Friday, January 14, 2011

Banks Stole Over 1 Million U.S. Homes in 2010

US banks ‘foreclosured on record 1m homes in 2010


Banks repossessed a record one million US homes in 2010, and could surpass that number this year, figures show.

Foreclosure tracker RealtyTrac said about five million homeowners were at least two months behind on their mortgage payments.

Foreclosures are likely to remain numerous while unemployment remains stubbornly high, the group said.

Among the worst hit states were Nevada, Arizona, Florida and California, once at the heart of the housing boom.

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Intel Hub: Thousands of Americans were thrown out of their homes illegally as the big bank used robo signers to evict Americans from their homes EVEN when they were NOT in foreclosure.

S&P, Moody's Warn On U.S. Credit Rating

With attention focused on sovereign-debt worries in Europe, two major credit-rating firms reminded investors again that the U.S. has debt problems of its own.


Investors bought Treasury debt nonetheless, ignoring the comments, which echoed prior statements by the companies and may still be months or years away from having any practical meaning.

"The warning on the U.S. rating is well-founded," said Brian Yelvington, chief fixed-income strategist at Knight Capital. "However, it will probably fall on deaf ears until the peripheral Europe story plays out."

Moody's Investors Service said in a report on Thursday that the U.S. will need to reverse the expansion of its debt if it hopes to keep its "Aaa" rating.

"We have become increasingly clear about the fact that if there are not offsetting measures to reverse the deterioration in negative fundamentals in the U.S., the likelihood of a negative outlook over the next two years will increase," Sarah Carlson, senior analyst at Moody's, said.

Separately, Carol Sirou, head of Standard & Poor's France, told a Paris conference on Thursday that the firm couldn't rule out lowering the outlook for the U.S. rating in the future.

"The view of markets is that the U.S. will continue to benefit from the exorbitant privilege linked to the U.S. dollar" to fund its deficits, Ms. Sirou said. "But that may change."

However, Ms. Sirou, who has an administrative role and has no say in sovereign ratings, was mainly reiterating statements the agency has made in the past. She specifically referred to a comment more than two years ago by John Chambers, chairman of S&P's sovereign-rating committee, suggesting that AAA ratings can always be changed.

The U.S. currently has the highest possible credit rating and a stable outlook at both raters, but both have warned repeatedly in recent years that the government's long-term budget headaches must eventually be addressed.

The firms' latest comments had no apparent impact on an auction of $13 billion in 30-year Treasury debt Thursday afternoon. The auction was slightly weaker than analysts expected, leading the government to pay 4.515% on the bonds, up from 4.492% before the auction.

Bloomberg News

A Wall Street sign stands outside the New York Stock Exchange. S&P and Moody's warned the U.S. about its credit rating and urged the government to do more to arrest a deteriorating fiscal situation.

But demand was higher than in other recent 30-year auctions, and this came at the end of a full week of new debt offerings that went off without a hitch.

Benchmark 10-year Treasury notes rallied on the day, lowering their yield, which moves in the opposite direction of price, to 3.307%. The cost of insuring U.S. debt against the risk of default in the credit default swap market was little changed, remaining well below that of Germany, the euro-zone benchmark.

Germany's elevated default-insurance price is based partly on its exposure to the nagging debt problems of countries on Europe's periphery. Those worries have also helped drive investors to U.S. Treasurys as a relatively safer alternative.

In its report, Moody's said the U.S., Germany, France and the U.K. still have debt metrics compatible with their Aaa ratings.

But all four countries must bring future costs of pension and health-care subsidies under control if they "are to maintain long-term stability in their debt-burden credit metrics," Moody's said in its regular Aaa Sovereign Monitor report.

These measures of the U.S. debt burden include federal debt to revenue, estimated to average 397% of gross domestic product until 2020. The ratio of interest to revenue, meanwhile, is expected to rise to 17.6% by 2020, nearly double last year's level. These are "quite high for an Aaa-rated country," Moody's said in its report.

The report also said that there is "a small but increasing likelihood that markets will demand a higher risk premium on government debt, in sharp contrast to the safe-haven status that the U.S. Treasury bond has long enjoyed."

Higher borrowing costs could make cutting deficits more difficult in the future, the Moody's report said.

The ‘food bubble’ is bursting, says Lester Brown, and biotech won’t save us

Crops destroyed by Aussie floods
Tom Philpott

For years -- even decades -- Earth Policy Institute president and Grist contributor Lester Brown has issued Cassandra-like warnings about the global food system. His argument goes something like this: Global grain demand keeps rising, pushed up by population growth and the switch to more meat-heavy diets; but grain production can only rise so much, constrained by limited water and other resources. So, a food crisis is inevitable.

In recent years, two factors have added urgency to Brown's warnings: 1) climate change has given rise to increasingly volatile weather, making crop failures more likely; and 2) the perverse desire to turn grain into car fuel has put yet more pressure on global grain supplies.

Brown's central metaphor -- which he's been using at least since the mid-‘90s -- will be familiar to readers who've lived through the previous decade's dot-com and real-estate meltdowns: the bubble. The world has entered a "food bubble," he argues; we've puffed up grain production by burning through unsustainable amounts of three finite resources: water, fossil fuels, and topsoil. At some point, he insists, the bubble has to burst.

Well, for the second time in three years, the globe is lurching toward a full-on, proper food crisis, especially in places like Haiti that have de-emphasized domestic farming and turned instead to the global commodity market for food. In 2008, global food prices spiked to all-time highs, and hunger riots erupted from Haiti to Morocco. Now prices are spiking again, and have already surpassed the 2008 peak, The Sydney Morning Herald reports.

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Euro Remains Heavily Overbought, Canadian Dollar Falls Back From Two-Year High

The Euro made an impressive rally on Thursday, with the exchange rate advancing to a high of 1.3355,, while Canadian dollar fell back from a two-year high, with the USD/CAD bouncing back to a high of 0.9910.

