Obligations or CDOs, so they were probably buying the “Mez” in this deal to make it into a CDO, or CDO-squared… as were many of the others as well. (After we’re done with the MBS portion of our class, we’ll move to CDOs.)

And notice the one labeled, “U/W Purchase?” That’s Credit Suisse First Boston, or CSFB… this deal’s underwriter showing the other investors how much confidence they have in the deal by buying in at $12.6 million.

Then in the column on the right… the investors in the “Sub Tranches,” including Ellington, a hedge fund in San Francisco… JPMIM again, or JPMorganChase… Eurohypo, a German bank… Princeton, the university’s investment fund… Citi London… Fischer Francis is a fixed income investment management firm… Deerfield is another hedge fund… BUT STOP on C-Bass for a moment, because C-Bass was this deal’s loan servicer.

C-Bass, which stands for “Credit Based Asset Servicing and Securitization,” was basically a securitization advisor until they bought Litton Loan Servicing, which they sold to Goldman Sachs in 2007, and who sold it last year to Ocwen. MGIC, a monoline insurer, owned 45.5% of C-Bass… and MGIC’s competitor, Radian ALSO owned 45.5% of C-Bass. It’s so clubby.

C-Bass filed bankruptcy in 2010, and why not? The company’s filing listed assets of $10 to $50 million… and debt… OMG at over $1 BILLION.

You’ve got to love these guys…

I mean, if you’ve only got $10 million… and you can go bankrupt for a BILLION… I say you win. By the way… the CEO of C-Bass was a Goldman Sachs alum… and his partner came from Citigroup.

Just above the NIM you’ll see that GE-WMC bought in as well, which is another way to make investors feel like they’re not being viewed as a fatted pig that’s about to be served with an apple in its mouth. As in… “Look, Tom… they’re investing in it too… it must be safe, right?”

Okay, finally there’s the investors in the NIM. There’s Amaranth, a hedge fund… MKP, alternative investment advisers… and on down the list of mostly hedge funds that were all greedily swinging for the fences by investing in the deal’s un-rated, but crazy-high-yield, NIM bonds.

A COUPLE MORE KEY POINTS…

Now let’s talk about the question, “Who owns my loan?”

The answer you often hear is, “the investors,” but you should be at least starting to see why that’s not a particularly helpful answer, right? I mean, which investors? This deal has 17 tranches, and 70 investors, although some are duplicates because the same company bought into more than one tranche. And some of the investors are hedge funds, while others are buying in order to repackage what they bought into a CDO that they will be reselling.

So, who is the investor? Well, not only do you heave to think in terms of which one? But, depending on the tranche they bought, they may be receiving payments… or they may have already been wiped out by losses and that depends on the timing and the triggers and the over collateralization, or O/C, etc. etc.

And, let’s just say that we’re talking about one of the investors in the deal’s NIM bonds, and let’s say that investor has been wiped out due to losses resulting from loan defaults… but maybe that investor had purchased default insurance from Radian… then what? Does that mean your loan was paid off when that investor’s NIM bonds defaulted?

Obviously, the answer is no. Keep in mind, the deal we’re looking at was approximately a $1.4 billion dollar deal. At the bottom right of the chart below, you’ll see that Citadel… a hedge fund… was an investor in the deal’s NIM bonds to the tune of $1.3 million. Should those bonds default, assuming Radian had insured Citadel’s interest, Radian would be responsible to make the remaining bond payments with interest to Citadel.

However, even that simplified example assumes a lot.

The insurance companies that offer this type of insurance are known as the “monoline insurers,” because in 1989, the State of New York enacted Article 69, which amended the state’s insurance law to make “financial guaranty insurance” a separate line of coverage, and the new law prevented other types of insurers, such as property and casualty, life, and multiline insurers, from offering it. For years, the monolines claimed this exclusive focus made them stronger, but when the meltdown in the sub-prime bond market hit in July of 2007, their limited focus made it a certainty that they would be wiped out.

In early 2008, to give you an idea of how fast this last meltdown actaully melted down… when Fitch downgraded monoline insurer Ambac from AAA to AA, it triggered downgrades on more than 100,000 Ambac-insured bonds worth roughly half a trillion dollars. Plus, the monolines got into the market of insuring CDOs, which today, for the most, part we call “toxic assets.”

Once insuring CDOs is was only logical that the monolines, like Ambac and MBIA, get involved in placing large bets on CDOs through the use of credit default swaps, but at the same time, others in the market were using the same sort of contracts to bet against MBIA and Ambac.

Ambac filed for bankruptcy in November of 2010, subsequently filing lawsuits against just about everybody on Wall Street, from JPMorgan to Bank of America to Credit Suisse to Bear Stearns… alleging improper underwriting and more. Last month, Ambac received permission to emerge from bankruptcy and just yesterday, Ambac sued JPMorgan Chase saying that it has incurred over $200 million in claims on seven RMBS deals that Bear Stearns fraudulently induced it to insure. According to Reuters, the securities in question have loss over $1.8 billion.

