H.E.L.P Solutions, Housing defense solutions from an industry insider and expert attorneys

website www.thebanklied.com

2011-03-25T06:36:00.000-07:00

Although much has gone on over the past couple weeks I haven't updated information on this page and for those who follow it I apologize. That being said I'd like to encourage anyone interested in the most recent information about the banking and finance industries to view our up, but still adapting main webpage www.thebanklied.com.

I appreciate all those who seek information about the foreclosure crisis and I believe that it is desperately urgent that we all share of educate each other about the crisis and it's internal workings so we can protect ourselves currently and our country moving forward.

I will continue to add information on this blog occasionally but the majority of the news and articles will be placed on the complete website.

I appreciate you and look forward to seeing you.

2011-03-07T08:42:00.000-08:00

This is just a fraction of the cost associated with the attempted takeover of America by these banks. These kids going hungry and families losing their homes because a wall street exec thought he should pad his bonus by shorting or creating false purchases of securities they knew to be flawed; because they are the very ones who put them together.

The housing bubble was intentional. Not a few people made incredible amounts of personal wealth on it's expansion and fewer still made 10 times that by engineering it's explosion at the expense of all of us.

The situation we find ourselves in currently is not the result of market conditions it was caused by greedy bankers who saw an opportunity to take advantage of deregulation in order to create the greatest transfer of wealth in the history of the world.

We must make sure it never happens again and hold them accountable and put our protections back in place so that families dont have to make the choice between food and electricity to cook it. So that children can sleep without aching stomachs, so that mothers can comfort their children, and so no more fathers stay up nights checking their life insurance to see if it covers suicide.

You may think that this is overboard and these are only exceptional cases but it's happening all around us.

Please stand up and fight back... Take a stand. When is enough, enough?

Homeowner Suffers Horrific Injustice at the Hands of JPMorgan Chase

2011-03-04T20:02:00.000-08:00

Martin Andelman thanks for bringing this to our attention and most certainly I will get the word out as far and loud as I can.

Mandelman matters:
For over two years I’ve had a front row seat for the foreclosure crisis, the by-product of our government’s complete mishandling of the worst economic downturn in seventy years.
During that time I’ve been exposed to some pretty horrific things… people living in their cars with a child sleeping in the trunk… the eviction of an 89 year-old couple… I’ve gotten to know what that fear sounds like and feels like… the fear of losing one’s home while the country talks about you as being nothing more than an “irresponsible borrower,” someone who never should have bought your home in the first place, even though you may have lived in it for 30 years.
What I saw this past week, however, was something new for me… I’d heard of things like this happening before, written about them, even. But, I had never seen anything like it, up close and personal.

As a warning… this story is not for the squeamish. If you’re pregnant, or have heart disease, or just want to go on pretending that your country is still a place of which you’re proud… it’s better that you click off now… because this one isn’t going to make you laugh.
An Anaheim couple with an eight year-old daughter has lost their home… that would be one way of phrasing it. Another way to describe what happened would be to say that JPMorgan Chase, an outfit that I now see clearly is significantly worse than any crime family… has thus far been permitted by the courts and the laws in California to STEAL an Anaheim couple’s home.
Why do I say that Chase stole it? Well, there are lots of reasons, but I think the one that tops my list would have to be, because they never missed or were late on a payment… in every single month that JPMorgan Chase told the couple to make a payment… they paid the exact amount they were told to pay… on time and as agreed… never missed even one… never were late, not even once.

“We trusted the bank,” the Mom says, “like idiots.”

The husband in this family worked for the City of Placentia in Southern California for some 27 years. The wife and mother has her own small business. Their adorable eight year-old daughter, whose life is about to be inalterably changed at the hand of JPMorgan Chase, goes to school near by and loves her home. Her parents haven’t told her anything about this yet, and I pray to God they never have to… that JPMorgan Chase comes forward and stops this egregious wrong that they have let happen… that they have created.
I can barely tell this story… I can’t imagine it ever happening to me… I can’t imagine it ever happening to anyone in this country… a place I used to proudly think of as my country. Not so much anymore though.

The husband in this family became ill a few years ago… advanced diabetes… his kidneys have failed, he’s on dialysis… heart disease… he’s spent time on a respirator while hospitalized.
Yet, they’ve made it through everything, this family, through all of that and more… stayed together… raised a daughter… found ways to laugh and play together… they must love each other very much.

They had bought their 2-bedroom home in August of 2006… as it turns out… terrible timing… but who knew that the bankers, who had leveraged themselves 40-100 to one, were about to blame homeowners for their defrauding of the investment community, bankrupting the global financial system, and destroying the credit markets? Bernanke didn’t know… Paulson didn’t know… personally, I think that lets this couple off the hook about the whole should-have-known thing.
So, for three years they made their payments without fail. And maybe if it would have just been the economy or just the medical bills, they would have made it through this… but both was too much, and they received a Notice of Default in July of 2009.

They applied to JPMorgan Chase for a loan modification, and Chase granted them a trial modification in February of 2010. Chase told them to pay $869 for three months, and entered them into another program in May, telling them to make monthly payments of $1358.
They paid every month, on time every time… by cashier’s check, as required by Chase. The trial modification paperwork said something to the effect of:

“If all payments are payments are made as agreed, we will reevaluate you to determine if we can offer you a permanent modification.”

“We trusted the bank,” the Mom says, “like idiots.”

In August, they received a Notice of Sale. They called Chase… and imagine their relief when they were told not to worry one bit about that notice. Apparently, it was just the fault of Chase’s stupid computer system that just spits things like that out without anyone telling it to do so. False alarm, what a relief.
So, they paid their September payment… and paid their October payment… and it was around October 10th when they received another Notice of Sale. Again, they called Chase, perhaps a little less nervous than the last time the same thing had happened… and wouldn’t you know it… another false alarm… it was that darn computer system again. Nothing to worry about, Chase told them… just keep those payments coming.

Oh, but while we’ve got you on the phone, we need you to send in some current paycheck stubs and other miscellaneous pieces of information, which they did… and then did again… you know the standard operating procedures for servicers by now I’m sure.
I know, it’s not Chase’s fault… they’ve reportedly been having trouble hiring minimum wage people for the last three years. Or was it the investor’s who won’t let them modify? I can never remember which lie was Chase’s favorite… Bank of America was having the phone problems… Wells couldn’t stop their employees from losing stuff over and over… Yep, Chase was the can’t-hire-anyone-and-investors-won’t-modify, I’m almost positive.
Right around the third week of October, they come home to find a notice of sale pinned to their front door. Oh my God… they called Chase again. “Oh, just ignore it once again,” Chase lied. “You don’t have to worry about that, silly, you’re under consideration for a loan modification, why would we sell your house?”

A few more days and another notice on the door… Chase back on the phone… but this time everything was different… Chase said they were selling their home in ONE HOUR. To stop the sale, they would need to get down to the courthouse with about twenty-five grand… in 55 minutes, 50… 45… 40… I suppose we needed another vacant home in Anaheim in a hurry, because predictably, the home went back to Fannie Mae at the Trustee Sale. Gone, in the blink of an eye… sold October 21, 2010… just 21 days after they had made their October payment. Chase had told them not to worry… it was just the computer system… no one would sell their home.
And now it was gone.

The father has a hospital bed in the living room, he requires special care… their daughter… in school close by… eight years old… is that second or third grade? The couple pleaded with Chase that day on the phone, I can only imagine what that felt like for them on that day. Here’s what the mom said to me:

We’re not people who simply decided to skip out on our mortgage. We did everything as upright and by the book as we were instructed to do by Chase yet we still lost our home. On the day they took back the property, I called Chase pleading for an alternative to this. Their reply to me was “I suggest you find a new place to live.”

The Unlawful Detainer or UD hearing was the next indignity the couple would suffer… and I haven’t been able to stop thinking about this next part all week. With the medical bills they were receiving, and the uncertainty about the future, they didn’t feel they could afford a lawyer for the Unlawful Detainer trial. As the date for the UD neared, the husband was still in the hospital; he would be released roughly 48 hours before he would have to be in court.
They found an attorney who would help them and she called the opposing council, a lawyer from one of those scum-of-the-earth foreclosure mills that have no doubt been making untold millions intimidating homeowners, already scared to death and almost always without council, McCarthy & Holthus. They look like rich young men who don’t care at all about what the banks are doing to their neighbors… well, maybe not their neighbors… they probably live in some zillion-dollar beach pad.

(Hey fellas… looking forward to seeing you on Google! If you’ve been spending money on SEO trying to rank up at the top, I’ve got outstanding news… I’m going to put you right up there. May not be exactly what you had in mind, but then I don’t give a rat’s ass what’s in your under-developed minds.)

The couple’s lawyer asked the McCarthy & Holthus lawyer if there could be a continuance as the husband would be only a day or two out of the hospital…. they said they’d check with Fannie Mae… then said that Fannie said no. I guess Fannie Mae, a bankrupt and tax-payer owned mortgage company really wanted another empty condo in Anaheim.

The lawyer asked, what if the couple comes in and asks the judge for a continuance, would McCarthy & Holthus object? No, she was told, they would not object “vigorously.” So, the couple went to the UD expecting to ask the judge for a continuance, she pushing him in his wheelchair. As soon as they walked in, another McCarthy & Malthus lawyer, Kevin Mello was walking towards them. As he approached, the couple overheard Kevin say to another, “I’m so sick of all these sob stories.”

Oh, no he didn’t… Oh, yes he did.

(And boy oh boy, is Kevin going to regret saying that… LOL… Yoohoo, Kevy, baby… you hang in the courthouse right near my house… do you know how lucky you’re aren’t? I’m actually making a documentary about the foreclosure crisis, and hadn’t yet cast the shithead. How lucky is that?)
Mello asked the couple when they could be out of their home. They said that they would need six weeks. Mello made a call and said they could have 30 days. The husband asked to talk to the judge, but our guy Kevin said, “Why, the judge has no authority… he’ll tell you to be out in 4 days… the bank has all the authority.”

Does it now, Kevin? The bank? Fannie Mae? The scandal-ridden, morally and financially bankrupt, already absorbed into the federal government, Fannie Mae?
Kevin had some papers he said that the couple needed to sign. They said no, they didn’t want to sign anything. Kevin said they had no choice… either sign or be out in four days. He put the documents in front of them… they couldn’t move his hospital bed in 4 days… they signed. Stipulated to a judgment and waved future claims.

When they appeared before the judge, he said that they should be GRATEFUL that the bank gave them 30 days. When the couple tried to relay the story of the loan modification con job and Chase lying and then the stealing of the home… well, they didn’t use those terms, I did, but someone has to, right? Because that’s what happened, and I don’t give a damn what other factors are involved, that’s what happened, sure as shootin’.

And, even though I’ve been covering the inconceivable tragedy that is the foreclosure crisis, after learning of what happened to this this couple, I couldn’t help but wonder how or why this could possibly happen… and no one cared… in this country… and no one cared. Because I know I’ve been hard on the servicers, and deservedly so, but is it really possible that they are actually inherently evil… are they literally lying to everyone and intentionally try to sabotage the nation? How could that be true? It couldn’t, right? And something occurred to me, something that I had not previously considered. And maybe it’s important to consider.

Prior to the last three to four years tops, foreclosures were a very different animal than what we have going on today, but I’m starting to think that maybe a lot of people don’t know that. You see, prior to this crisis, foreclosures were exceedingly rare. When someone got into financial trouble they either sold their home, or borrowed against it to get through the storm. But this housing market was pushed off a cliff, the credit markets froze almost overnight, prices fell through the floor and fast. People losing homes today bear no resemblance to the foreclosures of the last 50 years… no resemblance whatsoever.

So, maybe our entire system, including the inadequate and fraudulent documentation, and the incredibly uncaring and incompetent treatment of the homeowners involved… maybe it’s happening because we haven’t stopped to realize that although today we have foreclosures and years ago we had foreclosures… they really shouldn’t be called the same thing because they’re not the same thing. In fact, they’re so different they shouldn’t share the same moniker.
Maybe we should call today’s foreclosures, fraudclosures… I mean, like all the time… like as in someone call Webster’s. Maybe if our society understood the substantive nature of the distinction, things would improve… no? I think maybe yes. Like, do the bankers think that today we’re just having more of the same foreclosures we had years ago… same thing… just more of them? Because that’s not the case. Because in the days before this crisis, you’d never modify a loan… the person who went into foreclosure wasn’t a person that anyone would ever consider modifying a loan for, because by the time they went into foreclosure there was no hope for anything but repossession and after that, of course, liquidation was a certainty. That’s not a description of today’s situation.

Look, what happened to this couple… is it not the kind of thing that you might expect to happen in some totalitarian regime? So, why is that okay with even one single American? We treat criminals better than this. But today’s homeowners aren’t losing homes for the same reasons as before, they’re not deadbeats, they’re victims. And something has to be done to change this, because as sure as I’m sitting here, what’s happening is going to end badly and I fear, violently. People are going to get hurt… I don’t know how, when or where… but no way does this just keep going and everyone’s okay.

Chase’s conduct was so offensive that a highly experienced trial attorney agreed to take their case.

A complaint will be filed on Tuesday in Orange County Superior court seeking compensatory and punitive damages.

The couple’s lawyer would later ask a McCarthy Holthus lawyer about the apparent preference for coercion and intimidation, and she basically replied by saying, “Hey, look… I’m not their lawyer, I’m the bank’s lawyer. If they wanted a lawyer they should have had their own.” My words, not hers… but that’s what she was saying.

No, I’m sorry McCarthy Holthus… on that point you’re entirely wrong. I mean, everyone know you don’t need to pay a lawyer when you’re applying for a loan modification… just ask the California State Bar, the Attorney General’s office… President Obama… come on… everyone knows that.

My own thoughts: Anyone who thinks that they will be fairly treated and their interests and rights will be protected without being represented by counsel are fooling themselves and falling right into the banks lap. Stand up and fight for your rights, they are yours and you shouldn't be ashamed or embarrassed to ask that they are protected. Please don't be the next story.

2011-03-02T14:32:00.000-08:00

Watch out for those forced escrows its another way the bank tries to take advantage and collect additional revenue.. Any excuse they can use to prey further upon the American people.

Forced Escrow Accounts Frustrate Homeowners: MyFoxDFW.com

Citizens United The Story of Stuff

2011-03-02T08:43:00.000-08:00

Citizens United "The Story of Stuff"... Excellent little piece and some ideas on what can be done about it. Clearly the idea that corporations are entitled to the same rights and privileges as individuals in our country is ridiculous and dangerous and how the supreme court could make a decision with that tone is baffling.

Apathy and disinterest is what's brought us to where we are. I don't think we individually feel strong enough to turn this thing around but we need some to engage in the discussion. We need to educate ourselves and think critically about the information that is disseminated to us as it often comes with a slant and motive. Until we take back our opinions and thoughts from those who are trying to tell us what to think and commit to putting in the time and energy to educate ourselves and visit multiple positions on each issue we will be ruled by the hyperbole and conjecture that gov't and corporations continue to feed us.

If we truly want to protect this country and protect the opportunities that it is designed to provide to our children and grandchildren we can no longer sit idly by and hope that someone else takes care of it. It's time to stand up commit ourselves to the process and work.

Please visit citizens united website. www.storyofstuff.org/citizensunited/

2011-03-01T06:55:00.001-08:00

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

Do you pay taxes? Bank of America doesn't

2011-02-26T13:58:00.000-08:00

Why don't our politicians address the lack of corp tax revenue being avoided? The loopholes and breaks given these companies via self serving politicians and lobbyists are creating a devastating hardship upon individuals. The theory that by giving business tax benefits (not even including the manipulation of the tax laws by corporations) they will funnel their savings down to the American workers has been undeniably disproved over the past 30yrs of the test period. Wages are down. Companies profits are up. Individuals are forced to work longer for less money. Corp leader pay is through the roof including stocks, bonuses, and wages. And Americans buying power has been considerably reduced.

It's time for a movement. It's time to claim our country back from the self serving troglodytes and their paid for political ilk to stop riding the rest of us for their personal gain and power grab.

