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FDIC Chairman Sheila C. Bair Addresses Robo-Signers

FDIC Chairman Sheila C. Bair Addresses Robo-Signers

Remarks by FDIC Chairman Sheila C. Bair to the Urban Land Institute, Washington, DC
October 13, 2010
Opener

Good afternoon. Thank you for inviting me to speak. The real estate sector has played a leading role in the recession and financial turmoil we have experienced in the past few years. The downturn in residential real estate markets and the ensuing financial crisis plunged the country into deep recession.

The economy is now recovering, but progress is slow, and the effects of the recession — including high unemployment — are likely to persist for some time. Once again, the health of the real estate sector will be crucial in determining the path of the entire economy. Restoring stability and normalcy to residential and commercial real estate markets will be essential to establishing a more robust economic recovery. But we still have a lot of work to do to repair our system of mortgage finance.

What I would like to discuss with you today is the work that needs to be done — in the short term and over the long term — to restore the vitality of real estate finance and the stability of our financial system.

Outlook for Housing and the Mortgage Market

After three long and difficult years for the housing sector, we’ve begun to see positive signs — but also continue to see hurdles to overcome. Home prices have largely stabilized in most markets. The Case-Shiller 10-city home price index, which declined by some 33 percent from the height of the crisis, has risen by just over 4 percent in the past year.

Federal policy initiatives — including tax credits for new buyers, the Treasury’s Home Affordable Modification Program, and the Federal Reserve purchases of mortgage-backed bonds — have played an important role in helping to restore stability to U.S. housing markets. But these initiatives come at the price of unprecedented government intervention. Through the FHA and the GSEs, nearly 60 percent of all mortgages outstanding today have government backing. Of the nearly $2.5 trillion in loan originations since 2009, about 94 percent were guaranteed by the GSEs, the FHA or the VA. In addition, the Federal Reserve has purchased more than $1 trillion of mortgage-backed securities.

And despite this unprecedented intervention, many challenges exist. Expiration of the homebuyer tax credit in April led to a second-quarter slump in new home sales and building-related retail sales that helped to slow the pace of economic growth over the summer.

Mortgage Foreclosures Trends

Meanwhile, a sustained high volume of mortgage foreclosures has been adding to the number of vacant homes and distressed sales. Some 2.4 million mortgages remained in the foreclosure process at the end of June, while another 2.7 million mortgages were at least 60 days past due. As of June, an estimated 11 million homeowners, or nearly 1 in 4 of those with mortgages, were underwater, owing more than their homes are worth. Not only are these borrowers generally unable to take advantage of today’s record low mortgage rates to refinance, but they become more likely to walk-away from their mortgages.

We also need to move away from incentives that encourage the lax underwriting that we saw prior to the crisis.

Sometimes I wonder: Have lenders really learned their lessons?

Just a few days ago, I received a flier from a mortgage lender offering 3.75% fixed rates programs up to 125% of value, and 24-hour underwriting.

And now we have the added concern that lenders may have been foreclosing on homes without proper documentation. The “robo-signing” of foreclosure documents is a serious matter for loan servicers, homeowners, and the entire industry. Upon initial review, it appears that FDIC supervised non-member state banks did not engage in this behavior and have limited exposure to loans signed by “robo-signers.”

We continue to closely monitor the situation, including working with other regulators through our backup examination capacity where the FDIC is not the primary federal regulator. We are also requesting certifications from loss share participants in our failed bank transactions that their foreclosure activity complies with all legal requirements.

The robo-signer situation underscores how wrong things went in the financial crisis and that there is still a lot of work to do. Foreclosure is a costly, unpleasant, and emotional process. It hurts communities and families alike. It should be a last resort. Loan modifications should be considered whenever possible. Foreclosure should only come after careful thought, thorough analysis, and good documentation.

Properly Aligning Incentives and the “Safe Harbor” Rule

The robo-signing issue also points to the poorly aligned incentives that have existed in the mortgage servicing business. Because the pricing of mortgage securitization deals did not adequately provide for special servicing, servicers were not funded or adequately staffed to address problems.

Not only that, servicers are often required to advance principal and interest on nonperforming loans to securitization trusts — but are quickly reimbursed for foreclosure costs. These incentives can have the effect of encouraging foreclosures, while discouraging modifications.

To address these and other problems, the FDIC recently adopted a new rule on securitizations. The new rule requires that the issue of servicer incentives be addressed in order to obtain safe-harbor status. Servicing agreements must provide servicers with the authority to act to mitigate losses in a timely manner and modify loans in order to address reasonably foreseeable defaults. The agreements must require the servicer to act for the benefit of all investors, not for any particular class of investors.

The rule also addresses a recurring problem in servicing: the obligation for servicers to continue funding payments missed by borrowers. Under most current servicing agreements, this obligation has the effect of accelerating foreclosures as servicers seek to recover these payments by selling the home. Our new rule strictly limits advances to just three payments unless there is a way to repay the servicer that does not rely on foreclosure.

While the FDIC’s new rule will help create positive incentives for servicing, it is, by the nature of our authority, limited to banks. The Dodd-Frank financial reform law now provides a chance to improve incentives across the market, whether the securitization is issued by a bank or not. Dodd-Frank requires regulations governing the risk retained by a securitizer. Those regulations may reduce the standard 5 percent risk-retention where the loan poses a reduced risk of default.

Given the important role that quality servicing plays in mitigating the incidence of default, I believe that the new regulations should address the need for reform of the servicing process. We want the securitization market to come back, but in a sustainable manner.

Its return should be characterized by strong disclosure requirements, high-quality loans, accurate documentation, better oversight of servicers, and incentives to assure that servicers act to maximize value for all investors.

The Government’s Footprint in the Mortgage Market

Looking down the road, the big question on everyone’s mind is what to do about federal government involvement in mortgage lending. For now, federal involvement is needed to keep credit flowing on reasonable terms to the housing market as the economy and the financial system recover. But going forward, there needs to be a broader debate about the future role of government in mortgage finance and the housing sector.

In hindsight, the implicit government backing enjoyed by the mortgage GSEs, where profits were privatized and the risks were socialized, was an accident waiting to happen. The time has come to take a hard look at the full range of housing policies and programs, including the size and nature of tax breaks and other subsidies to owner-occupied and rental real estate. As a nation, we must shift our focus away from narrow, short-term political interests and toward policies that create long-term sustainable improvement in the living standards of all Americans.

Commercial Real Estate Lending

We also face significant challenges in commercial real estate. Average CRE prices are down by 30 to 40 percent or more from their peak levels of 2007, and rents continue to drop for most property types and in most geographic markets.

Credit availability has also been limited as lenders have tightened standards, issuers have virtually stopped offering commercial mortgage-backed securities, and the credit standing of many borrowers has declined. FDIC-insured institutions hold about half of the $3.5 trillion in CRE loans outstanding, which means we’ve been focused on commercial real estate for a very long time. Lenders will continue to face some tough choices when loans come up for renewal with collateral values that have declined significantly from peak levels.

The federal regulatory agencies issued guidance last Fall designed to provide more clarity to banks on how to report those cases where they had restructured problem loans. This was an important step to reduce uncertainty as to how restructuring efforts would be viewed and reported for regulatory purposes.

