Since they all seem to be talking out of their asses…let me be frank and speaketh Le Face! Not in 5 yrs…not in 10 years…maybe in 20 years from now!

Seeing the inventory of shadow “hidden” reo’s there is no near in sight!

Now why give any loans today? The housing market is going down, these homes will continue to head under water? Buy today…Loose Tomorrow mentality? Especially the FHA loans??

Description: A sign advertising new homes for sale is seen on March 24 in Davie, Florida. (Getty Images)

May 27, 2010 | From theTrumpet.com
Not any time soon.

Remember when all those government economists and National Association of Realtors analysts were saying that housing prices wouldn’t recover until the first half of 2009? Then it was by 2010? Now the truth is coming out. No one knows when housing prices will recover—if ever.

According to mortgage-bond legend Lewis Ranieri, don’t expect a meaningful rebound in house prices for at least three to five years: “There is another big leg down and the question is how long does it stay.”

Don’t be quick to dismiss what Ranieri says, because he is possibly the one individual who is arguably just as responsible for America’s great housing bubble as former Federal Reserve Chairman Alan Greenspan (who lowered interest rates to record lows to try to get us to spend our way out of a recession), the politicians (who forced banks to lend to unqualified individuals) and the investment ratings agencies (that rated subprime mortgages as triple-A safe).

Ranieri was the high-flying Salomon Brothers trader who first packaged mortgages into bundles that could be sold and traded as securities on a national and international level. He was the man who institutionalized mass mortgage investing. His innovations back in the 1980s helped reduce the cost of mortgages for millions of people. But they also paved the way for the junk subprime lending that helped fuel the housing bubble.

Now Ranieri is saying to get set for more trouble ahead. Over the next 18 months, at least 3 million more properties will join the 5 million already in some stage of distress. “It’s an immense problem” that risks “flooding the market,” he said.

The market for mortgage-backed securities has virtually dried up since 2008. With so many people falling behind on their payments, investors have not been able to rely on the steady streams of income that mortgage bonds historically produce. Plus, with house prices plummeting, investors don’t even have the protection of collateral.

With such adverse conditions, investors don’t want to touch American mortgages with a 10-foot pole.

Normally this lack of investment demand would drive up mortgage rates and weed out weaker borrowers—thus allowing the housing market to return to investable conditions.

However, due to government intervention to prop up the housing market, there has been an unforeseen side effect. America’s pool of mortgages has actually become riskier for investors.

In an effort to prop up house prices in America and thus keep the big banks solvent, the government began massively encouraging more people to invest in homes: It changed tax laws, it used taxpayer money to modify loans for people who had borrowed too much, it offered first-time home buyers credits, and then extended the buyers’ credits again once they expired.

It even used taxpayer dollars to ramp up subprime lending—the same kind of risky lending that got the banks into trouble in the first place.

It was one massive taxpayer-backed effort to increase the pool of home buyers and thus demand for houses and house prices.

But the scheme largely backfired.

The government subsidies and handouts did encourage more people to buy homes—but mostly people who couldn’t normally afford homes on their own.

Look at the numbers. About 95 percent of the money used to buy homes in America today comes from the government. And guess which government organization issues the most loans. Is it Fannie Mae and Freddie Mac, the two government mortgage giants notorious for their low lending standards? No, it is a new government agency with even lower standards.

Meet the Federal Housing Authority (fha). You can get an fha-backed loan for a house with as little as 3.5 percent down. This is the most common loan in America today. If you include the government’s $8,000 first-time buyer’s credit (that just expired), the government was actually paying people to borrow taxpayer dollars to purchase homes.

“This is a market purely on life support, sustained by the federal government,” admits fha president David Stevens. “Having fha do this much volume is a sign of a very sick system.”

The fha backed more loans during the first quarter of this year than the $6 trillion Fannie Mae and Freddie Mac mortgage giants did! Those were your dollars being given to subprime borrowers.

If you were an investor, would you want to lend money to someone who could not save up a down payment? Would you lend to a family that required two incomes to afford the loan and still couldn’t save up a down payment?

Thus, the government is stuck with all the mortgages. It can’t stop giving money for loans, or the market will collapse, the economy will head down again and politicians will look incompetent. Yet at the same time, how long can the government afford to provide money for 95 percent of all home-buying activity in the country?

With America’s ballooning budget deficits, the days of government handouts may soon come to an end. When they do, don’t be surprised if house prices fall a whole lot further.

So when will a recovery come? No one knows for sure, but even Lewis Ranieri will likely be proved an optimist.

For the real reason America’s housing market exploded, and how to fix it, read “The Cause of the Crisis People Won’t Face.” •

The originators/warehouse lenders knew *exactly* what they were doing.  That’s why they were immediately assigned!

And look at the bonuses the instigators received as *rewards* for their actions.

And then they lied about AAA ratings to sucker in US and foreign investors, including municipalities and state governments that are now in critical economic positions, as well.

BY: CARRIE BAY DsNEWS.com

It’s hard to pinpoint just what brought the nation’s thriving residential real estate market to its knees. Everyone’s got an opinion, but trying to nail down the exact trigger in order to prevent a sequel is a difficult task. The Mortgage Bankers Association (MBA) is attempting to do just that.

According to a study released Wednesday by the trade group, poor risk management habits, including insufficient data and incomplete performance metrics, coupled with a short-term focus and unrealistic optimism among senior business managers were all factors that contributed to the collapse of the U.S. housing and mortgage markets.

The study entitled, Anatomy of Risk Management Practices in the Mortgage Industry was conducted by Professor Cliff Rossi of the University of Maryland and sponsored by MBA’s Research Institute for Housing America (RIHA). It analyzes the risk management processes employed by mortgage lenders leading up to the housing crisis and discusses lessons learned for future risk managers.

Professor Rossi, who has more than 20 years’ experience within the mortgage industry and at regulatory agencies, says that as home prices increased, lenders were pressured to offer innovative products that could help borrowers afford a home. He found that the increase and expansion of risk layering that resulted, along with changes in borrower behaviors, left risk managers unable to offer reliable risk estimates.

“According to some empirical analysis, when market conditions changed, mortgage performance models proved unstable, with loans originated in 2006 defaulting at four times the rate of what a model prior to 2004 would have predicted,” Rossi explained. “Moving forward, it will be essential for the industry to develop early warning measures of the level of risk in new originations and less reliance on imprecise historical performance of new loan products.”

Rossi says that in addition to limited information available for proper risk assessment, corporate culture and cognitive biases also strongly influenced decision-making during the boom. He argues that one of the biggest black eyes to come out of the prosperous years leading up to the bust was the decline in senior management’s loss aversion, thanks to a lengthy period of strong home prices and low defaults, which in turn led to relaxed underwriting and again, higher levels of risk layering.

“The combination of informational limitations on risk managers and a governance structure and culture that may have tipped decisions in favor of business-driven strategies is central to explaining the increase in risk-taking that took place throughout the industry,” Rossi said. “As the industry is now compensating for the resulting losses through tighter underwriting standards and a lower appetite for risk, it will be vital for executive management to instill a culture where all employees are on guard for risks that exceed the risk appetite of the company.”

Key findings from the study include:

• Subprime loan underwriting criteria along several risk attributes expanded between 1999 and 2006. In particular, combined loan-to-value ratios (LTVs) increased over time as the percentage of loans with silent second liens attached to the property also increased. At the same time, the percentage of loans with full documentation declined.

