Fraudulent foreclosures

[Perishabull]

This story regarding fraudulent foreclosures could be very significant IMHO;

 

Bank Of America Joins JPMorgan And Ally In Admitting It Never Validated Foreclosures Docs

 

From Zerohedge;

[The third major bank joins JPM and Ally, which have already halted foreclosures, in admitting that one of its officials "signed up to 8000 foreclosure documents a month and typically didn't read them." Which means Bank of America is about to halt its foreclosure process. Which leaves us with the last big mortgage lender: Wells Fargo, which is quietly doing the opposite.]

 

Is this the catalyst that spooks equity markets...?

 

 

Fraud Factories: Rep. Alan Grayson Explains the Foreclosure Fraud Crisis

 

Process explained from about 4mins 50 secs in;

From:

[drbubb]

Grayson has explained it well, and this could mean big trouble for the US banks.

 

It seems we are slowly but surely moving to a place where the bankers are going to feel another wave of pain.

The banking crisis in the US is far from over

[drbubb]

ANOTHER BILL to save the Bankers...

 

with one simple signature Obama has the capacity to prevent tens of billions in damages to banks from legal fees, MBS deficiency claims, unwound sales, and to formally make what started this whole mess: Court Fraud perpetrated by banks, a legal act, and to finally trample over the constitution. Will Obama do it? Potentially - the banking lobby certainly has enough power over him and his superiors, the members of the FOMC. On the other hand, the populist revolt that will surely follow the enactment of such a law will certainly end any dreams of a second term, and potentially of a completed first one.

 

The drama is now on: will Obama openly side on behalf of the bankers

 

/see: http://www.zerohedge.com/article/hr3808-eq...signing-scandal

[nomad]

ANOTHER BILL to save the Bankers...

 

with one simple signature Obama has the capacity to prevent tens of billions in damages to banks from legal fees, MBS deficiency claims, unwound sales, and to formally make what started this whole mess: Court Fraud perpetrated by banks, a legal act, and to finally trample over the constitution. Will Obama do it? Potentially - the banking lobby certainly has enough power over him and his superiors, the members of the FOMC. On the other hand, the populist revolt that will surely follow the enactment of such a law will certainly end any dreams of a second term, and potentially of a completed first one.

 

The drama is now on: will Obama openly side on behalf of the bankers

 

/see: http://www.zerohedge.com/article/hr3808-eq...signing-scandal

 

Obama vetoed this bill:

 

http://www.latimes.com/news/politics/la-pn...story?track=rss

 

and an interesting article about the "nightmare scenario" where many foreclosures are considered invalid

http://www.washingtonpost.com/wp-dyn/conte...0607227_pf.html

[nomad]

Bank of America halts foreclosure sales in 50 states "threatening to throw the real estate industry into a full blown crisis"

 

http://finance.yahoo.com/news/BofA-halts-f...set=&ccode=

 

If this is really about banks not being able to show who legally owns the loan and not having clear title there will be big problems ahead for banks. Just listened to Grayson video above, scary.

 

The politicians are grabbing onto this issue before elections to show that they are looking after their people and protecting them from the big bad banks, so it's growing.

 

OK, so who are the winners and losers here?

 

Banks clearly are going to have higher expenses proving their cases and employing people to do this job properly, which they'll probably pass onto the customers. I would think title insurers are in big trouble, because if previous foreclosures were invalid and the house has been re-sold, who has ownership? Lawyers will do well. Bondholders will not realise their losses as quickly, I don't know much about bonds, so don't know if this is a good or bad thing. People living in homes about to be foreclosed on get to stay longer, therefore denying rental income to wherever they would have moved to. They'll have more money to spend. The banks will work harder to modify loans rather than foreclose. Therefore less income for them again. People paying their mortgages properly at the agreed upon rates will be paying substantially more interest on the life of their house than people who can't or won't afford to pay for their houses. Savers and some investors will lose.

 

 

[Perishabull]

Bank of America halts foreclosure sales in 50 states "threatening to throw the real estate industry into a full blown crisis"

 

http://finance.yahoo.com/news/BofA-halts-f...set=&ccode=

 

If this is really about banks not being able to show who legally owns the loan and not having clear title there will be big problems ahead for banks. Just listened to Grayson video above, scary.

 

The politicians are grabbing onto this issue before elections to show that they are looking after their people and protecting them from the big bad banks, so it's growing.

 

OK, so who are the winners and losers here?

