Angelo and the Countrywide Gang – Their Rules in Their World?

What a tangled web he is in…
Angelo Mozilo needs no help from Moe or this forum to see that Mr. Mozilo & CountryWide are digging themselves deeper and deeper into a bigger hole…and the trash keeps smelling worse & worse by the day… I do feel bad for those few employees who truly give a shit about the people, their families & their loans but for the others watch out Karma is a bitch.

What happens when the Feds etc finish their investigation and close down CountryWide??? What happens to the people/borrowers who have loans with them???

Gator-

Nice post….I think I will purchase some BofA stock! Ben will keep printing money until the “little guys” fail, and then the large corporations will own 99% of the marketplace. When that happens, there won’t be any competition, and they can charge whatever price they want. Gator, you have looked into the mirror!!! Nice analysis.

thanks lookinthemirror,

It seems everyone likes to bash CW, however with mortgage bankers like them now eliminated from being in direct competition with the big banks…it will hurt the consumer with higher fees and rates.

What most do not understand or realize is that the investment banks and your ever friendly banker that most people trust their money with are the real crooks who developed the products and were buying the securities in massive proportion from countrywide, aegis, homebanc, etc and kept pushing them to originate even more. When CW indicated they were capped on what they could deliver due to guidelines…guess what……. the investors relaxed their standards even further. CW was a pass through mortgage company…Mozillo just developed a good system for delivering mortgages to the secondary markets.

I wish people could get past their rage and rationally look at the big swindle happening right in front of us……

Rick-

You USED to work at Countrywide?? You were accusing me of working there??? Interesting comment…….now I know why you are so bitter.

The excesses of Countrywide have been in place for a long time, and the Fed and Wall Street ignored it as long as it served a purpose.

Sometime in the late 1990’s, under the direction of Countrywide’s financial leadership, the rules for taking profit on servicing changed. Ask any Branch Manager at Countrywide when they were to have the loan ready for sale (if they had operations in branch), and they will tell you “within 48 hours of closing”. It was because they were booking the profit on servicing in a manner different from any other servicer. This is what put them in a position that by October 2000, they were almost sold. ABN/AMRO and Wells Fargo came very close to buying Countrywide. I am not sure about ABN/AMRO, but I am assuming they walked away for the same reasons Wells Fargo did. Wells had their accountants in the Countrywide offices doing due diligence, and for most of that time, could not figure out how Countrywide was deriving their bottomline. Wells Fargo did not come out and say Countrywide was using shady accounting practices, but they certainly alluded it was an accounting problem they wanted no part of.

It was widely speculated that Countrywide would have to file for bankruptcy by April or May of 2001 if the mortgage market did not change. The country was in the throes of the Tech Bubble bursting, housing sales were flat, and more and more corporations were eliminating good paying jobs here in exchange for goods to import.

The Fed lowered interest rates in the first week of 2001.

By the end of the January 2001, at least one Countrywide branch I know of had 900 loans in their pipeline, the majority refinances. For comparison, in December 2000, their pipeline had only 150 loans. It was the lowering of interest rates in 2001 that saved Countrywide from going under. They were turning over their own portfolio and getting up to 2.5 – 3 points per loan extra cash. From there, Countrywide went out and created agreements with large independent and regional lenders to buy all of their loans. By the end of 2003, Countrywide had almost tripled its servicing portfolio.

The Fed had nothing left to work with except manipulation of rates to keep the flame going. Wall Street loved it because they had expanded the use creative financial vehicles and were selling derivatives to the hungry bond market looking for yield because the Fed was artificially keeping rates low, which effected Treasury notes lower. Countrywide became the ‘go to’ people for more new loans. Unfortunately, the guidelines became so lax, what was once considered sub-prime was now considered prime.

But Wall Street didn’t care as long as the risk was passed off to investors.

The Fed didn’t care as long as the markets appeared strong.

Countrywide didn’t care, their stock was zooming and they were the ‘toast of the town’.

The most unfortunate set of circumstances is this – the profit that was taken by the originators, then lender, then Wall Street, cannot ever be retrieved. That means, as property values go lower, you must also calculate into the total loss the percentage represented in profit paid along the way. So, in effect, the loss is far greater than just the reduction in property value.