• The relative lack of geographic and product diversification by a number of the largest mortgage lenders was rationalized by investment opportunity costs and relative value.

• A false sense of security with new products originated prior to 2007 occurred as a result of better than average economic conditions coupled with a lack of information regarding subtle but real changes in borrower and counterparty behavior.

• Cognitive bias toward risk management may have combined with management views on loss-taking to view risk managers as overly conservative and inefficient, which would explain senior management’s actions that ultimately placed their firms at risk.

Michael Fratantoni, MBA’s VP of research and economics, commented, “Today’s mortgage industry is operating under vastly different guidelines than just a few years ago and the survivors in the industry today are clearly the companies that did things right. There is room for debate on how best to proceed, but certainly building a stronger risk management framework around the mortgage industry will be critical.”

May 25, 2010

A Montana Circuit Judge entered a preliminary injunction yesterday enjoining MERS, Recontrust, and Countrywide from undertaking any action to sell, encumber, or transfer the borrower’s property during the pendency of the borrower’s lawsuit challenging a non-judicial foreclosure. The Notice of Trustee’s Sale fraudulently represented that there was an “obligation owed to MERS” when there was never any such obligation, and there is no evidence of any lawful assignment of either the Note or the Deed of Trust from the original lender to anyone. None of the Defendants appeared for the hearing.

The borrower had previously obtained a Temporary Restraining Order which stopped the Trustee’s Sale. Yesterday’s ruling converted the TRO into a preliminary injunction for the duration of the litigation.

This is FDN’s second victory in Montana. The borrowers in both cases are represented by Jeff Barnes, Esq. (who personally appeared at the hearing yesterday and prepared the lawsuit, Motions, and legal memoranda), assisted by local Montana counsel Eric Hummel, Esq.

Jeff Barnes, Esq., www/ForeclosureDefenseNationwide.com

From: b.daviesmd6605

BY STAFF,  CITY NEWS SERVICE OCLNN.com
Wednesday, May 19, 2010

SANTA ANA – Distressed homeowners packed an appellate court hearing Tuesday as their attorney tried to persuade justices a 2008 California law should force banks to work harder to ease the terms of their mortgages.

Attorney Moses S. Hall argued before the three appellate court justices in the Fourth District’s Santa Ana courtroom that banks holding the loans of his clients are not complying with a state law compelling them to try to negotiate modified mortgages.

Attorney Justin D. Balser, representing the RPI Quality Loan Service Corp., argued the homeowners cannot bring the class-action lawsuit to the courts and must rely on the California Attorney General’s Office to enforce the law.

The appellate court justices appeared skeptical of that claim and queried him why people could not sue to have their rights enforced in the courts.

Balser argued that letting residents try to enforce the law in the courts would lead to a “flood of lawsuits.”

“This is the only statute of its kind in the nation,” Balser said.

Attorney Melissa Coutts, who also represented RPI, said she was looking for the appellate justices to provide guidance on the law, which she argued was too vague.

“If there was a specific remedy (in the law), we wouldn’t be here,” Hall responded. “There’s nothing to help keep people in their homes.”

Terry and Mike Mabry filed their class-action lawsuit after they said their lenders refused to help them save their home in Corona.

The two had invested in 13 properties, which they rented, but when the economy soured their found themselves struggling to keep up with mortgage payments as renters left or demanded lower rent, they said. They ended up losing some of the properties and others were lost in short sales, they said.

However, when it looked like they wouldn’t be able to afford the adjustable rate mortgage on their own home they contacted their lender and were told they could not renegotiate the terms unless they missed at least two payments, Terry Mabry said. The couple had not missed any payments, she said.

“When we reached out for help we were hit with one wall after the other,” Terry Mabry said. “The bankers led us to believe they were working with us, but they weren’t. All we wanted was to be helped.”

Terry Mabry argues that all the state law was meant to do was give homeowners a chance to work with the lenders to save their houses and is not a guarantee.

“The law was meant to create a discussion, not to guarantee a solution,” Terry Mabry said. “But we never even got to the discussion point. That’s the most frustrating part.”

The Mabrys thought they were in serious negotiations until they returned home one day to find a notice to sell their home floating around the front lawn.

Carlos and Maria Hernandez of Lake Forest also thought they were going to save the home they bought 5 years ago after they were put in a home-loan modification program for eight months.

“The next thing we know we were given a notice that the house was already sold,” Carlos Hernandez said.

“We put all of our savings in that house,” Hernandez said. “We want to stay in it because it’s for the future of our kids.”

Carlos Hernandez had trouble making mortgage payments because he lost his job, but was able to keep up with the new payments, he said.

The Mabrys and Hernandezes remain in their homes as appellate court justices consider the lawsuit.

Read more: http://www.oclnn.com/orange-county/2010-05-19/business/mortgage-holders-sue-bank-in-class-action#ixzz0p84ayuW5

[youtube=http://www.youtube.com/watch?v=c_IZTdBO7EA]

Jonathan Stempel

NEW YORK (Reuters) – Lehman Brothers Holdings Inc (LEHMQ.PK) on Wednesday sued JPMorgan Chase & Co (JPM.N), accusing the second-largest U.S. bank of illegally siphoning billions of dollars of desperately-needed assets in the days leading up to its record bankruptcy.

Hot Stocks

The lawsuit filed in Manhattan bankruptcy court accused JPMorgan of using its “unparalleled access” to inside details of Lehman’s distress to extract $8.6 billion of collateral in the four business days ahead of Lehman’s September 15, 2008, bankruptcy, including $5 billion on the final business day.

JPMorgan was Lehman’s main “clearing” bank, in which it acts as a go-between in Lehman’s dealings with other parties.

According to the complaint, JPMorgan knew from this relationship that Lehman’s viability was fast weakening, and threatened to deprive Lehman of critical clearing services unless it posted an excessive amount of collateral.

“With this financial gun to Lehman’s head, JPMorgan was able to extract extraordinarily one-sided agreements from Lehman literally overnight,” the complaint said. “Those billions of dollars in collateral rightfully belong to the Lehman estate and its creditors.”

Lehman also said JPMorgan officials including Chief Executive Jamie Dimon decided to extract the collateral after learning from meetings with Federal Reserve Chairman Ben Bernanke and then-U.S. Treasury Secretary Henry Paulson that the government would not rescue Lehman from bankruptcy.

In the widely expected lawsuit, Lehman and its official committee of unsecured creditors are seeking $5 billion of damages, a return of the collateral and other remedies.

JPMorgan spokesman Joe Evangelisti called the lawsuit “meritless,” and said the bank will defend against it.

Any money recovered could increase the payout to creditors. Lehman has also sued Barclays Plc (BARC.L) to recover an $11.2 billion “windfall” from the takeover of U.S. assets.

In March, a bankruptcy judge approved an accord providing for JPMorgan to return several billion dollars of assets to Lehman’s estate, but giving Lehman a right to sue further.

Lehman collapsed after letting its balance sheet swell through exposure to commercial real estate, subprime mortgages and other risky sectors. With $639 billion of assets, Lehman was by far the largest U.S. company to go bankrupt.

EXAMINER REPORT

In his March report on Lehman’s bankruptcy, court-appointed examiner Anton Valukas said Lehman could raise a “colorable claim” against JPMorgan over the collateral demands.

He nevertheless said JPMorgan could raise “substantial defenses” under U.S. bankruptcy law.