Daily Winners and Losers

Euro_Remains_Heavily_Overbought_Canadian_Dollar_Falls_Back_From_Two-Year_High_body_ScreenShot019.png, Euro Remains Heavily Overbought, Canadian Dollar Falls Back From Two-Year High





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Euro_Remains_Heavily_Overbought_Canadian_Dollar_Falls_Back_From_Two-Year_High_body_ScreenShot017.png, Euro Remains Heavily Overbought, Canadian Dollar Falls Back From Two-Year High

The Euro made an impressive rally on Thursday, with the exchange rate advancing to a high of 1.3355, and the single-currency may continue to pare the decline from earlier this month as the European Central Bank adopts a hawkish outlook for inflation. The EUR/USD is a whopping 200+ points higher on the day after moving 194% of its average true range, but we may see a corrective retracement unfold going into the Asian trade as the near-term rally tapers off ahead of the 100-Day moving average at 1.3403. As the near-term rally remains heavily overbought, the euro-dollar may fall back to fill-in the gap from the 120-SMA at 1.3050, and the exchange rate may consolidate going into the following week as market participants speculate the EU to step up its efforts in curbing the risk for contagion. However, if European policy makers struggle to meet on common ground, the euro could face headwinds over the following week as uncertainties clouding the economic outlook continues to bear down on market sentiment.

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Euro_Remains_Heavily_Overbought_Canadian_Dollar_Falls_Back_From_Two-Year_High_body_ScreenShot018.png, Euro Remains Heavily Overbought, Canadian Dollar Falls Back From Two-Year High

The Canadian dollar fell back from a two-year high, with the USD/CAD bouncing back to a high of 0.9910, and the reversal in the exchange rate may gather pace over the following week as the Bank of Canada is widely expect to maintain a neutral outlook for future policy. The dollar-loonie is remains 25pips higher on the day after moving 75% of its daily ATR, and the exchange rate may continue to push higher going into the end of the week as the economic docket is expected to reinforce an improved outlook for the world’s largest economy. However, as the overnight rally fails to close the gap from the 240-SMA (0.9916), the exchange rate may consolidate going into the Asian trade, and the USD/CAD may carve out a bottom over the following week as we expect the BoC to retain a cautious outlook for the region. As the central bank lowers its outlook for future growth, BoC Governor Mark Carney may talk down speculation for a rate hike in the first-quarter of 2011, and we may see a sharp reversal in the days ahead as the daily RSI continues to hold above 30.

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« "As An American, I Am Deeply Embarrassed By This IDIOT Who's Totally In The Service of the Bankers" »

Max Keiser on Obama. Classic. Aired today.

  • "He's a stone-cold liar."
  • "How does Obama get up in the morning and look at himself in the mirror and not cry in embarrassment and shame? As an American myself, I am deeply embarrassed by this idiot who's totally in the service of the bankers."

This was in reference to the appointment of JP Morgan Vice-Chairman, William Daley, as Obama's Chief of Staff. But the specific occasion or reference for Max's comment doesn't really matter. And it's a moot point, anyway. Obama clearly has no shame. His bowing to foreign heads of state, which conservatives have made much hay over, may be regrettable, but what he's done for the bankers is just obscene. I'm not at all surprised by the appointment of a JP Morgan executive to replace Rahm Emanuel.

Dr. Pitchfork


Don't miss "Perps in the White House" by Robert Scheer...

Nothing shocking here, but just a reminder that BHO doesn't love you any more than George Bush does.


Full video from RT...

Max Keiser from earlier this week...

Photo - The Wall Street love couple...

« Dylan Ratigan: Does America Need A Corruption Tax »

Video - Harvard professor Lawrence Lessig with Ratigan - Jan. 11, 2011

Cash & Corruption - The power of money in politics...


Recently from Ratigan...

112th Congress Brought To You By Wall Street


Ratigan & Marcy Kaptur: MERS Whitewash & Fraudclosure Cover-Up


« Dylan Ratigan: Capitalism Is Broken »


The same clip...

For readers who can't watch MSNBC because of Adobe Flash issues...


Krona in ten year high against euro

The Swedish krona reached its highest level in a decade against the euro on Wednesday, according to the news agency AP. Around lunchtime one euro would only buy 8,8347 crowns. Only in the last year, the euro has fallen 14 % against the krona.

Speculation about an increase in the European debt crisis is one possible reason for this, but the strength of the Swedish economy is another. Here, the local interest has been increasing to keep up with the growth figures after the 2008 global financial crisis.

Today the Swedish government was praised in Brussels as being the best in class when it comes to keeping the public finances in order. "I would like to cite Sweden as the prime example in this regard, EU's financial commissioner Olli Rehn told reporters at a press briefing.

But for Swedish export companies the strong krona is eating into the profit, as they will be paid less for their goods. The euro-countries represent 40 % of the Swedish export.


The Federal Reserve plans on making changes to the TILA (Truth in Lending Act) laws, where homeowners will find it impossible to sue Banks and prevent Foreclosures! This is despite the outcry from consumer groups and even the Senate Finance Committee!

What else did we expect from the M.F.s!?

I would like to know, WHY the govt. - our elected officials even gave control over the banks and the people and their rights to a NON GOVERNMENT Entity - Which is what the Federal Reserve is! THE FEDERAL RESERVE IS A PRIVATE BANK - NOT A GOVERNMENT ENTITY OF THE UNITED STATES!

First you need to understand that, to understand why they could not give a flying F**k about the people! So, why would our elected officials who are suppose to watch out over you and me, give them the control over our rights against the banks?!

When will this stop?!

If there was ever a call to action - IT IS NOW!


The Federal Reserve plans on making sure, if anyone wants to sue a bank for FRAUD they have to pay IN FULL the mortgage amount before they can sue! WTF?????!!!!!! In other words - if you don't have the full amount of money for your mortgage you CAN NOT SUE! How the F**K are our elected officials allowing this?!

Oh, The Federal Reserve says it is hurting the economy, by people suing the banks! What a F**king Unbelievable statement - in other words the banks can commit FRAUD all they want on people!