MBIA filed for bankruptcy in 2009, and a whole line of banks showed up to challenge the filing, claiming that MBIA wouldn’t be able to make good on its credit default swaps if it went ahead with its plan to restructure into two units. Since then, MBIA has settled its credit default swap liability with Morgan Stanley and others, and… well… the saga continues.

The point is this… maybe there was default insurance purchased by some investors in certain tranches of a given RMBS, certainly not all investors purchased such coverage, and even so… the insurance carrier may have filed bankruptcy and investor claims may not have been paid, or paid at a reduced amount.

And even if a given claim was paid to a given investor in a given tranche, the default insurance we’re talking about here, WOULD NOT be paying off a MORTGAGE in the underlying pool of loans, as some people have apparently been led to believe.

And lastly… when you read the list of the 70 investors in this deal, does it really seem like homeowners would be in any way better off negotiating with any of those hedge funds and assets managers for a loan modification than they are with their servicer? I’m guessing that we’ve got a much better shot with BofA at its worst, than we would trying to convince a hedge fund or asset manager that has just lost fifty or a hundred mil. I’m just saying…

Investors in GE Deal

The next slide discusses the deal’s “Key Assumptions,” just like I talked about in my last article on valuing loans in a pool… you remember, right?

Now, this slide was titled “Residual Value – Refresher,” because it was prepared to refresh GE’s executives as to the investment that GE made in the deal. And under “Key Assumptions” at the top, you’ll see all the same terminology we’ve been using since the valuing a pool article…

Prepayment speeds (which includes refinancing of loans)
Losses (includes loan defaults, which reduce the amount of over collateralization)
Discount rate (that’s the rate used in the NPV calculation to arrive at the PV or present value)
Triggers Pass/Fail (and we just discussed these above when talking about the NIM)

Next the “residual” is discussed (just like we talked about above when discussing the NIM)

The excess spread is the amount earned in excess of what’s paid out to investors, and the bullets describe how it’s treated, first covering CREDIT LOSSES, which are LOAN DEFAULTS, and then going to maintain the O/C before release beginning in month 17, with the $28.5 million expected to be released in month 26.

Key Assumptions of Ge Deal

Once again… remember that the “Loss Assumptions” shown on the slide below, relate to GE’s investment in the deal.

Start at the chart at top left… DEFAULTS…

The loss assumptions data, which was provided by Merrill Lynch, separates out the first liens from the second liens and used 2003 as benchmark data. Now remember… this presentation was created on a deal that closed during the fall of 2005. Yet, the data being used as a benchmark is from 2003… roughly just 24 months later.

However… look at the graph on the right, which shows “Cumulative Defaults.” Month 0 is when the deal begins its life and notice that 24 months from Month ’0′ the cumulative defaults are between 1-2 percent. So, looking at only 24 months of default data from 2003 clearly wasn’t enough to predict defaults in this deal going forward… not to mention the fact that no one lost homes to foreclosure in 2003 when home prices were going nowhere but up.

So… the top left chart shows that defaults on first mortgages are supposed to be 8.83 percent, 8 percent on seconds. The middle chart on left shows “Severity,” or as we’ve been calling it, “loss severity,” and it’s the amount expressed as a percentage that we think we’ll lose on the 8-9 percent defaulting loans. And the bottom chart shows expected losses.

To see how it all works together, take the 8.83 percent… multiply by the loss severity of 35 percent… and you’ll get the 3.09 percent in losses, that appears in the chart at bottom.

Now, obviously, WMC didn’t have a whole lot of data on loss severity, which makes sense because in 2003 there probably weren’t any losses resulting from loan defaults to speak of… in fact, in 2003, a foreclosed home would have more than likely resulted in a gain as prices continued to rise. So, the 35 percent loss severity that was plugged in would appear to use the SWAG methodology (that’s a “Scientific Wild Ass Guess,” in case you weren’t aware).

So, obviously using 24 months of data going forward from 2003 wasn’t sufficient, but what data should the issuers of these types of securities in 2005 used to forecast future defaults, loss severity percentages and prepayments? I mean, 2000 to 2002 was a pretty bad recession, in case you’d forgotten, and going back into the 1990s would have been comparing completely different loan products. I’m not defending them, nor am I saying it couldn’t have been better, but I just want to show you the nature of the problem from different perspectives.

The overriding point being that no one saw what was to come, specifically… and lots of people lost a lot of money… and there will be lots of litigation going on for lots of years to come as a result.

What went so terribly wrong was how our government handled it, choosing to provide untold TRILLIONS to banks, while abandoning America’s homeowners financially, leaving them to fend for themselves, and sending them hat in hand to giant financial institutions asking that their loans be modified.

I’m not defending the way the banks have handled the situation, but I don’t pay taxes to my bank, nor do I elect my bank’s President, and I certainly have never depended on my bank to protect my rights as an American citizen.

To those who won’t like what I’m about to say… tough.

The specific failure of which I speak rests on the Obama Administration ALONE.

Loss Assumptions Ge Deal

And on the next slide below, we have the basis for the deal’s “Prepayment Assumptions.”