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Chris Hayes talks with Pulitzer Prize–winning journalist David Cay Johnston

Now more than ever

2011-02-25T12:57:00.000-08:00

As our political leaders try to come to a solution for this problem it is now more urgent than ever that we pay attention and hold bankers and politicians accountable for what has happened.
Apathy and disinterest has brought us here it's time to wake up and demand change and fight for the rights of every individual who doesn't have enough money or power to be wooed by those in positions to regulate. Its time to take a stand and stop fighting with your neighbor; it's time to fight alongside them to take back our country from those who would use it to serve only themselves.

2011-02-24T10:46:00.000-08:00

We need to open our eyes to whats going on... We can't afford to sit idly by and allow those who will take advantage of us to continue. Collectively we need to assert ourselves into the conversation and force our voices to be heard. The process of designing regulations and laws to benefit those of the financial minority has to stop but it won't until we demand it.

I love my country and the fact that everyone has an opportunity to succeed but without a level playing field that gives everyone access to reach their potential we are deluding ourselves with false promises.

Please fight back. Tell your friends and neighbors and let's get some of our passion back and fight these elitists that are trying to monopolize success.

Angry Yet?

2011-02-21T22:32:00.000-08:00

Enjoy... Hopefully it makes you mad enough to take action and protect your interests and the interests of your family. If we as a country are willing to sit idly by and allow this to happen we will have it on our hands as well.

Dont you see it too?

2011-02-17T16:51:00.000-08:00

Why do politicians attack so aggressively the benefits and strengths of the the American middle class? Instead of blaming the middle class and their unions for the downfall of the American economy and the detriment of our country. It seems the biggest and most obvious issue associated with our country today is not middle class protections but the 30yr attack on the majority of American people through the destroying of financial regulations and top tier tax discounts that have allowed corporations to run over individuals by placing an over adjusted tax burden back onto the middle and low class of American wage earners as well as creating market bubbles that's advantages are entirely accessed by the top 10% or less of wage earners. By creating a system using the clever "trickle down" theories of gov't we have been stood upon by all those who wish to do nothing other than benefit themselves and their personal interests. There is a surprising lack of altruism in corporations and politicians everyone is playing a personal angle to get future advantages whether money or influence as both are peddled regularly at our expense. We have media that is owned by corporations and apologetically slanted and biased despite their tag lines which encourage via hyperbole and scare tactics those who are unwilling to think critically to regurgitate the absurd positions thus enraging and confusing the public. It's all a game. And it's at our expense. Both sides of the aisle play it and frankly it's getting ridiculous. Take a stand on something you believe in. Stand up to abuse and take some power back.

The Big Short... What's been done?

2011-02-16T08:58:00.000-08:00

I know the Goldman short has been addressed repeatedly in housing finance circles over the past 6 mos. but I'm still amazed that the general population hasn't really grabbed it. It's infuriating and such an obvious answer to so many questions that those first addressing the housing bubble may be asking. There are many individuals who setup too big to fail companies to bubble and burst in order to generate personal wealth. See that was easy to understand wasn't it? Insiders created all the necessary element in order to create the perfect storm and they bought all the influence they needed to facilitate it. Now, those same individuals are still running amok in gov't and finance and nobody is being held accountable. Can't wait to see what they are cooking up next for us. When will enough be enough for the American people? When do we finally get mad enough to pay attention and demand action?

Here's an article from July of last year just to remind us of how we've been played and how nothing has been done about it.

tgolferman:
Why did the SEC rush into a settlement with Goldman Sachs (GS) over fraud charges pertaining to its ABACUS CDO for 550 million dollars on Thursday? Could it be because there is enough evidence in the public domain to prove that the SEC under William Donaldson and Christopher Cox committed FINANCIAL TREASON by aiding and abetting Goldman Sachs, a select group of firms, and privileged individuals with the largest insider trading scheme, which will heretofore be known as "The Big Short", along with the Federal Reserve and Financial Accounting Standards Board (FASB)?

First, lets get to the name "the big short." During the Financial Crisis Inquiry Commission hearings, emails and internal correspondence were provided to the Commission. Below is a part of an annotated email from Goldman Sachs CFO David Viniar from July 25, 2007:

"Tells you what might be happening to people who don't have the big short." 1

What is or was "the big short" (TBS)? Act one of TBS was the systematic expansion of the residential and commercial real estate - stock market bubbles using the 2004 Net Capital Rule Waiver, which would allow the biggest investment banks to take capital held in reserve for market losses and invest it in the market in any way they saw fit. 2 The second act was softening the rules on Complex Structured Financial Transactions (CSFT) which would allow GS and similar companies more leeway in creating ABACUS and similar investment vehicles. 3 Act three or popping the bubbles to guarantee TBS paid off was done via implementation of FAS-157 by the Financial Accounting Standards Board (FASB). 4

Understanding what group within FASB was pushing for 157 and who was in the group is important to understand the Big Short:

In 2003, it created a User Advisory Council, which includes representatives from individual and institutional investors, equity and debt analysts, lenders and credit rating agencies. 5

Mr. Robert Ehudin - Managing Director - Credit Risk Management Advisory Group - Goldman, Sachs & Co. 6

In a Chief Financial Officer magazine September 1, 2006 article Robert Herz the head of the FASB states:

Herz concedes that numerous issues surrounding fair value need to be addressed. But important users of financial statements are pressing him to move forward on fair value without delay. 7

You see, GS and others pushed FAS-157 knowing the rule change would force firms to re-value assets on their books which would in essence create paper losses that would cause further distress in an already troubled real estate market full of toxic mortgages which would eventually bring down the stock market where the real money was going to be made considering the hyper inflated stock price values to earnings multiples.

David Viniar of GS in a December 15, 2006 email wrote the following:

On everything else my basic message was let's be agressive distributing things because there will be very good opportunities as the markets goes into what is likely to be even greater distress and we want to be in position to take advantage of them. 8

GS and everyone on the FASB User Advisory Council knew what FAS-157 was going to do to assets on the books of companies around the country. Massive write downs were magically going to occur and being net short on mortgages, debt, and the stock market should be where the SEC should be doing insider trading short selling investigations. Unfortunately, since it was money that played a role in who controlled the SEC before the collapse, it has been the same money stolen in the collapse that has been controlling them up to now. Just like a judge recusing himself because of a conflict, the SEC should not be allowed to conduct investigations of firms whose alumni are working at the SEC. Nor should the SEC be allowed to investigate frauds related to rules changes it had a hand in changing.

In a November 2007 CFO magazine article just before the official enactment of FAS-157, after some companies had already been recommended to make their 157 accounting adjustments before the actual enactment it stated:

The Royal Bank of Scotland Group estimates that U.S. banks and brokers, already under massive losses caused by the collapse in the subprime credit market, potentially face hundreds of billions of dollars in write-offs because of what are called Level 3 accounting rules, according to Bloomberg.9

It is very easy to understand how "The Big Short" could produce trillions upon trillions of dollars of profit for individuals that knew when the write downs would begin to occur. The beauty of the entire operation was to focus attention on the firm and away from individual investors. The firms obviously had varying degrees of success and failure, which is the perfect smoke screen which has kept the spotlight off of insiders that knew what to short, when to short, and for how long to short.

GS knew what was going to happen when 157 went into full effect. Daniel L Sparks of GS writes in this February 22, 2007 email concerning Paulson:

I will not want us to trade property derivatives until we get much closer to home as it will be a significant distraction from our goal.

This is a time to just do it, show respect for risk, and show the ability to listen and execute firm directives. 10

Getting closer to home is basically making sure you have all your bets laid off. Since the upper echelon of GS knew how TBS worked, during this critical time they would not want traders going out and trying to be hero's. From this point forward the FIRM would make sure it made some money on TBS. The real money though would be made by insiders shorting everything in sight and when the time was right they would be given a sign to extricate themselves from their shorts and go long.

The man that would decide how to manage the big short was none other than Ben Bernanke, the Great Depression expert hired to take over for Alan Greenspan. His role would be to better control this operation in order to prevent a total collapse, like what occurred during the Great Depression, while trying to preserve the power of those who had worked so hard over the past 20 to 30 years deregulating the financial markets. I have not uncovered the sign he gave the insiders to exit their short positions; however, considering the stock market began moving upward before Bernanke gave his blessing to adjust fair value accounting or 157.

In a September 30, 2008 Bloomberg article highlighting the resistance of the SEC and FASB to suspend FAS-157 despite nearly a full year of economic collapse in the real estate, credit, and stock markets, it stated the following:

Federal Reserve Chairman Ben S. Bernanke and other proponents say removing the rule would erode confidence that firms are owning up to losses. 11

Ben Bernanke must have given a signal to close short positions because the stock market began to rise and then he gave his blessing to adjust the accounting rule:

Federal Reserve Chairman Ben Bernanke on Tuesday argued that regulators should make some improvements to controversial mark-to-market accounting rules at the same time as lawmakers create a systemic risk regulator that will fill in 'shocking gaps' in regulatory oversight. 12

Shortly thereafter FASB adjusted 157 in April 2009:

The Financial Accounting Standards Board, pressured by U.S. lawmakers and financial companies, voted to relax fair-value accounting rules that Citigroup Inc. and Wells Fargo & Co. say don’t work when markets are inactive. 13

TBS was over for now. The stock market stabilized, job loss trends had been reversed. But, trillions of equity in real estate, most of which was the result of a highly rigged and leveraged market, was lost in a period of years. Pension funds had lost billions if not trillions resulting in reduced retirement benefits. Trillions and trillions of dollars had been skimmed out of the stock market.

What happens to a national or global economy where a small minority of people steals trillions of dollars from the majority of people, with the help of the governments financial market regulators? Can the financial markets ever re-establish trust if those who engineered this collapse and those who profited from it as insiders are not brought to justice? I hope we aren't that dumb and susceptible to propaganda.

Finally, GS hasn't granted me any interviews, so much of my analysis of the facts can be written off as speculation. However, I will leave you with one last bit of evidence that clearly highlights the treasonous actions of GS, the Bush SEC, the Bush FED, and the Bush FASB.

Fabrice Tourre of Goldman Sachs wrote in an email on January 23, 2007 concerning his involvement in the ABACUS CDo some roughly three months before it went public:

standing in the middle of al these complex, highly levered, exotic trades he created without necessarily understanding all the implications of those monstruosities!!! Anyway, not feeling too guilty about this, the realpurpose of my job is to make capital markets more efficient and ultimately provide the US consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job ;) amazing how good I am convincing myself !!! 14

This is why the SEC settled with GS. Since both were involved in TBS they both wanted the news media spotlight to shine elsewhere.

Now, since many of the insiders bought their way into the Obama inner circle of economic advisors, I would have to say that he has been played like we all were played. So, what does he do now? I would first demand the resignation of Ben Bernanke and Tim Geithner to show their sponsors that I wasn't going to be played any longer. Then, I would call on the House and Senate to quickly remove us from the southern half of NAFTA, withdraw from the WTO, and suspend China's MFN status and to quickly erect tariffs on goods or services coming from any country with a standard of living below that of the U.S. and that has a trade surplus with America, and force any U.S. multinational corporations wishing to sell product in the U.S. to bring back their productive capacity and begin employing Americans. The chances of the House and Senate doing this would be very slim; therefore, I would issue an executive order requiring an end to the southern half of NAFTA and a permanent suspension of China's MFN status. Next, I would direct my justice department to begin an immediate investigation into the roll of the FED, SEC, and FASB in the roll of the collapse and to bring any and all parties to justice. This would require a massive expansion of the financial crimes division of the Justice Department. I would then issue another executive order to nationalize the FED and remove its leadership and replace it with a team with the likes of Joseph Stiglitz, Paul Krugman, Peter Morici, Elizabeth Warren, and Brooksley Born to name a few. While this would be a very turbulent time, I think it is the only thing that President Obama truly can do to restore confidence in our financial markets and to save the Democratic Party in November and his job in 2012.

Time's a wasting Mr. President.

Sources:

1) http://documents.nytimes.com/goldman-sachs-internal-emails#document/p9/a3
2) http://www.nytimes.com/2008/10/03/business/03sec.html?_r=1
3) http://www.cfo.com/article.cfm/8509345?f=search
4) http://www.fasb.org/jsp/FASB/Pronouncement_C/SummaryPage&cid=900000010271
5) http://www.cfo.com/article.cfm/8505758?f=search
6) http://www.fasb.org/user_advisory_council/uac_members.shtml
7) http://www.cfo.com/article.cfm/7851757/3/c_7873404?f=related
8) http://documents.nytimes.com/goldman-sachs-internal-emails#document/p25
9) http://www.cfo.com/article.cfm/10097878?f=search
10) http://documents.nytimes.com/goldman-sachs-internal-emails#document/p29
11) http://www.bloomberg.com/apps/news?pid=newsarchive&sid=agj5r6nhOtpM
12) http://www.marketwatch.com/story/bernanke-we-need-improvements-fair-value
13) http://www.bloomberg.com/apps/news?pid=newsarchive&sid=agfrKseJ94jc
14) http://documents.nytimes.com/goldman-sachs-internal-emails#document/p80

(TGOLFERMAN http://tgolferman.newsvine.com/_news/2010/07/17/4699618-the-big-short-why-did-the-sec-and-goldman-rush-a-settlement-on-abacus)

No Money in Modification

2011-02-14T06:37:00.000-08:00

This video is a bit dated but it is an accurate representation of how these purchases are generally sold and it shows why most servicers and "owners" prefer to foreclose rather than modify. In addition to profit margins they are also incentivized to foreclose because they understand that they don't have legal standing to claim the asset and if they modify the original note they still leave that elephant standing in the middle of the living room who could potentially crush their new flat screens and sofas they purchase with ill gotten gains. By pursuing foreclosure they eliminate the potential of a legal standing issue and generate greater revenue. It's good to be the king!

Neil Garfields Livinglies.wordpress.com

2011-02-10T13:55:00.000-08:00

Editorial:

I worked on Wall Street and I was an investment banker. I know the mentality. If money is sitting there, they will take it and worry about it later. This article is the tip of the iceberg and it belongs on Page 1. I agree with the NY Times editorial staff about how important this article is. It didn’t get blocked because it was about Bear Stearns, which is defunct. But the story is the same for all the mega banks. They screwed the investors, stole the money, then screwed the investors again, along with the homeowners, and stole the house. And it is still going on.
The “secret pocketing of money” is no secret amongst those who work on Wall Street. To them it was a game and they won and each time a news article comes out missing the point again they have another laugh. Unfortunately the regulators and legislators are buying the spin in the media instead of investigating the facts.
Fictitious “Bonds” (i.e., non-existent) were sold by fictitious “trusts” or “SPV’s” (i.e. non-existent) on the CLAIM that each SPV or Trust consisted of a fictitious pool (i.e., non-existent) each pool containing fictitious “assets” consisting of the fictitious (i.e. non-existent) obligations of homeowners who had been “loaned money” from a fictitious company pretending to be a bank or lender. The practice on Wall Street was called “selling forward” which means you are selling something you don’t have, like selling short, which is selling a stock before you buy it.
THEN a fictitious transaction (i.e., non-existent) was recorded and reported between the party pretending to be a lender but who was acting, at most, as a mortgage broker (unregistered and unregulated). This was the promissory note and mortgage deed or deed of trust. The transaction described in the note and mortgage never happened and was never meant to happen. All the “securitized”loans were table funded, so none of the “lenders” were creditors. They were fee based servicers. The REAL transaction was never committed to writing or recorded or reported.