You do realize after this takes affect - The Banks will screw EVERYONE left and right - they will not have to be accountable to any loans or Fraud they commit EVER!

Portion of article:

The Federal Reserve is moving ahead with plans to change the right-of-rescission rule as part of the Truth in Lending Act (TILA) despite intense outcry from consumer advocates, civil rights groups, and top members of the Senate Banking Committee.

Revised TILA will require borrowers to repay a mortgage in full before a loan is rescinded. Consumer groups say the measure is designed to prevent homeowners from using the right-of-rescission protection as a defense against improper foreclosure.
The Fed’s proposal is designed to ward off frivolous lawsuits that will delay foreclosures and have an adverse impact on economic recovery by ensuring “a clearer and more equitable process for resolving rescission claims” that closely mirrors present court requirements. The central bank wants to lift what it views as undue compliance burdens and litigation risk for creditors.
The Truth in Lending Act was passed in 1968, giving homeowners the right to rescind, or cancel illegal loans for up to three years after closing the transaction when borrowers are not provided with requisite disclosures at settlement.
Foreclosure attorneys have used the rescission clause to help homeowners in numerous cases involving predatory lending where faulty and fraudulent disclosures were key pieces of evidence.

It is when I am seeing red - I use foul language and right now - I am seeing red more than ever! If there was ever a moment in time, where it is proven the banks have control over our government and our lives and it is being shown they are bankrupting all Americans, it is now!

Considering the Federal Reserve will continue to dump money in the laps of banks and the bankers walk away with billions in bonuses every year, but as of yesterday the Federal Reserve has said it will NOT HELP States in bailing them out. What does that mean? States may have to stop paying people their pensions! So in other words the Federal Reserve will NOT HELP you and me in any way shape or form!


What Really Happened inserted this video in regards to this article! I am now inserting it here! Thanks Michael for bringing this video out and to our attention!

I feel we HAVE TO DO SOMETHING! Even though our elected officials have not paid attention to our voices before! WE HAVE TO CALL THEM AND LET THEM KNOW OUR OUTRAGE AT THIS! THEY HAVE TO STOP THE FEDERAL RESERVE FROM TAKING OUR RIGHTS OF SUING THE BANKS DUE TO FRAUD! Every time I think, nothing else will shock me about what outrageous things are going on...... I get shocked over and over again on how our government is allowing Private industry and banks to rule the people and laws!

EDIT - HERE IS RON PAUL'S D.C. PHONE NUMBER: 202-225-2831 begin_of_the_skype_highlighting 202-225-2831 end_of_the_skype_highlighting



ANOTHER EDIT - I called Ron Paul's office, the woman who answered said "Ron Paul, is aware of the TILA changes by the Federal Reserve". I asked what is he doing about it? She transferred me to a voice mail to leave a message to speak to someone about it. I left a message basically saying exactly what is above! IT IS UNACCEPTABLE A PRIVATE BANK CAN CHANGE THE LAWS AND RIGHTS FOR THE AMERICAN PEOPLE! OUR ELECTED OFFICIALS HAVE TO STOP IT! I said, I have a blog and posted this phone number for everyone to call and I will look forward to putting what Ron Paul is doing about this situation! If I hear anything back, I will immediately post it!

Another Edit - I have called my elected officials and let them know they can not allow a private bank to change our laws and rights. The people who answer say "they will pass my concern along"! Guess I won't be holding my breath about it!

We can not allow our sovereignty to be completely handed over to a foreign entity! It can not be allowed! We must stand up against this! We need to hold our elected officials accountable to giving our rights and laws away to a bank in full public view! We are no longer a sovereign nation upon allowing the Federal Reserve to control our laws and rights! This was not the left or right who did it, it was ALL of them who did it! They are ALL under control of the banks and corporations including foreign ones! We are no longer a nation of "For the People and By the People"! Only if we stand up and raise our voices so loud that they can not be ignored, will we get our rights and government back!

Big Banks to New Jersey: Stop Bugging Us About Foreclosure Documents

When New Jersey tightened its rules for foreclosures in response to the crisis over false loan documents, it took the unprecedented step of ordering the six largest servicers -- Ally Bank/GMAC, Bank of America (BAC), Citibank (C), JPMorgan Chase (JPM), Wells Fargo (WFC) and OneWest -- to explain why they should be allowed to continue with their foreclosures. If any of them couldn't adequately justify itself, New Jersey would suspend all the foreclosure actions by that bank in the state and appoint a special master to investigate its past and proposed processes.

On Jan. 5, the banks responded, and in essence each said: Look judge, we're good guys committed to keeping people in their homes whenever possible, and while we admit that in the past we had problems -- teeny-tiny problems -- we've fixed them already.

Most of the banks' briefs then argued, with varying degrees of aggressiveness, that the court doesn't have the power to impose a foreclosure moratorium or appoint a special master because that would break court rules, violate New Jersey's Constitution and the U.S. Constitution -- including the banks' due process rights -- and overstep the judiciary's role. They also claimed it was generally wrong because the banks were regulated federally. Only Chase declined to challenge the court's authority to impose the moratorium or appoint a special master.

Systematic Rule-Breakers

However strong these challenges to a potential moratorium and special master may be, the irony of banks arguing that halting foreclosures would break court rules and violate their due process rights is richer than New York cheesecake. After all, the banks' actions in the foreclosure process have systematically involved documents that break court rules and violate homeowners' due process rights, which is what led New Jersey to act in the first place. Irony aside, the banks are essentially saying: If you suspend our foreclosures or appoint a special master to investigate us, we'll sue to stop you.

Although the banks vigorously assert that their document problems never led them to foreclose wrongly and that their records are in impeccable shape, they do admit to errors in their documents, at least to some degree.