 

Banks clearly are going to have higher expenses proving their cases and employing people to do this job properly, which they'll probably pass onto the customers. I would think title insurers are in big trouble, because if previous foreclosures were invalid and the house has been re-sold, who has ownership? Lawyers will do well. Bondholders will not realise their losses as quickly, I don't know much about bonds, so don't know if this is a good or bad thing. People living in homes about to be foreclosed on get to stay longer, therefore denying rental income to wherever they would have moved to. They'll have more money to spend. The banks will work harder to modify loans rather than foreclose. Therefore less income for them again. People paying their mortgages properly at the agreed upon rates will be paying substantially more interest on the life of their house than people who can't or won't afford to pay for their houses. Savers and some investors will lose.

 

It's perhaps unlikely but if a hyperinflationary scenario developed whilst this is all being thrashed out, effectively the people involved may even get to keep real estate for free. If the FED has to print to make up for losses (if this ends badly) then perhaps it's not such an unlikely scenario...?

 

This is a potential nightmare scenario for the banks if it drags on since the equity value of these homes could continue to drop for some time...

 

Turning to the UK for those who lied about income on their mortgage docs (and there were a LOT), if (when) interest rates go up and banks want to repossess then legal issues surrounding this aspect could also potentially arise here.

[nomad]

and it grows. . . Jerry Brown the Attorney General in California (also currently running to be Governor) asks ALL lenders in the State to suspend foreclosures until they can show they followed proper procedures.

 

http://us.mobile.reuters.com/article/bonds...824889120101008

[drbubb]

and it grows. . . Jerry Brown the Attorney General in California (also currently running to be Governor) asks ALL lenders in the State to suspend foreclosures until they can show they followed proper procedures.

 

http://us.mobile.reuters.com/article/bonds...824889120101008

Moonbeam must reckon this will help his election chances.

 

Will he make it back, do you think?

[nomad]

Moonbeam must reckon this will help his election chances.

 

Will he make it back, do you think?

 

ha ha, yes, I think Moonbeam will be back! Whitman doesn't seem to have the charisma needed. It's close though and a lot can happen in a few weeks.

 

Check this out - submitted on Zero Hedge

 

http://www.zerohedge.com/article/gonzalo-l...e-class-anarchy

 

Gonzalo Lira On The Coming Middle-Class Anarchy

Submitted by Gonzalo Lira

 

The Coming Middle-Class Anarchy

 

True story: A retired couple I know, Brian and Ilsa, own a home in the Southwest. It’s a pretty house, right on the manicured golf course of their gated community (they’re crazy about golf).

 

The only problem is, they bought the house near the top of the market in 2005, and now find themselves underwater.

 

They’ve never missed a mortgage payment—Brian and Ilsa are the kind upright, not to say uptight 60-ish white semi-upper-middle-class couple who follow every rule, fill out every form, comply with every norm. In short, they are the backbone of America.

 

Even after the Global Financial Crisis had seriously hurt their retirement nest egg—and therefore their monthly income—and even fully aware that they would probably not live to see their house regain the value it has lost since they bought it, they kept up the mortgage payments. The idea of them strategically defaulting is as absurd as them sprouting wings.

 

When HAMP—the Home Affordable Modification Program—was unveiled, they applied, because they qualified: Every single one of the conditions applied to them, so there was no question that they would be approved—at least in theory.

 

Applying for HAMP was quite a struggle: Go here, go there, talk to this person, that person, et cetera, et cetera, et cetera. “It’s like they didn’t want us to qualify,” Ilsa told me, as she recounted their mind-numbing travails.

 

It was a months-long struggle—but finally, they were approved for HAMP: Their mortgage period was extended, and the interest rate was lowered. Even though their home was still underwater, and even though they still owed the same principal to their bank, Brian and Ilsa were very happy: Their mortgage payments had gone down by 40%. This was equivalent to about 15% of their retirement income. So of course they were happy.

 

However, three months later, out of the blue, they got a letter from their bank, Wells Fargo: It said that, after further review, Brian and Ilsa had in fact not qualified for HAMP. Therefore, their mortgage would go back to the old rate. Not only that, they now owed the difference for the three months when they had paid the lowered mortgage—and to add insult to injury, they were assessed a “penalty for non-payment”.

 

Brian and Ilsa were furious—a fury which soon turned to dour depression: They tried contacting Wells Fargo, to straighten this out. Of course, they were given the run-around once again.

 

They kept insisting that they qualified—they qualified! But of course, that didn’t help at all—like a football, they were punted around the inner working of the Mortgage Mess, with no answers and no accountability.

 

Finally, exhausted, Brian and Ilsa sat down, looked at the last letter—which had no signature, and no contact name or number—and wondered what to do.