Some have criticized these loan workouts as a policy of “extend and pretend.” But, as on the residential side, the restructuring of commercial real estate loans around today’s cash flows and today’s low interest rates may be preferable to the alternative of foreclosure and the forced sale of a distressed property. And going forward, as is the case with residential mortgage lending, we need better risk management and stronger lending standards for bank and nonbank originators to help prevent a recurrence of problems in commercial real estate finance.

Conclusion

Obviously, these remain very challenging times for the real estate industry, and for our economy at large. Recovery of the U.S. real estate sector will take time. Problem loans will need to be worked out or written off, and credit channels will have to be re-established around a sounder set of market practices.

As this is taking place, the FDIC and other regulators will be doing our part to promptly and carefully implement the various elements of Dodd-Frank. We are committed to transparency and openness in this process, and have established an open-door policy to make it easier for the public to give input and track the rulemaking process.

I know there is a lot of concern out there right now that Washington and the business community are at cross purposes, and that financial regulatory reform could become an impediment to the economic recovery. I understand these concerns.

But I want to emphasize to you, as I said at the outset of my remarks, that I firmly believe that we share the same basic goals: to restore the vitality of real estate finance and the stability of our financial system. The American people have paid a high price for the mistakes, excesses and abuses of the past. And there is plenty of blame to go around.

I think they are looking for us, as leaders in government and business, to work together and come up with common sense approaches that will put our financial system on a sounder and steadier path for the future. I have outlined some of my thoughts on what needs to be done, and I am looking forward to hearing your thoughts as well in the Q&A session.

We have many challenges before us. But we are Americans. And that means that when the challenges are the greatest, we work together to resolve differences, find solutions and fix the problem. That knowledge, of who we are and what we’re capable of, should give all of us confidence that the future remains bright despite the challenges of the present. Thank you.

Last Updated 10/13/2010 communications@fdic.gov


© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in assignment of mortgage, fdic, foreclosure, foreclosure fraud, foreclosures, robo signers, servicers, sheila bair, Trusts3 Comments

INDYMAC’S/ONEWEST FORECLOSURE ‘ROBO-SIGNERS’ SIGNED 24,000 MORTGAGE DOCUMENTS MONTHLY

INDYMAC’S/ONEWEST FORECLOSURE ‘ROBO-SIGNERS’ SIGNED 24,000 MORTGAGE DOCUMENTS MONTHLY

Please welcome Ericka Johnson Seck to the ROBO-SIGNER Hall of Sham!

MERS & LPS once again the “Common Thread”

Here is a list of her many Corporate Hats:

  • Vice President of Mortgage Electronic Registration Systems Inc. (MERS)
  • Vice President of Deutsch Bank National Trust
  • Vice President of Bank of New York
  • Attorney in Fact of IndyMac
  • Attorney in Fact of ONEWEST
  • Attorney in  Fact of FDIC

I must confess, she was my first study because she signed two assignments for “one” of my properties using “two” different employers. 🙂 ‘<blush> I even created my very first youtube video in her honor (see below)!

Thanks to Judge Arthur Schack and Tom Ice from Ice Legal in Palm Beach County, we all became familiar with Erica for wearing too many corporate hats.

She is the “Robo-Signer” Judge Schack called out in three particular cases in NY and made her an instant foreclosure household name. I don’t think she ever emerged in NY soon after this. Also see the  HSCB v. Yasmin case.

Excerpt of DEUTSCHE BANK NATIONAL TRUST v. HARRIS

The Court is perplexed as to why the assignment was not executed in Pasadena, California, at 46U Sierra Madre Villa, the alleged “principal place of business” for both the assignor and the assignee. In my January 3 1, 2008 decision (Deutsche Bank National Tr (1st Canpuny v Maraj, – Misc 3d – [A], 2008 NY Slip Op 50176 [U]), I noted that Erica Johnson-Seck, claimed that she was a Vice President of MERS in her July 3,2007 INDYMAC to DEUTSCHE BANK assignment, and then in her July 3 1,2007 affidavit claimed to be a DEUTSCHE BANK Vice President. Just as in Deutsche Bank National Trust Company v Maraj, at 2, the Court in the instant action, before granting itn application for an order of reference, requires an affidavit from Ms. Johnson-Seck, describing her employment history for the past three years.

Further, the Court requires an explanation from an officer of plaintiff DEUTSCHE BANK as to why, in the middle of our national subprime mortgage financial crisis, DEUTSCHE BANK would purchase a non-perferforming loan from INDYMAC, and why DEUTSCHE BANK, INDYMAC and MERS all share office space at 460 Sierra Madre Villa, Pasadena, CA 91 107.

24,000 Monthly Documents executed by her team

Now Lets move on to this below… according to this deposition her office signs 24,000 mortgage related documents out of the this figure she signed about “750” a week making it approximately 3000 mortgage documents used in foreclosure cases. Anything from Affidavits of Debt, Lost Note Affidavits, Assignment of Mortgages, Declarations pretty much anything having to deal with Bankruptcy and Foreclosures.

This is what she signs without any notary present.

DEPOSITION OF ERICA JOHNSON SECK

[ipaper docId=37528161 access_key=key-t6hhb0aqxj8gvgam8s7 height=600 width=600 /]

Below is a sale that happened in DC all in 1 single day! It appears she also puts properties in her name with her co-employees Roger Stotts and  Eric Friedman.

ROGER STOTTS  signs these as well and according to the depo above Indymac/Onewest is “NOT” the custodian as defined below. Why do they commit fraud?


FIRST VIDEO MADE OF DAVID J. STERN, ERICA JOHNSON-SECK BACK IN FEBRUARY 2010

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in assignment of mortgage, bogus, CONTROL FRAUD, corruption, deposition, deutsche bank, erica johnson seck, fdic, foreclosure, foreclosure fraud, foreclosure mills, foreclosures, Former Fidelity National Information Services, investigation, judge arthur schack, Law Offices Of David J. Stern P.A., lis pendens, MERS, MERSCORP, Moratorium, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., notary fraud, note, onewest, robo signers, roger stotts, STOP FORECLOSURE FRAUD, stopforeclosurefraud.com11 Comments

Something strange about this NY foreclosure case involving JPMorgan Chase…

Something strange about this NY foreclosure case involving JPMorgan Chase…

Just in yesterday’s post we were puzzled about how exactly JPMC is foreclosing on WAMU loans without finalizing the deal. This case is a perfect example.

2010 NY Slip Op 32126(U)

23 EAST 39th STREET DEVELOPERS LLC, FARZANEH YEROUSHALMI, and BEHROUZ BENYAMINPOUR, Plaintiffs,
v.
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as successor to WASHINGTON MUTUAL BANK, ALLEN GUTTERMAN, 23 EAST 39th STREET MANAGEMENT CORP. JOSEPH J. BLAKE & ASSOCIATES, INC., MARIE RIOS, “JOHN DOE,” “ROBERT DOE” and “JANE DOE NO. 1 to 50,” the last being fictitious names, Defendants.

603703/09, Motion seq. No 001.

Supreme Court, New York County.

July 30, 2010

DECISION/ORDER

MARCY S. FRIEDMAN, Judge.