Citi conceded the most mistakes:
"Of the 4,023 active foreclosures in New Jersey serviced by Citi, only 613 involve affidavits that were prepared under our pre-strengthened processes -- which review is ongoing -- Citi has determined that foreclosure affidavits need to be corrected in 210 cases. Of those 210 cases, a significant percentage contained errors that were actually in the borrowers' favor."
Citi's statement means that using its original procedures, at least one-third of all of its New Jersey foreclosure filings were problematic. Since Citi's review is ongoing, that percentage could rise. Moreover, if some errors were in the borrowers' favor, those errors had to be substantive, not simply a matter of perfect documents signed by someone who "technically" shouldn't have been signing them.

A Pretty Weak Defense

BoA, Chase and Ally/GMACM were more vague. All noted that they are replacing documents, but they assert their foreclosures were appropriate. Each says their records are generally accurate and add something like Ally's statement: "We note that, to the best of our current understanding, GMACM has found no evidence of any loans referred to foreclosure where the borrower was not in default." (Bold in the original.)

"The borrower was always in default" is a pretty weak defense to the legal issues with their court filings, however, because whether or not a borrower is in default isn't the only key fact in a foreclosure case. (Moreover, not every bank could accurately make that claim, particularly BofA.)

For example, if the amount of money the homeowner is supposedly in arrears is incorrectly listed, that affects the borrower's ability to make up the default and become current. Similarly, courts might care if homeowners are told by the bank to default so they can qualify for a home loan modification, and then the bank fails to record their payments and forecloses. Finally, even if a homeowner is in default, the foreclosing company still has to have the right to foreclose.

Unhelpful Numbers

If a bank lacks the right to foreclose but forecloses anyway, big problems can result. Many recent Massachusetts homebuyers are discovering that they don't really own their homes, because the banks that foreclosed on them and then resold them didn't have the right to foreclose in the first place. That's a nightmare affecting innocent purchasers of foreclosed properties caused purely by the banks carelessness.

The fact that all the borrowers were in default -- as best as the banks can tell -- doesn't mean the foreclosures were proper.

OneWest and Wells Fargo were more aggressive. OneWest proudly emphasized that nationally, 98% of its affidavits in cases were accurate -- meaning that 2% were not. It also asserts that its average error was just 1% of total indebtedness. But that statistic is unhelpful in understanding the impact of the errors on individual homeowners because, by definition, some of the errors were greater than that.

For example, even a small error in the amount needed to bring the loan current can prevent a homeowner from curing the default. Moreover, OneWest's accuracy boast is limited to financial information -- it doesn't address whether or not OneWest always was the bank with the right to foreclose in the case when it did.
Wells Fargo was positively defiant: "Wells Fargo respectfully states that there is no basis for the Court to presume that the data in any, let alone all, the affidavits submitted by Wells Fargo are, or were, factually inaccurate." That's a very bold attitude for Wells to take, given that it has not only used robo-signers but also has failed to prove its standing to foreclose in ongoing court cases.

In one Connecticut case, the judge noted that questions kept "popping out" of Wells Fargo's documents and has demanded more evidence showing Wells really has the right to foreclose. In a Texas case, a Wells Fargo employee swore in a court filing that Wells owned the loan -- until the homeowner's attorney pointed out that Freddie Mac claimed ownership, at which point the Wells person swore that Freddie owned the loan, and Wells just serviced it. Ultimately, the judge concluded Wells could not prove the homeowner owed it anything.

When Wells makes its "respectful" statement to New Jersey, is it counting its affidavits and testimony in these cases as factually accurate? If not, is there some reason Wells thinks its New Jersey documents are so pristine that the court has "no basis" to question them?

Previously Overlooked Criticism

The banks' claims that their past document problems were very limited and technical aren't credible. And it's not just the recent news of foreclosure problems that destroys the banks' credibility: For years, foreclosure defense and bankruptcy attorneys, as well as academics, have pointed out flaws with bank foreclosure documents. All that's new -- new in the last six months or so -- is that the media has been paying attention.

University of Iowa law professor Katherine M. Porter used 1,700 bankruptcy cases as the database for her seminal 2008 paper, Misbehavior and Mistake in Bankruptcy Mortgage Claims. Based on the data, she wrote: "mortgage servicers frequently do not comply with the law. . . . The bankruptcy data reinforce concerns about the overall reliability of the mortgage service industry to charge homeowners only the correct and legal amount of the debt."

In her congressional testimony on Oct. 27, Porter noted that before she stopped updating her database more than a year earlier, she had identified some 50 decisions in which judges found "inappropriate foreclosure practices or misbehavior by mortgage servicers or their agents." She gave as an example a bank that had charged a debtor more than $2,000 in "penalty interest" that wasn't owed. The judge found the bank had made identical improper charges in about 50 other cases and as a result, fined the bank $95,000.

Or take the work of Kurt Eggert, professor of law at Chapman University and director of the Elder Law Clinic. Eggert documented problems with mortgage servicing back in 2004, as he explained in his recent congressional testimony. Eggert said:
"In 2004, I documented the widespread misbehavior of mortgage servicers, and defined "servicer abuse" as follows:

Abusive servicing occurs when a servicer, either through action or inaction, obtains or attempts to obtain unwarranted fees or other costs from borrowers, engages in unfair collection practices, or through its own improper behavior or inaction causes borrowers to be more likely to go into default or have their homes foreclosed. . . . Servicing can be abusive either intentionally, when there is intent to obtain unwarranted fees, or negligently, when, for example, a servicer's records are so disorganized that borrowers are regularly charged late fees even when mortgage payments were made on time.

The types of servicer abuse that my 2004 article discussed are still quite present today."
Or consider the sworn testimony from a former employee of one big Florida foreclosure mill that it used inaccurate documents, including documents listing wrong amounts owed.

And then there are the lawsuits against the banks and their attorneys.

New Jersey separately ordered the 24 companies that have filed at least 200 foreclosure actions in the state in 2010 to show that their processes are sound. If they can't, the state will take further steps. The 24 include 22 private finance companies, Mortgage Electronic Registration System (MERS), and the New Jersey Housing and Mortgage Finance Agency. They have a few more weeks to reply to the court. So, we'll have to wait to see how effectively they defend their practices.