These graphs and data presented were to examine most or all of WMC’s loan products, in different combinations with prepayment penalty and without… and WMC’s actual prepayment experience between 2003 – 2005… over 31 months.

This slide, which is showing WMC’s actual prepayment experience over that 31 month period, not only shows how they arrived at the key assumptions for this deal, but it also shows how frequently people were refinancing their mortgages between 2003 and 2005… which is pretty darn amazing, by any standard.

Prepayment Assumptions GE DEAL

Well… that’s all I’ll cover for now… I don’t want to overwhelm everyone… assuming anyone is actually still following along… so, we’ll leave the rest for the next installment. Stuff like the Collateral and Due Diligence and Securitization Deal Structure… and the Computational Materials, which are the detailed data points they used for things like average life for each tranches, trigger events, and then swaps and the hedging strategies… things that sound more complicated than they actually are.

Nothing about this is truly hard to understand… it’s all grocery store math, really.

We’ll also be drilling down into all the different types of insurance involved in RMBS securitizations, that way maybe people will stop telling me they think their loan has been paid off three times.

And finally we’ll look at the Clean-Up Call, which is what happens at the END of a RMBS REMIC deal… here’s a preview to keep you coming back for more… the specific language in this deal says…

“The servicer may repurchase all of the mortgage loans and properties acquired on behalf of the Trust when the loans remaining have been reduced to less than 10 percent of the original balance.”

Oh my… I can hear the questions popping like popcorn. Don’t worry… get this stuff down and we’ll move on to the next part in a few days. I’ll have you securitizing your own pools of loans in no time.

Mandelman out.