 

On television, the news was talking about “robo-signatures” and “foreclosure mills”, and rank illegalities—illegalities which it seemed everyone was getting away with. To top it off, foreclosures have been suspended by the largest of the banks for 90 days—which to Brian and Ilsa meant that people who weren’t paying their mortgages got to live rent free for another quarter, while they were being squeezed out of a stimulus program that had been designed—tailor made—precisely for them.

 

Brian and Ilsa are salt-of-the-earth people: They put four kids through college, they always paid their taxes. The last time Brian broke the law was in 1998: An illegal U-turn on a suburban street.

 

“We’ve done everything right, we’ve always paid on time, and this program is supposed to help us,” said Brian. “We follow the rules—but people who bought homes they couldn’t afford get to squat in those McMansions rent free. It would have been smarter if we’d been crooks.”

 

Now, up to this point, this is just another sob story of the Mortgage Mess—and as sob stories go, up to this point, it’s no big deal.

 

But here’s where the story gets ominous—here’s where the Jaws soundtrack kicks in:

 

Brian and Ilsa—the nice upper-middle-class retired couple, who always follow the rules, and never ever break the law—who don’t even cheat on their golf scores—even when they’re playing alone (“Because if you cheat at golf, you’re only cheating yourself”)—have decided to give their bank the middle finger.

 

They have essentially said, Fuckit.

 

They haven’t defaulted—not yet. They’re paying the lower mortgage rate. That they’re making payments is because of Brian: He is insisting that they pay something—Ilsa is of the opinion that they should forget about paying the mortgage at all.

 

“We follow the rules, and look where that’s gotten us?” she says, furious and depressed. “Nowhere. They run us around, like lab rats in a cage. This HAMP business was supposed to help us. I bet the bank went along with the program for three months, so that they could tell the government that they had complied—and when the government got off their backs, they turned around and raised the mortgage back up again!”

 

“And charged us a penalty,” Brian chimes in. The non-payment penalty was only $84—but it might as well been $84 million, for all the outrage they feel. “A penalty for non-payment!”

 

Nevertheless, Brian is insisting that they continue paying the mortgage—albeit the lower monthly payment—because he’s still under the atavistic sway of his law-abiding-ness.

 

But Ilsa is quietly, constantly insisting that they stop paying the mortgage altogether: “Everybody else is doing it—so why shouldn’t we?”

 

A terrible sentence, when a law-abiding citizen speaks it: Everybody else is doing it—so why don’t we?

 

I’m like Wayne Gretsky: I don’t concern myself with where the puck has been—I look for where the puck is going to be.

 

Right now, people are having a little hissy-fit over the robo-signing scandal, and the double-booking scandal (where the same mortgage was signed over to two different bonds), and the little fights between junior tranches and senior tranches and the servicer, in the MBS mess.

 

But none of that shit is important.

 

What’s really important is Brian and Ilsa: What’s really important is that law-abiding middle-class citizens are deciding that playing by the rules is nothing but a sucker’s game.

 

Just like the poker player who’s been fleeced by all the other players, and gets one mean attitude once he finally wakes up to the con? I’m betting that more and more of the solid American middle-class will begin saying what Brian and Ilsa said: Fuckit.

 

Fuck the rules. Fuck playing the game the banksters want you to play. Fuck being the good citizen. Fuck filling out every form, fuck paying every tax. Fuck the government, fuck the banks who own them. Fuck the free-loaders, living rent-free while we pay. Fuck the legal process, a game which only works if you’ve got the money to pay for the parasite lawyers. Fuck being a chump. Fuck being a stooge. Fuck trying to do the right thing—what good does that get you? What good is coming your way?

 

Fuckit.

 

When the backbone of a country starts thinking that laws and rules are not worth following, it’s just a hop, skip and a jump to anarchy.

 

TV has given us the illusion that anarchy is people rioting in the streets, smashing car windows and looting every store in sight. But there’s also the polite, quiet, far deadlier anarchy of the core citizenry—the upright citizenry—throwing in the towel and deciding it’s just not worth it anymore.

 

If a big enough proportion of the populace—not even a majority, just a largish chunk—decides that it’s just not worth following the rules anymore, then that society’s days are numbered: Not even a police-state with an armed Marine at every corner with Shoot-to-Kill orders can stop such middle-class anarchy.

 

Brian and Ilsa are such anarchists—grey-haired, well-dressed, golf-loving, well-to-do, exceedingly polite anarchists: But anarchists nevertheless. They are not important, or powerful, or influential: They are average—that’s why they’re so deadly: Their numbers are millions. And they are slowly, painfully coming to the conclusion that it’s just not worth it anymore.