And we'll probably have to wait longer than that to see what New Jersey does in response to the big banks' brushoff.

Judge holds bankers in contempt, threatens jail

Representatives from six major banks that skipped a hearing in a Miami condo association receivership case could face the wrath of Miami-Dade Circuit Judge Jennifer Bailey today if they fail to show up a second time.

The judge already has declared lenders that own or are foreclosing on units at Bird Grove Condo are on the hook for $105,999 in expenses for the court-appointed receiver for the association. She also held the six in contempt of court.

Bailey last month granted a request by the receiver, Miami attorney Lisa Lehner, to be paid for pulling the building — an asset for the foreclosing banks — back from the brink of condemnation.

When Lehner was appointed in March, garbage hadn't been collected for weeks, electricity was about to be cut off, the building had no insurance, and an elevator was broken. She turned it around in months.

"They have property and collateral that if I walk away from turn into nothing," Lehner said. "Here I am, sitting as their property manager, working for free after practicing law for 28 years. It's just not fair."

Lehner's demand for $5,579 in expenses per unit went uncontested at a Dec. 1 show cause hearing where Bank of America was the only lender to send a representative. Missing were Flagstar Bank, GMAC, PNC Bank, SunTrust Bank, U.S. Bank and Wells Fargo.

In November, banks owned two units and were foreclosing on another 17 units in the 39-unit building at 2734 Bird Ave. between a gas station and a gallery. A one-bedroom, one-bath unit is listed for sale for $50,000. Bank of America filed nine foreclosure cases, followed by GMAC with five.

The six lenders were ordered to send non-attorney representatives to today's hearing, when Bailey will discuss whether the banks also should be required to pay the receiver's upcoming maintenance fees. Bailey's order threatened to have bankers arrested if they didn't show, and she warned, "You may be held in jail up to 48 hours before a hearing is held."

Lawyers for the six banks did not return calls for comment before deadline. They include Hollywood's David G. Cornell with Ben-Ezra & Katz, Weston's Elsa Hernandez Shum with the Law Offices of David J. Stern and Tampa attorney Erik DeL'Etoile with Florida Default Law Group.

It's possible future expenses may not be billed by Lehner, who plans to step down from the post.

"I'm withdrawing. It's their property. They're going to have to figure out what to do with it if they want to save it," she said. "I certainly was prepared to not be paid for a long time." But, she said, she did not think she would be spending 11 months without pay.

Justifying Fees

Lehner's dilemma is similar to many cases involving foreclosing banks and troubled homeowner or condo associations, in which a judge appointed a receiver at the request of the association. But in this instance, the association was almost broke; in March, it had only $6,316 left to operate a building that Lehner estimates costs $10,000 a month to maintain.

The association counted more than $143,000 in accounts receivable, "all of which clearly presented a serious cash-flow problem," Lehner wrote in a July 30 motion.

She would be working for free for an undetermined period of time even though associations typically pay for receiverships.

Demanded Expenses

After spending months ordering repairs, collecting association fees and paying the building's overdue bills, Lehner demanded her expenses, arguing banks were getting a free ride.

Bailey asked her to distinguish her case from a 3rd District Court of Appeal decision in 2009, which determined lenders in the process of foreclosure aren't responsible for unpaid association fees until they take title, regardless of how long they delay final judgment.

Lehner's attorney, Lipscomb Eisenberg partner Deborah Baker, cited a 1911 Florida Supreme Court decision, a 1959 legal treatise and a 1992 opinion from the 11th U.S. Circuit Court of Appeals.

That was enough to convince Bailey, who congratulated Lehner and Baker for their work in court on Nov. 1.

"In all candor, the efforts of the receiver and her attorney have been nothing short of heroic in connection with this building," the judge said.

"No doubt," responded Bank of America's representative, Akerman Senterfitt shareholder Jeff Trinz.

Trinz was the only representative to appear at the show cause hearing the next month.

Lehner and Baker also credited Trinz as being the only bank representative to cooperate with them.

Association Law Group partner David C. Arnold, a North Bay Village attorney who represents condo associations and is not involved in the Miami case, has his doubts about Bailey's ruling.

"How they would hold the banks liable for the receiver, I think, is a stretch. I don't think it's going to hold up. It's innovative thinking, but I just don't see how the 3rd DCA's going to affirm any type of action like that," he said.

State laws governing condo associations ensure common expenses are assessed against unit owners, not the banks holding mortgages, he said.

Undercutting the receiver's arguments is the fact that efforts to save the building might not benefit the banks, Arnold said.

"They don't have to foreclose at all. A lot of them just walk away and give up their mortgages," he said.

The way Lehner described lenders' attitudes in her case could point to that end game.

"Most of the banks don't seem to want to do anything about it," she said. "Without any thought of any consequences, not to care about the human cost? All right, I get that. But not to care about their property? I just don't get that."

Nightmare on Wall Street

In a ruling that could be historic, the Supreme Judicial Court of Massachusetts ruled against two fraudster banks, US Bancorp and Wells Fargo, who illegally foreclosed on homes. In short, the two banks stole homes to which they had no legal claim.

This rattled stock markets, causing the broad-based KBW Bank Index to fall by 2.2%, with Wells Fargo's stock prices falling by 3.4% as markets began to recognize that "business as usual" theft of American homes by banksters will be subject to greater scrutiny. Tellingly, the banks have been arguing that they are following industry practice. The ruling in Massachusetts (one of the most respected Supreme Courts in the US) affirms that industry practice is fraudulent. Perhaps as many as 66 million mortgages (those tainted by improper industry recording procedures) could be affected by the ruling.