Every time the Fed steps in to “save” a financial institution it is with taxpayer money. Even though those financial institutions profited from the sales of not only loans but all the creative financial vehicles as well. The money represented by Treasury Notes held at the Fed that is used to “save” a bank must be replaced by the Federal Government, even though the Federal Government did not own those bonds.

What?!? What does that mean?? It means this – the currency is controlled by the Fed, but the Fed is not controlled by the government. So, when they use Treasury notes, which are owned by the banks, the Federal government must replace those bonds, buying them with tax money.

That’s right. The Fed, divided into twelve regions, each ruled by a “Governor”, is owned by the banks in that region. How the banks own it is they are required to buy a certain amount of US Treasuries, under a complicated formula, which the Fed holds, and the banks can borrow against and claim as part of their asset base. What this means, is that the Fed cannot be told what to do by the Executive Branch of this country. The Legislative branch can change the parameters, ie rules, that the Fed operates under, but everybody knows what a clusterf##k congress is. It’s amazing they can find the bathroom. So, of course, the Fed has no worries there.

No, the largest shareholders of the Federal Treasuries at the Fed, control the Fed. If the CEO of Bank of America tells Ben Bernanke to jump, he can only ask how high. Everyone should stop and ponder this. Do not wonder why the Fed backstopped the Bear Stearns deal.

Yes, Chase would have been in trouble too due to counterparty exposure, Everyone of the big banks and investment banks would have. It does not remove the fact that Bernanke was only doing what his true boss, the CEO of JPM Chase, told him to do.

That leads us to misperceptions of Bank of America and Countrywide. Everyone wants to make a big Deal about the $2 Billion last August that Bank of America put into Countrywide. Well, it wasn’t even their money, but that is another story. HOW ABOUT THE $9.5 BILLION CHASE PUT IN THE WEEK BEFORE?

That’s right. The PR machine that is Countrywide, in that previous week, put out the statement that a consortium of over 40 banks had extended them a line of credit of $11 billion, on which they drew the full amount. Yeah, 40 banks, when $9.5 billion was from one bank. It’s true, the 10K is there for everybody to read, and has been since last August.

That doesn’t even come close to the precarious position Countrywide has placed the Federal Home loan Bank system. It will take quite a few tens of Billions of taxpayer money to replace the losses realized from Countrywide loans there also.

Those who think Countrywide bashing is unfounded are, well, they just don’t have enough information yet.

Hell, I’ve been doing it for many years, and have the letters from Countrywide’s legal department, threatening legal action against me, to prove it. Funny thing is, I haven’t stopped. My lawyers have said I don’t need to, I got the first letter in 2003.

So Moe, keep on getting the message out about Countrywide and its leaders. Maybe the public won’t so easily support the next ‘Countrywide’ to come along.

BTW – There might be several people in the world with the name Rick. And some may have had the misfortune of working for Countrywide. I am not one.

I just read the lovefest between Gator and iliketolookatmyselfinthemirror. Gotta say something.

Financials are a “BUY”????? What an idiot. Short all of them. A couple of them might be a buy in a year, not now when you can make money on the way down. Just wait until election time, when the waterfall appears and you have no paddle.

No, it’s not because of the election, the games of hiding the sausage (losses) will be near its end run. The banks can only do it for so long. As their non-performing assets pile up, they have to raise capital reserves. Most of the banks just can’t issue any more stock without forcing the dilutive effect of a dive to take place. As the stock price goes lower, they have to increase the number of shares held in reserve. It is an ugly cycle.

Get a clue! When a bank says one week they are in great shape, then issue new stock the next week, it means they lied. They are so bankrupt they are hiding losses, and desperately trying to raise capital, praying the market comes back.

It is a firm grasp of the obvious to single out Lehman. The only thing you were right about is that Bear Stearns was structurally in better position because of the debt it bought than Lehman. But they still went bankrupt. Lehman is the single largest holder 2006 subprime originations. Can you day KABOOM! Merrill is almost in the same identical boat. They are the second largest holder of 2006 subprime originations. Both are bankrupt as we speak, if they were forced to bring level 3 onto the balance sheets, they are underwater by several times their assets. It ain’t even close.