The pretender at the closing merely transmitted a flat data file like a spread sheet with various pieces of data that the originator inserted manually. If they changed the date of the loan from the closing date tot eh recording date, they now had a second loan to sell to a second loan aggregator, who knew what was going on because they were giving the orders on what to write, when to write it and who to send it to.
The ACTUAL TRANSACTION between the homeowner and the ACTUAL source of funds was never disclosed to either the lender nor the borrower nor ever committed to writing. Hence the representation that there ever was a secured loan was false, and through no fault of the borrower. The documentation from the closing was neither lost nor destroyed but often described as one or both. The sole reason they didn’t want to produce the original documentation was that it would not conform to the deal proposed to the investor and did not conform to the deal made with the borrower. Better to say you lost it or accidentally destroyed it than to admit criminal fraud.
The effect was obvious. The investment bank took the money from the investors and the money paid by borrowers and the money paid by third parties through insurance, credit default swaps, and under cover of cross collateralization and over-collateralization kept the money, obscuring the fact that they were neither paying nor allocating money received to the investor who was the payee of the money nor the borrower who was the obligee.
Thus neither one knew the true status of the loan. The investor was kept in the dark about the continuing receipt of money by the investment firm, and the borrower was kept in the dark (a) about the real lender not being paid money that came in and which was required to be paid against the borrower’s obligation and (b) about the ALLOCATION or ACCOUNTING for the money that the investment bank was receiving and disbursing in the name of the payor (borrower) and payee (lender/investor).
On an arbitrary basis, computations were made an strategies employed to give the appearance of a normal mortgage market but in fact that was all a fiction. The end result is that the investors and insurers were defrauded out of billions fo dollars on losses that never occurred and paid to parties who had no insurable or ownership interest. The very existence of Notice of Default, Acceleration and Notices of Sale, Complaints for foreclosure was and remains a fiction that cannot be supported by the facts. The strategy employed by the pretender lenders is to use the documents describing fictitious transactions as a substitute for alleging real facts and THEN introducing the documents as proof of those facts alleged.
Judges relying on their law school days or when they practiced law before this historical scheme was developed, are ruling on the basis of presumed facts that do not exist. They are presuming those facts based upon documents that describe transactions that do not exist. The sole hook on which they hang their hat is whether the borrower received the benefit of the loan. But Judges to themselves, the judicial system and most importantly the title recording system a disservice when they presume that the documents are anything more than ink on paper without any value, derived or otherwise.

(Neil Garfield @ Livinglies.wordpress.com)

2011-02-10T09:00:00.001-08:00

Stay Calm, Remain in Your Homes

This is standard advice in times of emergency. The principle is simple and logical. Authorities are dealing with limited resources in a critical environment where every second counts. The fewer events and people they need to deal with, the more effective they can be.
If you know me, you know that I am upbeat and positive by temperament and challenges don’t faze me. I’m pretty level-headed, and I do my own thinking. Though curious by nature, I don’t give much credence to conspiracy theories and usually can explain away most government ineffectiveness by mind boggling stacks of stupidity heaped upon layers of incompetence.
Lately, however, I have been starting to wonder just who is involved in shaping the events of our time. Is there really a plan to swap our prosperity and independence in favor of global profiteering and the new world order?
First, we exported manufacturing so that other nations, even our enemies, wound up with our jobs. Ross Perot warned us of the plot behind NAFTA. We have allowed all of the power to fall to a handful of global elitists who profit from failure and misery.
Consider the implications of this; there are fewer Americans with jobs than in 2000 but there are eleven million more workers. Nearly fourteen million are officially unemployed and the number of people who have given up looking for work, the self-employed owners of failed businesses don’t even show up in that.
According to Stars and Stripes, “In January, the unemployment rate among vets between the ages of 20 and 24 was 24.1 percent, compared with 17.7 percent for the same age group in the general population.
Recent college grads are entering the workforce at a time when employers project they will be hiring 22% fewer college graduates this year.
And now, with increasing frequency, the unintended consequences of a global asset bubble are coming home to roost. And, there is no stopping them.
The convergence of numerous events is creating what I fear will be emergency type conditions that will become routine for many Americans. Think post Katrina, soon playing in cities everywhere.
According to The National Energy Assistance Directors’ Association, 8.9 million households are expected to qualify for financial help to heat their homes this winter, up from 8.3 million last winter. It’s the third year in a row the number of households needing assistance has set a new high. Nearly nine million people are having difficulty just staying warm.
By now, if you haven’t felt it directly, someone close to you has; a dramatic downturn in the quality of life, for many, a complete reversal of fortune. Whether we feel bad for them or are happy to see their decline instead of ours, their loss of prosperity erodes the prosperity of everyone. They go from contributor to the community to a drain on the community. Many are boomers who worked all of their lives and are now seeing their golden years turn to rust.
The pension funds they contributed to have been looted by financial intermediaries, and although many of the funds are going to court, there isn’t enough money on the planet to pay back the shortfall. The institutions they are seeking relief from are technically insolvent. And, the device intended to protect pensions, the Pension Benefit Guarantee Corporation, is upside down and sinking.
According to the Washington Post, “During fiscal year 2010, the PBGC paid $5.6 billion in benefits to participants of failed pension plans. That year, 147 pension plans failed, and the PBGC’s deficit increased 4.5 percent to $23 billion. The PBGC has a total of $102.5 billion in obligations and $79.5 billion in assets.”
And, it’s only starting. It will get worse every year until there will be no way to bridge the gap. The PBGC only insures one in seven pensions; the rest may have no recourse whatsoever.
We must remind ourselves that we aren’t talking about the effects of just mortgage securitization, but a massive global Ponzi scheme that leveraged bad and even nonexistent debt instruments into the biggest transfer of wealth in history.
And, it goes on.
The money, a lot of American household net worth combined with an amount equivalent to the national debt, is stashed in off shore accounts and beyond the reach of recovery.
Equity in boomers’ real estate holdings has been systematically stripped by the leveraging up of appraisals followed by the pushing down to affect more strategic defaults. And, it’s working. One quarter of all homes are worth less than is owed on them. That didn’t happen by accident, it was part of a business plan.
Where will these boomers go to live when they have no money? What choice do they have? They will be in tax payer funded shelters and tent cities with communities struggling to pay the medical costs of this aging poverty class. It will be expensive and unpleasant.
Nationwide, six million families have lost their homes as a result of an international Ponzi scheme. The myth is that after that they “rented an apartment that they could afford” and lived happily ever after…within their means.
The major impediments to this rosy scenario are lack of income, bad credit, kids and pets. Fortunately, government has been working on a large part of the housing problem with a mind-boggling prison construction program.
All of this will have a negative trickle-down effect on everyone. Note how life changing emergencies may have recently resulted from a lack of resources for mental health care and probation follow-up. We knew the individuals had problems, but there is no funding to treat them.
Predictions of State and Cities financial collapse are being forewarned by layoffs in the most protected jobs, teachers and emergency responders.
The total neglect of our infrastructure during our false prosperity is now colliding with our ability to even make emergency repairs, as evidenced by the collapse of a relatively new bridge in Minneapolis. Things are starting to get that third world feel. Parks are being closed or ignored, codes aren’t being enforced, pot-holes don’t get filled, and trash blows through the weedy parking lots of long ago whitewashed shops.
In Vista, California, where years of financial mismanagement have led to a severe budget shortfall, emergency workers are telling the public to expect longer response times due to a reduction in the number of ambulances. We have them; we just can’t afford to use them.
In March, the city will turn out the street lights. So, at a time when we have fewer resources to respond, life will be getting a lot more dangerous for residents and visitors. Not that it matters, I recently dialed 911 to report an accident to which I was the only witness. According to the call timer on my cell phone, it was nine minutes until they answered.
Cities are primarily dependent on property and sales taxes, and when property values were rising and consumers were spending, Vista administration went on a spending spree and hired all of their friends, built new buildings, and put tax payer’s money into an ill-advised, redevelopment scheme.
Some of the jobs have survived despite the fact that the city no longer performs the function the individual carries out.
The first step was to eliminate the services that all of those people were hired to deliver. A perfect example was Vista’s sign compliance program. Several staff were hired, and for two years they photographed and cataloged commercial signage that was out of compliance with the code.
But, now that all of the preliminary work is done and paid for, the compliance part of the program was scrapped because there was no money to pay for it.
Given the size of the budget shortfall in Vista, the only alternative is a massive reduction in wages and benefits. Cuts in senior administration aren’t likely so that means that city workers, the people who actually do anything, the lowest paid and most vulnerable, will be let go first.
Most communities are facing these same problems, but some are better prepared than others. Those that failed to prepare for a decline in revenue will soon be switching to crisis mode. The numbers tell the tale. And, until we come up with 11 million jobs and stop evicting families from their homes, things won’t get better.
We are facing a crisis that is already tearing at the principals on which this country was founded. Due process is routinely being denied in cases where borrowers have proof that documents were forged.
Stay calm, remain in your home. The last thing that any of us needs is to have these unlawful foreclosures continue. Even if you have been foreclosed on, do everything you can to stay in your home. You do not want to be out on the street, and we don’t need any more vacant houses. In San Bernardino, Buffalo, Detroit, and Chicago the banks aren’t bothering to take title to the property.
What should you do? Do what authorities always advise in terms of emergency. Remain calm, stay in your home…no matter what. Do not let them take your home. Every day you can remain in your home is another day to get closer to long term relief.
The unlawful foreclosures taking place in America’s communities are compounding an already dire situation. It doesn’t need to continue. We must all resist the efforts by unknown foreign entities to steal our homes.
You must fight your own fight, but you needn’t fight alone. You must learn everything you can about your own situation, but the information you need is all available on my blog.
If you won’t join the movement in the streets, join it here, at Protect Americas Dream http://www.gwmantor.hersid.com/. If you will not draw a line in the sand, draw one at your front door.
Never give up. The very worst thing anyone can do is surrender their home without resistance. Stay calm, remain in your home.

(Taken from 4closurefraud.org George W. Mantor)

Are we the "unpeople"

2011-02-09T21:48:00.000-08:00

We must recognize that based on the statistical composition of the foreclosure data that we are not looking at a homeowner induced epidemic. Clearly the issues are systematic even if you base it solely on pure numbers of foreclosures and expectations of future foreclosures. The system is flawed is the only reasonable and definable explanation for the sheer numbers we are looking at.

For those who want to continue to attempt to blame individuals, whether a third party or yourself, all you have to do is consider the nature and mass of the epidemic in order to see the truth.

No unorganized mass of individuals without combined structure or intent could have begun such an enormous influence. You, as a homeowner, are clearly not at fault for the systematic abuses that are the real base for the situation you each independently find yourself in. Please stop blaming yourselves and start defending yourselves. You must look after YOUR FINANCIAL INTERESTS because nobody else is taking up the cause.

Commentary from Noam Chomsky follows:

The many Americans whose lives have been damaged by financiers' single-minded focus on short-term profits at the expense of everyone else are only a harbinger of what is to come. Financial elites remain in charge, as evidenced by recent "financial reform" legislation that does not even reinstate the Glass-Steagall law separating investment and commercial banking. New York magazine has described how Obama officials blocked even inadequate reforms, let alone the stronger proposals from Nouriel Roubini, one of the few major economists to foresee the economic crash. Former International Monetary Fund chief economist Simon Johnson tells us "our banking structure remains -- and the incentive and belief system that lies behind reckless risk-taking has only become more dangerous," thus setting the stage for an even worse crash than that of 2008. And, as U.S. competitiveness continues to decline and it cannot afford its endless wars without drastically cutting social spending, countless more Americans will find themselves paying the price for U.S. elites' imperial mentality.

In today's system, Chomsky explains, to "stay in the game," CEOs must maximize their own short-term profits while treating the costs of doing so as "externalities" to be paid by the taxpayer.

Chomsky thus argues that human survival requires changing the system, not merely periodically replacing those running it. His "Hopes and Prospects" covers President Obama's first year in office and the many "hopes" that he has so profoundly disappointed because of a system that virtually requires "doublethink" of its leaders. Obama was undoubtedly as sincere when he spoke of "our fidelity to the rule of law and our Constitution" at West Point on May 22 as he was six months earlier when he secretly approved Gen. David Petraeus' proposal for a "broad expansion of clandestine military activity" worldwide that "does not require the president's approval or regular reports to Congress."

Obama also presumably holds two contradictory opinions when he continues Bush policies he so recently criticized and promised to change: extending executive power to indefinitely imprison people without trial, torture (though by allied rather than U.S. torturers), indiscriminate killing (particularly by escalating in northern Pakistan, as described in Truthdig, "Unintended Consequences in Nuclear Pakistan"), and supporting Israeli policies precluding a two-state solution. Chomsky also observes that Obama could not have been elected in the first place, given his greater need for campaign funds from above than fidelity to his voters below, had he not been prepared to continue these imperial policies.

Chomsky's explanation of the American system's imperial mentality also illuminates a seeming mystery: How could decent people like Jimmy Carter, Bill Clinton and Barack Obama commit so much evil? Our concept of evil is shaped by such paranoid psychotics as Hitler, Stalin and Mao, who all hated their victims and openly lusted for power. We do not yet understand that in today's American system the problem we face is not so much inhumanity from the mad and evil as "ahumanity" from the sane and decent.

As the American economy and polity continues to unravel and suffering mounts at home and abroad, however, a mass movement may arise that is capable of saving America and the world. If so, such a movement is likely to attempt solutions of the sort Chomsky proposes. Here are two out of a far larger number:

State capitalism for the many: The American Enterprise Institute's chief declared in a May 23 Washington Post Op-Ed that "America faces a new culture war," between "free enterprise" offering "rewards determined by market forces" and "European-style statism." "Hopes and Prospects" explains at some length, however, why this formulation is absurd. America's "free enterprise" system has always been based on massive government aid, from the Army building 19th century railroads, to the Pentagon's post-World War II role in building the Internet and Silicon Valley, to today's "rewards" to Wall Street and oil companies determined not by market forces, but those companies' political clout. America has been practicing "state capitalism" since the founding of the Republic, and will continue to do so for the foreseeable future no matter which party is in office.

The real choice, Chomsky makes clear, is not free enterprise versus statism, but state capitalism for (A) the few or (B) the many. The latter would include breaking up the banks, a focus on job creation and safety net expansion where needed, single-payer health insurance, higher taxes on the wealthy, far lower military spending, public members on corporate boards, greater employee workplace control and, above all, a new public-private partnership to see America become a leader in a clean energy economic revolution.

A Nuclear Weapons-Free Zone and Two-State Solution in the Middle East: Chomsky proposes that rather than continuing to engage in senseless fighting and confronting Iran over nuclear weapons, U.S., Israeli, Arab and Iranian interests would be far better served by the U.S. using its enormous military and economic clout to create a Mideast nuclear weapons-free zone that Iran says it is willing to accept, and a comprehensive and fair Israeli-Palestinian settlement including Hamas' promised recognition of Israel and cessation of rocket attacks. A major benefit to the U.S. would be to reduce the threat of domestic terrorism. For only a comprehensive new policy that addresses the source of anti-U.S. hatred -- U.S. war-making on civilians and support of corrupt and vicious local regimes -- can reduce it.

Fifty years ago, Americans were told that the North Vietnamese communists were so evil that 55,000 Americans and millions of Vietnamese had to die, and much of Vietnam had to be destroyed, in order to keep it "free." But for 20 years now, despite the triumph of the communists, Vietnam has been a normal trading partner of the United States and poses no threat to its neighbors. Could the Middle East also be normalized were U.S. leaders to use their enormous power to promote peace rather than war? Maybe, maybe not. But it is obvious that the risks of trying to do so are far less than the present dangers of nuclear proliferation, chaos in nuclear-armed Pakistan, Israel-Iran military confrontation and increasing support for anti-American terrorism within the 1.2 billion-strong Muslim world.

That Chomsky's sensible proposals are not seriously discussed is a measure of the ubiquity of U.S. elites' imperial mentality in mid-2010. Chomsky suggests that John Quincy Adams' fear of divine retribution to America for its cruelty to Native Americans is unfounded, and that "earthly judgment is nowhere in sight." Much of his work, however, suggests otherwise. A U.S. elite imperial mentality that once threatened mainly unpeople is today threatening America itself.

The fundamental tension throughout Chomsky's work is between his belief that organizing and popular movements offer hope of change and the overwhelming evidence he presents of elite power precluding such change. On the one hand, he writes that "Latin America, today, is the scene of some of the most exciting developments in the endless struggle for freedom and justice" as its nations improve their citizens' lives by extricating themselves from the neoliberal regime and elect leaders responsible to mass movements from below rather than financing from wealthy minorities above.

But on the other hand, his description of the stranglehold elites hold over both domestic and foreign policy offers little near-term hope for the kind of systemic changes he believes are needed to save the species. It is true that postwar America has not before faced the kind of economic and imperial decline that now awaits it, and this may produce possibilities for systemic change. But they are nowhere yet in sight.