As I have been arguing in a series of pieces (see here and here and here), in their haste to commit lender fraud, the banks that securitized mortgages also perpetrated tax fraud and securities fraud. The inevitable outcome of those frauds is foreclosure fraud. As Lynn Szymoniak and Ray Brown have written, 2010 became the year in which "'foreclosure fraud' emerged in case law' -- defined as 'fraud by mortgage companies, mortgage servicing companies, and banks servicing as trustees for securitized trusts." Foreclosure fraud is not a matter of some pesky little paperwork problems. It is the designated solution to paper-over the lending and securities and tax frauds that the banksters used to bubble-up and then collapse the US real estate sector. To put it simply, the Court found that the practices followed by the industry have made legal foreclosure impossible.

All of this, in turn, was happily consistent with the Bush "Ownership Society" plan to transfer all wealth to the top few tenths of one percent of the wealthiest Americans. The banksters would simultaneously burden homeowners with so much debt that they'd lose their homes, and would sell to investors fraudulent toxic waste securities while using credit default swaps to bet on failure. Bush's ownership class would end up as the creditors who got all the homes, who got all the financial wealth sucked out of pension funds and other managed funds, and with their gambling winnings from the inevitable defaults.

But in their haste to steal property, the Wall Street banksters ran up against US property law. They thought the judges would turn a blind eye to blatant theft. Unfortunately, courts across the country have awakened and are beginning to rule against them. As I have said, the banks are toast -- as anyone still holding bank stocks will discover in coming months. Losses will easily wipe out all equity at the biggest banks, several times over. Further, the vulture predators now buying up foreclosed properties will find that the titles are not clear. It will take at least a decade to sort out the mess created by Wall Street's securitization of home mortgages and to restore property rights law.

Here is the good news: Bush's Ownership Society dream has morphed into a Nightmare on Wall Street. The banks have no legal standing to foreclose. Delinquent homeowners that have been subject to foreclosure fraud can remain in their homes. While they still owe their mortgages, no one has the right to take their homes away from them. This improves their negotiating power to secure mortgage modifications -- to get payments down to something they can afford. That is good -- for the homeowners, for their neighbors, for the nation as a whole. And, ironically, even for those holding the "securitized mortgages" -- including the fraudster banks.

The current wave of foreclosures -- expected to reach 13 million by 2012 -- is not good for anyone. It is a classic example of a negative externality, where pursuit of apparent individual self-interest results in losses for everyone. Stopping foreclosures and shutting down the fraudsters will stop those losses. The only ones who will be hurt are the top management officials at the biggest banks -- who will lose their bonuses and who will be prosecuted for numerous felonies. The other 99.9% of the rest of us will experience a Pareto improvement -- as economists call it when you win and no one (but the criminal class) loses.

Let me explain. I will assume that everyone is reasonably familiar with the lending fraud, in which Wall Street rewarded mortgage brokers who induced home-buyers into NINJAs and liar's loans they could not afford -- aided and abetted by crooked real estate agents, appraisers, credit raters, and accountants. Those fraudulent loans were then packaged into fraudulent securities -- that did not meet the "reps and warranties" required by the "PSAs". (Briefly, when an investment bank pooled a bunch of mortgages to "back" a security, it guaranteed that they met minimum standards as required in the Pooling and Service Agreements. But they did not, which means the originators of the securities must take back all the bad "liar's loans".)

I will also assume that readers know that the securities, themselves, were fraudulent from inception because they did not meet those "PSAs" (the very strict requirements governing securitizations -- most important of which was the requirement that the Trustees obtain the "wet ink" notes of the homebuyers, something that apparently was never done). That, in turn, means that "mortgage backed securities" are not backed by mortgages -- they are nothing but unsecured debt and now are mostly worthless.

Finally, I will assume that readers are familiar with the tax and recording frauds perpetrated by the mortgage industry's creation of MERS (Mortgage Electronic Registry System) -- which allowed the banks to illegally evade property recording fees and allowed securities holders to evade US federal taxes. Those expose the banks to hundreds of billions of fees, back taxes, and fines.

One might have thought that all those frauds would be enough to satisfy Wall Street. But, no, the biggest fraud was yet to come -- a fraud that necessarily followed on from all the previous frauds. The structure of the whole Ownership Society juggernaut required low-cost foreclosures in order to transfer property to America's true owner class. It was a foregone -- nay, planned -- conclusion that all the NINJAs and liar's loans would go bad. There would be millions upon millions of homes that would be foreclosed.

Unfortunately, foreclosure is expensive. Over the past half millennium, Western property law evolved to make it difficult for the King or his minions to take property away from its owner. One claiming to be a creditor against land would have to present evidence, including the "wet ink" note, that one had legal standing.

Keeping track of all those notes, collecting payments, properly recording sales, processing foreclosures, and conducting sales of seized property is extremely expensive. That is why Jimmy Stewart's thrifts could not survive with mortgage defaults running higher than a couple of percent. And that was with a very cheap and efficient home finance system based on thrifts that made loans to their community while collecting the community's saving. All you needed was a good loan officer who knew his customers, a teller, and an experienced property appraiser. But the modern mortgage industry needed to support a huge infrastructure of brokers, securities originators and distributors, appraisers, credit raters, accounting firms, mortgage insurers, servicers, and -- importantly -- foreclosers. All of that is costly.

Further, the modern mortgage system was designed to generate a tsunami of defaults, orders of magnitude greater than historic proportions. Indeed, the hope was that virtually all mortgages would go bad, so that the property could be seized and transferred to our true propertied class of rightful owners -- those north of the 99th percentile -- while leaving the dispossessed homeowners in permanent debt peonage as a result of "reformed" bankruptcy law. And bankruptcy of homeowners let the banksters collect on their bets. There is no way that even the exorbitant fees and interest rates charged on hapless subprime and Alt-A borrowers could possibly cover all those costs of the "new and improved" home finance food chain.

Hence, a system of cheaper property transfers and foreclosures would be required. But the banksters were too clever by half in their hurry to create a low-cost foreclosure machine. They knew they could never afford to securitize and then foreclose on millions and millions of mortgages following well-established, legal, and expensive procedures -- with teams of paper pushers, process servers, and lawyers. So they cut corners. And it is the corner-cutting that has come back to bite them.