This action arises out of plaintiffs’ purchase of a $10.4 million townhouse located at 23 East 39th Street in Manhattan. Plaintiffs sue for rescission of the purchase and mortgage agreements based on fraud and misrepresentation of the value of the property. By separate motions, JPMorgan Chase Bank, National Association, as successor to Washington Mutual Bank (“Chase”) and Joseph J. Blake & Associates (“J.J. Blake”) move, pursuant to CPLR 3211(a)(1) and (7), to dismiss the complaint based on documentary evidence and for failure to state a cause of action.[1]

The relevant facts are as follows: Plaintiffs purchased the townhouse pursuant to a five-year “lease back” agreement in which the sellers of the property agreed to rent the space from plaintiffs for $700,000 annually with an option to terminate after one year. Although the $7.25 million mortgage on the property was issued by Washington Mutual Bank (“Wamu”), Chase acquired the mortgage from the FDIC after the FDIC took over Wamu in late 2008. JJ. Blake prepared an appraisal of the property for Wamu. Within a few months after plaintiffs closed title, the sellers ceased paying rent to plaintiffs. Plaintiffs then defaulted on the mortgage and Chase commenced an action to foreclose on the property entitled JPMorgan Chase Bank, N.A. v 23 E. 39th St. Devs. LLC, et. al., (Sup Ct, New York County, Index No. 104639/09). By order in the foreclosure action dated February 11, 2010, this court granted Chase’s motion for summary judgment to foreclose, issued an order of reference to compute, and appointed a receiver to manage the property.

It is well settled that on a motion to dismiss addressed to the face of the pleading, “the pleading is to be afforded a liberal construction (see, CPLR 3026). Wc accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory.” (Leon v Martinez, 84 NY2d 83. 87-88 [1994]. See 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144 [2002].) However, “the court is not required to accept factual allegations that are plainly contradicted by the documentary evidence or legal conclusions that are unsupportable based upon the undisputed facts.” (Robinson v Robinson, 303 AD2d 234, 235 [1st Dept 2003]. See also Water St. Leasehold LLC v Deloitte & Touche LLP, 19 AD3d 183 [1st Dept 2005], lv denied 6 NY3d 706 [2006].) When documentary evidence under CPLR 3211 (a)(1) is considered, “a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law.” (Leon v Martinez, 84 NY2d at 88; Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, L.L.P., 96 NY2d 300 [2001].)

In order to plead a claim for fraud, plaintiff must allege “a material misstatement, known by the perpetrator to be false, made with an intent to deceive, upon which the plaintiff reasonably relies and as a result of which he sustains damages.” (Megaris Furs. Inc. v Gimbel Bros., Inc., 172 AD2d 209, 213 [1st Dept 1991] [emphasis omitted].) Moreover, “each element must be pleaded with particularity” and “the circumstances constituting the wrong shall be stated in detail.” (LaSalle Nat. Bank v Ernst & Young L.L.P., 285 AD2d 101, 109 [1st Dept 2001] [internal citation omitted]; CPLR 3016[b].) A cause of action seeking rescission based on fraud must be plead “with the specificity required by CPLR 3016(b)” (Accurate Copy Serv. of Am. v Fisk Bldg. Assocs. L.L.C., 72 AD3d 456 [1st Dept 2010]), and “is to be invoked only when there is lacking complete and adequate remedy at law.” Rudman v Cowels Communications. Inc., 30 NY2d 1, 13 [1972].)

Plaintiffs’ sole cause of action against Chase is to rescind the mortgage, mortgage note, and guarantee “[d]ue to the inflated appraised value and/or the 5-year lease.” (Ps.’ Amended Compl., Fourth Cause of Action, ¶ 61 [Ex. 3 to Supp. Aff. of Joseph Muccia].) However, plaintiffs fail to allege with any particularity that Chase engaged in any fraudulent acts that would provide a basis for rescission of the mortgage. Further, plaintiffs do not claim that, when Wamu issued the mortgage to them, Wamu (as opposed to the seller) made misrepresentations on which they relied that would constitute a fraud. Even if plaintiffs adequately plead a cause of action that would permit them to rescind the mortgage agreement, the specific language of the Purchase and Assumption Agreement between the FDIC and Chase states that Chase specifically does not assume “any liability associated with borrower claims for payment of or liability to any borrower for monetary relief, or that provide for any other form of relief to any borrower . . ., related in any way to any loan or commitment to lend made by [Wamu] prior to failure . . ., or otherwise arising in connection with [Wamu’s] lending or loan purchase activities.” (Muccia Aff., Ex. ¶ 2.5.) Thus, pursuant to the express terms of the Purchase and Assumption Agreement, any potential liability by Wamu to plaintiffs was not transferred to Chase. (See Cassesc v Washington Mut., Inc., 2008 WL 7022845, *3 [ED NY 2008].) Accordingly, plaintiffs’ fourth cause of action will be dismissed.

Plaintiffs’ sole cause of action against J.J. Blake appears to allege fraudulent misrepresentation. Specifically, plaintiffs claim that JJBlake “inflated the value of the property so WAMU will underwrite the Mortgage,” “exaggerated the square footage of the Property,” and “knew that there was no 5-year lease with one-year option to renew.” (Ps.’ Amended Compl., Fifth Cause of Action, ¶¶ 38a, 38f, 38g.) Plaintiffs fail, however, to allege any facts demonstrating that they relied on any of the alleged misrepresentations in the appraisal when they purchased the property. Moreover, J.J. Blake conclusively shows, based on the affidavit of plaintiff Behrouz Benyaminpour, that plaintiffs did not receive the appraisal until after they closed on the property. (Aff. of Jonathan Bruno, Ex. H., ¶ 26.) Contrary to plaintiffs’ apparent suggestion, this large-scale commercial transaction docs not implicate a consumer fraud. Plaintiffs’ fifth cause of action against J.J. Blake will accordingly be dismissed.

In light of plaintiffs’ complete failure to set forth any misrepresentations to them by Chase or J.J. Blake, or otherwise to adequately plead causes of action against Chase and J.J. Blake, plaintiffs’ claimed need for discovery is not a basis for denying the instant motions.

It is hereby ORDERED that the motions of JPMorgan Chase Bank, National Association, as successor to Washington Mutual Bank, and Joseph J. Blake & Associates to dismiss the complaint is granted to the extent of dismissing the complaint as against them; and it is further

ORDERED that the remaining claims are severed and shall continue; and it is further

ORDERED that the remaining parties are directed to appear in Part 57 (60 Centre Street, Room 335) for a preliminary conference on Thursday, September 30, 2010, at 11:00 a.m.

This constitutes the decision and order of the court.

[1] Although Chase moved to dismiss plaintiffs’ original complaint (Chase’s Motion, Ex. A), in its supplemental reply, Chase addresses the allegations in plaintiffs’ amended complaint (Supp. Aff. of Joseph Muccia, ¶ 3). Accordingly, the court will consider Chase’s motion as to plaintiffs’ amended complaint. (Sec Sage Realty Corp. v Proskauer Rose LLP, 251 AD2d 35, 38 [1st Dept 1998].)

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in conspiracy, fdic, foreclosure, foreclosure fraud, foreclosures, jpmorgan chase, washington mutual1 Comment

Could WAMU/ JPMorgan Chase Foreclosures be invalid?

Could WAMU/ JPMorgan Chase Foreclosures be invalid?

This is going to raise questions on how this has been able to proceed without the finalizing of the sale.

You cannot have an omelet if the chicken hasn’t laid the egg yet!