 

Once enough of these J. Crew Anarchists decide they no longer give a fuck, it’s over for America—because they are America.

 

 

Update I:

 

The Center for Public Integrity has a story, written by Michael Hudson this past August 6, that shines a light on the issue of perverse incentives of the HAMP program. These perverse incentives came to light because of a whistleblower, a former employee of Fannie Mae, filing a lawsuit. Fannie Mae was so keen on being perceived as a money-maker, after the Federal government bailout, that the aid programs passed by the Congress and signed by the President were turned into profit centers.

 

The former executive, Caroline Herron, recounts:

 

“It appeared that Fannie Mae officers were focused on maximizing incentive payments available to Fannie Mae under various federal programs – even if this meant wasting taxpayer money and delaying the implementation of high-priority Treasury programs,” she claims in the lawsuit.

 

Herron alleges that Fannie Mae officials terminated her $200-an-hour consulting work in January because she raised questions about how it was administering the federal government’s push to help homeowners avoid foreclosure, known as the Home Affordable Modification Program, or HAMP.

 

Herron further alleged that “trial mods” were implemented regardless of eligibility of applicants, so that Fannie Mae would be eligible for Federal government bonuses.

 

Ms. Herron’s testimony in fact proves Ilsa’s suspicion that there was a scam at bottom. As Mr. Hudson writes, “Herron charges that Fannie Mae continued in headlong pursuit of ‘trial mods’ even though it knew that many had little chance of becoming permanent. [. . .] Fannie preferred doing trials, Herron alleges, because it was eligible to receive incentive payments from the Treasury Department.”

 

So in the pursuit of these perverse incentives, people who did not qualify for HAMP were enrolled in the program. And when their “trial mods” were up after 90 days, they would be notified that they didn’t qualify—regardless of whether they in fact did qualify, as in the case of Brian and Ilsa.

 

All so as to be perceived as a profitable operation, worth having been bailed out. All so as to be perceived as “returning America’s money”.

 

As of February, 2010, of the over one million homeowners’ mortgages under HAMP auspices, 83% were “trial mods”. One would assume that those 850,000 homeowners would also be assessed an $84 penalty for non-payment.

 

$84 times over 850,000? You do the math.

 

 

[nomad]

and I suppose a voice of reason . . .

 

"To sort this mess, both banks and borrowers must do the right thing"

 

http://www.washingtonpost.com/wp-dyn/conte...personalfinance

 

"Perhaps it is only natural for Americans to take some guilty pleasure in watching as the big banks and Wall Street wizards who created this flawed and complex mortgage machine are hoisted on their own petards. But be careful what you wish for. The financial system is still fragile enough that we may not be able to afford a full helping of revenge."

 

 

 

 

 

 

[drbubb]

Brian and Ilsa—the nice upper-middle-class retired couple, who always follow the rules, and never ever break the law—who don’t even cheat on their golf scores—even when they’re playing alone (“Because if you cheat at golf, you’re only cheating yourself”)—have decided to give their bank the middle finger.

 

They have essentially said, Fuckit.

 

They haven’t defaulted—not yet. They’re paying the lower mortgage rate. That they’re making payments is because of Brian: He is insisting that they pay something—Ilsa is of the opinion that they should forget about paying the mortgage at all.

 

“We follow the rules, and look where that’s gotten us?” she says, furious and depressed. “Nowhere. They run us around, like lab rats in a cage. This HAMP business was supposed to help us. I bet the bank went along with the program for three months, so that they could tell the government that they had complied—and when the government got off their backs, they turned around and raised the mortgage back up again!”

 

“And charged us a penalty,” Brian chimes in. The non-payment penalty was only $84—but it might as well been $84 million, for all the outrage they feel. “A penalty for non-payment!”

 

Nevertheless, Brian is insisting that they continue paying the mortgage—albeit the lower monthly payment—because he’s still under the atavistic sway of his law-abiding-ness.

== == ==

 

Good for him !

That tiny remaining smidge of normal old-fashioned morality may save them in the end.

 

No one forced them to overpay and borrow too much chasing an impossible dream of "always increasing home prices".

 

Why should prudent people be asked to bail out the reckless - including the reckless banks !

 

== == ==

 

The Center for Public Integrity has a story, written by Michael Hudson this past August 6, that shines a light on the issue of perverse incentives of the HAMP program. These perverse incentives came to light because of a whistleblower, a former employee of Fannie Mae, filing a lawsuit. Fannie Mae was so keen on being perceived as a money-maker, after the Federal government bailout, that the aid programs passed by the Congress and signed by the President were turned into profit centers.