But don’t be fooled by thinking CDO’s, which are the safest of the derivatives, will be returning 70 cents on the dollar. That is lunacy. They already have lost, on average, 40% of their value, and that is if housing prices go back to January 2006!
Once the auditing and valuations proceed, if there is a market for them, the underlying property values will have declined 30% on average. So with two of the five tranches already completly wiped out, which means an unrecoverable 40%, take 30% off that. That is best case scenario!

And don’t get me started about CLO’s and CMO’s, which both have credit card debt, student loan debt, auto debt all in one stinking pile, and all of it setting record default rates.

Now, start speaking about the alphabet soup of swaps with the Fed. The banks are taking credit card debt, that because of the new bankruptcies rules they shoved down congress’s throats, they can’t easily write down, and packaging it as new bond securitizations. They are swapping a pile of debt that alreday has a 50% default rate, and swapping it with the Fed for good US Treasuries!!!!!!!!!! Your tax money will go to replace the losses of the Fed.

I am not a democrat, but I will say this, the whole thing happened on the Republicans watch. They had the whole shooting match for 6 years, and that was when the real cheating occurred. So much for fiscal responsibility. Hey Georgie………

The FDIC has increased the number of employees it has by more than 50% since March. They want to increase that by another 30 -40% by the end of the summer. The FDIC, not me, says they expect at least 150 bank failures over the next two years, and it may be as many as 300. If the FDIC is getting ready for it, don’t you think you should too?

You gotta remember, during the S&L crisis, bank rules were different. In Texas, if a bank in Dallas wanted to open a branch in Houston, they had to get a seperate commercial license for it, because it is in a different county. It was also considered a seperate bank in the S&L tally, even though it was just a branch. I believe a total of 580 banks were taken over by OTS in the 1980’s. With how banks are today, and how the rules are different on how they will be counted, it is easy to guess that well over a few thousand locations will be taken into receivership.

Yeah, buy financials.

WTF!!!! Get a CLUE! Telling people to buy Financials. What an idiot.

Only someone pretending would say otherwise, because the numbers don’t lie. In the end, it doesn’t matter who you like or not, the numbers can’t lie, only people can.

WOW….So which rick are you…??? the sane coherent one or the hit and run artist??….

so much negative energy in your rant it is almost impossible to begin.

Is it at all possible for you to have a legit conversation with out lashing out for some inadequacy you seem to have…I am not sure who stole your wallet but it is time to either forgive or forget.
Find which parent did not hold you enough and forgive them…for your own health.

The banks going bankrupt are who exactly?? maybe the r e g i o n a l s….why …commercial exposure not residential.

The FDIC has mostly the regionals on the watch list.

So you predict 80% of the mortgage backed paper (MBS) will go belly up and be worth 0? That a few thousand banks will be defunct? It seems goldman, blackrock, and sam zell seem to disagree with that analysis. I bet they are all idots since they are stepping into the financials (banks not brokers as i have said)?? Where do you bank with your billions??

You are basically proving my point…I am pretty confident that JP morgan, Citi, BofA and Wells with not only be left standing but have acquired the best of the bunch left.

Based on your rant you anticipate over 50% of mortgages will default in this country?? Based on what trend??

As far as financials….who told people to buy financials??? please let me know….who said put any money in brokers like merrill, lehman or any other IB at this point. I believe the deck is stacked against the brokers(IB) and that the big banks will be left standing with the money.

You seem to be delusional about what you read based on your attacks. Could be a comprehension issue.

I said put some money in the big 4- ….Jp morgan, Citi, BoA and Wells. I am confident that all 4 will be worth quite a bit more in the next 5 years after this transfer of wealth the FED is helping to create is complete.

You seem to disagree….is your prediction the big 4 above will be ko’d and BK’d. Please pass along your forcast…not just you screaming about the end of the financial system but where we land after and when. Please… your facts and not an irrational rant that contradicts basic economic fundementals….