  • Were the shareholders made aware that JPMC never finalized the deal?
  • How does this effect those who filed for Bankruptcy?
  • Why hasn’t the FDIC stepped up when they knew that this was on going and never finalized the sale?
  • What happens to those who have an assignment of mortgage from WAMU to JPMC?
  • Is JPMC currently servicing any of WAMU’ loans?
  • All the chain in title that are in question?
  • Bailout? What Bailout?

Thanks to Foreclosure Hamlet and 4closurefraud for this alert!

Via: 4ClosureFraud

This is very intriguing… Check out the the excerpts from the report below…

Game Changer?

WaMu sale hasn’t closed, document suggests

Next month will mark two years since federal regulators seized Washington Mutual and sold it to JPMorgan Chase for $1.9 billion. Now a document that appears to be from the Federal Deposit Insurance Corporation suggests the deal still hasn’t closed.

“Everyone is saying the sale is finalized,” said the shareholder, Farokh Lam, of Woburn, Mass. “It is not.

Lam noticed that on pages 7 and 9, the original WaMu purchase and sale agreement allows the FDIC to extend the settlement date. He says he asked about it, and the FDIC confirmed in phone calls and emails that the settlement date was set for Aug. 30, 2010, and could be extended further.

“Settlement Date” means the first Business Day immediately prior to the day which is one hundred eighty (180) days after Ban Closing, or such other date prior thereto as may be agreed upon by the Receiver and the Assuming Bank. The Receiver, in its discretion, may extend the Settlement Date.

It says: “The purpose of this amendment is to extend the time period for Final Settlement to August. 30, 2010.

WaMu’s final days were chronicled in depth by Puget Sound Business Journal Staff Writer Kirsten Grind in an award-winning series.

Does this mean that all the WAMU foreclosures being pushed through the courts by JPMorgan Chase using the FDIC Purchase and Sale Agreement are invalid?

Does it mean if they haven’t closed the deal THEY DO NOT OWN THE LOANS OR THEIR SERVICING RIGHTS?

Where are the windfall profits going after the foreclosure sale?

What if the agreement changes before it is finalized?

So many questions…

Pipe up in the comments and let me know what you think.

The way I see it is, if they haven’t finalized the deal, how can they foreclose on the homes?

[ipaper docId=36027673 access_key=key-5z7g1dy0c99oralt1p0 height=600 width=600 /]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in discovery, fdic, foreclosure, foreclosure fraud, foreclosures, investigation, jpmorgan chase, non disclosure, psa, securitization, servicers, STOP FORECLOSURE FRAUD, wamu, washington mutual4 Comments

FINREG Rule-Making the Next battle?

FINREG Rule-Making the Next battle?

Hat Tip to a viewer for this…

There are numerous complaints from conservatives, political and economic, as to the continuation of the federal GSEs and guarantee programs that dominate the market place. These matters now are coming to the forefront of Congressional consideration in the wake of passage of FINREG. The bifurcated approach was practically driven: one bite was too much to swallow, and the methods of solution are dramatically different.

FINREG has been described as a broad general outline for actions yet to be taken by as many as 16 federal agencies through rule-making processes. One of the most potentially significant pieces of this regulatory maze is supposed to be the Consumer Protection Agency tucked away in Federal Reserve. The rule-making process will be long and tortured. Agency lawyers basically offer up drafts for comment by the public. The “public” translates into “special interests”. These are generally consumer protection groups, or industry groups. Legions of industry specialized lawyer-lobbyists comment in technical terms that are incomprehensible to 99% of the lawyers in the country. The complexity tends to make it an insider ball game. Industry lawyer-lobbyists that worked the bills know where the choke points are—where the skeletons are hidden. Consumer advocates are few and far between—generally outgunned– certainly underpaid in comparison to the well-financed industry groups. Disinformation is industry’s stock in trade. Confusion is its currency. By the end of the process even the most well-meaning regulators are overwhelmed. What to believe? Who to believe? Much like the judiciary, the rule-makers receive comments from the industry side, and wait to hear the consumer rebuttals. If the rebuttals are poorly framed, the consumer comments are placed in the shadows. Even when the most aggressive rule-making process generates in a proposed rule, the rule-regulation may be held in suspense for decades. The existing agencies will be best able to engage in rule-making quickly. No doubt industry-originated drafts are already circulating in at least some instances.

For an entirely new rule-making authority, it may take a year or more simply to find the writers, employ them, then map a strategy and initiate the formal rule-making process. Years pass—other agencies with a head start fill the void. Conflicting rules are inevitable—the new agency may be consumed initially simply by attempting to stake out its jurisdiction by submitting comments to other agencies rule-making either directly in the public record or through back-room confrontations. What is the effect?

Generally, regulations emerging from a rule-making procedure are either or “interpretative” or “legislative” rules.  Interpretative regulations cite to various legislative provisions to clarify already reasonably definitive statutory mandates. The interpretative rules are promulgated by the agency charged with jurisdiction over the subject matter. The responsible agency writes rules to clarify broader statutory language, or conflicting statutory language. Sometimes this type of rule-making will parrot statutory language in order to provide the agency with a statement of internal policy upon which specific case determinations may be based. These latter agency decisions may be referred to as rulings but more correctly are described in administrative law as “orders”. The agency that promulgates interpretative regulations is bound by and must follow those regulations in its individual case decisions/orders. Interpretative regulations may be applied retroactively in the reasonable discretion of the agency. The retroactive application is often challenged by industry members subject to orders based on the regulation. Generally the industry will argue that the interpretation conflicted with underlying statutory intent as reflected by committee reports, floor speeches by sponsors etc. The industry may also argue that the orders pursuant to interpretative regulations may not issue for retroactive application in event that they conflict with long-standing administrative practice by that agency, and may even go so far as to state that the longstanding practice was implicitly incorporated by statute even if not specifically referenced. The theory is that the legislature is all-knowing, and adopts administrative rules implicitly when legislating in that area because the legislature would have specifically altered the treatment if it had so intended. These fears tend to make retroactive application difficult and contentious.

A legislative body may also authorize legislative rule-making. Generally, this will be done by language such as the “agency shall write rules to implement the purposes” of the general legislative mandate. Other times, there will be a more ambiguous direction: “this section shall be effective upon adoption of regulations”. In the latter case, the agency is basically vested with authority to decide for itself if and when it needs the rules to be created and applied. Agency discretion in the context of legislative rule-making is tantamount to a punt by Congress to the agency of matters too complex for legislation. These matters are supposedly within the special expertise of the agency and its word is law virtually equivalent to Congress’. Legislative regulations are drafted by persons appointed or supervised by the then-current Administration.

The regulatory path generally follows the following course: Congress passes a statute with Committee Reports. The agency determines the priority of required or permitted action. The Agency publishes intent to engage in rule-making in a described area. Sometimes this is described as “Advance Notice of proposed Rule-Making” or ANPRM. Sometimes it is simply notice of Proposed Rule-Making. In any event, the notice generally constitutes the beginning of agency hearings and/or opening of a comment period during which the agency is accessible to introduction of information, supposedly on the record.

The agency takes comments, hears testimony and investigates facts. It makes determinations of fact and law and writes regulations accordingly. The agency will typically publish “proposed rules” incorporating and addressing the comments made during the open hearing process. The notice of associated with published proposed rules should invite further comment—but on a more limited basis. The proposed rules may stand in place for years, while under attack from all sides. Eventually—as much as 20 years later—the proposed rules tested by time may become “final”.