Mar

GUEST POST: A Letter to President Obama, from James Deal, Attorney at Law

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

78733Leave a Comment2012-03-29+16%3A28%3A30Mandelman

~~~

JAMES ROBERT DEAL ATTORNEY PLLC

PO Box 2276, Lynnwood, Washington 98036-2276

Telephone (425) 771-1110, fax (425) 776-8081

James@JamesRobertDeal.com

March 29, 2012

President Barak Obama

The White House

1600 Pennsylvania Avenue

Washington DC 20500

Dear Mr. President,

I write to identify a policy change that would add trillions of dollars of liquidity to the housing market overnight. It would stimulate home sales, stabilize home prices, and reduce the number of home foreclosures.

My suggestion is to make existing home mortgages assumable. Buyers then would not have to go get new loans. Existing loans could be “recycled.”

To do this Congress might amend the Garn-St. Germain Act to suspend enforcement of due-on-sale clauses in residential mortgages until liquidity is restored to the system.

However, the Garn Act, Title 12, Chapter 13, USC 1701 ff., included a non-binding provision that encouraged lenders to allow assumptions at compromise rates, but this provision, because it was not mandatory, has never been enforced. It says:

(3) In the exercise of its option under a due-on-sale clause, a lender is encouraged to permit an assumption of a real property loan at the existing contract rate or at a rate which is at or below the average between the contract and market rates, and nothing in this section shall be interpreted to prohibit any such assumption.

Relying on this paragraph, perhaps the appropriate agency could make the change without Congress having to amend the Garn Act.

As it is currently written, the standard FNMA/FHLMC Paragraph 18 due-on-sale clause does not actually require a seller to pay off a loan at the time of sale. It only gives the lender the option of calling the loan due should the seller sell without lender consent. Should a seller sell without lender consent, and should the lender call the loan due, the buyer and seller have 30 days to pay off the lender. If the loan is not paid, the lender can foreclose, which typically takes another six months.

If enforcement of due-on-sale clauses were to be suspended, then sellers would be able to pass their mortgages on to their buyers. Buyers would not have to go through the now very difficult process of qualifying for new loans. More homes would become saleable. Home values would tend to stabilize. Fewer homes would be “under water.” Instead of sellers simply abandoning their homes, more would be able to sell them. The number of foreclosures would drop. More renters could become home owners.

Although this simple change would not add new money to the system, it would keep existing money in the system, and make that money available to buyers, thus adding effective liquidity to the system as a whole.

I would assume that many banks have already decided as a matter of internal policy that due-on-sale clauses will not be enforced as long as mortgage payments are paid. Banks do not need more REO properties. However, buyers, sellers, and real estate agents do not know this. And they should know this. Sellers and buyers should be encouraged to do assumption transactions and wrap-around deed of trust transactions. The real estate agents I talk with all assume that due-on-sale clauses are still enforceable. They are very cautious about suggesting that sellers and buyers “go around” due-on-sale clauses. They do not want to be liable if the bank forecloses. Their errors and omissions insurance might not cover them if they advise buyers and sellers to “go around” a due-on-sale clauses.

Before the Garn Act was passed states had their own laws regarding due-on-sale clauses, generally judge-made laws. Some state courts took the position that a due-on-sale clause was in effect a de facto restraint on alienation against selling and buying and declared due-on-sale clauses void, at least for residential transactions.

The Garn Act relied on the Commerce Clause to preempt state laws regarding due-on-sale clauses and federalize the issue. This preemption was a good thing at the time because lenders were operating more and more across state lines. The laws needed to be uniform. Further, the cost of money had risen, and banks needed to recycle their loans to earn more money.

However, at this time in our history, the inability of sellers to allow buyers to assume their existing loans means that buyers must get new financing, and that can be difficult. Strict enforcement of due-on-sale clauses, now more than ever before, really does act as a de facto restraint on alienation.

I would suggest that enforcement of due-on-sale clauses be relaxed for an initial one year trial period so that buyers could assume existing mortgages or do wrap-around deed of trust transactions. I would suggest that buyers be required to meet reasonable requirements for assumptions if there is to be a release of liability for sellers, minimal approval requirements for assumptions without release of liability for sellers, and perhaps no approval requirements at all for wrap-around deed of trust transactions, in which sellers would not be released from liability, as was the general situation before passage of the Garn Act.

Wrap-around deed of trust transactions with no release of liability to the seller should be allowed with no bank review as an available option for two reasons: First, banks are already overwhelmed with dealing with loans in default and short sale transactions, and second, such wrap-around transactions can be closed in a matter of weeks instead of months. If a seller will remain secondarily liable on a loan, he can be counted on to do his own review of his buyer’s credit worthiness.

I would suggest that relaxation of enforcement of due-on-sale clauses apply not only where buyers are buying homes they will occupy, but also where investors are buying homes which will be rentals or which will be improved and resold. Yes, non-owner-occupied investors will go around snapping up homes, but that would not be a bad thing. Sellers would be able to sell their homes and perhaps buy other homes. Foreclosures may be avoided. Banks will not lose as much money. Investors are more likely to have the cash necessary to buy out the equity of owner-occupied sellers and repair homes and get them onto the market as sales or rentals.

Regarding homes that are “under water,” loans on those homes could be modified down to a reasonable interest rate and a principal balance equal to fair market value. After modification, the loan would become assumable.

My second suggestion has to do with co-signers. More buyers could qualify to buy homes if they could assemble a group of non-occupant co-signers. It is my understanding that FHA will allow an occupant-borrower to strengthen his loan application by bringing in non-occupant co-buyers but that Fannie Mae and Freddie Mac will not.

I would suggest that an owner-occupied home buyer be allowed to solicit his relatives and friends to be co-signers and that each be allowed to obligate himself for $1,000 or $20,000 or some other fixed maximum amount of money. I would suggest that this guarantee be non-dischargeable in bankruptcy to strengthen it.

In Washington there is a 1.78% excise tax on title transfers, so for friends to serve as co-signers they should not be required to go on title as co-buyers, as is currently required. Co-signers would voluntarily assume responsibility to supervise their buyer, make sure he is employed, maybe even hire him, and make sure he is paying his mortgage.

With more parties obligated, lenders would have more confidence that a borrower would pay his mortgage. It would be an American version of a Grameen Bank loan where an entire village co-signs for a borrower and guarantees payment.

I would suggest that if an occupant-buyer secures sufficient co-signer guarantees, he should be allowed to purchase a home on a zero-down basis.

Third, I would suggest that the almighty credit scoring system be relaxed, particularly when a borrower can assemble a credible group of cosigners.

Finally, I would suggest that the entire system of qualifying borrowers be reviewed so that those capable of repayment can get loans. There are many arbitrary loan qualification requirements which prevent people who are capable of making their mortgage payments from getting loans.

The best thing about all these suggestions is that they do not involve the outlay of any federal money.

Sincerely,

James Robert Deal

Mar

MUST SEE TV: WA State Supreme Court Hears Arguments in Case Against MERS

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

78734Leave a Comment2012-03-29+16%3A07%3A43Mandelman

“May a party be a lawful ‘beneficiary’ under Washington’s Deed of Trust Act if it never held the promissory note secured by the Deed of Trust?”

That’s the key question the Washington State’s Supreme Court heard arguments in the potentially pivotal case, Bain v. Mortgage Electronic Registration Systems, et al and Selkowitz v. Little “Litton” Loan Servicing, LP, et al. It’s also a form of the same question that’s been asked by countless homeowners and their lawyers as they’ve fought to prevent their homes from being lost to foreclosure over the last 3-4 years.

Go back in time fewer than five years and you’d be hard pressed to find anyone who had ever heard of Mortgage Electronic Registration Systems, but today the acronym “MERS,” is a household dirty word in American homes from coast-to-coast.

Although the mortgage banking industry would say that they created Mortgage Electronic Registration Systems for the benefit of mankind, there’s no question that its creation also provided the industry with a way to avoid having to pay the costs involved in recording mortgage transfers. Lenders permanently list MERS as the “mortgagee of record,” and by doing so the avoid the expense of recording any subsequent transfers.

MERS makes the claim that it is both an “agent” of the lender and the “mortgagee,” but the practice has fueled a firestorm of debate over a wide range of legal issues, and although many courts seem to have accepted the MERS way… it’s often not clear whether such decisions were actually made in favor of MERS, or just against homeowners not making their mortgage payments.

What MERS does is operate a computer database that’s supposed to track mortgage servicing and the ownership rights of mortgage loans throughout the U.S. And when I first heard that explanation, I thought… well, that sounds incredibly boring.

Frankly, as a layperson… the whole thing is kind of insane, especially when you stop to consider that although MERS would readily admit that it doesn’t own any mortgage loans… it is also the recorded owner of over half of the nation’s residential real estate. At least I think that’s right… every time I try to understand it better, the whole thing confuses me and then I have to take a nap.

The best way to understand the issue I’ve seen…

The video below puts you in the courtroom to watch as both sides of the debate present oral arguments related to MERS’ involvement in the foreclosure process in front of the nine justices of the Washington State Supreme Court.

I found it fascinating to watch… almost as good as an episode of “Boston Legal,” in fact, the MERS lawyer kind of reminded me of Bill Shatner’s character on that show, Denny Crane.

You’ll watch the plaintiff’s attorneys who are representing homeowners at risk of foreclosure argue that MERS violates the state’s Deed of Trust Act, among other things… followed by the attorney flown in from Minnesota to appear “pro hac vice,” on behalf of defendant MERS, who basically argues that MERS isn’t the problem no matter what because no one ever needs to know who owns their loan.

I’m paraphrasing, of course, but you’ll see what I’m saying when you watch it. It’s not quite 45 minutes long, but it feels shorter… and afterwards, I’ll pick up the discussion below and share my thoughts on the matter.