Evangelisti contended that “as the examiner’s report makes clear, it was the ill-advised decisions of Lehman and its principals to take on perilous leverage and to double down on subprime mortgages and overpriced commercial real estate — and not conduct by our firm — that led to Lehman’s demise.”

Lehman, though, maintained that JPMorgan extracted the collateral to “catapult” itself ahead of other creditors.

“A century ago, John Pierpont Morgan used his position atop the world of finance to shore up a teetering firm and rescue the nation from the brink of financial collapse,” the complaint said, referring to the Panic of 1907.

“A century later, when the nation faced another epic financial crisis, Morgan’s namesake firm stripped a faltering Lehman Brothers of desperately needed cash,” it added.

The case is In re: Lehman Brothers Holdings Inc et al, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.

(Reporting by Jonathan Stempel; Additional reporting by Matthew Goldstein; Editing by Phil Berlowitz, Bernard Orr,Gary Hill)

THEY KNOW FROM THE BEGINNING WHO THE REAL PARTIES ARE!

WAS ANY OF THIS EVER DISCLOSED TO THE BORROWERS?

LPS Transmittal Letter. Instructions to the MILLS.

• WHO
• HOW
• WHERE

Note at the end it does NOT WANT any emails on these matter.

RELATED STORY:

Fidelity’s LPS Secret Deals With Mortgage Companies and Law Firms

NOW LOOK AT THE ADDRESS…

LENDER PROCESSING SERVICES (LPS) BUYING UP HOMES AT AUCTIONS? Take a look to see if this address is on your documents!

Posted by SUItheGATOR on May 24, 2010 ForeclosureHamlet.org

Another area that should be investigated in the foreclosure mill process is the “process serving” Mills such as ProVest LLC.

I worked at ProVest for 7 months a few years ago, as jobs are scarce. There were some issues there of some of the servers just “drop serving” the summons, (just leaving at the door and saying they gave it directly) or Sewer serves, (saying it was served and they never even left at the door). A few borrowers obtained legal counsel and executed their rights, as they were never properly served, but there are probably more borrowers unaware they have been “had”.

If Improperly served, the court dates cannot be set.

Due to ProVest’s aggressive style, and high volume of work, it is possible many servers, not direct employees, were forced to do the serves this way due to the volume and ProVest’s unrealistic expectations. They wanted a serve within 10 days of it being filed at the court house. As an employee, server or not, if you did not meet their outrageous timeframes it provoked what I call “public floggings” of employees. Not a nice place to work.

ProVest does process serving for many of the foreclosure mills such as Stern and FDLG… And for the record, when I was there, a husband worked for FDLG, and the wife worked for ProVest…

So, if you want more dirt for your compaign, here it is.. Check to see if the borrowers were properly served.

RELATED STORY:

Lender Processing Services LPS and ProVest: Resemblance is uncanny

Contributed by muckracker1 (Editor) beforeitsnews.com
Tue May 25 2010 17:57

Latest in 83 year old Black farmer’s fight against illegal foreclosure:
Harry Young files $100 million lawsuit against DOJ and USDA based on loan officer’s testimony at Young’s trial

by Monica Davis

Harry Young is an 83 year old farmer in western Kentucky. He has been waging a five year legal fight to regain his land after the government foreclosured and auctioned the property in 2005. Young filed a $100 million lawsuit against the Secretary of the United States Department of Agriculture, the Department of Justice and various federal officials May 24, 2010. He is seeking a jury trial.

Young, whose land was foreclosed and auctioned in what he contends was an illegal foreclosure, was arrested and tried on charges of allegedly making threats against the Farm Services Agency in Owensboro, Kentucky. He was the last black farmer operating in three western Kentucky counties when his land was sold at what supporters claim was an illegal auction based on fraud in 2005.

At the time, he was not allowed to present evidence of his payments. Young has denied the allegations, that he: made threats, and that he hadn’t made payments on his loan–as alleged by the Assistant US Attorney, who said, in a 2005 press release that “…for many years, Mr. Young had] lived in this house and farmed the land without making payments.”

Young’s land,which includes coal and oil deposits worth as much as $750,000,000 was sold at an auction which supporters say was based on fraudulent, perjured information by federal officials. After the auction,
Young filed suit against the U.S. Department of Agriculture and FSA in May in U.S. District Court in Louisville. In the suit, he asks for $25 million for “the embarrassment, humiliation, pain and suffering and personal indignities” caused by the USDA and FSA. He also asks for $5 million for loss of income from farm and related operations. (Local paper.)

That suit, and two others, were thrown out, based on information from the USDA, which did not include the receipt for the payments totaling over $100,000 in 1985/86. Young was tried on the threat charges in the Western District of Federal Court in Paducah, Kentucky. Supporters say the charges were retaliation for his refusal to stop legal action to regain his farm. His trial on the threat allegations resulted in a hung jury on . Rather than risk another trial, Young accepted a plea bargain deal, where he accepted a pre-trial diversion agreement, agreeing to “stay out of trouble for a year.”

Several issues arise: 1. the government did not acknowledge his loan payments; 2. his account was credited with a loan that another farmer received; and 3. he never received a jury trial in earlier proceedings.

According to a local newspaper covering the foreclosure in 2005:

…Young, who is black, says he is a victim of a racist organization. He points to a letter from Jeffery Hall, state FSA executive director, in December 2004 stating that “no voluntary payments on Mr. Young’s account (have) been received since 1980,” and Young “has remained on the property basically rent free.”

The letter contradicts financial statements that show disbursements of $121,800.26 and $9,394.59 from an escrow account to the Farmers Home Administration, the FSA’s former name, in 1985 and 1986, Young said. (Local paper)

Young also said he was charged interest for loans he never took out. “I don’t owe them nothing,” he said. “I’ve overpaid them if they mark interest off.” (Local paper)

Under oath, in contrast to what had been said earlier–that “anyone could have typed up” the receipt which Young said proved his case, the local FSA county supervisor acknowledged that the signature on the receipt for two loan payments was his. On that basis, Young filed a his latest lawsuit.

For the past 20 years, that this legal battle has been waged, Mr. Young has said that the government was lying about his failure to pay his loan, and had charged him for a loan which he never applied for–the proceeds of which reportedly went to a white farmer. Young has always maintained that he paid his loans–which has been corroborated by by court testimony of the county supervisor of the Farm Services Agency (FSA) and its parent agency, the US Department of Agriculture (USDA), which had earlier claimed that Young hadn’t made a payment on his loan in twenty years. In 2005, the US Attorney out of Louisville, Kentucky, in a press release, said, “For many years, Mr. Young has lived in this house and farmed the land without making payments.”

Justice Department attorneys refused to consider the receipt from the County Supervisor as evidence in 2005. And, when Young showed the receipt to a US Marshal during the auction of his property, the US Marshal reportedly said: “I can’t read.”

Did someone step on SHIT?

Don’t fall for it! They’re running out of humans!

Industry News: Morgan Stanley (NYSE: MS) To Hold Investment Symposium For Domestic Partners

May 25th, 2010 • by mitch AMERICAN BANKING NEWS

Morgan Stanley (NYSE: MS) announced Tuesday that in conjunction with the Gay & Lesbian Alliance Against Defamation (GLAAD), the Williams Institute – UCLA School of Law and The Principal Funds, it will host a private reception and investment symposium on wealth planning for domestic partners on Thursday, May 27, 2010.

The Wall Street bank said the symposium will focus on findings from two studies by the Williams Institute on challenges gay and lesbian individuals and their partners face under current retirement and real estate tax laws.