What does this mean to the community of mortgagors—subjects of predatory loans and predatory collection practices?

To bring it home dramatically to relate to current discussions, the decision by Bankruptcy Court Judge Federman, in B.R. Western District Missouri Case # 10-20086; In re: Box stated at page 8, “The fact that the February 18, 2010 assignment [typical MERS as nominee of a bankrupt originator] was made after the bankruptcy case was filed does not render it per se invalid in that there is no rule prohibiting a creditor from assigning its claim postpetition.”   [Emphasis Added]. This has implications with respect to tracking custody, obtaining discovery, simply unraveling the transactions. It touches upon the after-acquired note issues, and generally invites frauders and their successors to carry on in good stead.

In another hot recent case, Cleveland vs Ameriquest et al, U.S.C.A. 6th Cir. No. 09-3608, the Court responded to Clevelands’ assertions of injury by underwriters that “began to direct lenders on the types of loans to meet the [underwriters’] securitization needs….and turned a blind eye even when the loans made no economic sense.” The District Court below had decided that the city had no claim that the defendants had abetted a nuisance, ”because subprime lending…is legal”. Interestingly, the facts pled suggested that the city asserted not just subprime, but predatory, subprime lending.  References to official sources bear out this connection between predatory and un-economic loans. Quoting from a well-done brief on the topic;

Specifically, in the matter of Associates Home Equity Services v. Troup, 343 N.J.Super. 254, 267 (App. Div. 2001) the Appellate Division opined:

Predatory lending as been described as: a mismatch between the needs and capacity of the borrower… In essence, the loan does not fit the borrower, either because the borrower’s underlying needs for the loan are not being met or the terms of the loan are so disadvantageous to that particular borrower that there is little likelihood that the borrower has the capacity to repay the loan. (citations omitted).

This definition set forth by the Appellate Division is entirely consistent with Federal guidance on the topic.  Specifically, by “Advisory Letter” AL 2003-2 from the Office of the Comptroller of the Currency (“OCC”) to the Chief Executive Officers of All National Banks…, the OCC stated:

The terms “abusive lending” or “predatory lending” are most frequently defined by reference to a variety of lending practices.  Although it is generally necessary to consider the totality of the circumstances to assess whether a loan is predatory, a fundamental characteristic of predatory lending is the aggressive marketing of credit to prospective borrowers who simply cannot afford the credit on the terms being offered.  Typically, such credit is underwritten predominantly on the basis of the liquidation value of the collateral, without regard to the borrower’s ability to service and repay the loan according to its terms absent resort to that collateral. (emphasis provided).

Furthermore, Section 39 of the Federal Deposit Insurance Act generally requires Federally Chartered banks to establish “safety and soundness” standards for underwriting loans.  At 12 C.F.R. Part 30—Appendix A, “Interagency Guidelines Establishing Standards for Safety and Soundness,” the various federal agencies who regulate banking institutions were directed to consider a number of factors in implementing loan underwriting guidelines.

At subpart “C.” lenders are directed to “…establish and maintain loan documentation practices that:

***

2.  Identify the purpose of a loan and the source of repayment, and assess the ability of a borrower to repay the indebtedness in a timely manner.

At subpart “D” lending institutions are directed to “establish and maintain prudent credit underwriting practices that:

***

3.  Provide for consideration, prior to credit commitment, of the borrower’s overall financial condition and resources, the financial responsibility of any guarantor, the nature and value of any underlying collateral, and the borrower’s character and willingness to repay as agreed.’”

So the question now is whether the City of Cleveland failed to properly assert that subprime predatory lending was the subject of the complaint—or the Court has ruled that “predatory lending” is legal?

Much if not most of the mortgage crisis arose as a result of predatory lending on steroids. The reasons were varied: 1) to generate fees all around by refinancing loans and originating new ones, 2) to obtain products to sell to investors as a steep markup—more fees/profits and last but not to be over-looked in respect of predatory loans, the servicer is entitled to hold the proceeds of foreclosure until the tranche MBS are “called” bought out and the trust is closed—or investor payout as prescribed in the MBS themselves whichever comes 1st. the main driver for “designed to fail” or predatory loans was the probability that the loans would default and the originator’s servicing rights’ foreclosure pool would grow as the foreclosures went on according to plan.

Now clearly the above 2 issues among many are critical to the continuation or termination  of the practices which have crushed the entire home-owning population of America, along with the economy, the future of our children, and destroyed the prospect of comfortable retirements for even the most diligent workers. The length and breadth of the damages from this obscene—but not illegal?—behavior is without parallel.

The last hope for correction in the future if not the past is the orderly and honest establishment of a keen regulatory system that directly addresses these and related issues. This will occur in Agency hearing rooms, in Comments and testimony before the agency staffs. A coordinated effort by advocates is necessary to identify cases of abuse, why they happened and what would prevent the same thing occurring again.

If I have misstated, understated or need to identify further stark examples of judicial distress due to confusion of the law, please post your suggestions. We need to identify corrections before the industry glosses over them. Do not play defense—play offense.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in fdic, federal reserve board, MERS, mortgage, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., OCC1 Comment

FDIC launches Lawsuit to Four former Indymac Executives

FDIC launches Lawsuit to Four former Indymac Executives

FDIC sues four former IndyMac executives

The agency accuses the managers of the defunct bank’s Homebuilder Division of acting negligently by granting loans to developers who were unlikely to repay the debts.

By E. Scott Reckard, Los Angeles Times
July 14, 2010

Launching a new offensive against leaders of failed financial institutions, federal regulators are accusing four former executives of Pasadena’s defunct IndyMac Bank of granting loans to developers and home builders who were unlikely to repay the debts.

The lawsuit by the Federal Deposit Insurance Corp. alleges that the IndyMac executives acted negligently and seeks $300 million in damages.

It is the first suit of its kind brought by the FDIC in connection with the spate of more than 250 bank failures that began in 2008. Regulators said it wouldn’t be the last.

“Clearly we’ll have more of these cases,” said Rick Osterman, the deputy general counsel who oversees litigation at the agency.

The FDIC has sent letters warning hundreds of top managers and directors at failed banks — and the insurers who provided them with liability coverage — of possible civil lawsuits, Osterman said. The letters go out early in investigations of failed banks, he added, to ensure that the insurers will later provide coverage even if the policy expires.

The four defendants in the FDIC lending negligence case, who operated the Homebuilder Division at IndyMac, collectively approved 64 loans that are described in the 309-page lawsuit.

They are:

•Scott Van Dellen, the division’s president and chief executive during six years ending in its seizure;

•Richard Koon, its chief lending officer for five years ending in July 2006;

•Kenneth Shellem, its chief credit officer for five years ending in November 2006;

•William Rothman, its chief lending officer during the two years before the seizure.

Through their attorneys, they vigorously denied the allegations.

“The FDIC has unfairly selected four hard-working executives of a small division of the bank … to blame for the failure of IndyMac,” said defense attorney Kirby Behre, who represents Shellem and Koon. “We intend to show that these loans were done at all times with a great deal of care and prudence.”

Defense attorney Michael Fitzgerald, who represents Van Dellen and Rothman, said no one at the company or its regulators foresaw the severity of the housing crash before it struck, and that IndyMac was one of the first construction lenders to pull back when trouble struck the industry in 2007.