~~~

A simplified view of how we got here…

The foreclosure crisis put MERS in the national spotlight as it started filing foreclosure lawsuits on behalf of financiers and servicers against millions of American families.

These people losing homes to something using the name MERS had been told by President Obama that because of his new government program, Making Home Affordable, they would be able to get their loans modified and hence save their homes from foreclosure simply by calling their bank… assuming, of course, they weren’t “irresponsible borrowers.”

So, believing that he was both smart and “a man of the people,” they did what he said they should do… but he wasn’t, and it didn’t work.

But, more than just “didn’t work,” the experience was nothing short of torturous, and in fact, I’m quite certain that many who lived through it, would have jumped at waterboarding as an alternative.

Lawyers representing homeowners who had clearly been wronged tried turning to the courts to enforce the HAMP guidelines, but to no avail. So, they went after anything and everything… TILA/RESPA… MERS and the failings of securitization… and most recently robo-signing related allegations are all the rage…

“I’ll take one securitization audit, and one forensic… oh… and give me one of those fraud reports too… to-go, please… how much? Oh my. Do you take Texaco cards?”

The thinking was obvious… judges and everyone else could see them coming a mile away… cause enough trouble for the servicers and they’d offer to modify loans and hence save homes. And soon… when even that wasn’t working… well, then even just delaying the loss of a home was something of a win, right?

Right… wrong… it didn’t matter… homeowners not making their mortgage payments was the issue at hand, as far as the vast majority of judges went, and today, although the battle rages on fueled by words like “forgery and fraud,” the outcomes are fundamentally the same as far as homeowners at risk of foreclosure are concerned.

Oh sure, some states became better than others, and bankruptcy courts seemed to fare better than others, but homeowners became more and more confused as courts of appeals, in some cases, tooketh away, what lower courts had given.

The OCC turned out to be an acronym for the Office of Ceremonial Complacency.

Many states today have bills on their legislative calendars that could help in some ways, but banking lobbyists don’t give up a single yard without a fight.

And finally it was OCCUPY… the blunt force edition of the foreclosure defense game, but again, to most… sort of a delay with a side of pepper spray.

So… now what? What’s next? The UCC 9 v. UCC 3 argument? Okay, fair enough. Not as exciting as securitization fail and REMICs exploding all over the place, but I’m in… why not?

I don’t like it any more than anyone else, but the fact is that in 2011… a year during which in some states like New Jersey and Nevada, foreclosures were said to be down year over year by something like 80 percent, even with the servicers waiting for the settlement to be reached so they could pick up their “Get Out of Fail Free” card… even with all of the things that caused delays… foreclosures were essentially flat when compared with 2010. Absent anything new that I’m not seeing… can you imagine how bad this year and next are going to be?

Well, of course, there is the $2,000 if you were foreclosed on in 2009-2011… do I have that right? I think so, but every time I type that out my mind says… no, that can’t be right… and then it is.

So, in the Bain case you watched on the video… what happens if the court sides with the plaintiffs? Says that MERS does violate the state’s Deed of Trust Act… does that save homes in a way that I’m not seeing. Or, will the servicers just start foreclosing judicially, as they’ve done in response in Hawaii, for example.

So… I called a couple of lawyers licensed to practice in the State of Washington to ask if their views of the Bain case confirmed mine… and they did.

Please understand what I’m trying to say, because I’m not saying everyone shouldn’t fight this year and next and next and next… and harder than ever, for that matter. I know I will…

BUT, WAIT A MINUTE… some changes have come to pass.

Like what? Like, the new servicer standards, for one.

Remember… the servicers and their propensity to ignore the toothless HAMP guidelines is one of the main reasons we’re all here, right? Well, now we have new servicer guidelines that are part of the settlement agreement between the 49 AGs and the five largest servicers that doesn’t quite exist as yet, but I’m willing to believe if you are.