“We’re pleased to facilitate this discussion with GLAAD and the Williams Institute, said Robert Perry, Managing Director, Los Angeles Metro Regional Director, Morgan Stanley Smith Barney. “This event provides a forum for us to highlight our wealth planning expertise with a targeted focus on the individual needs of the LGBT community.”

Morgan Stanley will have Alan Wolberg, Executive Director, Wealth Advisory Resources, Planning Director – Soundview Region, Morgan Stanley Smith Barney as its feature speaker.

“On behalf of GLAAD, we are pleased to partner again with our long-time friends at Morgan Stanley Smith Barney on this symposium,” said GLAAD President Jarrett Barrios. “Wealth planning is critical to protect ourselves and our families, as well as to inspire and engage future generations in the work that is important to each of us.”

The event will take place on Thursday, May 27, 2010 at 5:30 p.m. at the Luxe Hotel Sunset Boulevard, 11461 Sunset Boulevard Los Angeles, CA 90049.

Wish he can do both New York and Florida…would be interesting!

Source: www.doctorhousingbubble.com

How many real estate agents and brokers does it take to sell a California home?  2 ¼ if we look at current inventory levels and the amount of Californians with a real estate or broker’s license.  One of the early observations of the housing bubble was how much money was being spent in the economy because of high wage California housing bubble jobs.  Toxic loan after toxic loan provided wonderful commission checks but also provided the state with a nice chunk of tax revenue.  Year after year this went on.  Our fate has been intertwined with real estate and since real estate has busted so has ourstate economy.  I remember a few colleagues that were pulling in high six-figure incomes as mortgage brokers and real estate agents and were spending every dime as quickly as it came in.  Many have downsized drastically and don’t have a penny to their name.  Ironically many of these people drank their own Kool-Aid and bought million dollar homes with the same mortgage sewage they were passing onto their clients.  A few are now in bankruptcy and many have lost or will lose their homes.

California is likely to face a lost decade in housing.  Do I mean from 2000 to 2010?  In some areas we have already reached a lost decade.  Yet many areas will face their lost decade from 2010 to 2020.  Here are 5 reasons why California real estate will have a decade of slow or no growth ahead:

Reason #1 – High paying finance and real estate jobs are gone

I went ahead and compiled 14 years of license and broker data for California above.  From 1996 to 2002 we averaged approximately 300,000 active licensees in the state.  This was before the bubble ramped up.  We reached a peak in 2008 of 549,000 active licensees.  Today that number is down to 493,000 and is continuing to fall as many simply let their license expire.  Even with recent sales increases we are still close to half the volume of the bubble years.  Plus, home prices are half of what their peak values were.  So even basic math will tell you that at the very least, half of income in this industry is gone (for example the 5 to 6 percent agent cut is based on the sale price).  Then on the lending side you have 96.5% of loans being government backed and these don’t provide the nice kickbacks that the option ARMs did for example.  In other words, high income no GED required jobs are now gone.  Even those with industry specific degrees and training are finding it hard to get good jobs in today’s economy.

And many other jobs tied to the FIRE side of California employment and construction took big hits:

These were good paying jobs that are now gone.  Many of these jobs depended on the perpetual growth of the housing bubble.  But even as we will see with inventory levels, do we still have a bubble in this industry?

Reason #2 – Too little inventory and sales for the amount of workers

I went ahead and took a major snapshot of how much MLS inventory is currently listed for public view in California.  Although inventory is spiking, you start seeing issues that are plaguing the industry:

Since February of this year California has added 64,500 homes to the MLS, an increase of 41 percent.  This is a massive jump.  Part of this jump aligns perfectly with the failure of HAMP and more banks pushing inventory onto the market.

But let us use that current inventory number and run a quick analysis:

493,576 real estate agents and brokers / 219,217 homes on the CA MLS = 2 ¼ agents and brokers for each home

I find the above fascinating.  We have close to 500,000 licensed agents and brokers for 219,000 homes on the market.  And you wonder why we have a problem?  This is like going to a used car lot with 20 cars and finding 50 sales representatives.  However like many things in life, I believe that the Pareto principle applies here as well.  That is, 80 percent of sales is likely to come from 20 percent of those with active licenses.

Although the shadow inventory is much larger than the 219,000 homes on the MLS, agents and brokers only make money when they sell.  And banks don’t seem in a big hurry to move the entire inventory out at once.  In other words, we have years of junk built up in the pipeline with wages slashed.

Reason #3 – California budget and revenues shattered

If you want to see a problem in the making look at this:

The state for the fiscal year of 2007-08 collected over $101 billion.  How do things look today?

For the fiscal year that is coming to an end, we are projected to bring in $81 billion.  We are short by $20 billion and this includes every kind of tax increase you can imagine.  This does little considering half of the state revenues come from personal income taxes and many of those high paying bubble jobs (see above) are now gone.  Yet the state kept spending more and more assuming that a Ponzi like income stream was going to come in forever.  That is not the case as we are now painfully finding out so we must adjust.

The Legislative Analyst Office (LAO) is projecting problems well into 2015.  Another issue that the state will have to contend with is high pension costs of soon to retire baby boomers.  Recently CalPERs announced that the state will need to pitch in $700 million to cover its poor bets.  They are pulling back for the moment:

“(LA Times) Facing political fire, the state’s largest public pension fund Wednesday retreated for a month from a plan to approve a $700-million increase in taxpayer contributions it gets from the state and about 1,000 school districts.

State Treasurer Bill Lockyer, a member of the California Public Employees’ Retirement System board, said the fund needs to assess the consequences of the huge hike on California at a time when the state faces an estimated $19-billion budget deficit.”

You can rest assured that there will be some serious battles on this front for years to come.

Reason #4 – Shadow inventory

The Wall Street Journal put together data regarding shadow inventory that we already knew about.  California ranks near the top of shady banks and home squatters that are simply staying put and not paying their mortgage:

Source:  WSJ

This is just nuts.  In California 7 percent of loans that are 90 days overdue are not in foreclosure!  What is even more stunning is the nationwide amount of people living in homes with no payment and foreclosure for 2 years!  This is a slap in the face of every prudent middle class American.  And the idea of poor homeowners is nonsense here in California.  You have folks living in prime locations not paying their mortgage who can easily afford a nice rental.  But they’ll sit it out while banks sit back and suck on thetaxpayer gravy train.  This data merely confirms what we already know.  The state is plagued with delinquent loans.  In fact, 15 percent of all California loans are 30+ days late or worse.

Reason #5 – Consumer psychology and jobs

The mantra that real estate prices never fall is completely shattered for an entire generation of Americans.  Those who lived through the Great Depression are largely absent from our current economy and can’t share their wisdom.  And given the preference of Americans to watch Dancing with the Stars instead of reading some history, many have forgotten that real estate can crash and crash hard.  But if history is any guide, we will have a generation of Americans who are more cautious and thus will put a lid on any mega jumps in appreciation for the next decade.

On Friday the California unemployment rate came out and we are still at a record high of 12.6 percent.  Adjusted for the underemployment rate we are closer to 23 percent.  Even the running average at the BLS shows us over 21 percent:

Keep in mind this is a one year rolling average so this will only move higher as we have been at peak levels for many months.  This also goes back to my earlier reasons for a lost decade in home prices.  Those high paying jobs are gone.  You can only purchase a home by what your income can support.  A large number of those depended on toxic mortgagesthat were easy to churn on a short notice.  After all, giving NINJA loans with no verification allowed seedy mortgage brokers to turn out loan after loan.  Now even with lax lending inFHA insured loans, at least they have to verify income.  As it turns out, there simply isn’t that many that can qualify in California.