Fitzgerald added that the FDIC thought Van Dellen trustworthy enough that it kept him on to run the division after the bank was seized.

The suit naming the IndyMac executives was filed this month in federal court in Los Angeles, two years after the July 2008 failure of the Pasadena savings and loan. The bank is now operated under new ownership as OneWest Bank.

IndyMac, principally a maker of adjustable-rate mortgages, was among a series of high-profile bank failures early in the financial crisis that were blamed on defaults on high-risk home loans and the securities linked to them.

But the majority of failures since then have been at banks hammered by losses on commercial real estate, particularly loans to residential developers and builders — and IndyMac had a sideline in that business as well through its Homebuilder Division.

The suit alleges that IndyMac’s compensation policies prompted the home-building division to increase lending to developers and builders with little regard for the quality of the loans.

“HBD’s management pushed to grow loan production despite their awareness that a significant downturn in the market was imminent and despite warnings from IndyMac’s upper management about the likelihood of a market decline,” the FDIC said in its complaint.

An investigation of IndyMac’s residential mortgage lending practices could lead to another civil suit, potentially naming higher-up executives, attorneys involved in the case said.

Continue reading… LA TIMES

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in fdic, indymac, lawsuit, onewest1 Comment

Was There a Plan to Blow Up the Economy?  The Subprime Conspiracy: COUNTERPUNCH

Was There a Plan to Blow Up the Economy? The Subprime Conspiracy: COUNTERPUNCH

May 3, 2010

Was There a Plan to Blow Up the Economy?

The Subprime Conspiracy

By MIKE WHITNEY

Many people now believe that the financial crisis was not an accident. They think that the Bush administration and the Fed knew what Wall Street was up to and provided their support. This isn’t as far fetched as it sounds. As we will show, it’s clear that Bush, Greenspan and many other high-ranking officials understood the problem with subprime mortgages and knew that a huge asset bubble was emerging that threatened the economy. But while the housing bubble was more than just an innocent mistake, it doesn’t rise to the level of “conspiracy” which Webster defines as  “a secret agreement between two or more people to perform an unlawful act.”  It’s actually worse than that, because bubblemaking is the dominant policy, and it’s used to overcome structural problems in capitalism itself, mainly stagnation.

The whole idea of a conspiracy diverts attention from what really happened. It conjures up a comical vision of  top-hat business tycoons gathered in a smoke-filled room stealthily mapping out the country’s future. It ignores the fact, that the main stakeholders don’t need to convene a meeting to know what they want. They already know what they want; they want a process that helps them to maintain profitability even while the “real” economy remains stuck in the mud.  Historian Robert Brenner has written extensively on this topic and dispels the mistaken view that the economy is “fundamentally strong”. (in the words of former Treasury secretary Henry Paulson)  Here’s Brenner :

“The current crisis is more serious than the worst previous recession of the postwar period, between 1979 and 1982, and could conceivably come to rival the Great Depression, though there is no way of really knowing. Economic forecasters have underestimated how bad it is because they have over-estimated the strength of the real economy and failed to take into account the extent of its dependence upon a buildup of debt that relied on asset price bubbles.

“In the U.S., during the recent business cycle of the years 2001-2007, GDP growth was by far the slowest of the postwar epoch. There was no increase in private sector employment. The increase in plants and equipment was about a third of the previous, a postwar low. Real wages were basically flat. There was no increase in median family income for the first time since World War II. Economic growth was driven entirely by personal consumption and residential investment, made possible by easy credit and rising house prices. Economic performance was weak, even despite the enormous stimulus from the housing bubble and the Bush administration’s huge federal deficits. Housing by itself accounted for almost one-third of the growth of GDP and close to half of the increase in employment in the years 2001-2005. It was, therefore, to be expected that when the housing bubble burst, consumption and residential investment would fall, and the economy would plunge. ” (“Overproduction not Financial Collapse is the Heart of the Crisis”, Robert P. Brenner speaks with Jeong Seong-jin, Asia Pacific Journal)

What Brenner describes is an economy \that–despite unfunded tax cuts, massive military spending and gigantic asset bubbles–can barely produce positive growth.  The pervasive lethargy of mature capitalist economies poses huge challenges for industry bosses who are judged solely on their ability to boost quarterly profits. Goldman’s Lloyd Blankfein and JPM’s Jamie Dimon could care less about economic theory, what they’re interested in is making money; how to deploy their capital in a way that maximizes return on investment. “Profits”, that’s it.  And that’s much more difficult in a world that’s beset by overcapacity and flagging demand.  The world doesn’t need more widgets or widget-makers. The only way to ensure profitability is to invent an alternate system altogether, a new universe of financial exotica (CDOs, MBSs, CDSs) that operates independent of the sluggish real economy. Financialization provides that opportunity. It allows the main players to pump-up the leverage, minimize capital-outlay, inflate asset prices, and skim off record profits even while the real  economy endures severe stagnation.

Financialization provides a  path to wealth creation, which is why the sector’s portion of total corporate profits is now nearly 40 per cent. It’s a way to bypass the pervasive inertia of the production-oriented economy. The Fed’s role in this new paradigm is to create a hospitable environment (low interest rates) for bubble-making so the upward transfer of wealth can continue without interruption. Bubblemaking is policy.

As we’ve pointed out in earlier articles, scores of people knew what was going on during the subprime fiasco. But it’s worth a quick review, because Robert Rubin, Alan Greenspan, Timothy Geithner, and others have been defending themselves saying, “Who could have known?”.

The FBI knew (“In September 2004, the FBI began publicly warning that there was an “epidemic” of mortgage fraud, and it predicted that it would produce an economic crisis, if it were not dealt with.”) The FDIC knew. ( In testimony before the Financial Crisis Inquiry Commission, FDIC chairman Sheila Bair confirmed that she not only warned the Fed of what was going on in 2001, but cited particular regulations (HOEPA) under which the Fed could stop the “unfair, abusive and deceptive practices” by the banks.) Also Fitch ratings knew, and even Alan Greenspan’s good friend and former Fed governor Ed Gramlich knew. (Gramlich personally warned Greenspan of the surge in predatory lending that was apparent as early as 2000. Here’s a bit of what Gramlich said in the Wall Street Journal:

“I would have liked the Fed to be a leader” in cracking down on predatory lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an interview this past week. Knowing it would be controversial with Mr. Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich broached it to him personally rather than take it to the full board. “He was opposed to it, so I didn’t really pursue it,” says Mr. Gramlich. (Wall Street Journal)

So, Greenspan knew, too. And, according to Elizabeth MacDonald  in an article titled “Housing Red flags Ignored”:

“One of the nation’s biggest mortgage industry players repeatedly warned the Federal Reserve, the Federal Deposit Insurance Corp. and other bank regulators during the housing bubble that the U.S. faced an imminent housing crash….But bank regulators not only ignored the group’s warnings, top Fed officials also went on the airwaves to say the economy was “building on a sturdy foundation” and a housing crash was “unlikely.”