Ever since the day that the Obama administration prematurely asseverated that the AG settlement had arrived, I’ve had only one thought on my mind… what happens if servicers don’t adhere to the new standards?

Is there a private right of action? I don’t think so… they’re not even laws, right? So what good are ANOTHER set of servicing guidelines related to loan modifications that no one can enforce when they’re ignored? We’ve already got a perfectly good set of servicing guidelines related to loan modifications that no one can enforce when ignored… they’re called HAMP guidelines and they’re like new, hardly used at all. If they were a car they might be a 2009, but they’d have no miles on them and still come with the full factory warranty and that new car smell.

Why are we troubling the servicers with having to come up with another set of guidelines they don’t have to follow? Don’t they have enough on their plates already? I mean… they’ve got all those foreclosures still to get handled… and without several of their biggest mills, like Stern and Baum.

Then there’s designing the next phase of document creation, that’s not going to be done in a day or two. And I hear that some servicers may actually have to get things notarized… no, I mean for real… actually notarized.

I think we should just call the five servicers involved and tell them not to bother with the new guidelines… we don’t need them.

Either that, or we should put some pressure on our AGs and our state legislatures to give the new standards or guidelines the force of law… you know… including a private right of action for homeowners, and a provision for attorneys fees.

What are the banking lobbyists going to say in response to that? There will never be lending again in this state? No chance. Plus, even if the new standards were made into state law, it would be very easy for the banks to not get sued and lose… just don’t break the new law and follow the standards you agreed to follow in the settlement, which you said you’d follow… so, what’s the problem?

To the AGs and state legislators, I would put forth that we don’t need new rules that lack teeth… that no one who agreed to them has to follow. We’ve got plenty of those kinds of rules related to loan modifications already. Why would the AGs oppose taking the terms and making them law?

I realize the states are gong to have “independent monitors,” but I’m not worried about the monitors getting screwed over and losing their homes… monitors aren’t being damaged by rules being broken, it’s the homeowners, silly. They’re the ones that need to be able to assert their rights under the agreement.

And to the homeowners not at risk of foreclosures just yet… forget about the deadbeat cracks, shouldn’t any rules of any federal program or settlement with our government be followed? Period? Of course they should. So, since we KNOW the last set were ignored, let’s make these new standards into a law with a private right of action and a provision for attorneys fees and let’s see what happens from there.

Maybe with such a law and attorneys fees clause, the trial bar will get interested, and they’ve got a lobby in DC that’s pretty effective, I hear.

I know… there are allowable margins for error in the settlement agreement, and extended timeframes for compliance… but, so what? Whatever we’ve got, make it a law… something that must be adhered to, or consequences might result.

Embrace incremental improvements…

If you’re waiting for a BIG BANG, you’re going to be waiting for a long time. It’s become obvious that, as I’ve been saying for so long I’m tired of saying it… it’s a game of inches.

And it’s a simple game. You hit the ball… you catch the ball. Sometimes you win, sometimes you lose and sometimes it rains.

Well, some things are actually better. Over 80 percent of trial modifications become permanent modifications today… that didn’t used to be true. And I’ve checked with lawyers all over the country and they’re seeing what I’m seeing… better modifications… and principal reductions more and more.

Bank of America has started granting principal reductions as part of their loan mods. I’ve seen eight in the last two weeks, and a dozen lawyers from around the country, including Bruce Levitt in New Jersey, have reported the same thing. And how about BofA’s new rent-for-three-years-if-you-can’t-afford-it-any-more program? I call it a soft landing.

And Ocwen is offering shared appreciation modifications (“SAM”) and they’re offering quite a few of them by the way. But they are still awaiting approval from several states… it’s a requirement, I’m told.

And look… I’m not just saying this stuff to protect homeowners from bankers… I’m saying it to protect the bankers and our society too. I just don’t believe many people can take another failed program that happened because no one followed the rules. Last time, well… that’s one thing… it wasn’t pretty, but we made it through.

Not to put too fine a point on it but there are more than a few programs I could reference… like, dozens… that have failed so spectacularly that… and I do mean this literally… their reported outcomes would have been identical had they been administered by farm animals or house pets. And that would be funny, were it not so entirely accurate.

Allow the same exact things to happen back-to-back and I’m not at all sure… all bets could be off.

Or… tell me I’m wrong. I’m always willing to be wrong. I actually like being wrong because I always learn something… and it happens so infrequently these days… lol.

Mandelman out.

Mar

MM PODCAST: From Fannie Mae to FHA – Edward Pinto Wants Government Out of Housing Finance

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

78608Leave a Comment2012-03-29+01%3A50%3A57Mandelman

Edward J. Pinto

Resident Fellow, American Enterprise Institute

An executive vice president and chief credit officer for Fannie Mae until the late 1980s, Edward Pinto has done groundbreaking research on the role of government housing policies in the lead-up to the financial crisis. His data have revealed striking facts about the contributions of housing policy to the mortgage crisis.

Two of his major research papers have been submitted to the Financial Crisis Inquiry Commission: “Government Housing Policies in the Lead-up to the Financial Crisis: A Forensic Study,” and “Triggers of the Financial Crisis.”