I see a sideways moving decade for California real estate.  And for the next one or two years prices will start trending lower again as the Alt-A and option ARM waves hit and the gimmick parade starts running out.  You can only keep a lid on corruption for so long.  The “once in a century” problems now seem to be hitting every month.  A near 1,000 point drop in the Dow, the trillion dollar Euro bailout, and other mega events will come quicker as a reckoning day will hit.  All it takes is a failed Treasury auction and you can kiss cheap mortgage rates goodbye.

WE WANT A REFUND!

Cenk UygurHost of The Young Turks
Posted: May 24, 2010 06:44 AM

Sometimes when you explain to people that some of the most complicated financial transactions in the country were just side bets, they don’t really believe you. They think it’s an oversimplification. We couldn’t have wrecked the global economy because some people made side bets. These are sophisticated bankers with sophisticated financial instruments, so it must be more complicated than that. It isn’t. They bet one another, whoever lost got paid by the American taxpayer.

To be fair, sometimes they had the money to pay off one another without government bailouts, but not often. That’s because they were largely betting with money they never had. AIG is the perfect example. Their executives made hundreds of millions of dollars in bonuses from the early wins in these bets, but then stuck the taxpayers with a $182 billion bill when they lost.

A credit default swap is when you bet that a certain asset is going to default. If you’re wrong, then you have to pay a little bit. If you’re right, you get paid a ton. So, AIG collected a lot of little winnings when they bet that mortgage backed securities would not go into default. But then when they did go into default, they lost big.

So, what does all of this have to do with us? Well, Hank Paulson, Tim Geithner and Ben Bernanke in their infinite wisdom decided that we should pay AIG’s bets for them. Did they go back and take the money the AIG executives got for their earlier so-called winnings? No, of course not. Did they even inquire into whether these bets were on actual assets that the other parties were on the hook for? Apparently not.

Let me explain that more. If you bought a package of mortgage backed securities and wanted to insure it in case anything went wrong, that’s a fairly normal derivative. That basically works as insurance for your security. So, if we paid off people who actually owned those securities, it still wouldn’t be right in my opinion but it would be a lot more understandable. The argument would be that it would destabilize the economy too much if all of the people holding the mortgages all of sudden lost most of their value.

But what if they didn’t hold the mortgages, they just bet on them? That’s like the difference between bailing out the Dallas Cowboys to help the local Dallas economy versus bailing out bookies who bet too much on the last Cowboys game. The latter is what we did with AIG. We paid off people’s bets for almost no reason.

I explain all of this because it’s very important that you understand that when we paid $62 billion to AIG “counterparties,” we weren’t saving the economy, we were paying off the bookies. The money we gave them didn’t go toward saving one house or one mortgage or even a package of mortgages or even investors who bought the packages of mortgages. It went to paying off people who made side bets on the mortgages (and even sometimes put down bets on a made up collection of mortgages that didn’t even exist in the real world called “synthetic” collateralized debt obligations).

This is insanity. When you understand what really happened, you have one natural reaction – I want my money back. It’s like we paid Donald Trump for a bet he made against Steve Wynn. Why did we do that? I don’t give a damn if The Mirage or Caesar’s Casino won. Why did you pay them with my money?

So, we’re now starting a campaign to get our money back. I’d love to get the whole $62 billion paid out to the AIG counterparties (let alone the whole $182 billion we’ve sunk into AIG all together). But, we’re going to start out nice and modest. We’d like to have Goldman Sachs pay us our $12.9 billion back that they got from AIG.

That’s all taxpayer money. All of it went to Goldman for some silly bet they made with a buffoonish company that never had the money in the first place. As “sophisticated investors” they should have realized that AIG never really had the cash to pay them.

It’s like making a million dollar bet with your deadbeat friend. Do you really expect to get paid when he doesn’t have ten bucks to his name? How sophisticated can you be if you don’t even realize that your counterparties are broke? So, sad day for you, you made a bet with the wrong guy. That’s capitalism, baby. Go home, lick your wounds.

Except as we all know, that’s not how it worked out. Instead the former CEO of Goldman Sachs, Hank Paulson decided to give them the money anyway, from the United States Treasury. Paulson had made $700 million dollars earlier when he made the same kind of deals as the head of Goldman before he became our Treasury Secretary. Not much bias there, right?

So, other than this enormous conflict of interest, why target just Goldman Sachs? Many reasons. They were one of the largest beneficiaries of this “backdoor bailout” from AIG. They were the ones who set up many of the securities in the first place. In fact, they sold $23 billion worth of this junk to AIG (they’re lucky we’re not asking for all of that back).They set them to blow and then bet against them. And they said they didn’t need the money away. Great, then we’ll take it back please.

Yes, they actually said they didn’t need the taxpayers to pay them. They said many times on the record that they were “properly hedged” and that they could have gotten paid off by other companies and didn’t need AIG to pay them. Fantastic! Out with it. We’re going to be generous and not charge much interest, so we’ll take a check for $13 billion made to the United States Treasury.

I’m not kidding. We are going to start applying pressure to both Goldman and the Treasury Department to return that money to its rightful owners, the American taxpayer. Of course, we need your help. We want everyone across the political spectrum to put pressure on the Treasury Department to ask for that money back and for Goldman to give it back.

I invite conservatives, libertarians and tea party activists to join us as well. Don’t you want your money back? Weren’t you angry about the bailouts? Don’t you have a sense that the people in Washington and Wall Street are screwing you? Well, this is how they’re doing it. Time to stand up and fight. Tell Goldman not to tread on you.

To show you how nonpartisan this is, the first protest will be aimed at one of the one guys most responsible for this atrocious decision – Tim Geithner. He is our Treasury Secretary and should be fighting for us and not for the bankers. He can fix his original mistake (he was at the New York Fed when they decided to give these backdoor bailouts at a hundred cents on the dollar when no one thought they were worth anywhere near that much) and get our money back from Goldman.

I have a question for the tea party participants, have you ever wondered why you’ve never protested the one guy in the Obama administration most responsible for the bailouts and the economy? That’s the Treasury Secretary. And the reason you’ve never protested him is because the corporate front groups who organize your protests love Geithner and want to look out for him. Isn’t it time you corrected your mistake, too?

Come join us. Let’s do a real protest of the people who caused this mess in the first place. And let’s get our damn money back.

Join us on Monday, June 7th at noon in front of the Treasury building to demand our $13 billion back from Goldman Sachs. First job is to get Geithner to recognize that he should have never given that particular money to that particular bank for that particular transaction. Or to come out and justify his actions. Let him step out, greet us and tell us why it was such a smart idea to pay off AIG’s side bets with Goldman. I’ll be looking forward to that.

And I’ll be looking forward to seeing you at the protest, no matter what your politics are. You can RSVP by going to the Facebook page for this event. See you there.

Join the Protest Here

UPDATE: Progressive Change Campaign Committee has joined our effort now and we are doing a joint petition to get our money back. Please sign the petition here so your voice can be heard on this even if you can’t make it out to the DC protest.

Everyone in the country should be able to agree to this. I was just on the Dylan Ratigan program on MSNBC and even the conservative on the panel agreed. Sign the petition and help get our money back.