As I have shown, MERS was created to circumvent the expensive and time-consuming laws that required recording property sales in public offices. Only the initial sale of property would be lawfully recorded; thereafter, the dozen or more sales of a mortgage would be recorded only electronically at MERS, on the fiction that all subsequent sales were in-house transfers among deputized MERS "vice presidents" at member firms. That was recording fraud. MERS also encouraged mortgage servicers to retain the notes, in order to speed the inevitable foreclosures. But that violated Federal tax laws that required the notes to be held by the Trustees of the securitizations. Tax fraud. It also violated the PSAs that required the Trustees to certify that they had the notes. Securities fraud.

Finally, the banksters created something called the Lender Processing Services (LPS) to out-source mortgage default services in order to speed foreclosures--in other words, to circumvent lawful practice. LPS got "kickbacks" from law firms by illegal "fee-splitting", agreeing to share late fees, etc, piled on mortgages in return for sending foreclosure cases to the firms. (Thorne v. Prommis Solutions Holding Corp., Northern District of Mississippi) In addition, LPS has been found to routinely supply incorrect and doctored documents to litigants and judges in foreclosure actions. According to a ruling analyzed by Szymoniak and Brown, it is staffed primarily by paralegals (Burger King kids!), with little supervision by attorneys. Indeed, LPS was designed to minimize human involvement and judgment in the foreclosure process--to save precious time, and more precious money. Judge Sigmund Weiss concluded that LPS's "thoughtless mechanical employment of computer-driven models and communications to inexpensively traverse the path to foreclosure offends the integrity of the American bankruptcy system." But this "thoughtless" and inhuman process was required precisely to minimize the costs to the banks of foreclosing on properties. Hence, just as MERS was created to minimize costs of securitizations and multiple sales of underlying mortgages, LPS was created to minimize court costs of processing the expected foreclosures.

TSA Airport Security Cartoons

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« BUSTED: Robert Khuzami SEC Enforcement Chief »

Keep in mind as you read that Citigroup was hiding - lying about - $40 billion of sub-prime exposure, and the CFO at the time, Gary Crittenden was fined a paltry $100k for his role in this blatant rape of federal securities law.

Khuzami who once promised to be a tough cop on the beat, allegedly broke protocol, held a secret meeting with his good friend - counsel for Citi - then instructed SEC staff to go easy on Crittenden and Arthur Tildesley, the lying curbskank at the helm of Citi investor relations.


The U.S. Securities and Exchange Commission’s internal watchdog is reviewing an allegation that Robert Khuzami, the agency’s top enforcement official, gave preferential treatment to Citigroup Inc. executives in the agency’s $75 million settlement with the firm in July.

  • Inspector General H. David Kotz opened the probe after a request from U.S. Senator Charles Grassley, an Iowa Republican, who forwarded an unsigned letter making the allegation. Khuzami told his staff to soften claims against two executives after conferring with a lawyer representing the bank, according to the letter.

Citigroup agreed in July to pay $75 million to resolve SEC claims that the bank understated investments linked to subprime mortgages as the housing crisis unfolded. Gary Crittenden, who stepped down as chief financial officer in 2009, and Arthur Tildesley, the New York-based bank’s former head of investor relations, agreed to pay $100,000 and $80,000, respectively, to resolve related claims.

The agency’s settlement was questioned in August by U.S. District Judge Ellen Huvelle, who eventually approved it. She asked SEC lawyers why the agency hadn’t pursued executives more aggressively.

  • “There has been nothing here that is being done to assure anyone that senior management who’s responsible, whatever level of culpability you’re talking about, is going to have any pain here,” Huvelle said.
  • According to the letter, the SEC’s staff was prepared to file fraud claims against both individuals. Khuzami ordered his staff to drop the claims after holding a “secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend” of his and “who was counsel for the company, not the individuals affected,” according to a copy of the letter reviewed by Bloomberg News.

Prince and Rubin

  • The agency also said in a filing that former Chief Executive Officer Charles O. “Chuck” Prince and former chairman Robert Rubin were among executives who knew 2007 losses were mounting on mortgage assets that Citigroup was faulted for not disclosing.

Continue reading at Bloomberg...


More detail from Columbia Journalism Review...

Link - CJR

And American Lawyer got hold of the actual fax and notes that it “contains purported inside details about the SEC’s negotiations with Citi that suggest it wasn’t written by a random disgruntled Iowan, but by someone with knowledge of the SEC’s handling of the Citi case.”

Here’s the text of the fax, which is awfully specific and ought to be very easy to prove or disprove:

In the Citigroup investigation involving hiding/failing to disclose more than $50 billion of subprime securities from investors, the [SEC] staff had negotiated a settlement with one individual that included fraud charges and was prepared to file contested 10(b) fraud charges against another individual,” the fax states. “But just before the staff’s recommendation was presented to the commissioners, enforcement director Robert Khuzami had a secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend of Khuzami’s and a fellow former (Southern District of New York) alum, and who was counsel for the company.

American Lawyer helpfully points out who represented Citi in the SEC settlement talks and which of them also worked at the SDNY.

Citi was represented in the SEC case by Brad Karp of Paul, Weiss, Rifkind, Wharton & Garrison and Lawrence Pedowitz of Wachtell, Lipton, Rosen & Katz, among other lawyers from the two firms. John Carroll of Skadden, Arps, Slate, Meagher & Flom represented Crittenden. Tildesley had Simpson Thacher & Bartlett’s Mark Stein. Karp, who is not a former Manhattan federal prosecutor, declined to comment Tuesday; Pedowitz, Carroll, and Stein (who are all former SDNY assistant U.S. attorneys) didn’t return our calls.