Also you mentioned a few thousand locations will be taken into receivership. this is your analysis?? I have not read anywhere in this country or elsewhere the number is anywhere near a few thousand. Are you talking in this country or the planet you seem to dive bomb from.

FYI= Sheila Blair, Chairman of the FDIC states:
“There are 76 banks on the troubled-bank list, and most
of those will be nursed back to health or be acquired by
stronger institutions rather than fail. Plus, those 76
banks represent $22 billion in assets out of $13 trillion
overall. That number could go up, but we would still be
well within historical norms and far below the number we’ve
seen in other troubled times. To put things in perspective,
there were 1,500 banks on the troubled bank list in 1990.”

Also the FED is actually cornering the market to control the shift of wealth…but that is a lesson for another day.

So rick what is your forcast?? Your Advice?? based on your rant it seems we are set for a 10 year depression….is that your feeling? really rick…i mean really???

There is clearly a babbling idot in the villiage and it is becoming quite obvious who it may be……

Now Gator, read this carefully and digest before you respond. As I have said, there are a few points you make conclusions with that are false. I only wish to inform you. One is securitizations. You seem to think CDO’s and MBS are the same. The other is that the deck is stacked against any bank or brokerage. It is not. They made bad financial decisions, and should and will pay the price. Some are being bailed out, even though they created the mess. No one is a “sacrificial lamb”. These are big boys that played, and they should have known the risks.

Yes, Chase, BofA, Citi and Goldman will stay through the coming storm. The first three are the largest shareholders of Federal Treasury reserve notes, thus the Fed will protect them before all others, and use taxpayer dollars to replace losses on Treasuries while doing so. Goldman will stay by sheer connection, they have positioned past employees well throughout the Fed and Treasury, and, yes, you are right, they are no dummies.

But are you saying that the system is fair? Are you saying the average person can expect the same help if they lose a significant portion of their investments?

Only if the average person gets the same financial help the big boys get can their stock value go up the way you describe. A success will be if they remain level, but the real value will have gone down due to printing of extra dollars. You are not factoring the real loss of value, the rise that has yet to be seen in metals, and the devaluation of many currencies. For the next 5 years, there are better places to hide money than the top financial stocks. Starting three to five years from now will be the time to again put money into them.

My view has been shaped over twenty years following this. I began talking of the pitfalls of derivatives since 1998, after LTCM. At the same time, 1998, Phil Graham got the bill passed that removed Glass-Steagall. That is what caused all of this to happen. The proliferation of derivatives based on MBS, and the subsequent expansion of level 3, could not have happened without the removal of Glass-Steagall.

More important and to the point, the Fed, since it is owned by the largest banks, is not there to be the champion of the middle class, but to serve the interests of those who own it. The only way to prevent the circumstances we are in from happening again, is to eliminate the Federal Reserve system. They, by function, can only create asset bubbles. They have no other function.

Believe this, we are at the edge of a cliff right now. Commercial Real estate has historically always lagged residential by 12 – 18 months. we are at that point now. You are correct in pointing out the regional banks are the main target of the FDIC concern, because their exposure is great. More than 30% of regional banks have exposure to commercial real estate loans that exceed their hard assets by 200%, 300%, 400% and more. But don’t forget about the big banks.

Most of the twenty largest banks have exposure to derivatives and blown MBS representing 300%, 400% and some many more times, their hard assets. Hell, Chase is the single largest holder of derivatives in the world. There are somewhere around $600 Trillion in derivatives, globally. Most are built on the backs of US MBS. In Sept 2007, Chase had $92 Trillion in derivative holdings, almost 1/6 of all derivatives. Their hard assets in Sept 2007 were $ 1.3 trillion.

This is why I have said you are halfway there. Even with only a haircut of 5%, on paper, they are insolvent. The losses on derivatives, as a whole, will be no less than 50% across the board. They are bets on the performance of MBS. The derivatives do not own the mortgages, they are only bets on the performance of those mortgages. The MBS is still there, intact, and it owns those mortgages. The owner of a CDO cannot assume the property of a foreclosure represented within one of its tranches, because the CDO is only a bet on whether that mortgage would perform and reach maturity.

MBS and CDO’s are distinctly different, and I believe many people are not realizing that yet.