Follow Cenk Uygur on Twitter: www.twitter.com/TheYoungTurks

MAY 24, 2010, 9:53 AM ET

By Nick Timiraos

It turns out that Fannie Mae and Freddie Mac, already becoming the most expensive legacy for taxpayers from the financial crisis, aren’t just too big too fail. As my column in Monday’s WSJ explains, they’re also proving too tough to reform.

Here’s a closer look at five common questions about what’s happening with—and what’s next for—Fannie and Freddie:

1. Why doesn’t the financial-overhaul bill address Fannie and Freddie?

The Obama administration says it’s too soon to take action to address the future of the housing-finance giants because markets are still fragile, and others have said the bill is already too complex without Fannie and Freddie in the mix.

Revamping the housing-finance giants, which own or guarantee around half of the nation’s $10.3 trillion in home mortgages, was never going to be easy. But the fact that, together with the Federal Housing Administration, the companies guaranteed 96.5% of all new mortgages last quarter has made the challenge only greater.

During the debate on financial-overhaul legislation, Republicans proposed measures that would have wound down the companies and limited the amount of further government aid. But the amendments didn’t specify what would take the place of Fannie and Freddie.

Both parties are “ignoring the issue,” says Lawrence White, an economics professor at New York University. Yes, markets may be too fragile for action now, but he says a plan now would give markets time to prepare for the future.

2. Why are Fannie and Freddie still losing money?

The companies have taken $145 billion in handouts, including $19 billion this quarter, from the U.S. Treasury so far, and that number could rise as foreclosures mount. Each quarter, as more mortgages go delinquent, Fannie and Freddie have to set aside more cash in reserve to cover losses if those loans end up defaulting and the homes they’re secured by go through foreclosure.

Nearly all of those defaults are coming from loans that the companies made during and immediately after the housing boom. Loans today have significantly tighter lending standards and should be profitable.

While losses could continue for several quarters, there are signs that delinquencies may have peaked during the first quarter. Fannie Mae and Freddie Mac each said that the number of its loans that were seriously delinquent fell in March, from February.

3. Why is the government still putting money into the companies?

Each quarter, the government injects new money into Fannie and Freddie to keep the companies afloat. That allows the firms to meet their obligations to investors, which keeps the mortgage market moving. If the government decided to stop keeping the firms afloat, that could send borrowing costs up sharply for future homeowners and could create new shocks for the housing market.

In February 2009, the Obama administration said it would double to $200 billion the amount of aid it was willing to put into each of the two firms. Then in December, it said it would waive those limits, and allow for unlimited sums over the next three years. The companies are now akin to government housing banks, with an independent regulator, but one that ultimately must answer to the Treasury Department, which controls the purse strings.

The current arrangement has raised concerns that the companies could continue to make business decisions that might lead to higher losses and that they wouldn’t be making if they were still being run for private shareholders. “Unregulated pots of money—that was a cause of their demise, and now we’ve taken that monster and turned it into a super-monster” with little independent oversight, says David Felt, a former senior lawyer at the companies’ federal regulator, the Federal Housing Finance Agency.

What would the mortgage market look like today without government support?

Consider the market for “jumbo” loans, or those too large for government backing. Rates on jumbos are around 0.6 percentage points higher than conforming loans. That’s nearly double the historical spread, but an improvement over the peak 1.8 percentage point spread during the financial crisis.

Lending standards are also much tighter for loans without government backing, and 30-year fixed rate loans are much less common. Mike Farrell, chief executive of Annaly Capital Management, estimates that mortgage rates today would be two to three percentage points higher without government guarantees.

What will ultimately happen to Fannie and Freddie?

Congress has to decide what it wants the housing-finance system of the future to do. “Everyone acknowledges that the model is broken, that the model was flawed, yet we don’t know how to run a mortgage market without them and we have nothing with which to replace the broken system,” says Howard Glaser, a Clinton administration housing official and housing-industry consultant.

Still, a consensus is growing between some academics and policymakers that the government will continue to play some role at least in backstopping mortgages. Recent testimony from top administration officials over some general insight into what the administration wants the future system to do.

What will ultimately happen to Fannie and Freddie?

Congress has to decide what it wants the housing-finance system of the future to do. “Everyone acknowledges that the model is broken, that the model was flawed, yet we don’t know how to run a mortgage market without them and we have nothing with which to replace the broken system,” says Howard Glaser, a Clinton administration housing official and housing-industry consultant.

Still, a consensus is growing between some academics and policymakers that the government will continue to play some role at least in backstopping mortgages. Recent testimony from top administration officials over some general insight into what the administration wants the future system to do.

There have been other clues: The Obama administration has made clear its view that the failure of Fannie and Freddie shouldn’t be pinned on government affordable-housing mandates, which suggests that any future housing-finance entities would continue to serve a role supporting that function. And an administration report on the foreclosure crisis said that better regulation of the entire mortgage market, and not just any government-related entities, would be a “high priority” for the future.

Readers, what do you think the government should do with the firms?

Don’t make a fool of Miami-Dade Circuit Court Judge Jennifer Bailey!

She sent the lenders a very powerful message!

Take a very good look at the miami ruling!

HSBC never posted the bond and proceeded to foreclose, violating a specific court order. Eslava’a attorney Shaleen Khan, sought to overturn the sale based on HSBC’s violation. Outcome – let’s just say that Judge Bailey wiped the floors with William Huffman, who represented HSBC through Florida Default Law Group.

Almost holding Huffman in contempt, not only did Judge Bailey overturn the foreclosure, she wiped out Enslava’s entire $207,000 mortgage. Bailey blasted Huffman saying the order she expects performance not apologies and complained about the general “chaos and disorganization” of lenders and their lawyers.

Judge Bailey states ” FLORIDA DEFAULT can cut whatever deal it wants to cut with them, but at the end of the day the bank is responsible for this!

Thank you

You should see these bird houses Mr. Geeai is building.   They really are fun.  He took me into his shop to show off his work.  Lined up on his workbench were a series of seven birdhouses in various stages of construction.  My favourite  looks rather like the sorting hat from Hogwarts only it is covered in beehive paper.   Only from Mr. Geeai.

After the appropriate ooh’s and ah’s  on my part (genuine,  I assure you, for I do enjoy his work) he looked up at me and grinned.  “Guess what?”

“What?” I ask.

“I checked all eight of my houses on MERS’s own website and I don’t have MERS on any of my mortgages.”  He seemed rather pleased with himself.

Something didn’t sit right with this news.  You see,  there are 60MM+ mortgages on the MERS system.  Countrywide was one of the worst offenders of the MERS system and Countrywide did bang up business in this area during the hay days.    I could see not having one house with MERS on the mortgage,  but all eight?  Something just didn’t add up.   I’m no statistician,  but I took enough of it in college to know that there was just something wrong with this information.

“Mr. Geeai”,  I said.  “Something is just not right here.”

“Hey,  I did what you said,  I checked with the website and it showed no records on my name and addresses.”

I explained to him the idea of statistical abnormalities and why it didn’t make sense that all of his houses should not be in the system.  Then I asked him if I could take his tax information,  go to the courthouse and do a little title search of my own on his behalf.  I knew he wouldn’t,  and I knew something was wrong.  He heartily agreed with this idea and  was well pleased he was going to get the information without having to deal with the courthouse.  So he gave me the information on his eight houses and I left.