(Noam Chomsky is an American philosopher emeritus professor at MIT)

2011-02-09T07:47:00.001-08:00

The Truth about Your Mod

2011-02-08T22:01:00.000-08:00

I’m sorry but I just can’t stop writing about the disaster known as HAMP, which is the government sponsored loan modification program. It seems like every day there’s a new story about how much of a disaster the loan mod program has become. In case you aren’t familiar with loan modifications, read on…
A loan modification is when your mortgage lender agrees to permanently or temporarily lower the interest rate of your home loan so the payment becomes more affordable and, in theory, the homeowner can stay in the home without defaulting. And while the hypothesis is solid, the loan modification program has been a credit disaster for millions of consumers. HAMP, the government sponsored loan modification program, actually requires that homeowners pay less than what they are contractually required to pay each month just to prove that they can handle a lower monthly payment. This is leading to severely damaged credit, millions of dollars of late fees, and foreclosures.
Here’s what your mortgage lender will not tell you about your loan modification application…

You never really needed a loan modification in the first place – Many consumers are being solicited for loan modifications as if they were being solicited for credit card offers or home equity loans. The problem is many, if not most, of the homeowners who receive these offers are still quite capable of making their monthly payment and won’t get approved for the modification because there is no hardship. Of course the lender won’t know this until you’ve gone through the process of applying for the modification and the lender has taken the time to review your application, which is taking around 6 to 9 months in many cases.

We’re going to tell you to make less than your contractual payment, and then we’re going to report you as paying late to the credit bureaus – One of the more comical aspects of the loan modification programs is the requirement of the homeowner to make a lesser payment while the lender evaluates your loan mod application. This is called the “trial payment period” and was never supposed to last longer than 3 months. During this time the consumer, at the lender’s request, is breaking the terms of their promissory note by not making their contractual minimum payment. The lenders are then reporting this to the credit bureaus as a past due account. The longer it takes for the lender to deny or approve your application, the more late payments you’ll end up with and the more damaging it is to your credit.
We’ve laid off thousands of employees to save money so it’s going to take at least 6 months to get to your application, if you’re lucky – Evaluating a loan modification package only takes a few hours but getting to your application is going to take several months. This is, of course, because the demand is outpacing the supply of bank employees to do the work. Banks can’t hire people fast enough to bring the demand/supply model back in balance, and they likely don’t have any desire to do so.
You have no shot at getting approved – In order to qualify for a loan modification you have to have a hardship worthy enough to justify the lower rate. The problem is one man’s hardship is another man’s inconvenience. For example, you’d think that a severe loss of your home’s value is a hardship. You’d be wrong. You might also think that a reduction in pay or a child starting college is a hardship. You’d be wrong again. The point is the rules are not clear at all so homeowners waste time and money applying for a loan mod when they have absolutely no chance of it getting approved.
While we’re taking at least half a year to consider your loan modification we’re going to charge you late fees – Despite the fact that you CAN make your normal monthly payment you’re not doing so (during the trial period). This means each month you’re technically paying late. You’re not late as in you didn’t get your payment sent in by the due date but you’re late as in you didn’t make the full contractual payment. This means you’ll be assessed a late fee each month your mortgage is past due.

After we deny your loan modification application we’re going to begin foreclosure proceedings – In the ultimate slap in the face many consumers are getting notices of intent to foreclose soon after they’ve received their loan modification denial. Of course you can stop the foreclosure proceedings at any time by making good on all of your past due balances, which will be made up of your monthly underage and accrued late fees. If you’re able to do so it doesn’t save your credit because your credit reports will already have a record of the foreclosure proceedings starting, which won’t be removed just because you bring your mortgage current. You get to enjoy that for seven years.
We’re not going to remove any of the late payments that WE caused – Every month you were short on your mortgage payment likely resulted in another late payment being added to your credit files. And regardless of the outcome of the application the late payments are likely to persist for seven years. The lender insisting on a lower monthly payment, of course, is what caused the late payments.
If it seems like the loan modification programs set the rules in opposition, you’re actually right on. Pay on time, but don’t pay the full amount on time. We’re ok with you paying late, but we’re still going to charge you a late fee. Thanks for trying to do the right thing by saving your home, but now we’re going to foreclosure anyway. Think long and hard about whether or not you really need or want a loan modification. The damage of a failed attempt is almost no better than simply walking away from your home.

Taken From (http://www.smartcredit.com/blog/2011/02/08/loan-modifications-more-about-the-failed-program/)

2011-02-06T00:47:00.000-08:00

What does it take for people to get mad anymore? Sometimes it seems like any minute perceived affront by stranger or friend can send someone into a death spiral of over analyzed and disproportionate reactions. We can be so enraged by another person who intentionally or not takes our assumed privileges like parking spaces and seconds of our day. Being cut off, not being attended to quickly enough in retail stores or being attended too aggressively, waiting for traffic lights or traffic itself, people blocking the aisle at the grocery store, someone taking 20 items in the 15 items or less line, etc. The list is really quite endless.

The curious part of this little bit of human nature is that when we are truly wronged it seems like it takes far more slight to get us riled up. Case in point of course is our current financial situations as well as the lack of oversight and protection from those we deemed able to provide it by our votes.

We have an entire financial industry that has taken complete and total advantage of us as investors, homeowners, workers, tax payers, virtually every hat we wear has been affected by this gluttony of greed and yet the anger seems tempered and rationed. Why is that?

I have to believe that it has something to do with a general lack of understanding of the abuse that has gone on. It seems that maybe as a whole we are unwilling to believe what has happened; it's just too big to wrap our collective heads around. Maybe it’s the slant of the media since no media is unfettered from corporate alignment we have no real source of consistent genuine unbiased information. In order to decipher reality we have to use critical thought which admittedly can be tiring and since John Stewart, David Letterman, and Glen Beck are so much easier maybe it would be OK if we just regurgitate what they feed us as our own and get back to watching reality TV.

Well here's some cold hard truth. The banks screwed us. They inflated housing prices intentionally with the purpose of creating a bubble. They intentionally sold loans that were structured to fail. They sold these intentionally flawed loans to home buyers and investors and got the ratings agencies to grade them as pure 100% guaranteed products. They flooded the market with these securities and then as the real market became less interested in them they started creating shell corps to purchase them inside their own companies just to keep the bubble inflated and to keep generating sales commissions. They knew the securities were crap so they got our politicians to remove legislation which allowed them to short sell all the crap that they were passing on to us and their investors at the same time, thus generating millions in profits for individuals as well as the same companies that were running the operation. They deregulated securities so the money they pulled off the soon to be collapsing housing market could be funneled into commodities futures thus driving up prices by creating a false supply and demand scenario creating much higher food and fuel costs. Especially significant for those around the world that depend on grain commodity prices for their survival. The bankers then took our tax dollars that our elected politicians offered them with blank checks and no recourse. They continued to blame the housing inflation on investors despite all the mounting evidence. They crashed the credit markets for small business and retail clients like you and me eliminating many opportunities for local growth and created many job loses. They burst their own bubble intentionally profiting on their short positions and caused countless people to lose their jobs. They left us upside down in our homes.. They gave borrowers unfamiliar with finance extremely complicated adjustable and interest only loans. They refused to budge and work in good faith with homeowners who had lost jobs or income based on the bubble they created and popped for their own greed and benefit. They continue to refuse to adjust loan amounts to compensate for new market value even though they are the ones who drove it up intentionally and knew homeowners wouldn't be able to service their loans. They use fraud and document preparation companies to create whatever they need to take a home because they have companies ready to pick them up using bid manipulations. They created a system that robbed municipalities and counties out of billions in revenue and tried to circumvent the 300 yr old property laws that allow for individual ownership. They created a system in which nobody can claim free title on any piece of property anymore and they pay and manipulate the judicial system to continue to see it their way despite falsified documents and obvious violations of well established law. They used us! Intentionally! Without concern or empathy! And you want to get mad at the guy who pulled in front of you during rush hour?

It's way past time that we get angry. I know it's easier to get mad at the grocery clerk who's moving a little slow but let's point our anger at those who truly, honestly deserve every ounce of anger we can muster.

We may think we are far different from the upheaval in the Middle East right now but it seems like we should be just as angry, just for some reason we've gotten soft... How much further do we need to be pushed? Taking your job and your house and giving your kids a huge tax burden for years to come all for the greed of the already wealthy?

Think about it.

Ed Schultz: Wall Street's Hand in Causing the Food Crisis in Egypt

2011-02-03T16:22:00.000-08:00

Please don't think that it's not always about the money. If you follow the money you will always find explanations for inexplicable behaviors. We need to stand up and stop being apathetic to the strategies that finance and politics are being used to abuse individuals worldwide. It's time to get angry.

Something Large This Way Comes....

2011-02-03T11:29:00.000-08:00

And so it picks up steam. What started in Iceland, instigated by Wall St, has now engulfed Tunisia, Yeman, Sudan, Egypt, Syria, Jordan and others yet to be made manifest. Saudi Prince Turki bin Abdul Aziz Al Saud has warned the country’s royal family to step down and flee before a military coup or a popular uprising overthrows the kingdom.
Julianne the Apostate can take the credit of kicking this ball down the hill as it was his release of some of those documents which demonstrated selected venality amongst certain countries’ leadership. It would have happened anyway, but the Apostate, it seems, was the spark. How this could be to Israel’s benefit is beyond me.
The control system is blowing apart at the seams. Anyone thinking the unrest across North Africa to the Middle East is part of a planned paradigm has got to be crazy. Certainly, there are organizational forces at work trying to ride on top of the chaos, but all semblance of control is gone. Israel is isolated, Saudi Arabia could well fall , and soon; Syria, Jordon; Lebanon is already Hezbollah and the Southern Border is laced with rockets which can be set up and bound for the obliteration of whole blocks of Tel Aviv in about 20 minutes.
The United States is in the fourth, fourth cycle of the four cycles of societal growth. Every generational cycle since the beginning of this country has been marked with tremendous upheaval. Before 1776, this country had been thriving and it wasn’t until the coinage act which mandated use of the king’s coin, which he wouldn’t allow in country if it weren’t borrowed at interest from the central bank that there was any real impetus to change.
We had the Revolutionary War.
Four score and seven years later, at another major turning point in the country’s history, we had the civil war. Lincoln had his Greenbacks and the International bankers were partially thwarted.
Eighty years later there was another watershed moment for the country which culminated in a depression and two World Wars, all of which can be lain at the feet of International Bangsterism.
Now, sixty five years later, we find ourselves at another watershed moment where America the Great is morphing into something different yet again and the instigating factor is once again, International Bangsterism.
China and Russia are in ascendancy; the US/EU domination is failing. Russia sits between both the Chinese and Europe. Don’t be surprised to see Russia becoming a pivotal player in the final settlements. Russia has lots of oil and gas upon which Germany, France and the rest of the EU depend.
The entire western banking system is on a precipice from the MERS curse – the securitization of Real Estate Assets and the fraudulent bubble the Bangstas pumped into it. For those who are aware of the true story, there is head shaking amazement it still stands. There are ever more assaults upon the gates of predatory capitalism yet to be unleashed. The edifice shall not stand. The collapse is a foregone conclusion.
The United States will no longer be the largest imperial power the world has ever seen. How it moves from here is up to all of us individually and collectively. Typically, the fourth turn has involved a war. The current state of weaponry precludes all out war but there are insane individuals with their fingers on the control levers of power who see insanity and war as preferable to dignity and respect.
What comes next is where the real battle shall take place. Socially how things work out across the Middle East is yet to be seen. The shaking is just beginning. Trust that great powers are at work trying to ride the tiger.
The tiger will probably eat a few of those trying to ride it, others may survive the ride and come back when the tiger finally goes back to sleep. International Bangsterism with their handmaidens at Citi, JP Morgan Chase, Bank of America, Wells Fargo, Morgan Stanley and Goldman Sachs have boxed themselves in and have nowhere to go. The tiger needs to eat them before it goes back to sleep.
Ultimately, the cause of all of our worldwide difficulties, is due to the manner in which money is created. At the moment, it is nothing more than a Ponzi scheme which has reached its mathematical limits. Change the way money is created and all the nightmares can begin to fade. Dis-honest money demands dis-honest dealings between peoples and nations. Honest money will go a long way to diffusing that paradigm.

One of the Duties of the Sovereign is to produce the coin of the realm and in this country the Sovereign are the people as manifested by their representatives. This primary duty was abdicated to a group of men nearly 100 years ago for their private profit. That has to change
Fractional Reserve Banking must be met with severe consequences.
The Sovereign’s coin can be the only coin accepted in the payment of taxes for all levels of the Sovereign (State, County, City, National)

It really is that easy. One two three. Honest money changes everything.
2011 is the year of the counter attack. We are just beginning to see it unfold. There will, of course, be a great deal of shake up as the collapse of the dominant paradigm continues to play before our faces. Be aware, be prepared. Embrace the coming riot. Roll with it, look for Truth, navigate it as best you can. Survive.
Something large this way comes. What exactly it is remains to be seen. There is much drama yet to unfold. Nod your head at anyone who tells you they know what is to come then shine them on down the road. They don’t know, no more than you or I know. But this I believe we can all agree on:

Something Large This Way Comes
(taken from http://blog.chinkinthearmor.net/wordpress/?p=632#more-632)

Shame and Guilt and how the banks use your good nature against you

2011-01-31T20:04:00.000-08:00

I can’t think of any subject that has been so widely and frequently discussed and studied, over such a long period of time, by such a large number of experts and observers, who continually espouse such a diverse range of opinions and cite such a large number of conflicting facts, that is still so misunderstood. Of course we're talking about mortgage loan modifications.

Let’s start with the questions on everyone’s mind… Why aren’t more loans getting modified? Why is it so difficult to get the bank to modify a mortgage? Why are trial modifications ending in foreclosure? Why is it that people are consistently treated so poorly by the banks? Is it the investors that are making it hard to get a loan modification? Is the government doing enough to get banks to modify loans? And should people hire an attorney to help them obtain a loan modification, or go it alone? Or is a modification actually what you want, if by some slim miracle you slip through the cracks and get qualified.

I think the fundamental thing that almost no one understands involves how a bank views a borrower’s request for a loan modification. Lot’s of people, including me in past articles, have said that banks simply don’t want to modify mortgages. Lot’s of people, including me, have also pointed out that servicers make more money by foreclosing than modifying loans. All of those points remain accurate but are not necessarily the reason a modification works or doesn't.

Your bank views you calling to request that your mortgage be modified as the beginning of a process. Maybe you truly need and deserve a loan modification, but maybe not. The only way the bank will be able to tell one way or the other is by putting you through that process, and it’s not a pleasant process in the least. Unless of course you're the loan servicer in which case this is a tremendous opportunity to run up unaccounted fees and random charges.

Let’s say that you’re someone that has good credit, you’ve never missed a payment, and now are saying that you need your loan modified or you may lose your home to foreclosure. When you call your bank to ask about a loan modification, they’re going to tell you that they can’t talk to you until your payment is delinquent by at least 30 days. You hang up the phone. You’re disappointed. And you now have your first decision to make: Do you let your credit score get trashed by going 30 days late on your mortgage? It’s not an easy decision. Once you head down that path it’ll be years before your credit score is back up where it’s always been, and if you need your credit to be good for other reasons, chances are you’ll decide that you no longer want a loan modification because the cost of trying to get one… sacrificing your credit score… is too high.
The bank’s process has just saved the bank quite a bit of money. Had the bank agreed to modify your loan, it would have been like throwing money away unnecessarily because you kept making your payments without them having to modify your loan. (Of course the credit implications of this scenario are far less severe than most people understand but the banks continue to play guilt and shame and end of the world scenarios in order to really push you into not questioning them)

Now, let’s say that you decide to go 30 days delinquent on your mortgage. You call back, now 30 days late, but now your bank tells you that you have to be 90 days late before you can be transferred to a negotiator. You hang up the phone. Again, you’re disappointed. Do you go 90 days late, or do you bring your loan current and forget the whole thing? Some bring their loans current, others don’t.
If you don’t bring your loan back to current status, you’re about to start receiving a series of letters and phone calls designed to make you feel ashamed, guilty and scared. And those letters will come more and more frequently, and they’ll be written using stronger and stronger terms. And chances are you’ll feel worse and worse as time goes by.