 

The former executive, Caroline Herron, recounts:

 

“It appeared that Fannie Mae officers were focused on maximizing incentive payments available to Fannie Mae under various federal programs – even if this meant wasting taxpayer money and delaying the implementation of high-priority Treasury programs,” she claims in the lawsuit.

 

 

THIS TRUE VILLAINY - and typical of what happens when the government gets involved.

 

GL is right, the system is in real trouble, when average law-abiding citizens lose fail in its basic fairness

[nomad]

Nevertheless, Brian is insisting that they continue paying the mortgage—albeit the lower monthly payment—because he’s still under the atavistic sway of his law-abiding-ness.

 

Good for him !

That tiny remaining smidge of normal old-fashioned morality may save them in the end.

 

No one forced them to overpay and borrow too much chasing an impossible dream of "always increasing home prices".

 

 

== == ==

 

 

Can I ask, why you think this kind of morality will save them in the end? I'd like to think it's a good thing, but as another law abiding person who saves up and pays the bills, I do wonder why the people who bought the cars and boats (and get to keep them) on home equity presumably going up, get the cheaper ride forwards when home prices go down. They regenotiate, keep the car and boat, and the people who pay cash, save up and "do the right things" get to pay for other people's excesses at the end of the day. I hate to say it, but I worry that people who are ethical are not going to win this game. I'd like to be proven wrong though.

[nomad]

It's so bad sometimes you just have to laugh!

 

Robo-signers: Mortgage experience not necessary

 

http://finance.yahoo.com/news/Robosigners-...bcef&ccode=

 

"Banks hired hair stylists, teens to process foreclosure documents, workers' testimony shows"

 

"In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn't define the word "affidavit." Others didn't know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers' accusations about document fraud".

 

Once again we're between a rock and a hard place, do you let the banks break the law or do you wreck further the (already wrecked) economy? Should the banks win or the people who are paying nothing to live in their houses (many of whom also faked a document or two about their income to get their house) win?

[Perishabull]

It's so bad sometimes you just have to laugh!

 

Robo-signers: Mortgage experience not necessary

 

http://finance.yahoo.com/news/Robosigners-...bcef&ccode=

 

"Banks hired hair stylists, teens to process foreclosure documents, workers' testimony shows"

 

"In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn't define the word "affidavit." Others didn't know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers' accusations about document fraud".

 

Once again we're between a rock and a hard place, do you let the banks break the law or do you wreck further the (already wrecked) economy? Should the banks win or the people who are paying nothing to live in their houses (many of whom also faked a document or two about their income to get their house) win?

 

The children of our generation are going to be laughing a lot in the history lessons of the future I reckon. It's like one big black comedy.

[drbubb]

BAC is coming under real pressure

[GTG]

The Robo-Signing Mess Is Just the Tip of the Iceberg, Mortgage Putbacks Will Be the Harbinger of the Collapse of Big Banks that Will Dwarf 2008!

 

President Obama Falls Victim to Chase Robo-Signer

 

 

 

[nomad]

Taxpayers won't be paying for it this time, because remember, "Never again will taxpayers be on the hook because a financial company is deemed 'too big to fail'," Obama said, right?!? I guess they'll have to take it out of the bonuses . . . Bonus season should be interesting this year!

[drbubb]

Taxpayers won't be paying for it this time, because remember, "Never again will taxpayers be on the hook because a financial company is deemed 'too big to fail'," Obama said, right?!? I guess they'll have to take it out of the bonuses . . . Bonus season should be interesting this year!

 

Since the "risk tail" on business they do is so long, at least 80% of banker's bonuses should be paid out over a long period in preference stock. with maybe 20-25% maturing each year.

 

This way, if the bank blows up, then those responsible would be the first to suffer

 

It is only fair to do it that way.

 

Any higher or faster payout, should be taxed at 80-90%

[nomad]

Since the "risk tail" on business they do is so long, at least 80% of banker's bonuses should be paid out over a long period in preference stock. with maybe 20-25% maturing each year.

 

This way, if the bank blows up, then those responsible would be the first to suffer

 

It is only fair to do it that way.

 

Any higher or faster payout, should be taxed at 80-90%

 

100% agree with you.

 

And it continues . . .

 

http://www.bloomberg.com/news/2010-10-19/p...-mortgages.html

 

Institutional investors want BAC to buyback $47 billion worth of MBS. They include Pimco, NY FED according to "people familar with the matter"

[drbubb]

Institutional investors want BAC to buyback $47 billion worth of MBS.

They include Pimco, NY FED according to "people familar with the matter"

Good old Pimco, looking to shed their garbage

 

Where is Angelo Mozillo, when a worthy villain is needed?