As work was awaiting me,  piling up,  actually,  I wasn’t able to get to the courthouse until later that afternoon.  I finally got to the recorder’s office about 4:30.  I had to get help finding what I was looking for and I ran out of time before I was  able to look up all eight properties.    MERS was on four out of the four I was able to find before I was kicked out.

I stopped by Mr. Geeai’s house on the way home and found him happily ensconced in his workshop playing with his birdhouses.  I waved the printouts at him and said “Guess what?  You have MERS on every mortgage I was able to find.  Four out of four.    I would have gotten the others but before I was able to get to them,  the nice lady came into the room to tell me that while I didn’t have to go home,  I couldn’t stay there.”

Mr. Geeai put down his paper mache goo,  wiped his hands,  looked over his glasses at me and said,  “what do you mean?  Let me see those”

So I showed him the printouts and where the Mortgage Identification Numbers (MIN) was.

“Those numbers right there means you have MERS on your mortgage.”

Mr. Geeai was not pleased with the information.  “Now what do I do?”  he asked?

“Now”,  I said,  “you have a choice.  You can choose to do nothing with the full knowledge that you are buying into a fraud,  or,  you can take action to make sure that you aren’t.”

“What do I do?”

“Well,  the first thing you should do is file a request to your service provider in accordance with 15 USC whatever it is asking them to provide you with the name and contact information of the person or entity who holds the beneficial interest in your mortgage.  When they blow you off,  which they probably will,  you file it a second time.  When they blow you off the second time,  you hire an attorney and tell them you want to file a chain of title action to make sure your title is clear.”

He looked at me for a few moments.  I could tell his mind was ticking as he weighed information and possible consequences of various courses of action.  “What’s up?  I asked.

He shook his head.  “I don’t like it,”  he said.

“What don’t you like?”

He sighed,  pulled his glasses from his nose and looked at me for about 10 seconds.   “There are several things I don’t like,”  he finally began.  “I don’t like having to hire a lawyer,  I don’t like having to take action,  and I feel ….  weird about going down this road because from what you are telling me,  if I am successful,  I end up with my house and no mortgage.  I feel weird about that because I did borrow the money and if you borrow the money,  you are obligated to pay it back.  And I worry that if I take action,  they will foreclose on me while I go through it and I have too much to lose to risk that.”

“Well,”  I began,  “let’s look at this.  Do you see the danger of having MERS on your mortgage?”

He nodded.

“Do you understand that if they are not able to show a clear chain of title and you take no action,  you will never see clear title to your houses or worse,  that you may believe your house is paid off only to have someone show up years later claiming to have a valid assignment trying to force you to pay a second time?”

“Yes”

“And do you see that if that last part happens you will have to hire an attorney to figure a way out of it 20 years down the road?”

“Yes”

“I understand your fear,”  I said.  “But there is a way you can do away with the issue of foreclosure while you are in this lawsuit,  assuming it goes there.  There is a thing called an interpleader action which is where you pay the money to the court while the action is pending.  The court then demands your mortgage service provider not do anything until the suit is resolved.  The service provider is secure because all of your mortgage payments are going to the court.  You won’t have to pay any penalties,  that whole issue goes away.  Do you understand that?”

“Yes”

“As far as hiring a lawyer,  let me ask you something.  Supposing you spend $10K on attorney fees only to end up owning  several hundred thousand dollars worth of property free and clear.  Is that a good business decision?”

Long pause,  “yes.  But I feel weird.”

“Why do you feel weird,  Mr Geeai?”

“I borrowed the money,  I made an agreement.”

“But they are stealing from you.”

“Yes”.

“Mr. Geeai,  I understand your reluctance to pursue this because you feel you are getting something for nothing.  But I ask you,  what is the greater moral hazard,  you supporting the fraud or you calling a stop to it even though  in the process you come out ahead?  And let me ask you another question;  we talked last week about how dangerous it is to have a second,  very private database where the chain of title is hidden from view,  where there is no public,  transparent record of just who owns what.  What is the greater moral hazard?  Letting them get away with stealing all of this property AND controlling critical information with absolutely no oversight,  or you coming out ahead because you stopped them from stealing your property from you and putting you at risk from their bogus data?”

Mr. Geeai did not respond.  He just looked at me.  And then he looked at the papers I had handed him.

“And let me point out to you Mr.  Geeai,  they lied to you.  You went to the MERS website and they told you that you didn’t have anything to worry about.  They told you that their private database which they control absolutely was correct,  that you did not have MERS on your mortgage,  that you had nothing to worry about.  They told you everything was fine.  I went to the courthouse,  which is the only database that matters,  and looked.  They lied to you.  You do have MERS on your mortgage.”

Mr. Geeai just looked at me.

I looked at my watch.  “My goodness,  will you look at the time.  I have to go home and prepare dinner for the little ones.”

I started to leave.  “I hate you”  he called out in a friendly voice as I let myself through his back gate.

“I know,”  I called back.

“I don’t want to deal with this.  I just want to play with my birdhouses.”

“I know Mr. Geeai.  But while you are playing with your birdhouses,  they are playing with your real houses.”

I’ll let you know what happens.

Source: Chink In The Armor

I was told “I haven’t seen anything yet” stay tuned folks this is going to get interesting!

TILA Rescission, BK Court questions validity of “Creditor’s” claims, BAP Affirms denial of relief from stay.

source:PhilUp

[scribd id=31186546 key=key-rp33ydl7iw1b0nq18ed mode=list]

non edited version: CASE FILE California BANKRUPTCY In Re HUBBEL and PEREZ RELIEF FROM STAY DENIED TILA QUESTION2

mmflint — May 17, 2010 — “This is not Fannie May’s house, this is not Freddie Mac’s house. This is public housing and should be used as public housing.” — Max Rameau, Take Back the Land

This is not Freddie Mac’s website: http://www.michaelmoore.com

[youtube=http://www.youtube.com/watch?v=QyvciE_O4nY]

Anger at the root of mortgage default problem, study finds

By Kenneth R. Harney The Washington Post
Saturday, May 22, 2010

Memo to the bank: Take this money-sucking, underwater house and shove it! Go ahead and wreck my credit for years to come. I’m walking away, no matter what.

Why?

That’s the question posed by Brent T. White, a University of Arizona law professor whose academic paper last year on the fast-spreading “strategic default” phenomenon drew sharp criticism from lenders and Wall Street, who viewed him as the Pied Piper of the walk-away movement.

Now White has published a paper based on the personal accounts of 356 strategic defaulters and homeowners on the verge of doing the same. His finding: People who intentionally default on their loans are not as economically rational or calculating in their decision-making as widely thought.

In fact, he said, their decisions to pull the plug “may not turn out to be economically rational.” But they walk anyway, in large part because they are at the end of their emotional rope. They have transitioned from feelings of anxiety and hopelessness to outright anger at their lenders, the government and a financial system they consider unfair.

Continue reading … WaPO

Written on Sun, 05/23/2010 – 10:25am
By Chip Brian

When Lender Processing Services (NYSE:LPS) reported earnings 29 days ago on April 22, 2010, analysts, on average, expected the company to report earnings of $0.79 on sales of $595 million.

The company actually reported EPS of $0.80 on sales of $592 million, beating EPS estimates by $0.01 and missing revenues estimates by $3 million.

Since the company’s report, share of Lender Processing Services have fallen from $38.66 to $34.45, representing a loss of 10.89% in the past 29 days.