Then in 90 days, assuming you’ve gone the distance, you call the bank again. This time they’ll tell you that your credit score is now too low to qualify for a loan modification. Now you’re enraged. You stomp your feet. And then, if there’s anyway you can do it, chances are you bring your loan current and try to forget the whole idea of a loan modification. Maybe you get rid of a car payment to do it, maybe you rent out a room or take on a part-time job to generate the extra income you need, or maybe you borrow the money from a relative. You never even bring up the whole experience to your friends or family members because you’re ashamed that it even happened. You’re ashamed that you were having trouble making the mortgage payment that you signed up for, and you’re ashamed about having gone 90 days late on your mortgage payment and almost losing your home. The whole thing becomes one of those skeletons that you hope will soon fade away in your closet of memories. Besides, what would your friends or family members even say if you did tell them? Do you think they’d be on your side and angry at the way your bank treated you? Or would they take the view that the bank had every right to handle your situation the way they did, because after all, you signed the mortgage and agreed to make the payments… the bank has no obligation to lower your payment just because you having trouble making it. You’re lucky the bank didn’t foreclose, in the eyes of your friends or family members.

Oh, and one or two more things, while we’re at it… maybe you should have opted for a little less house and not gone quite so far out on a limb… maybe you should have spent a little less on your car too, and not used your credit cards for all those nice clothes you wear… maybe you’re just living way beyond your means. You’re probably not saving for retirement either. You’re one of THOSE irresponsible people and maybe losing your home to foreclosure would teach you a lesson.

But, let’s say for a moment that you could not find a way to bring your mortgage payment current when told, when you were 90 days delinquent, that your score was now too low to qualify for a modification. Now you’re 120 days behind, and soon it’s been six months since you’ve made a payment to your bank on your loan. By now the bank is sending you the most threatening letters imaginable. They could foreclose at any moment according to the letters, and their tone tells you that you are basically an irresponsible failure who cannot be trusted because your word means nothing. You promised to make the payment and now you’re not living up to that promise. You’re a promise breaker… a liar. How do you sleep at night? You shouldn’t even have friends, because if your friends knew what you were up to, they likely wouldn’t want to be your friend anymore.

You’re now seven months late, then eight, and then nine. Now the bank is calling you almost daily, the pressure is becoming unbearable, you’re trying everything to make more money so that you can make the payment. If you do find a way to come up with the cash, you bring your mortgage payment current immediately. If you get a new job that pays more, you call your bank and start begging and explaining that everything is going to be okay… you’re working again… if they’d just please understand… you’re a good person… you’ll pay your payment every month and on time from now on… you’re sooooo sorry to have gotten behind… How about $1200 this week, and then $1200 the following week, and then $2000 by the end of the… blah, blah, blah. Does it feel like the bank is trying to bleed you dry? Cause they are! At this point the bank will continue to come up with fees and deadlines until one day you're unable to meet the demand and they will foreclose just after they've taken every last dollar out of your pocket as you desperately try to save your home.

You’re a babbling fool that will agree to just about anything the bank says at that moment. If the person you’re talking to at the bank acts the slightest bit nice to you, or comes off as even a little bit understanding of your situation… you gush with appreciation and feel like you want to be their BFF. Thank you, thank you, thank you, thank you, thank you, thank you… really… thank you so much. My husband thanks you, my children thank you… my dog thanks you. Yuck. It’s disgusting, really.

Or, maybe that’s not what happens. And now you’re almost eleven months late. You’re working. You could make a reasonable payment if you weren’t so far behind. You’ll never be able to pay off the arrears though, so what’s the point. You’re desperate… you’re about to give up and resign yourself to the fact that you’re going to lose your home to foreclosure. You’re trying to get used to the idea that you’ll soon be packing and calling the moving truck… its heart wrenching for anyone to watch.

Since foreclosure is now imminent, the bank can’t threaten to ruin your credit score anymore, as it’s already ‘F’ and would be ‘G’ if scores went that low. The bank is now trying to figure out two things:
1. What is the likelihood of you being able to make the payment if the bank modifies your loan? What if they take the amount in arrears, tack it on to the back end of the loan, and reduce your monthly payment by a couple hundred a month? Would that do it? Or would you agree to the deal and then not be able to make the modified payment… and again in six months end up right back in foreclosure where you are now.
If the bank thinks that might happen, they won’t modify your loan. They’d rather foreclose now than go through this same thing next year and end up foreclosing then. But that’s not the most important factor to your bank… this is all about your bank’s degree of certainty that if they modify your loan, you won’t be back in foreclosure anytime soon, and likely never. Your bank views a loan modification as pretty close to unthinkable in the first place, so it’s unquestionable that it’s a once in a lifetime thing in their eyes. You should be too embarrassed to even ask a bank to modify a loan a second time, according to your bank. It’s almost like… if that happens, you’ll probably want to change your name and move to another state. What a load of crap the banks have peddled our way all these years.

So, you see… it’s a range. In order to get your loan modified, you need to fall somewhere between “Definitely won’t default again if loan reasonably modified,” and “Will self-cure the mortgage before home is actually taken back by the bank”. Get it?

I talk to people all the time that have recently applied for a loan modification, and they always talk to me about how it will cost the bank more to foreclose on their particular house, so they expect the bank to modify the loan. But then the bank refuses, and I hear people say that they can’t understand it because the bank should do what’s in the best interests of investors. Then we start talking about how servicers make more money foreclosing, all of which is true. The problem with this line of thinking, however, is that it fails to incorporate all the data… it’s not just a numbers game to the bank. First they need to know, if they offer you nothing, will you really end up losing the home to foreclosure, or will you let the Devil himself rent out a room to avoid that shameful outcome? Then they need to know that if they do accommodate you and provide you with a modification, chances are good that you’ll never miss a payment for the rest of your life.

So, how should a bank go about getting the answer to either or both of those key questions? Self-cure and/or re-default? It’s not like you can find the answer to either of those questions from looking at an application or a credit report. You certainly can’t tell by talking to someone on the phone.
The only way a bank can know for sure whether you’re going to self-cure and eject yourself from the foreclosure process, is to let you get to that point and see what you do.

It’s like a game of poker… will you fold under extreme stress and pressure and show up with the money to save your home, or will the bank actually be forced to foreclose, and therefore better off to modify your loan… and if they do approve your “mod,” as they say in the biz, will you make it just fine for a long, long time, or will you end up right back where you are today, next year at this time, if not sooner?
Once a bank knows the answer to those two questions about you, then the bank’s cost comparison between modification and foreclosure becomes pivotal, but until then, chances are the bank will play out its inherently superior hand and count on you folding your cards before foreclosure by coming up with the money you said you could not possibly come up with when you were talking with your bank’s representative about a loan modification.

I talked to a woman a few days ago, she said she was in her early sixties, said she owned two homes, desperately needed at least one loan modified and probably both, otherwise she’s going to be on the street. She wanted me to recommend a few attorneys for her to talk to, and I gave her the contact information for the lawyers I knew in reasonably close proximity to her home. Then she asked me a few questions, and the last one I’ll always remember. Referring to the lawyer, she said:

“Do you think I have to tell him about my trust account?” (Adorable, right?) I answered as honestly as I could. I said: “I wouldn’t.” (It’s probably not the right answer, I realize,but I’m just saying…)

The reason that, other things being equal, I advise people to hire an attorney to help them negotiate a loan modification is that their lender or servicer will ALWAYS have a huge built in advantage in any negotiation over the settlement of a debt you contracted to repay, because the moral norms for borrowers work against them, and the market norms that apply to banks, support the bank doing pretty much whatever it thinks it needs to do to get the borrower into compliance with the terms of his or her loan… or reclaim the property.
Even when people hear that a bank did something really egregious or even illegal, many of them just say: “Yeah, well, I guess that can happen.” It’s as if to say that perhaps the bank went too far, but the borrowers were juggling flaming chainsaws in terms of risk, and the bank still has the right to take back its home and punish the irresponsible homeowner who fell outside of our society’s norms by failing to fulfill his or her promise to repay a debt.

See, there are some things in our society that work the way they do only because we believe they will work the way they do. The FDIC, or Federal Deposit Insurance Corporation, is a commonly offered example of this principle at work. The FDIC “guarantees” cash deposits up to $250,000 per account, as of last year, I believe. So, no one has to worry about rushing down to the bank to get their money out if there’s a problem at the bank, the FDIC will cover any loss up to $250,000 per account.
Except, even in the best of times, the FDIC could not possibly come up with the money to cover even a small fraction of bank deposits in this country. If there ever were a disaster that caused all the banks to fail, the FDIC would be meaningless. The FDIC is an independent agency of the federal government and you might call it a “faith based” organization because it only exists to give us faith in our banking system, and only works as intended because of that faith.

Well, loan modification negotiations are a little bit like that. The bank gets to use shame, guilt and fear to get you into compliance with your loan. Once you’re deeply ashamed, you won’t tell anyone what’s going on… and you’ll feel worse every day. Then you become afraid to answer the phone. Then you’re turning off the machine… you won’t even want to hear the phone ring.

Your bank will also greatly exaggerate what it will cost you to lose your property to foreclosure. You’ll be told that you won’t be able to buy anything for a decade, and all kinds of other nonsense. By the time you’re done reading a few of the letters you get from your lender each week, you can easily become convinced that losing your home is almost the end of all opportunity in your life. Might as well be a bum after that. It’s absurd of course… you can buy another home in 2-3 years, if that’s even what you want to do. There’ll be so many foreclosures on the market… you’re going to be hearing about foreclosures selling ten years from now.

The point is, that when homeowners start the process of negotiating with their lender, they’re not only subject to being made to feel guilty and ashamed, but they are also likely to over-estimate the personal cost of foreclosure, all as a result of the bank’s and our society’s intentional efforts to make borrowers feel that way. It’s no accident. You see, we keep the banks open and safe by believing in the FDIC, and we keep people from walking away from their homes when the value of those homes drops significantly by imposing our society’s moral norms, which include shame, guilt and fear, related to repaying debts. If the government and the banks can make homeowners deeply ashamed and afraid to lose their homes, then fewer people will even ever ask for a modification in the first place. With me?

Why the Bank Doesn’t Want You to Hire a Lawyer or other Expert…
When a homeowner hires an attorney to help negotiate a loan modification, that attorney is not going to being made to feel ashamed, guilty, or afraid… the borrower can be made to feel all of those things and more, but the lawyer, not so much. He or she is a hired gun, if you will. That’s why the banks don’t want homeowners to be represented, and why they want homeowners to call them directly.

Treasury looks the other way on this “put-the-borrower-through- @#!*% ” process because it understands that banks have to make sure that they are not throwing away money by modifying loans for borrowers who would have self-cured. Nor does the government want the banks to modify loans for people who won’t be able to make the modified payment. And since the only way for the bank to really know either of those things is to put the borrowers through their paces, as it were. Many will self-cure, some should be foreclosed upon… blend, shake, stir and pour,,, see what comes out. And of those that fall somewhere in the middle, some will have more or less equity, and some will be in markets where houses are selling relatively faster than others.

Out of that psycho-social-financial-market analysis, the bank will modify some loans… but the process used to conduct the so-called analysis is guaranteed to frustrate the @#!*% out of everyone who enters it that’s determined to obtain a loan modification.

Being represented by an attorney or other expert throughout the process is unquestionably better than not being represented, mostly because that attorney won’t be subject to the bank’s tactics of trying to shame, guilt or scare, and as a result of that, is likely to think more clearly than you would be able to. And also because of the attorney’s or other expert’s knowledge of the law related to the foreclosure process and the HAMP guidelines, that attorney is more likely to get a result that’s acceptable to you, the homeowner… and by acceptable, I mean a modification that’s sustainable over time.

Absolutely not. The situation we’re in today is NOT a normal market correction, and I thought I’d better make it clear how I feel about how the banks are handling loan modifications: I hate everything about it, and I think it could not be more wrong. The Obama Administration has continued our government’s tradition of implementing pointless programs designed to help stop the foreclosure crisis. Nothing our government has done has helped in the least… they’ve failed us at every turn.

PAY ATTENTION, I KNOW IT"S BEEN A LONG ARTICLE BUT HERES THE MEAT!

It’s not today’s homeowners that are responsible for the position in which they find themselves… no matter what anyone tells you… it is NOT your fault. If someone would like to debate that point with me, bring it. I’m easy to find. But come to the discussion prepared, because I am.

This meltdown was caused by this country’s financial institutions, and not by people with mediocre credit scores who wanted to buy houses. It’s the banks that did this, but no one is making them do anything to fix what they’ve clearly broken.

We’ve given the banks in this country something like $11 TRILLION so far, and we’re going to have to give them a lot more. The so-called toxic assets are still right where they were last fall, and the banks that were too big to fail last year, are now bigger. They have an obligation to act in the best interests of the homeowners they screwed, and in the best interests of our nation’s economy because without American taxpayers, they wouldn’t even be open for business.

So, don’t read what I’ve written and come away thinking that I approve of the way banks view borrowers asking for loan modifications… I don’t. I’ve only written what you’ve just read because I think it’s important that people understand the dynamics of what’s going on… that the reason they feel guilty and ashamed is because the banks and our government want them to feel that way, so that people don’t just start walking away from their mortgages because they’re so far underwater.

They’re manipulating you into feeling ashamed for being in trouble on your mortgage… but don’t let them make you feel that way. It’s not your fault… it’s the banks that wear the black hats in this horror movie, make no mistake about that. And, in the event that you’ve already lost a home to foreclosure, don’t believe the crap about how your life will be ruined for another ten years. It’s simply not true. You may not be able to buy another house for the next few years, but so what? We haven’t come close to hitting bottom, so you wouldn’t want to buy another home in the near future anyway. All forecasts say that we’ll have 12 million more foreclosures in the next two years, and that number is probably low, so don’t feel alone and ashamed about your situation. The people you’re talking to down the street have problems too, they’re just too ashamed to tell anyone about their situation, just like you’ve been afraid to talk about yours.

Let it go… and let’s turn up the heat on exposing what the banks have done and continue to do.

Please get angry! Get frustrated! Get upset and choose to do something about it.. You'd be surprised at the level of success adequate professional and informed representation can get you. You'll be amazed at the options and choices you have once you stop allowing the banks to shame you into inaction.

Politics is still sleeping with the enemy.. GET MAD!

2011-01-30T21:03:00.000-08:00

By Daniel Pennell, a systems expert who has testified before the Virginia House of Representatives on MERS - VIA Livinglies Web

This week demonstrated how financial special interests have created an obscene and incestuous relationship with the leadership in the state legislature and the Governor’s office in Virginia. This cabal managed to kill off a bill (HB-1506) proposed by Delegate Bob Marshall, a bill designed to protect the integrity of the county property records and preserve the integrity of home owner’s title to their property. Simultaneously they attempted to alter the Uniform Commercial Code (UCC) with HB-1718, such that any “record” (the previous version said document) signed or unsigned by a person they claim owed a debt would be good enough for the banks to win a legal judgment against a person. In other words a spreadsheet from a bank would be good enough to take someone’s home or report someone to a credit bureau. This was in direct response to a Supreme Judicial Court decision in Massachusetts, Ibanez, where the court said that a bank had to have proof it owned a mortgage before it could foreclose.

The problem that HB-1506 addresses originated in 1995 when Wall Street banks took upon themselves the authority to replace the existing public land title recordation system with its 300+ years of successful history, with a member’s only private system. This system called the Mortgage Electronic Registration System (MERS) gutted the public property records and left millions of homes with questionable titles. This was done without any government approval and against the recommendations of the title industry and the county recorders. MERS has been found by 10 state supreme courts to be acting illegally and is currently being sued by CA, NV, TN and 14 other states. The Federal Reserve, Office of the Comptroller of the Currency (OCC), regulator of the national banks and the FDIC are investigating MERS for questionable business practices and for the systemic risk it poses to the nation’s financial system. The CEO resigned last week. Speculation in Washington has the OCC taking over MERS and nationalizing our land records, a clear violation of states’ rights.