Khuzami is a former prosecutor, but he’s also yet another in that line of Obama’s Wall Street-friendly appointments. Khuzami came over from the German giant Deutsche Bank. So this story also has a revolving-door angle. Yves Smith on that:

This is why prominent lawyers and other high level fixers earn as much as they do. They have ongoing personal relationships with influential figures and can pull strings when they need to. But how a seasoned and supposedly tough prosecutor like Khuzami ever thought this settlement would pass muster is beyond me. Did he really think no one would notice or care, that this was a sufficiently old matter that any objections to it would die down quickly?

Remember, Khuzami and the SEC settled with Goldman Sachs, too, despite having a good case against the firm. And it’s worth emphasizing that Khuzami, as the WSJ put it in a headline in April, “Oversaw Deutsche CDOs” before he jumped to the SEC:

Before taking his current job at the SEC last year, the 53-year-old Mr. Khuzami spent five years running the U.S. legal division of Deutsche Bank, one of the largest issuers of collateralized debt obligations in 2006 and 2007. As part of that job, he worked with lawyers who advised on the CDOs issued by the German bank and how details about them should be disclosed to investors. The group included more than 100 lawyers who also defended the bank against lawsuits and vetted other financial products, these people said.

Deutsche Bank has faced allegations of inadequate disclosure over its creation of CDOs.


Issa and Khuzami...

Issa questions Khuzami about the Merrill Lynch - Bank of America bailout...


National Debt. To whom do we owe it? (2/5) Ron Paul 2008

Economy facing headwinds, but Bernanke hopeful

WASHINGTON (Reuters) – Jobless claims hit a 10-week high last week while producer prices shot up in December, pointing to headwinds for an economy that Federal Reserve Chairman Ben Bernanke said was showing fresh vigor.

However, a surge in exports to their highest level in two years, which included record sales to China, helped narrow the U.S. trade deficit in November, an encouraging sign for fourth-quarter economic growth.

The data on Thursday marked one step forward and two steps back for an economy that appeared to gain a bit more momentum toward the end of last year.

Bernanke said he was hopeful about the recent improvement in the outlook, saying he expects the economy to expand between 3 percent and 4 percent this year.

"That's not going to reduce unemployment at the pace we'd like it to, but certainly it would be good to see the economy growing," Bernanke said at a conference on small business sponsored by the Federal Deposit Insurance Corporation.

In November, the Fed's estimates for 2011 were in a range of 3 percent to 3.6 percent.

"I think deflation risk has receded considerably and so we're moving in the right direction," Bernanke said.

Still, Thursday's data showed just how torturous the economy's path to recovery would be.

The number of Americans filing for first-time unemployment benefits rose unexpectedly to 445,000 from 410,000 in the prior week, a Labor Department report showed. It was the biggest one-week jump in about six months and confounded analyst forecasts for a small drop to 405,000.

The jobs figures weighed on U.S. stocks and boosted government bonds, which were also benefiting from concerns about Europe's debt struggles.

"The jobless number highlights the patchy recovery we've seen in the job market and reinforces that it will be a slow process bringing down the jobless rate," said Omer Esiner, market analyst at Commonwealth Foreign Exchange in Washington.

The rebound in benefit claims came in the wake of the holidays, which may have hindered new applications and created a backlog. Claims, which peaked around 650,000 in April of 2009, had been on a downward trajectory, dipping below 400,000 for the first time in two years during the week of Christmas.

The four-week moving average of new claims, which strips out short-term volatility, rose by 5,500 last week to 416,500.

A separate report from the Philadelphia Federal Reserve Bank showed factory activity in the U.S. Mid-Atlantic region accelerated less in December than originally reported.


Though underlying inflation trends remain tame in the United States, food and energy costs were rising briskly at the wholesale level as 2010 drew to a close.

U.S. producer prices climbed 1.1 percent in December after a 0.8 percent rise in November, according to another Labor Department report. Economists had been looking for a repeat of that 0.8 percent advance in December. For the year as a whole, the PPI index was up 4 percent.

Inflation excluding food and energy, however, rose just 0.2 percent, in line with forecasts. That left the year-on-year gain in core producer prices at 1.3 percent, just below analyst estimates, helping tame inflation fears.

The rising prices producers receive ultimately could put upward pressure on retail prices, acting like a tax on consumers that could slow growth. Up to now, companies have not been able to pass increasing costs onto consumers because of weak demand, but that too has consequences.

"Eventually this means corporate profits could be squeezed," said Robert Dye, senior economist at PNC Financial Services in Pittsburgh.

A recent spike in global food costs has raised fears of a crisis in the poorer corners of the developing world.

World food prices hit a record high last month, outstripping the levels that sparked riots in several countries in 2008, and key grains could rise further, the United Nations' food agency said recently.


On a more positive note, the U.S. trade gap narrowed to $38.3 billion in November from $38.4 billion in October, the Commerce Department reported. Analysts had expected it to widen to $40.5 billion.

November's deficit was the slimmest since January 2010. Exports totaled $159.6 billion, the highest since August 2008 -- just weeks before the bankruptcy of Lehman Brothers touched off a trade-crushing global panic.

Exports to China in November totaled a record $9.5 billion. Still, they were swamped by rising imports that pushed the politically touchy U.S. shortfall with China to $25.63 billion.

Chinese President Hu Jintao meets with President Barack Obama in Washington next week, and trade issues -- and what the United States calls China's "substantially undervalued" exchange rate -- will be high on the agenda.

The split between weak underlying inflation and high food and energy prices makes it harder for Federal Reserve officials to argue publicly that inflation is not a threat. A fear of inflation being too low has underpinned the Fed's efforts to support the economy by purchasing government bonds.

Another key factor is the bleak jobs picture, not helped by the Labor Department data.

The number of Americans who continued to claim benefits after an initial week of aid retreated sharply to 3.88 million from 4.13 million, offering some reason for hope.

Still, the total number of Americans on benefit rolls, including those receiving extended benefits under emergency government programs, jumped to 9.19 million from 8.77 million.

(Additional reporting by Emily Kaiser and Mark Felsenthal in Washington, Dave Clarke in Arlington, Virginia, and Richard Leong in New York; Editing by Andrea Ricci)