SmarTrend is bearish on shares of Lender Processing Services and our subscribers were alerted to Sell on May 07, 2010 at $35.31. The stock has fallen 2.4% since the alert was issued.

Dear Editor:

Once again, a U.S. Trustee is leading the way in exposing fraud in foreclosures. On Friday, May 21, 2010, United States Trustee R. Michael Bolen, Region 5, Judicial Districts of Louisiana and Mississippi, by Mary Langston, Assistant U.S. Trustee, New Orleans, Louisiana, filed a Motion for Sanctions against Lender Processing Services, Inc. and The Boles Law Firm. The Motion was filed in a bankruptcy action, In re Ron Wilson, Case No. 07-11862, U.S. Bankruptcy Court, Eastern District of Louisiana.

The U.S. Trustee is seeking to sanction LPS and The Boles Law Firm for making misrepresentations in statements and/or in testimony in open court, during the course of Show Cause proceedings initiated by the Court. Show Cause Orders were entered on May 9, 2008, July 11, 2008 and July 18, 2008. The misrepresentations relate to a Motion to Lift Stay (“2d MFR”) filed on March 10, 2008 and execution of a false affidavit supporting the 2d MFR, filed on behalf of Option One Mortgage Corporation, n/k/a Sand Canyon Corporation.

The misrepresentations concern payments received but not posted by Option One, dated January 2, 2008; January 31, 2008; and March 3, 2008 (the “Unposted Payments”).

According to the Trustee, Fidelity National Information Services, Inc. (now, Lender Processing Services, Inc.) misrepresented to the Court its knowledge of, and whether it communicated with Boles about the Unposted Payments. Further, the Trustee alleges that LPS/Fidelity misrepresented that it did not function as a “go between” in this case, between Boles and Option One, with respect to the Unposted Payments.

“Boles lacked candor before this Court, based on statements that one if its attorneys made to the Court on June 26, 2008 during the OSC [Order to Show Cause] proceeding. In that hearing, the Boles attorney indicated that, although Boles possessed one or more of the Unposted Payments, Boles did not know why it had received them. Upon information and belief, the proof will show that Boles received the Unposted Payments because Boles had issued instructions directing that each of the Unposted Payments be sent to it.”

Again, according to the Trustee, “The respondents’ [LPS and Boles] representations were not well grounded in fact, were made in bad faith to avoid potential liability, and have resulted in unnecessarily protracted discovery and litigation concerning their roles involved with the 2d MFR and false affidavit.”

In a 19 page Memorandum of Law supporting the motion for sanctions, Trustee Mary Langston set forth that Dory Goebel, an officer and employee of Fidelity, was questioned regarding an Affidavit she had submitted regarding unposted mortgage payments. Goebel essentially denied communications between Fidelity and the Boles firm:

“Goebel testified that Fidelity would not have communicated with the Boles law firm regarding post-referral payments; rather, Option was responsible for notifying its counsel directly about such payments. Goebel further testified that she reviewed the Wilson file, and that were no communications between Fidelity and Boles regarding the Unposted Payments because “[n]o, that is not the responsibility of Fidelity. We would not know of additional payments, Option One would.” August 21, 2008 Tr. 110:18 – 111:5. Goebel’s testimony thus portrayed that Fidelity would not even know that a borrower’s post-referral payment had been received unless Option posted the payment on Option’s accounting system; and that Fidelity would not communicate with Option’s counsel about payments received.” (Memorandum, p.8)

According to Trustee Langston, “However, Goebel’s testimony simply does not comport with the evidence the United States Trustee has obtained from Option, Fidelity, and Boles through discovery.” (Memorandum, p.8) The Trustee goes through the many communications that contradict Goebel’s testimony. She concludes, “… the evidence establishes that both Boles and Fidelity had knowledge about the Unposted Payments which they misrepresented to the Court. Upon information and belief, Fidelity and Boles played an integral role in communicating about those very payments, participating in queries about how to handle the Unposted Payments.” (Memorandum, p.9)

This is not the first time that a U.S. Bankruptcy Trustee has sought to impose sanctions against Fidelity and/or LPS. Most recently, the in the case of Niles and Angela Taylor, 2009 WL 1885888 (Bankr. E.D. Pa. 2009), Judge Diane Weiss Sigmund also determined that sanctions were warranted in a foreclosure case involving Lender Processing Services. Judge Sigmund described in great detail how the default mortgage servicing and foreclosure systems really work.

Lender Processing Services (“LPS”) was described as the largest out-source provider in the United States for mortgage default services. The LPS systems frequently resulted in incorrect information regarding mortgages reported to litigants and judges in foreclosure actions. The LPS network of national and local law firms were required to communicate directly with LPS, and not the mortgage servicers, about any issues that arose in any given case. Likewise, the servicers were required to execute a 51-page Default Service Agreement with LPS that delegated to LPS all functions with respect to the default servicing work. LPS used a software communication system called “NewTrak” to deliver instructions and documents to the LPS network attorneys and to deliver any information to the servicers. LPS also had access to the servicers data-base platforms. The law firms were staffed primarily by paralegals with little supervision by attorneys. See
In re Taylor, supra, at 1885889 to 1885891.

Judge Sigmund found that he LPS system was designed to minimize human involvement. She concluded, “When an attorney appears in a matter, it is assumed he or she brings not only substantive knowledge of the law but judgment. The competition for business cannot be an impediment to the use of these capabilities. The attorney, as opposed to the processor, knows when a contest does not fit the cookie cutter forms employed by the paralegals. At that juncture, the use of technology and automated queries must yield to hand- carried justice. The client must be advised, questioned and consulted. The thoughtless mechanical employment of computer-driven models and communications to inexpensively traverse the path to foreclosure offends the integrity of our American bankruptcy system. It is for those involved in the process to step back and assess how they can fulfill their professional obligations and responsibly reap the benefits of technology. Noting less should be tolerated.”

In a case pending in the United States Bankruptcy Court for the Southern District of New York, In re Silvia Nuer, Case No. 08-17106 (REG), in a Memorandum of Law of the United States Trustee in Support of Sanctions Against J.P.Morgan Chase Bank National Association, filed January 4, 2010, the Trustee reviewed the testimony of Mr. Herndon, a witness for Chase, who testified that the chain of title for the property in question passed through three entities. Previously, however, Chase had submitted contrary documents. In particular, Chase had submitted an assignment “that appeared to show that Chase assigned its right as mortgagee to Deutsche, as trustee for Long Beach Mortgage Trust 2006-2. The Assignment was signed by Scott Walter as “Attorney in Fact for Chase (the “Walter November 1 Assignment”)…It was signed on November 1, 2008, after the Filing Date. This 2008 Assignment to a trust that closed in 2006 signed by an individual who did not in fact work for Chase has become the focus of the sanctions debate. Regarding the Walter Assignment, the Trustee states: “Here, the misconduct of Chase includes the attachment of the Walter November 1 Assignment…Chase’s own witness could not explain the Walter November 1 Assignment…”

Walter was actually an employee in the Minnesota office of Lender Processing Services.

What is an appropriate sanction for a company that repeatedly makes false statements in bankruptcy proceedings – and files false mortgage assignments and Affidavits – so that the bankruptcy judge will lift the stay and allow a foreclosure to proceed more quickly?

If the debtor engaged in these acts, the case would be referred to the U.S. Attorney so that criminal charges of bankruptcy fraud could be filed against the debtor. Why should a repeat offender deserve less?

Lynn E. Szymoniak, Ed., Fraud Digest

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