Delegate Merricks submitted HB-1718. Bills to change the UCC are rare because the implications of unintended consequences are usually substantial and unforeseeable. The bill summary on the Legislative Information System (LIS) says the bill is intended to address recent court decisions and changes in technology. There is no question that the bill was targeted at both protecting MERS and avoiding a court decision in VA similar to that in MA. Delegate Merricks, member of a bank board and a former vice president of a bank, seems to suggest that take the home first and then figure out who actually is entitled to do so later. Never mind the risk to title that a future buyer of a foreclosed home faces or that we have situations in VA where multiple banks are foreclosing at the same time on the same person. In that fight the winner gets the house and the loser the right to sue the borrower for the loan amount.

The banks wanted HB-1506 killed and HB-1718 passed to protect MERS and, I believe, to avoid providing proof to mortgage investors that they were defrauded. The requirement to record would have provided evidence to investors in mortgage backed securities (MBS) that what they bought was empty; the mortgages were never legally transferred to the MBS. In my humble opinion if you sell someone a security that you claim is backed by collateral when it is not then that would be securities fraud. Among these investors are Fannie Mae and Freddie Mac whose losses are being paid for with tax dollars to the tune of billion of dollars. Other investors include state and private pension funds. The total exposure to the banks exceeds $1.5 trillion. You can see why they would fight so to avoid a $21 fee and the right to use their own “records”.

HB-1506 was killed by the Speaker of the house (Delegate Howell), the Chairman of the Courts Committee (Delegate Albo), the Chairman of the Civil Subcommittee (Delegate Athey) and the governor’s office.

Delegate Howell, the Speaker, sits on the board of Virginia Heartland Bank.

Courts Chairman Albo received 13% of his campaign funds from the VA Bankers Association and more from two major bank servicers.

The lobbyist representing the bankers, Matt Bruning, at the hearing of the Civil Subcommittee was a former aide to the chairman of the subcommittee, Delegate Athey, and an aid to the governor.

A reason given by Delegate Athey for not passing HB-1506 on was that the governor’s office in the person of Terri Suit, head of the governor’s foreclosure task force sent a letter asking the subcommittee to hold off and let the task force work on it. The Virginia Public Access Project reports that Terri Suit, ,chair of the Foreclosure Task Force, was a paid lobbyist for the Mortgage Lenders Association and the “private” members of the Task Force largely comprise representatives of the mortgage industry.

HB-1718 was pulled from the floor when Delegate Marshall threatened to attach an amendment excluding mortgages from the language. Had the speaker left it on the floor, the members would have had to record a vote on the amendment and with the amendment there no longer was reason to pass it. Delegate Merricks sits on the board of Virginia Bank & Trust and has 25 years in the banking industry.

The relationships are so inappropriate as to cause any reasonable citizen to question the integrity of the process.

A survey released today in the Financial Times shows that Americans trust of all large institutions is at an all time low with only 25% of American saying that they trust financial institutions.

A survey published last week ranked Virginia as the country’s second most corrupt state only after Tennessee.

The citizens of Virginia appear to be making an accurate assessment based on the shenanigans going on in Richmond this week.

HAMP and The Treasury

2011-01-27T22:13:00.000-08:00

So we've all heard about the HAMP modification program. It's been in the news for quite some time now and modification companies still suggest that struggling homeowners should scrape together their last few dollars and throw it to them so they can save their home.

The tragedy in this process is two fold. Firstly how someone can take a fee from another party without adding value is beyond me. There is no extra incentive for a servicer to accommodate a third party request for modification. Meaning that the third party adds no additional value to the homeowner who files his/her own paperwork. The only exception to this would be the third party document preparer who suggests that they are familiar with the banks qualifying process and what the borrowers income, assets, and other qualifiers need to be in order to get approved. Of course if this is the value that a modification expert intends to provide it seems obvious that the provider intends on manipulating the correct numbers and to provide the bank with the numbers that would fit in their box for approval regardless of what the true figures may be. This leaves the borrower on the hook for signing a document that does not reflect the borrowers true position and giving the bank leverage to pursue recourse based on fraud in the future long after the modification "expert" has moved on. Sounds pretty close to some of the foolishness that got us into this mess in the first place to me.

The other issue with modifications is that the servicers and banks are not incentivized to secure these modifications with homeowners. The financial incentives are far greater to bleed a homeowner dry with trial periods, late fees, lost paperwork, and other nefarious charges in order to line the pockets of the servicer. The bank of course has no intention of reworking any loan as it would have to purchase it back from the end investor or at a minimum get the investor to agree to new terms in order to facilitate an actual modification.

So you are asking yourself... "How come some people are getting modified?" The answer is that they aren't. The bank will occasionally alter front end terms on a security by giving the borrower a temporary teaser rate adjustment. While the bank shows the borrower the new payment in 16pt bold and italic font what they fail to highlight is that the fully indexed rate is not being reset but is actually accruing as a negative amortization feature and the additional interest that would've been paid had no adjustment been offered will eventually find it's way back into the loan re amortized over the course of the remaining unadjusted period or as a balloon at the end of the loan. And of course you know I don't even need to explain principle reduction because regardless of how far upside you are the bank is not making an adjustment.

So what are you to do? The secret to success when dealing with the banks right now is creating leverage and frankly getting mad enough to want to stand up for yourself and fight back. The banks have committed levels of fraud in servicing, securitizing, fees, and origination that would take a hundred blogs to explain even in it's most basic forms.

As Marcy Kaptur Congresswoman from Ohio recently shouted from the floor of congress... "People are rapidly losing hope and trust. They believe their government has been captured by special interests and no longer cares about them, and they are right.... You don't leave your home until you have had adequate legal representation!"

People please if not me find someone to protect you. Foreclosure, modifications, NOD's, Servicing, etc. are all legal procedures by nature. You have laws that can protect you and can bring the banks to the table in an honest and fair negotiation. Don't be willing to stand by and continue to let them have their way with you and every other hard working American homeowner who is so discouraged they have lost hope. Don't throw your money away at modification processes that have proven time and again that they are unsuccessful take some control back and fight for what's yours!

http://www.msnbc.msn.com/id/41299299/ns/business-real_estate/ Please Read and Get Mad!

(found this the day after I posted this blog)

A BILL to Terminate the Home Affordable Modification Program of the Department of the Treasury

Structured Finance 2.0

2011-01-25T08:12:00.000-08:00

The real estate boom of the past decade resulted from the explosive combination of a few financial innovations greatly expanded during the previous decade most often with the help of calculated deregulations offered by politicians to their biggest benefactors. Structured finance, credit default swaps, and sub prime lending all moved into high demand and complicated structures. Most regulators, generally insiders, only saw the upside of these new structures and since they were sold to sophisticated investors well versed in risk and leverage they were subject to limited oversight by the SEC. Credit default swaps were protected by regulatory indifference and the Commodity Futures Act and Sub prime was fueled with a wink and nod approach by the Fed. The lack of oversight was intentional and had taken many years of deregulation to accomplish but at this point it was what both Wall Street and politicians wanted.

Traditionally banks had structured financial assets tied to the real economy. I.e. stocks, bonds, currencies, gold, etc. Structured products on the other hand were generated to have any set of given properties and returns they wanted and were backed entirely with derivatives. (Side bets on other financial assets) So you can either invest in complicated algorithms that produce returns based on performance of actual product or you can invest directly in the product that the calculations are based on. To complicate the issue further it is also possible to invest in a hybrid structure that contains both real assets as well as derivative bets against other real assets in a series of highly complicated mixes.

The advantage of structured finance is twofold. First it creates new assets that can be invested in while not being limited to OTC stocks and bonds. Structured finance as its name implies could be engineered to very specific investor terms of yield and timing which was essential for timing liabilities of the investors. Secondly by creating assets that were more customized for investors, businesses ability to raise capital should be easier.

As an example if an airline flight across the world were the real asset being invested in an investor would be hedged against possible risk if it included an option to buy oil at a cheap price in the future. Thus if oil prices rise hurting the profitability of the flight by decreasing demand, the secondary option would increase in value thus protecting the initial investment. Additionally, of course by multi tiering investments this way the banks would increase their fees and revenues for the additional structures. The other advantage that made these so appealing for the larger banks was that they had the greatest ability to create unique leveraging giving them the ability to charge a premium for these bundled packages and increasing their profit line as well as the volume of transactions.

As banks began structuring MBS and CDO SPV's for investors instead of the typical standard yield across the board they tiered the returns and graded the risk into multiple levels called tranches. This structure allowed the securities to generally be graded AAA without much thought and it allowed the banks to restructure entirely new products based on the high yielding higher risk 2nd and 3rd tiers. Eventually banks began creating CDO's squared which consisted entirely of other CDO's while still getting AAA grades. As housing prices increased due to the aggressive nature of lending which was of course due to the high demand for mortgage backed structured finance the bets seemed increasingly less risky as prices continued to climb. This perfect storm if you will was obviously doomed to fail as price climbs on the assets would be capped at whatever amount borrowers were able to continue making mortgage payments. This is why as the housing boom continued into the later stages lenders continued to create loan structures that allowed borrowers to purchase higher priced assets at lower incomes. This structuring allowed the banks to keep running up profits despite the obvious end of the line.

The issue of fraud at the point of structured finance is not just procedural but conceptual as well. To contest that banks clearly didn't account correctly and sold investors a bill of goods on the securitization side is obvious and is being proven in the courts today. What is also starting to be addressed now is the suggestion that banks using these structured finance tools to generate revenue continued to draw homeowners into loans that everyone knew would eventually default and that were clearly overvalued. The train was being floored even though everyone knew the tracks ended quickly up ahead.

From Sub prime to Alt A to Option ARMS retail financing options were created with a clear design to qualify more buyers in order to sell more structured finance at the expense of homeowners and investors worldwide.
As the banks passed through the risk from these obligations to investors they collected their substantial fees and bonuses.

If this weren't enough once retail demand for their mortgage backed securities began to wane instead of reading market conditions they created shell companies to purchase the derivatives that they couldn't sell on the open market thus creating false demand and keeping valuations high by manipulating the market forces. This not only moved product off the books and made the banks more attractive and sound but it of course generated millions in bonuses for the enterprising individuals who managed the false sales.

While structured finance is a useful tool, when it is unregulated the temptation to manipulate and abuse is far too powerful. It's time to take our markets back from those who choose to abuse them and it's time to call them to account for what they've done. Leaving millions of Americans homeless, upside-down, and in debt at the expense of bonuses is not acceptable behavior and even without formal regulation should've been stopped before we ended up here.

Commodities Bubble

2011-01-21T19:36:00.000-08:00

Again another repost from April of 2008 and yet still very applicable. The commodities markets are heating up again due to a significant move out of the USD. These same principles need to be addressed and yet it's 3 years later. Someone needs to force the legislative and executive branches to account for this mess.

(April 2008 repost)

Bernanke is really putting his flawed logic to the test if he drops the banking rates again next Tuesday. From the beginning of his term as Fed chief there has been some inclinations as to his true positions on inflationary pressures and his seemingly controversial dismissal of their relevance in the broader market. His absolute commitment to accommodate and bow to big money's whims has been overlooked by many. Jim Cramer (Mad Money) virtually begged Bernanke to listen to the poor hedge fund managers and bank exec's during the CDO free fall from his MSNBC platform. Looking at Cramers record it would appear his greatest success is baldness and screaming. His investment house over it's entire existence is a woeful display of mismanagement and bad bets but since he had an associated level of success at a time when everyone was succeeding we now have to listen to him. When the hedges and banks mark to market indexing left them high and dry and they were stuck holding billions in questionable debt they had yet to unload to school teachers, metal workers, policemen, and the rest of us; they began screaming that the system that had brought them such success was now clearly flawed and could no longer be trusted. Instead of holding strong and governing the markets Bernanke has decided it's better to concede to the spectacle and tuxedo adorned monopoly men of Wall Street. He has consistently dropped rates and encouraged bailouts all while watching the dollar freefall to it's lowest levels ever against the Euro. He's watched as commodities have soared and has encouraged continued profiteering by lowering the inner banking rates and opening lending windows to non institutionalized banks. By doing so he can claim his trying to eliminate the credit crunch but all he's really doing is allowing the same individuals who ran the mortgage industry into a brick wall during their cash grab to turn their full efforts with an equal lack of restraint into the commodities market. Nobody could possibly believe that the cheap money made available by the Fed is going to collateralized debt, it's going straight into the commodities market and Bernanke keeps feeding the frenzy by discounting rates. The logic is absurd and clearly a man with the intelligence and experience of Bernanke is aware of exactly what's going on.

With an anticipated drop of .25% during next weeks meeting we can expect commodities are going to continue their rise. Oil and grain futures will continue to be used as a wealth driven tool as opposed to a hedge. If Bernanke chooses to take a stand and leave rates where they are, the sell off will be quick and prices will begin to realign themselves. Do we really need hedge individual fund managers to make billions in salaries at the expense of the many? Capitalism without restraint is oppression. Those who have bear a responsibility to act fairly and responsibly. Restraint, accountability, and compassion need to be returned to business. Our current success at any cost mentality is going to upend the very platforms we have used to achieve our current positions.

My question to Ben Bernanke is how much longer will you suffer that the least of those in this world suffer at the expense of significant profit lines for the few? Isn't your job Sir to protect the markets as a whole and not defend the few who are already positioned and protected? How many will be killed in food riots before you take a stand? You act as if you feel what you're doing is in the best interests of the world, but I contend that is only the case if your world doesn't extend past the platinum clubs of the Wall Street elitist's. It's time you either admit your true purpose or do the right thing. Leave the rates alone. Let the fat cats take care of themselves for minute while you care for those who you are truly positioned to serve.

Mark to Market Accounting Bias

2011-01-21T19:28:00.001-08:00

I'm not one to toot my own horn but I think it's important that we recognize the issues assoiciated with deregulation and allowing the inmates to run the "ass"ylum (thanks for reminding me Sandra)as we have with commodities, structured obligations, accounting strategies, and general financial recklessness.

I wrote this piece in April of 2008 nearly three years ago and I feel it still needs to be addressed and finally writers and economists like William Issac the former head of the FDIC and author of Senseless Panic are being heard.

I read today that some economists have suggested that we freeze the "mark to market" pricing index that governs the values of securitized obligations for the next 12mos. What they are hoping is that stabilization of the indexes that sell and trade CDO's (sub-prime mtg debt) will help us find financial footing across all sectors. The sentiment seems more of a cash grab than an actual strategy to steady the roiling debt markets we are currently experiencing.

Let's start with the purpose of the "mark to market" financial grading system. As new debt instruments were established over the past 7yrs they didn't have a history of valuation. CDO's, CMO's, etc. were all valued based on market interest instead of market history because they were such new debt tools. Using a "mark to market" approach a daily value was calculated more or less on what people were willing to pay for the securities.

Now that the markets have destabilized and the instruments are being sold at deep discounts many are suggesting it's unfair to try and determine value using the system that brought them all the increases during their run. It seems that the sentiment is that if the mark to market is working overly optimistically then it is reasonable and an accurate assessment of qualified value but if the market is overly pessimistic then the valuations can't be trusted. The double standard is ridiculous.

That these financial minds of our times would make such a patently flawed suggestion and try to pass it off as protectionism is offensive and less than subtle. Clearly the banking and financial industries have only their interests at heart while attempting to spin it as a stabilization tool for the entire economy. Maybe they should've stabilized it during the run up. Maybe Greenspan should've recognized the potential pitfalls and done some preventive maintenance instead of dropping the mess right in Bernankes lap with a smile and a handshake. Not really Greenspan's strong point or philosophy for that matter.

Politicians not surprisingly have begun regurgitating the information that has been spoon fed them from the industry. McCain even recently mentioned the need to consider a stabilizing force in the mark to market evaluations. I'm not convinced if on rebuttal Mr. McCain could even remember his quote not to mention justify it's intent. I guess what angers me is that while profiteering on the backs of individuals on the front end with mortgages that nobody expected they could keep up with as well as back end profits by selling these same mortgages to investors with AAA ratings the industry is now suggesting it shouldn't suffer for their own indiscretions because it may effect the broader market and we just can't afford that. My thoughts, we can't afford not too. It's time for money to be accountable.