So, the Mortgage Insurance Companies of America [MICA] also knew. And, here’s a clip from the Washington Post by former New York governor Eliot Spitzer who accused Bush of being a ‘partner in crime’ in the subprime fiasco. Spitzer says that the OCC launched “an unprecedented assault on state legislatures, as well as on state attorneys general just to make sure the looting would continue without interruption. Here’s an except from Spitzer’s article:

“In 2003, during the height of the predatory lending crisis….the OCC promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. (Washington Post)

So, the Fed knew, the Treasury knew, the FBI knew, the OCC knew, the FDIC knew, Bush knew, the Mortgage Insurance Companies of America knew, Fitch ratings knew, all the states Attorneys General knew, and thousands, of traders, lenders, ratings agency executives, bankers, hedge fund managers, private equity bosses, regulators knew. Everyone knew, except the unlucky people who were victimized in the biggest looting operation of all time.

Once again, looking for conspiracy, just diverts attention from the nature of the crime itself. Here’s a statement from former regulator and white collar criminologist William K. Black which helps to clarify the point:

“Fraudulent lenders produce exceptional short-term ‘profits’ through a four-part strategy: extreme growth (Ponzi), lending to uncreditworthy borrowers, extreme leverage, and minimal loss reserves. These exceptional ‘profits’ defeat regulatory restrictions and turn private market discipline perverse. The profits also allow the CEO to convert firm assets for personal benefit through seemingly normal compensation mechanisms. The short-term profits cause stock options to appreciate. Fraudulent CEOs following this strategy are guaranteed extraordinary income while minimizing risks of detection and prosecution.” (William K. Black,“Epidemics of’Control Fraud’ Lead to Recurrent, Intensifying Bubbles andCrises”, University of Missouri at Kansas City – School of Law)

Black’s definition of “control fraud” comes very close to describing what really took place during the subprime mortgage frenzy. The investment banks and other financial institutions bulked up on garbage loans and complex securities backed by dodgy mortgages so they could increase leverage and rake off large bonuses for themselves. Clearly, they knew the underlying collateral was junk, just as they knew that eventually the market would crash and millions of people would suffer.

But, while it’s true that Greenspan and Wall Street knew how the bubble-game was played; they had no intention of blowing up the whole system. They simply wanted to inflate the bubble, make their profits, and get out before the inevitable crash.  But, then something went wrong. When Lehman collapsed, the entire financial system suffered a major heart attack. All of the so-called “experts” models turned out to be wrong.

Here’s what happened: Before to the meltdown, the depository “regulated” banks got their funding through the repo market by exchanging collateral (mainly mortgage-backed securities) for short-term loans with the so-called “shadow banks” (investment banks, hedge funds, insurers) But after Lehman defaulted, the funding stream was severely impaired because the prices on mortgage-backed securities kept falling. When the bank-funding system went on the fritz,  stocks went into a nosedive sending panicky investors fleeing for the exits. As unbelievable as it sounds, no one saw this coming.

The reason that no one anticipated a run on the shadow banking system is because the basic architecture of the financial markets has changed dramatically in the last decade due to deregulation. The fundamental structure is different and the traditional stopgaps have been removed. That’s why no one knew what to do during the panic. The general assumption was that there would be a one-to-one relationship between defaulting subprime mortgages and defaulting mortgage-backed securities (MBS). That turned out to be a grave miscalculation. The subprimes were only failing at roughly 8 percent rate when the whole secondary market collapsed. Former Treasury Secretary Paul O’Neill explained it best using a clever analogy. He said, “It’s like you have 8 bottles of water and just one of them has arsenic in it. It becomes impossible to sell any of the other bottles because no one knows which one contains the poison.”

And that’s exactly what happened. The market for structured debt crashed, stocks began to plummet, and the Fed had to step in to save the system. Unfortunately, that same deeply-flawed system is being rebuilt brick by brick without any substantive changes.. The Fed and Treasury support this effort, because–as agents of the banks–they are willing to sacrifice their own credibility to defend the primary profit-generating instruments of the industry leaders. (Goldman, JPM, etc) That means that Bernanke and Geithner will go to the mat to oppose any additional regulation on derivatives, securitization and off-balance sheet operations, the same lethal devices that triggered the financial crisis.

So, there was no conspiracy to blow up the financial system, but there is an implicit understanding that the Fed will serve the interests of Wall Street by facilitating asset bubbles through “accommodative” monetary policy and by opposing regulation. It’s just “business as usual”, but it’s far more damaging than any conspiracy, because it ensures that the economy will continue to stagnate, that inequality will continue to grow, and that the gigantic upward transfer of wealth will continue without pause.

Mike Whitney lives in Washington state. He can be reached atfergiewhitney@msn.com

Posted in concealment, conspiracy, corruption, fdic, FED FRAUD, federal reserve board, foreclosure fraud, geithner, hank paulson, S.E.C., securitization0 Comments

To ROB a COUNTRY, OWN a BANK: William Black

To ROB a COUNTRY, OWN a BANK: William Black

William Black, author of “Best way to rob a bank is to own one” talks about deliberate fraud on Wall St. courtesy of TheRealNews

[youtube=http://www.youtube.com/watch?v=sA_MkJB84VA]

[youtube=http://www.youtube.com/watch?v=ISsR7ZiWlsk]

Stop trying to get through the front door…use the back door…Get a Forensic Audit!

Not all Forensic Auditors are alike! FMI may locate exactly where the loan sits today.

 

This will make your lender WANT to communicate with you. Discover what they don’t want you to know. Go back in time and start from the minute you might have seen advertisements that got you hooked ” No Money Down” “100% Financing” “1% interest” “No income, No assetts” NO PROBLEM! Were you given proper disclosures on time, proper documents, was your loan broker providing you fiduciary guidance or did they hide undisclosed fees from you? Did they conceal illegal kickbacks? Did your broker tell you “Don’t worry before your new terms come due we will refinance you”? Did they inflate your appraisal? Did the developer coerce you to *USE* a certain “lender” and *USE* a certain title company?

If so you need a forensic audit. But keep in mind FMI:

DO NOT STOP FORECLOSURE

DO NOT NEGOTIATE ON YOUR BEHALF WITH YOUR BANK OR LENDER

DO NOT MODIFY YOUR LOAN

DO NOT TAKE CASES that is upto your attorney!

FMI does however, provide your Attorney with AMMO to bring your Lender into the negotiation table.

Posted in bank of america, bernanke, chase, citi, concealment, conspiracy, corruption, fdic, FED FRAUD, federal reserve board, FOIA, foreclosure mills, forensic mortgage investigation audit, fraud digest, freedom of information act, G. Edward Griffin, geithner, indymac, jpmorgan chase, lehman brothers, Lynn Szymoniak ESQ, MERS, Mortgage Foreclosure Fraud, nina, note, onewest, scam, siva, tila, title company, wachovia, washington mutual, wells fargo0 Comments

Fed Ends Bank Exemption Aimed at Boosting Mortgage Liquidity: Bloomberg

Fed Ends Bank Exemption Aimed at Boosting Mortgage Liquidity: Bloomberg

By Craig Torres

March 20 (Bloomberg) — The Federal Reserve Board removed an exemption it had given to six banks at the start of the crisis in 2007 aimed at boosting liquidity in financing markets for securities backed by mortgage- and asset-backed securities.

The so-called 23-A exemptions, named after a section of the Federal Reserve Act that limits such trades to protect bank depositors, were granted days after the Fed cut the discount rate by half a percentage point on Aug. 17, 2007. Their removal, announced yesterday in Washington, is part of a broad wind-down of emergency liquidity backstops by the Fed as markets normalize.