Today, Ed is continuing his work on how housing policies impacted the financial crisis and researching policy considerations and options for rebuilding our housing-finance sector. He earned his B.A. at the University of Illinois, and his J.D. at Indiana University.

Ed and I first came in contact with each other a couple of years ago, and although we haven’t always agreed on everything, I have followed his work closely and have come to have a great deal of respect for his work and for him as a person.

On this Mandelman Matters Podcast, I ask Ed about the results of his extensive research into the FHA, which he refers to as the “new sub-prime,” and “the next bailout.” His extensive study of the FHA’s data in terms of leverage and default rates will flat out shock you. And when you hear him explain how the government is perpetuating the foreclosure crisis… well, to say it’s infuriating would be an understatement.

Okay, so make sure your speakers are turned up and I’d make sure you’re sitting down to avoid falling over when you hear some of the things Ed Pinto has to say.

Two of Ed’s latest articles:

Truth in Government Lending is Long Overdue

Empty promise: The holes in the administration’s housing finance reform plan

~~~

And you can SUBSCRIBE to Ed Pinto’s blog and FHA WATCH bulletins.

He can be contacted via Email at: edward.pinto@aei.org

~~~

This Mandelman Matters Podcast is presented in two parts. Part 1 is just under 60 minutes and focuses on the FHA and the big picture facts about our government’s role in housing finance, and Part 2 is about 40 minutes, and goes further into the causes of the crisis, and where Ed sees us going from here.

Like I said, you may not always agree with his conclusions or cures, but his research is always fascinating, his facts are bulletproof, his experience as an “insider”at Fannie Mae is invaluable… and I don’t think there’s any question that his motives are pure.

Just click on PART ONE below to start listening to…

From Fannie Mae to FHA – Why Ed Pinto Wants Government Out of Housing Finance

A Mandelman Matters Podcast

And Coming Soon…

Mandelman out.

Mar

MM PODCAST: From Fannie Mae to FHA – Edward Pinto Wants Government Out of Housing Finance

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

78609Leave a Comment2012-03-29+01%3A50%3A57Mandelman

Edward J. Pinto

Former Chief Credit Officer, Fannie Mae

Resident Fellow, American Enterprise Institute

Okay, so make sure your speakers are turned up and I’d make sure you’re sitting down to avoid falling over when you hear some of the things Ed Pinto has to say.

~~~

Just click on PART ONE below to start listening to…

From Fannie Mae to FHA –

Why Ed Pinto Wants Government Out of Housing Finance

A Mandelman Matters Podcast

And Coming Soon…

Two of Ed’s latest articles:

Truth in Government Lending is Long Overdue

Empty promise: The holes in the administration’s housing finance reform plan

~~~

And you can SUBSCRIBE to Ed Pinto’s blog and FHA WATCH bulletins.

He can be contacted via Email at: edward.pinto@aei.org

Mandelman out.

Mar

You’ve got to give it up for the Spaniards… unless they’re bankers.

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

78183Leave a Comment2012-03-27+00%3A11%3A37Mandelman

Camping in Zuccotti Park? Bank Transfer Day? Occupy protesting evictions… singing in courtrooms to disrupt trustee sales… lawsuits heaped upon lawsuits… yawn.

What has happened to us? We used to be creative in our protests. We dressed up as Native Americans and dumped tea in Boston Harbor, for heaven’s sake. What about the 1960s? We stopped the war, if you recall. And we were the grooviest! Our history is jam packed with interesting protestors. Rosa Parks. Dr. King. Abby Hoffman. The Bonus Army?

We even burned our girlfriends’ bras for a while… that was fun to watch.

But, the international news out today has understandably left many Americans feeling… well, inadequate isn’t quite the word I’m looking for… impotent, maybe? Flaccid, perhaps?

You see, in Spain… as you may have heard… unemployment is north of 22 percent, there are mucho foreclosures, and the Spanish bankers have been getting the heat for it. Now, it seems they’ll be staying hot, unless they take matters into their own hands.

Spain’s high-class escorts have announced that they will not be offering their services to the country’s bankers until they start fulfilling their responsibilities to their society. “Today, life in Spain really sucks,” one of the girls said. “So, we don’t have to.”

According to RT… a news agency that I now hope to work for one day…

“The largest trade association for luxury escorts in the Spanish capital has gone on a general and indefinite strike on sexual services for bankers until they go back to providing credits to Spanish families, small- and medium-size enterprises and companies.”

The escorts are telling bankers that until they start closing more loans, they won’t be opening their… services… or accommodating any members of the financial services industry. A spokeswoman for the trade association praised the strike’s success by stressing that the government and the Bank of Spain have allowed the flow of credit to run dry.

The spokeswoman told RT… “We are the only ones with a real ability to put pressure the sector, or take pressure off. We have been on strike for three days now and we don’t think they can withstand much more.”

She also said that reports of bankers pretending to be deadbeat homeowners and bankrupt real estate developers in order to enter an escort’s place of business are pitiful. “Who else but a banker can afford the 300 euro an hour?” As soon as they pull out the cash the girls yell, “Métetelo por el culo!” As they laugh and walk away.