(Christopher Peterson MERS) Chris Peterson MERS

2011-01-21T18:55:00.000-08:00

Chris Peterson Professor of Law at the University of Utah's Law School discussing before congress some of the issues relating to a circumvention of property rights using the shell corporation MERS by the banking industry. What we need to recognize is that this was not only an affront to our county and municipal coffers this was a ruse to take a transparent system of public record and make it opaque for the benefit of trading and selling individual property. The issue we have now is that without qualifying the banks standing in a foreclosure homeowners could potential receive claims from multiple individuals or entities that all suggest an ownership of their mortgage proceeds. If clear standing isn't presented how is a homeowner to know who legitimately to pay off in order to fulfill their obligation?

http://www.youtube.com/watch?v=8VpCUfC9k6M

MERS Rundown

2011-01-21T18:48:00.000-08:00

The big banks are reporting that profits are up. Citigroup is celebrating a 46% gain in share prices and net income of $1.31 billion.

Wells Fargo just reported strong profits.Yet there are many reasons to doubt the good news. As I've said before, it is more likely that they are toast.

First, the income reports result in large part from reductions to loan loss reserves.

Yes, banks are partying like it is 1999—everything is hunky-dory so there is no reason to sock away reserves against possible defaults. Heck, no one is going to default in 2011.

Right? Move those reserves into the profits column.

Banks are not making any money in traditional lines of business—that is, by making loans. No one wants loans. The economy is down for the count. Other than pulling money out of loan loss reserves, banks can only make profits by revaluing assets.

The write-downs of trashy mortgages need to be reversed. Banks trade trash with each other at higher prices, recording profits. They sell trash to the government at inflated prices—more on that below. And they jack up late fees on homeowners, credit card users, and other debtors. Even though none of those borrowers can actually pay the late fees, the banks book the revenue now.

But here is the much bigger problem: the banks are getting sued from here to Pluto by homeowners, soldiers and sailors, Fannie and Freddie, PIMCO, the NYFed, and just about anybody with access to a lawyer. And, increasingly, the banks are losing.

JPMorgan-Chase was caught stealing homes from military personnel. The bank admitted 14 outright thefts—improper foreclosures. It is illegal to foreclose on active duty personnel. But illegal activity is routine business practice at the big banks. They flaunt the laws. They then claim they had some paperwork problems. Oh, you know, banking is such a complex business, you never know whose home you are taking. Widow, Orphan, Military Personnel. What the heck. Who keeps track, anyway? The bank also admitted that it overcharged 4000 active duty personnel—jacking up their mortgage interest rates to 9 or 10 percent even though those serving our country are supposed to get 6% rates (6? How generous is that?). The bank now says it feels their pain—“we feel particularly badly about the mistakes we made here” said bank officials in a statement. Because they got caught, of course. Routine overcharges are the business model at the big banks. Then they pile on late fees when families cannot afford the overcharges. Finally, they take the homes and throw the owners out onto the streets. Paperwork problems, you know. No prison terms for theft of homes by bank officials. At best, the bank says it is sorry and promises it will do better in the future. It would be interesting if bank robbers were allowed to pursue the same strategy.

Ok, next problem on the docket. Citigroup is still selling trash—to Freddie, no less. A recent audit has disclosed that 15% of the mortgages Citi sold to Freddie in 2010 were frauds. Folks, these are not the old trash Citi originated in the heyday of fraudulent loans back in 2004-06. No, these were all new originations, “underwritten” between February and May of 2010. I put “underwritten” in quotes, because it is clear Citi is not checking credit-worthiness. These are loans that are rated “not acceptable quality” by Freddie. They've got missing documents, the properties were not properly appraised, the incomes of homebuyers did not meet requirements, and the homes did not qualify, either. In other words, they had the same litany of problems that all the junk mortgages had back in 2005. Citi has learned no lessons from the fiasco it helped to created.

Indeed, Sanjiv Das, CEO of CitiMortgage (that originates loans for Citi) argued that with “only” a 15% rate of fraudulent mortgages, that qualifies as “one of the most outstanding stories” of Citi's business model; it represents a “fantastic job” he claimed. True, it is down from a 30% fraud rate in the fourth quarter of 2009. And, who knows, maybe this really is the least fraudulent business the big banks have going on right now—compared with money laundering, drug running, and who knows what else, this might really be the shining example of good citizenship on Wall Street.

So, fantastic improvement, Citi. The bank has cut its fraud rate in half. Still, just about one out of every seven mortgages it sells is a fraud. Just what kind of business can stay in business with a fraud rate like that? Oh, a big “too big to fail” sort of bank. Experts say that “the percentage of acceptable quality loans should be in the high 90s”—not down around 85%. This is a bank that received massive bail-outs by government, and is still screwing government by selling trashy garbage to Freddie. Vikram Pandit, currently the darling of the financial press because he manufactured presumably fake profits at the bank, declined to comment. That is quite a surprise.

Meanwhile, Citigroup upped its reserves to cover buybacks to $952 billion. Credit Suisse reckons it will need between $2.2 billion and $4.3 billion for defective mortgages it sold between 2005 and 2008. But like all estimates of the size of this catastrophe, that will prove to be orders of magnitude too small. In the third quarter of 2010 there were over 2000 repurchase agreements from Citigroup mortgage buyers demanding that Citi take back the junk it sold.

In a similar scam, Bank of America agreed to settle with Freddie and Fannie. Countrywide (taken over by BofA) had faced $127 billion in buyback claims for faulty securities it sold. Again, the problem was that the underlying mortgages did not meet the “reps and warranties” the bank had provided. It paid Freddie $1.28 billion and Fannie $1.52 billion—a measly 2+% of the value of the fraudulent mortgages the bank sold. Four Democratic members of Congress rightly objected—how could this settlement represent “the best possible recovery of funds available to taxpayers”? Meanwhile, Freddie posted 5 straight quarters of losses, receiving $63 billion in aid from the Treasury to cover its bad deals with banks like BofA. Apparently the deal with BofA was pushed through by Treasury Secretary Geithner, who continues to protect his Wall Street benefactors. But as Yogi said, it ain't over until it's over. BofA will be sued again and again over these fraudulent mortgages, by those with deeper pockets who are not subject to Timmy's will and access to Uncle Sam's purse.

Courts continue to chip away at the justifications banks and their Frankenstein creation, MERS, have created for theft of homes. MERS was manufactured by the industry to evade proper recording of property sales in county recorder's offices. This will sound overly dramatic, but there is no other way to accurately state it: MERS was from inception a criminal conspiracy designed to cheat counties out of recording fees, the US Treasury out of taxes, and homeowners out of their homes. That conspiracy will have to be proven in the courts, but everyday and everywhere courts are ruling against MERS. The fiction perpetrated by MERS is that it is simultaneously a nominee of the true owner of the mortgage debt and at the same time it is the mortgagee of the security instrument. (You cannot simultaneously be the party of interest and the nominee, of course.) It also disclaims any financial interest in the mortgage and has no claim on the mortgage payments. But it claims that it can operate as the agent of unnamed owners of the mortgage instrument, unknown owners who—since they are unknown—have never designated MERS as agent. I won't repeat my earlier missives: you must have a clear chain of title, demonstrating proper assignment of the mortgage at every step. It looks like none of MERS's mortgages meet that—which is what the Massachusetts Supreme Court ruling was all about.

Judges are waking up to the multiple scams. In Utah, judges are allowing homeowners to pursue a “quiet title action”. The owner seeks clear title to property free of lien by lenders or others. Typically, in a home purchase, the homebuyer signs a promissory note (note) held by the lender and a deed of trust (mortgage) that is recorded at the county recorder's office. The holder of the note has the right to receive mortgage payments; the mortgage provides the right to foreclose. In US law, the “mortgage follows the note”—the note holder who has the mortgage can foreclose if the payments are not made. In a quiet title action, the owner takes advantage of the fact that MERS purposely separated notes and mortgages, listing itself on the trust deeds as the beneficiary of the note.

Utah courts have recognized that as a fraud. MERS—with no financial interest in the mortgage—cannot be beneficiary. It is just a data registry. It makes no loans. It has virtually no employees. It does not receive mortgage payments. It was designed to defraud counties and the IRS. Hence, homeowners can go to court without any notification to MERS, serving legal papers only to the legal owners of the title to the property. This is usually some title company, that is supposed to be the trustee of the trust deed (mortgage). In cases in Utah, these title companies either did not respond at all, or they simply said that they didn't “know who the beneficiary of the trust deed is” and denied any interest in the deed. The judges then handed the deeds over to the homeowners. While they can still be sued for the mortgage payments they owe, the homeowners got their homes free and clear. In other words, no one can foreclose on them. Their debts are unsecured.

MERS has screwed up the records so badly that in many or most cases no one knows who holds the notes, who is entitled to receive mortgage payments, and who has got the deed. What we used to call “mortgage backed securities” are probably mostly unsecured. It is not clear that any of the securitizations of home mortgages were done properly. In that case, the securities are not mortgage backed. Mortgage servicers do not have the right to foreclose, and neither do the securities holders. Homeowners can follow the example in Utah because, apparently, all states have a similar provision to allow “quiet title action”. The mortgage debts are not secured by homes. The homeowners can keep their homes and tell the banks to take a flying leap.

And that makes the banks toast. Forget anything you read about their income, their profit rates, their recovery. They've got to take back the unbacked mortgage securities—they do not meet the “reps and warranties”. And there is no property behind them, so foreclosure is out of the question. They can pursue homeowners in court—but homeowners lost their jobs and in any case could not afford the houses the lender fraudsters put them into. Yet, they get to stay in the homes, can claim their titles, and can negotiate for better terms with banks that are failing.

The next several years will be fun. Bet on the lawyers.

MERS

2011-01-21T18:43:00.000-08:00

So I've been screaming for a couple years that the mortgage system has been taken over by virtual pirates without remorse or regulation. I've seen it from the inside out and am very comfortable asserting the position that homeowners have been duped and finally the courts are starting to agree with me! Here are a couple articles that explain the process and where the inherent flaws are in the recording system and why they aren't just harmless attempts at saving costs but legitimate attempts to ursurp power from individuals by tapping into their single greatest physical asset and source of liquidity.

From Richard Eskow:
People are debating the need for a "systemic fix"to address the foreclosure crisis. What we really need is a systemic redesign, from the ground up. Fortunately, the design was laid down centuries ago -- by 800 years of law, and by the idea that free people are entitled to limit the unwarranted power of others over their persons and property. These principles are a good foundation for structuring future negotiation, legislation, or regulation.

The president wooed corporate executives this week with a Wall Street Journal editorial called "Toward a 21st Century Regulatory System." What we really need is a 21st century banking system, built on ancient principles and not fly-by-night profiteering.

You could encode those principles in a document and call it the Borrower's Bill of Rights. You could even call it the Mortgage Magna Carta, since some of the basic principles involved date back that far.

People are taking action. The Commonwealth of Virginia is debating a law that would restore some basic homeowner rights and would severely restrict the use of MERS, a database and pseudo-company created by the mortgage industry to bypass property law and expedite the buying and selling of bundled mortgages at something approaching the speed of light. Homeowners and investors in mortgage-backed securities are teaming up against the banks (although they'll part way again soon, since their interests conflict in many ways). Attorneys General from all 50 states are conducting a joint investigation and are negotiating with the major banks. FDIC Chair Sheila Bair wants to create a "claims commission" for wrongly foreclosed homeowners, like the claims program for victims of the BP disaster in the Gulf.

These efforts are good, but they lack a unifying principle. Even the idea of a "systemic fix" or "systemic redesign" doesn't go far enough, because it doesn't establish the foundation for redesign. What's needed is a new charter, a new set of rights and principles for people who engage with the banking system (or have rescued it with their tax dollars). These "borrower's rights" would stabilize the banking system and protect both investors and stockholders. That means we're not talking about a socialist revolution, just the rule of law and sound business practices.

Let's not pretend that we live in a system where anyone who doesn't like the terms of a loan can turn it down. Banks operate in close collusion, so if you want to borrow you'll have to do it on their terms. It's an asymmetrical relationship. People can't turn these loans down individually, but they can set the rules of the road as a society, by working through their elected representatives.

What would those rules of the road, these borrower's rights, look like? Let's throw out a few to get the ball rolling:

1. Contracts must be honored. As banks sold mortgages to each other, the new mortgage holder often ignored many of the terms of the original loan. Due dates, penalties, and other provisions were unilaterally changed, often with no notice to the borrower until the penalties started showing up. A contract is an agreement between both parties, and it must be understood that if a bank breaches its terms that bank has broken the contract.

2. State and local laws can't be overruled by private enterprise. MERS was created to bypass the law by naming itself as the "owner" of mortgages that it freely admitted it didn't own. It was a dummy corporation, but we were the dummies for letting it happen. MERS permitted banks to foreclose without proper documentation, without holding the deed to the property, and without giving the homeowner his or her day in court.

From the Magna Carta, 1215 C.E.: "No free man shall be seized or imprisoned, or stripped of his rights or possessions, or outlawed or exiled, or deprived of his standing in any other way, nor will we proceed with force against him, or send others to do so, except by the lawful judgment of his equals or by the law of the land."

3. Real-world assets (like homes) can't become digital gambling chips. They must be backed by deeds and other documents that link them with reality. Mortgage bankers will tell you MERS was created just to make transactions faster and easier. There's nothing wrong with electronic databases and exchanges. But you can attach the digital image of a deed or court record very, very easily. By not requiring that these documents be obtained and registered in county courthouses, it became too easy to flip mortgages in the speculative market.

If this 'digital gaming' system didn't create the housing bubble and market collapse, it certainly made it more likely. The process needs to decelerate a little to stabilize the economy. There's nothing wrong with electronic databases, but it's easy to attach the image of a document to any computer record. That reconnects the economic virtual reality of the bankers with the physical (and legal) reality where actual people live in actual homes.

4. If you break the law, you pay the price. No more retroactive immunity, easy plea-bargain deals, or soft fines for bank crimes. What's more, if a bank exectutive breaks the law, the fine must be paid by the executive, not the bank's shareholders.

And how about a little jail time now and then? If you launder drug money for the Mexican cartels and don't wind up in the joint -- just because you're a banker -- then the criminal justice system needs a "systemic fix" too. Remember: If you can't do the time, don't do the crime.

5. When you cut a plea-bargain deal, or get rescued by the taxpayer, you must admit your wrongdoing. We said no "easy" deals or cushy settlements. There will be deals and settlements, of course. But an admission of wrongdoing should be required in every case. And it should be issued publicly, by the bank's CEO.

(I'm lookin' at you, Jamie Dimon! That Alabama corruption case was really sleazy.)

6. No more clauses allowing the banks to enter "abandoned" homes. Banks have been forcing this provision into their contracts for years. (Remember, it's not a symmetrical negotiation between two equal parties.) This provision has been the source of many abuses, and it should be outlawed. If a bank thinks it has the right to seize a home, let it go to court like everybody else.

(See the Magna Carta quote, above. What is this -- a Monty Python routine?)

7. Auditors must be legally liable if they certify sketchy and/or fraudulent bank programs as financially sound. PriceWaterhouseCoopers just skated on a technicality from an investors' lawsuit over allegedly fraudulent activities at AIG, in businesses which PWC certified to be sound. That's a miscarriage of justice.

If you should've known better -- in PWC's case it was their job to know, and it's impossible to imagine how they could not have known -- you should pay the legal price for your behavior. (Conflict alert: I used to work at AIG.)

8. We need ratings agencies that aren't inept, corrupt, compromised, or beholden to the companies they're rating. And yes, I do mean S&P and Moody's. Their internal emails and other documents showed they were morally compromised at best. They got everything wrong. They rated the worst junk in the world "AAA." They were a fundamental reason for the economy's collapse.

Raters should be able to rate -- and when they call themselves "agencies," that should mean "agency" as in the EPA and not "agency" as in "ad agency." I'm not familiar with the work of Jules Kroll, but his new rating company sounds like a good idea. Rather than just read what the banks give him, he says he'll conduct due diligence and investigate them. What a concept -- it sounds almost like a business. Or an agency.