$ 13 Trillion MBS. $ 600 Trillion Derivatives. Getting a clue yet?

It is why Bear Stearns two hedge funds blew up in June of 2007. They held only CDO’s of 2005 and 2006 originations. Those CDO’s could not assume the properties, thus getting some value in reselling. The CDO’s were only bets on the performance of those debts.

The way I understand your description is the CDO’s can take over foreclosed properties. They can’t. Already been proven in court in Cleveland, when the owners of over $ 1 billion on CDO’s tried to get the foreclosed properties represented in the issues they bought. The judge, once it was explained to him what the CDO’s were, laughed and tossed their case out. The attorneys could not produce any documents to show the owners of the CDO’s held the notes to those properties, because they don’t. The holders of the underlying MBS to those CDO’s hold the notes, and they aren’t giving them to the buyers of CDO’s.

Now, I am not saying Chase is going bankrupt or will be taken over, exactly the opposite is true. Chase will be one of the big boys gobbling up damaged banks and other damaged assets. But, it is not due to their being healthy, it is due to the fact they are the largest shareholder of Treasuries held by the Federal Reserve. The Fed, if the worst case should happen with our economy, will be forced to draw a line in the sand. The entities on the correct line in the sand, determined by their ownership of treasuries held by the Fed ,will be protected at all costs.. Those not on the correct side of the line in the sand are a target to be taken over as they get hammered by writedowns.

Right now, it is a good guess that only three entities are on that correct side of the line in the sand. Chase, BofA and Citi. Citi will have more money from the middle east pumped into it. I do not like that two people from the Middle East now own 10% of Citi. Get ready, they are going to own at least 20% by the end of this mess. The Fed will use every resource to protect Chase and BofA. Why, because they will use the Treasuries that Chase and BofA own to protect them.

Almost all Derivatives built on MBS will return at best, 50 -60%, and only a small fraction will do that. Derivatives that include other debt such as credit cards and auto loans, forget about it. There will be some value, but it will be somewhere between 10 -25% by the time they can be liquidated. The Fed is allowing banks to now securitize auto loans, credit card debt and other junk, and exchange it with the Fed for US treasuries, which the bank can then go borrow against. The Fed, before the swaps, had around $800 Billion in US Treasuries. More than $240 Billion in the last 6 months has been swapped.

It is the exact amount that futures trading on commodities has gone up since January. So, when people scream about speculators driving up oil, it is the banks that are most in trouble that are the speculators. How do you like those cookies? Creating another bubble. What happens if oil retreats back to $110? Massive losses. Of borrowed money. Of borrowed money guaranteed by US Treasuries swapped with the Fed for dubious debt that might get 50 cents on the dollar.

Any losses of those treasuries will be replaced not by Chase or BofA or any other bank party to the swap, but with taxpayer money.

As for my prediction on what will happen – nobody has a crystal ball, but the losses are already there and being hidden in level 3. Everyday that property values decline, those losses increase. There is a good case for an L shaped recession such as Japan has experienced over the last decade. Problem with comparing it with our current circumstances is that our overall losses are a few thousand times greater.

A depression, maybe, if the Fed doesn’t stop with the swaps it is almost guaranteed. That is what you are calling the “shift of wealth”. For some reason you don’t think it can happen with a depression. Sorry, it can only happen with a depression. It is probably the proof we are already in deep sh##. But, only with time can we look back and be certain.

My hope is it is only a deep recession. I hope we pull some manufacturing back to this country, and stop focusing on stock value as the only measurement. That has been the problem for us over the past 40 years. Energy companies have written government policy, insurers have written government policy, investment banks have written government policy. The public has allowed the elimination of good paying jobs in exchange for cheaper goods. The reason for the asset bubbles is in this very fact. We have reached the end run of exchanging jobs for goods. There aren’t enough good paying jobs to exchange anymore. This has left us with the real economy of wages going down, and the costs of goods going up.

Eliminate the Fed, establish a flat tax, with no deductions, and allow the big money to truly find a way to help create jobs by focusing on solving the myriad of problems the world faces today. That is how we get out of the mess.