Picket signs seen in downtown Madrid read:

“Don’t come here too soon. No Loans, No Moans.”

The bankers reportedly have become so desperate that they’ve tried to call on the government to mediate hoping the Escort Union would agree to a modification of their demands, but calls to officials were all placed on hold for over an hour before being disconnected inexplicably.

SDPnoticias.com, the site that initially published the story, said the bankers continued to use political clout to lobby the government to stop the strike, but apparently Spain’s Minister of Economy and Competitiveness responded by explaining that just like los swaps de incumplimiento crediticio, the government does not sufficiently regulate the escort industry and since neither trades on an exchange, they could not intercede.

“Escorts are choosing not to exercise their, um… I mean, they are making use of their right to deny admission or entry to… er… well, you know. So, it’s a very hard problem… oh dear, I mean… no one can negotiate,” the minister was quoted as saying as he blushed and hurried from the podium.

Clearly, today’s news from Spain shows that when it comes to protesting, Americans have lost some of our creativity and are simply not up for it as often as we once were. Frankly, many have expressed concern about our staying power as well.

One bright spot, however, is that we are starting to see more whistle-blowers coming out of U.S. banks, so perhaps it’s the jobs of the blowers that will get us excited about protesting again… and again.

Mandelmano echar.

Mar

You’ve got to give it up for the Spaniards… unless they’re bankers.

By Mandelman | HAMP, Housing & Economic Research, Loan Modification, News for the Patriot

78184Leave a Comment2012-03-27+00%3A11%3A37Mandelman

Camping in Zuccotti Park? Bank Transfer Day? Occupy protesting evictions… singing in courtrooms to disrupt trustee sales… lawsuits heaped upon lawsuits… yawn.

We even burned our girlfriends’ bras for a while… that was fun to watch.

But, the international news out today has understandably left many Americans feeling… well, inadequate isn’t quite the word I’m looking for… impotent, maybe? Flaccid, perhaps?

According to RT… a news agency that I now hope to work for one day…

“The largest trade association for luxury escorts in the Spanish capital has gone on a general and indefinite strike on sexual services for bankers until they go back to providing credits to Spanish families, small- and medium-size enterprises and companies.”

Picket signs seen in downtown Madrid read:

“Don’t come here too soon. No Loans, No Moans.”

“Escorts are choosing not to exercise their, um… I mean, they are making use of their right to deny admission or entry to… er… well, you know. So, it’s a very hard problem… oh dear, I mean… no one can negotiate,” the minister was quoted as saying as he blushed and hurried from the podium.

Mandelmano echar.

HERE COME THE BANKS… ALL RISE…

Are you listening Rick Santelli?

“Making Church Affordable”

Overall, I loved the show, but, if I may… there were just a couple things…

But… STOP! Don’t do that. That is NOT the answer, Brian.

Just like it’s NOT the answer to… “put more homes on the market.”

Martin

Hey, to subscribe to TBWS… CLICK HERE!

1. CFPB

2. The OCC

FASCINATING! SHOCKING! SCANDALOUS!

INVALUABLE INFORMATION AND INSIGHT FOR LAWYERS… REAL ESTATE LICENSEES… AND ANYONE INVOLVED IN THE FORECLOSURE CRISIS IN CALIFORNIA AND ELSEWHERE.

Okay, now that we’ve got that out of the way…

I PROMISE… YOU DO NOT WANT TO MISS THIS…

Mandelman Matters Podcast with David Cameron Carr

As it stands, and as a result of Wells Fargo’s handling of the matter, a 73 year-old woman is at risk of losing a home that she has owned for 43 years… and all because she fell behind on her mortgage by $104.27.

Remember Patricia Martin’s foreclosure situation with Wells Fargo?

HORSE PUCKY.

HEY DOERS… Looking for Something to DO?

First, to President Obama:

Now, to presumed GOP candidate, Mitt Romney…

That’s all I have to say about that…

MINUTES OF TALKING

Has the Housing Market Hit Bottom?

Or, was that our GDP that just sunk to nothing?

And that’s not all… so, click play below and get ready to hear the truth, the whole truth and nothing but the truth on 30 MINUTES OF TALKING FOR APRIL 28, 2012.

Well, think of this as Securitization Accounting, Part 2… at Mandelman U.

GE – Imagination at Work…

A COUPLE MORE KEY POINTS…

“The servicer may repurchase all of the mortgage loans and properties acquired on behalf of the Trust when the loans remaining have been reduced to less than 10 percent of the original balance.”

“May a party be a lawful ‘beneficiary’ under Washington’s Deed of Trust Act if it never held the promissory note secured by the Deed of Trust?”

~~~

Edward J. Pinto

Two of Ed’s latest articles:

~~~

~~~

Edward J. Pinto

~~~

From Fannie Mae to FHA –

Two of Ed’s latest articles:

~~~

“Don’t come here too soon. No Loans, No Moans.”

“Don’t come here too soon. No Loans, No Moans.”

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