9. If we rescue you, we call the shots.From now on, anybody who rescues a bank without creating strict rules of conduct going forward shall be deemed to have committed "regulatory malpractice." If one business rescues another -- a manufacturer rescuing a supplier, for example -- it takes a chunk of the profits and sets the terms for future deals. We rescued the big banks, did a victory dance just for getting our money back (they made a bundle off interest), and are still giving them sweet deals. What's more, they're sticking it to the American consumers who rescued them, every chance they get.

That's gotta stop.

10. Nobody gets rich by f*cking up. If you run your company into the ground, so that it will fail without massive taxpayer help, you're a failure in business. Period. If you pay yourselves massive bonuses after we rescue you, you're rewarding yourselves for being lousy at your jobs. (Here's a case in point.) That ends now. If anybody collects billions in payouts, it's us (see above).

And stop telling us you're worried about the deficit -- it just gives us more reason to pay it down with the bonuses you couldn't have earned without us.

11. If you're collecting low (or zero) interest money at the Fed's "discount window," you better be lending it. Too many banks are collected those low-interest loans and investing it in non-productive areas, or flat-out speculating with it. Financial reform slowed that down a little, but didn't stop it. Lending is down, for both businesses and homeowners. So why is there such a long line at the discount window?

12. 'Claims Commissions' are good, but the list of acceptable claims should include fraudulent lending and inappropriate contract changes -- and they shouldn't be limited to defaulting homeowners. Many underwater homeowners are paying loans that were deceptively issued and/or administered. The "claims commission" idea shouldn't be used to convince the public that only a few extreme cases are responsible for the problem. Millions of mortgages are defective, and should be repaired in a just way. Sounds like a job for the Claims Commission.

13. Banks shouldn't make money writing bad deals.Banks make money on bad deals when they own the servicing companies that collect fees and penalties. Even the best underwriting will miss a few risky borrowers. But the book of business at any major bank is saturated with defaulting or struggling homeowners. That means the bank wrote a lot of loans it shouldn't have written. By owning the servicers, banks can make money from their own bad judgment. And it's an egregious conflict of interest.

Banks shouldn't own servicing companies, or profit from their own underperformance in any other way.

14. Underwater homeowners shouldn't be bailing out hugely profitable banks. Sure, bank earnings are down for some banks this quarter (though others are doing spectacularly.) Whatever their margins, they're in a lot better shape than most underwater homeowners. So why aren't banks being asked to renegotiate the principal on some of these loans, especially primary residences? They're being bled dry so that banks don't have to admit they're sitting on a lot of artificially inflated assets. That's just prolonging the inevitable, at a high human cost.

The most moderate approach would be to say that banks and homeowners got into this mess together and should share the cost of getting out. I wouldn't be that "moderate."

15. After you've wrecked everything, don't make me listen to your complaints about regulation. This isn't exactly a "right," unless you count the right to be free from unwarranted intrusion of absurd ideas into a person's brain. But it's inhumane to make sensible people keep listening to whining about regulation -- from executives who ran their own companies, their entire industry, and the complete freakin' world economy into the ground. The President shouldn't be apologizing for regulations in the Wall Street Journal. He should be reminding its readers that on the street for which that paper is named, highly paid executives brought their companies to the brink of ruin and had to be saved by the government they so freely disparage.

In the name of sanity and decency, let's stop hearing complaints about regulation from people whose unregulated actions caused a worldwide economic meltdown. What's next -- gripes about radiation safety from the people who operated Chernobyl?

These aren't randomly selected ideas. Together they re-establish the rule of law, anchor the lending process back in physical reality, reduce the "moral hazard" that lets bankers avoid the consequences of their actions, and restore balance between banks, government, and their trading partners.

As we said, they're mostly meant as food for thought. Better ones would be appreciated. But isn't it time we made the most important "systemic fix" of all -- the one that repairs the broken link between a bank and the society in which it operates?

Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light.

(Thanks Richard)

Still trying to blame the homeowners?

2010-12-25T20:51:00.000-08:00

(Matt Taibbi Author)

In the ongoing effort to rewrite history and deflect blame from Wall Street for the financial crisis, former U.S. Treasury official and current American Enterprise Institute swine Peter Wallison has issued a lengthy analysis of the mortgage bubble that, surprise, surprise, lays the blame for the crash at the feet of government efforts to expand home ownership to "those who normally would not qualify."

The Washington Times piece about the Wallison study includes the following coda near the top. The emphasis here is mine: "Without waiting for the evidence, many in the political class, particularly those on the left, bought into the argument that the financial crisis was caused by greed."

I'm going to come back to that remarkable line written by senior Cato Institute fellow Richard Rahn, who's just jumped to the very top of my shit list, in a second. But just quickly, the argument goes on to summarize the conclusions in Wallison's study, which is described as a "stronger and more empirically-based" argument, having been done by one of what Rahn calls the "somewhat more sophisticated observers" who didn't just rush to blame the whole thing on greed without waiting for the evidence.

The essence of Wallison's argument is that the crisis was caused by the fact that the government in the late 1990s started forcing Fannie Mae and Freddie Mac to acquire increasing numbers of "affordable" housing loans.

Which is true. The Clinton administration did issue a mandate instructing Fannie and Freddie to purchase a larger portfolio of low-income housing loans. But this had nothing, or very little, to do with the mortgage bubble. What's fascinating about this AEI stance is the evolution of the right-wing argument: the first effort to explain the mortgage crisis involved, of all things, the Community Reinvestment Act of 1977, the anti-redlining law that required banks to issue a certain percentage of home loans to the people who made up the bulk of their depositors. That propaganda effort was only mildly successful for the screamingly obvious reason that the law in question was passed in the seventies, across thirty years of crisis-free American history. That, plus the fact that the CRA had absolutely no real impact on the sudden explosion of subprime home loans in the early part of the last decade, made this a propaganda non-starter.

So now they're coming back with this, pegging the whole mess not to greed but to Clintonian policies involving Fannie and Freddie. Note that although they could have done so, the AEI is not criticizing Clinton for the things he was actually guilty of, like repealing the Glass-Steagall Act and signing off on the Commodity Futures Modernization Act (which deregulated the types of derivatives that made the mortgage-backed securities boom possible) in 2000.

No, the criticism here is not really partisan; it's designed more to put class and race at the middle of the crash discussion, pitching the financial crisis as the result of a botched socialistic scheme to put "those who normally would not qualify," i.e. poor white trash and poor black and Hispanic people, in fancy homes.

Here is why this argument is bullshit, and I'm not the only one saying so.

The reason there was a sudden rush to lend out homes to subprime borrowers was not because of Fannie and Freddie, but because the banks had discovered fancy new derivative tools like CDOs and CMOs that allowed them to chop up bundles of home loans and turn them into AAA-rated securities. Countrywide was not trolling the streets looking for jobless indigents to lend mansions to (this literally happened, by the way) because the government was forcing them to. It was because big banks like Goldman and JP Morgan Chase and Bank of America were letting them know that they had a virtually limitless market for mortgage-backed securities, thanks to the new derivative tools that allowed them to sell billions of subprime MBS as AAA-rated investments to suckers like German land-banks and Icelandic trade unions and the like.

Every time the AEI or some other stooge comes out with one of these "But the government made us lend this shit!" arguments, we need to stand up and repeat: no, sirs, it did not. This was not a government program to put people in homes. This was an international fraud scheme to disguise crappy American home loans as AAA-rated safe investments so that they could then be hawked to foreigners and insurance companies and pension funds. The fact that a whole bunch of people who probably didn't deserve credit ended up owning mortgages and buying homes was actually an incidental side-effect, a kind of collateral damage, to the underlying fraud scheme. Not about greed, Richard Hahn? This crisis was about banks bundling subprime mortgages and selling it off as AAA-rated gold to pension funds.

That means a bunch of jackasses on Wall Street with $1000 suits and slicked-back hair were passing the word to Countrywide lenders that they needed masses of crap loans that they could then turn into investment-grade paper and sell it all off to, say, the state pension fund of Indiana.

That way, thousands of Indianan toll booth operators and teachers and prison guards and janitors who'd been working their whole lives and saving up nest eggs were made into customers of this toxic crap these bankers knew would blow up eventually. Indiana's pension fund lost $5 billion during the crisis. Virtually every state in the union suffered similar fates. Why? Because a bunch of used-car salesmen on Wall Street sold them fleets of lemons with no engines under the hoods.

I don't know what Richard Rahn would call making your yearly bonus goal by robbing some janitor in Indiana out of his pension. As a flack for the Cato Institute, I'm sure he would call it good business. But in my mind, if that's not greed, I don't know what the hell is.

This has to be repeated: Fannie and Freddie did not invent this scheme to turn subprime crap into AAA-rated gold. They were not the ones who were mismarking dicey home loans; that was the fault of the ratings agencies, who did so because they wanted to retain relationships with the big banks. Here's what Fannie and Freddie did do; they followed the market and bought lots of these loans after the banks had already collected them and chopped them up and mismarked them. As Barry Ritholz points out, they were essentially just another in a long line of dumb banks that jumped ass-first into the MBS market once it started to bubble up.

There's certainly a legitimate debate about government housing policy and whether or not it makes sense to have the Government-Sponsored Entities like Fannie and Freddie putting so much of our capital at risk to help low-income borrowers get houses. It may very well be that the Clintonian dictums went too far and were ultimately unsustainable. But that is an entirely separate issue, very different from the question of what caused the mortgage bubble and, by extension, the crash.

Plain and simple, the mortgage bubble was caused by the unregulated mass-marketing of mismarked, or fraudulently marked, subprime mortgages to customers who had no idea or only a very dim idea of what they were buying. This was high-tech fraud and stealing, and not just greed but unconscionable, criminal greed on a grand scale.

As for Richard Rahn talking about observers in the "political class" who blamed the crash on greed "without waiting for the evidence," let me just ask this: on the literary totem pole, what could possibly be lower than a flack for an industry-fattened think tank taking a paycheck to defend greed? I guess there are all sorts of creatures in God's kingdom, but man, are some of them ugly.

2010-12-25T19:11:00.000-08:00

I wanted to include the most recent story on the housing bubble and it's inherent flaws and manipulations by market insiders.

What many individuals don't recognize is the seriousness of the fraud that existed inside of the banking institutions that securitized home mortgages. Often we get caught thinking of fraud being on the front end of the process, what many people haven't recognized is the level of deception, manipulation, and outright fraud that went on once the mortgage was signed and prepared for sale to investors. Manipulation, like in this article, is just a portion of what the banks have their hands in as if this wasn't enough on its own. This is a simple manipulation that went on for at least 3 yrs. Bribing friends and other institutional investors to purchase securities that the market no longer had an appetite for in order to put sales on paper to generate bonuses for themselves. By creating a false market and defying their own previously demanded mark to market pricing standard they continued to drive home prices higher for individuals for at least 3yrs after the market should have been indicating a stabilization if not a retraction from previous highs. Similar to Goldman's process of shorting their own collateralized obligations while simultaneously pushing them to their investors this type of market manipulation is not only unethical but illegal but I promise you that the individuals involved will not face consequences.

Imagine the numbers of homeowners that overpaid for their homes over the course of those years all because of the fraud taking place in the back rooms of some of our most trusted institutions.

It's things like this that make my job of finding legal recourse for homeowners so easy. I suppose between robo signing and creating new loan documents, manipulation of prices by securitization, and wrongful foreclosure and due process I should be thanking them.

http://www.msnbc.msn.com/id/40795080/ns/business/

Seriously? Reaganomics?

2010-12-25T17:21:00.000-08:00

Today I once again heard the battle cry of many that claim Ronald Reagan was a genius economist, or more reasonably his ad visors and handlers. That their financial capacity and plans saved our country and brought us the greatest success in modern history, economically at least. While I won't contend that Reagan had an influence on our country's economic policy I would like to suggest that the blank check that seems to be afforded him in hindsight should be looked at a little more critically especially given the current state of economic affairs in our country. As most I believe would agree the warning signs looking back should have been much easier to see by not only professional financiers but by everyday Americans as well.

Let's just consider two major tenants of Reagan era economic policy. First tax cuts primarily for the most wealthy (generally expressed as the top 1% based on income) and deregulation of financial markets.

Consider the Reagan era tax cuts. The effect was primarily a change in the composition of tax revenue, towards payroll and new investment away from higher earners and capital gains on existing investments, with comparatively small effect on overall tax revenue: the changes "reduced the federal revenue share of GDP from 20.2 percent in fiscal 1981 to 19.2 percent in fiscal 1989," a 1% reduction. What this means is that a 1% drop in the overall tax received was generated entirely by changes made to existing savings and investment from the well heeled and a shift from tax burdens on the top 1% of earners to the middle and working classes. Considering the impact of the movement as a whole one may not recognize the sweeping nature of the reform or the impact it would have on its benefactors but when we consider the very small number of individuals who benefited from the swing of revenue it's quite sobering.

The theory at the time was labeled as "trickle down economics" and that by saving the greatest earners and investors even more they would generously pour those savings and more into better working conditions, wages, and bless the lives of all those they oversaw. Clearly at the time it was a tough pill to swallow realistically but even more so now that we've witnessed the slow disintegration of America's middle class.

Outsourcing middle class jobs to save companies bottom lines did not improve the lives of those whose responsibility it was to cover the shortfall and despite many claims to be anti big gov't Reagan and his policy makers did not decrease spending over his terms.

While I do agree that as in virtually all situations a case can be made that the era had some benefits I think critically thinking we must examine and accept the failures of our economic decisions during this time as they had a great impact on where we stand now and what we might consider moving forward.

More specifically reaching into current events in our country the Reagan era deregulation of the financial markets needs to be addressed as it has led to significant turmoil in our country. The housing mess.

Seeing the housing mess from the inside has been quite an amazing process. Working for the subprime lenders on a wholesale side and structuring capital on the secondary markets has given me a little perspective while I will still not claim that I am not constantly surprised by new information that seems to trickle out month after month I can say what I've seen is criminal, deceitful, and just plain wrong in many instances.

I won't venture into the deregulation time frame at this point while I would like to point out that no matter how you choose to affiliate yourself politically there is ample blame to go around on every side. For every Phil Gramm there is a Barney Frank that can bear equal but separate burdens.

The dismantling of the financial regulations began shortly before we began seeing the boom and bust cycles of specialized markets. Oddly the overseer of many of these was Alan Greenspan yet his record seems oddly unblemished. Even if we only address his two biggest unseen collapses, the tech bubble and the derivatives bubble (mortgage backed) we would have enough to seriously question the planning and pace at which our economy was handling its new freedoms. Add in the savings and loan scandal and the commodities fiasco's and we really should have been more aware but it appears gov't, business, and the treasury were all oblivious and completely unaware of the underlying issues associated with the new boom and bust cycles.

This is my opinion, but I'm fairly certain based on the risk vs. reward system in place for those same individuals who benefited from the original Reagan tax cuts were also the ones who benefited from the bubbles and their eventual collapse. The bankers and finance professionals reaped massive rewards for the selling and marketing of these securities both ".com", commodities, and housing. The manipulation of these markets has been shown in both previous cases and is coming out now in our latest bust. The latest collapse is a little more personal for many because it didn't stop at their wallet and their savings account balance it followed them home and took a toll on their families and personal lives.

The point needs to be made that for the past 30yrs we've had a particular approach to business and regulation including taxation and that has brought us to where we are good or bad. I'd contend that a much greater portion of us see it as bad while only a select few have reaped the reward of lack of constraint and pedal to the floor risk taking with no consequence or recourse. Shouldn't we think critically for a minute instead of throwing out our favorite pundits quip of the week? It seems we are all too tired to think for ourselves anymore but if we don't we are doomed to keep getting run over by the machine that has run us down several times already. Isn't it obvious that trickle down theory is flawed at best and a tool for the most advantaged to benefit off the rest of us at worst? Isn't it obvious that an unregulated market allows those in power to steal from those without?

Everyone is mad at the bonuses being paid to the executives that ran the their trains into a ditch. Being rewarded in tremendous excess for being completely inept or more likely just being intentionally self serving and unconditionally greedy at the expense of everyone else is not what we as a country should be rewarding. Pandering to those with great wealth and selling out position and influence in order to rub shoulders with the financial elite should not be what we desire from our representation.

The American people have been bamboozled and it's about time to put an end to it and restore the American dream to everyone and not just to those with influence, connections, and power.