The decision in 2007 underscores how Fed officials defined the mortgage-market disruptions that year as partly driven by liquidity constraints. In hindsight, some analysts say that diagnosis turned out to be wrong.

“It was a way to prevent further deleveraging of the financial system, but that happened anyway,” said Dino Kos, managing director at Portales Partners LLC and former head of the New York Fed’s open market operations. “The underlying problem was solvency. The Fed was slow to recognize that.”

The Fed ended the exemptions in nearly identical letters to the Royal Bank of Scotland Plc, Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Deutsche Bank AG, and Barclays Bank Plc posted on its Web site.

Backstop Liquidity

The Fed’s intent in 2007 was to provide backstop liquidity for financial markets through the discount window. In a chain of credit, investors would obtain collateralized loans from dealers, dealers would obtain collateralized loans from banks, and then banks could pledge collateral to the Fed’s discount window for 30-day credit. In Citigroup’s case, the exemption allowed such lending to its securities unit up to $25 billion.

“The goal was to stop the hemorrhaging of risk capital,” said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. “Investors were being forced out of the securities market because they couldn’t fund their positions, even in higher-quality assets in some cases.”

Using mortgage bonds without government-backed guarantees as collateral for private-market financing began to get more difficult in August 2007 following the collapse of two Bear Stearns Cos. hedge funds.

As terms for loans secured by mortgage bonds got “massively” tighter, haircuts, or the excess in collateral above the amount borrowed, on AAA home-loan securities rose that month from as little as 3 percent to as much as 10 percent, according to a UBS AG report.

Lehman Collapse

By February 2008, haircuts climbed to 20 percent, investor Luminent Mortgage Capital Inc. said at the time. After Lehman Brothers Holdings Inc. collapsed in September 2008, the loans almost disappeared.

“These activities were intended to allow the bank to extend credit to market participants in need of short-term liquidity to finance” holdings of mortgage loans and asset- backed securities, said the Fed board’s letter dated yesterday to Kathleen Juhase, associate general counsel of JPMorgan. “In light of this normalization of the term for discount window loans, the Board has terminated the temporary section 23-A exemption.”

The “normalization” refers to the Fed’s reduction in the term of discount window loans to overnight credit starting two days ago from a month previously.

The Fed eventually loaned directly to securities firms and opened the discount window to primary dealers in March 2008. Borrowings under the Primary Dealer Credit Facility soared to $146.5 billion on Oct. 1, 2008, following the collapse of Lehman Brothers two weeks earlier. Borrowings fell to zero in May 2009. The Fed closed the facility last month, along with three other emergency liquidity backstops.

Discount Rate

The Fed also raised the discount rate a quarter point in February to 0.75 percent, moving it closer to its normal spread over the federal funds rate of 1 percentage point.

The one interest rate the Fed hasn’t changed since the depths of the crisis is the benchmark lending rate. Officials kept the target for overnight loans among banks in a range of zero to 0.25 percent on March 16, where it has stood since December 2008, while retaining a pledge to keep rates low “for an extended period.”

Removing the 23-A exemptions shows the Fed wants to get “back to normal,” said Laurence Meyer, a former Fed governor and vice chairman of Macroeconomic Advisers LLC in Washington. “Everything has gone back to normal except monetary policy.”

To contact the reporters on this story: Craig Torres in Washington at ctorres3@bloomberg.net

Last Updated: March 20, 2010 00:00 EDT

Posted in bank of america, bear stearns, bernanke, bloomberg, chase, citi, concealment, conspiracy, corruption, Dick Fuld, fdic, FED FRAUD, federal reserve board, FOIA, forensic mortgage investigation audit, freedom of information act, G. Edward Griffin, geithner, jpmorgan chase, lehman brothers, note, RON PAUL, scam, washington mutual, wells fargo0 Comments

Freedom of Information Act Requests Show OneWest Bank Misrepresentation

Freedom of Information Act Requests Show OneWest Bank Misrepresentation

When will ALL this Bull Shit come to an END? Everything is a stage and all these “Non-Bank’s” are characters!

 Freedom of Information Act Requests Show OneWest Bank Misrepresentation
Posted on March 17, 2010 by Neil Garfield

Submitted by BMcDonald

Most of us are trying to get the info from the banks, which they will not do unless forced. Well, now many of us can walk right in through the back door. FOIA requests! I fought for 7 months to get the bank to cough up the info and it only took 6 days by going through the FDIC. So now I’m in the drivers seat. This damned bank has been lying from day one claiming they are the sole beneficiary of my loan. Now they have committed the fraud and done the crime by illegally selling my home. They are now in deep, deep, trouble.

I’ve been fighting OneWest Bank since August of last year here in Colorado. In Colorado they have nonjudicial foreclosures and the laws as so totally banker-biased it’s insane. All the bank has to do is go to the public trustee with a note from an attorney who “certifies” that the bank is the owner of the loan. What they don’t tell you is the bank has to go before a judge and get an order for sale in a 120 hearing. Most only find out about it at the last minute and don’t even show up because the only issue discussed is whether a default has occurred or not.

I discovered however that if you raise the question of whether the foreclosing party is a true party in interest or not, the court has to hear that as well. I raised that issue and demanded the bank produce the original documents and endorsements or assignements. The judge only ordered them to produce originals, which they did.

Long story short, I managed to hold them off for seven months after hiring an attorney. I found a bankruptcy case from CA in 2008 in which IndyMac produced original documents and ended up having to admit they didn’t own them. I had a letter from OneWest that only stated they purchased servicing rights. I had admissions from the bank’s attorney that there were no endorsements. And at the last minute I discovered the FDIC issued a press release in response to a YouTube video that went viral over the sweetheart deal OneWest did with the FDIC. The FDIC stated in their press release that OneWest only owned 7% of the loans they service. I presented all this to the judge but he ended up ignoring it all and gave OneWest an order to sell my home, which they did on the 4th.

About a week before the sale I went directly to the FDIC and filed a FOIA request for any and all records indicating ownership rights and servicing rights related to my loans and gave them my loan numbers. I managed to get the info in about 6 days. I got PROOF from the FDIC that OneWest did not own my loan. Fredie Mac did. And the info came directly from OneWest systems. And just last Friday I got a letter from IndyMac Mortgage services, obviously in compliance with the FOIA request that Freddie Mac owned the loan. So I now have a confession from OneWest themselves that they have been lying all along! I have a motion in to have the sale set aside and once that’s done I’m going to sue the hell out of them and their attorneys in Federal court.

So I found a wonderful little back door to the proof most of us need. If the FDIC is involved, you can do a FOIA request for the info. I don’t know if it applies to all banks since they are all involved in the FDIC. You all should try it to see.

Most of us are trying to get the info from the banks, which they will not do unless forced. Well, now many of us can walk right in through the back door. FOIA requests! I fought for 7 months to get the bank to cough up the info and it only took 6 days by going through the FDIC. So now I’m in the drivers seat. This damned bank has been lying from day one claiming they are the sole beneficiary of my loan. Now they have committed the fraud and done the crime by illegally selling my home. They are now in deep, deep, trouble.


  

Posted in concealment, conspiracy, corruption, fdic, FOIA, foreclosure fraud, foreclosure mills, freedom of information act, indymac, Law Offices Of David J. Stern P.A., Lender Processing Services Inc., livinglies, LPS, MERS, neil garfield, note, onewest, respa, scam2 Comments


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