Look at Moe. That is exactly what he has done. I would say, judging by what I see, he has succeeded, and has probably spawned others to new ideas.

There are silver linings, and ways to make money, as long as you don’t base your conclusions on false premises.

To all who are reading thesse posts:

1. Consumers are in a world of hurt due to taking on way too much debt (for whatever reason)

2. Asset bubbles will always occur to some extent in a capitalistic society.

3. If we are going to hold on to our capitalistic ideals, we will have to have a major systemic shift, because it is now broken for several reasons.

4. Forget about the alphabet soup: 1 + 1 equals 2, PERIOD. All of the rhetoric is just that. Currently, in our society 1 +1 equals -100……which means we are in deep trouble. There is absolutely “no demand” because consumer’s have spent up all of their wealth and the U.S. is now a debtor society. This has been occuring for a LONG TIME. Now, the chickens have come home to roost.

As far as exit strategies are concerned, here are the options as I see it:

a) The FED must continue to print money, and HOPE we can inflate our way out of this recession/depression.

b) The government must take drastic steps with regard to trade, price controls, and any other means to try and keep companies from sending job’s offshore.

c) The government must have a “hands-off” policy in order to allow the basic laws of supply and demand to occur (i.e. allow the institutions that made poor financial decisions to fail). They should only backstop firms or set up “shot-gun” weddings in situations that would damage the entire financial system (i.e. the Bear Stearns/JP Morgan situation).

d) American’s need to change their spending patterns NOW.

e) Unfortunately, in the short term, we will need to rely even more heavily on Foreign Investment Funds to save our tail (just like Europe did after WWII with the Marshall Plan).

f) Creative destruction will eventually right-side our nation, albeit there will be much more pain to come in the interim.

iliketolookatmyselfinthemirror states:

“b) The government must take drastic steps with regard to trade, price controls, and any other means to try and keep companies from sending job’s offshore.”

Then iliketolookatmyselfinthemirror states:

c) The government must have a “hands-off” policy in order to allow the basic laws of supply and demand to occur (i.e. allow the institutions that made poor financial decisions to fail). They should only backstop firms or set up “shot-gun” weddings in situations that would damage the entire financial system (i.e. the Bear Stearns/JP Morgan situation).

Ok, which way are you saying? The government should do something to control business as in b), or they should not do something, as in c)

If you are confused as to what the Fed is, I can tell you this; The Fed is not the government. Never has been. It is the banks. President Bush cannot tell Bernanke what to do, but Jamie Dimon can.

Anyone who says forget the alphabet soup is blind. It is the swapping of good US Treasuries for damaged debt securities that is the greatest peril to our economic system right now! It demonstrates the lack of depth you hold about how the economy works.

The Fed’s only function is to create asset bubbles. It has no other function. History has shown us that, over and over.

Best thing that can happen is to abolish the Fed.

You are as wrong as you can be if you think printing more money will help. Printing more money will only dilute the value of our currency, and the dollar will continue to decline versus other currencies, especially those that are not printing extra money.

Printing extra money is what Weimar Germany did after WW1. Within several months of that program beginning, the price of a loaf of bread went from 1 mark to 5 million marks. That is right, people were using wheelbarrows to carry enough money to buy a loaf of bread.

You believe selling US assets to foreign individuals and wealth funds is a smart thing to do? I guess allowing the bin laden family to own a major bank is your idea of ‘responsible’ money management. At what point will they let us have our businesses back? Or is that your idea, one world government?

Your ‘exit’ strategies are a design to ruin this country in only a few years. To compare the Marshall Plan and how money from a Soveriegn Wealth Fund would work is idiocy. The Marshall Plan was established to create economies that would pay us back for expenses we incurred defending those countries. A soveriegn Wealth Fund would never relinquish at any point in the future its ownership of any asset in the US.

Alan is correct, the only outcome of our trade policies over the last 40 years is to create competitors for ever diminishing natural resources. Your solution is to create more competitors.

The only solution is to abolish the Fed. If we don’t, the banks will only get larger and gain more control of our economy.

We must bring back the manufacturing base that made this country great and reclaim those jobs we have given to other countries.

And, we must not let any foriegn money into our society unless they can prove they provide the same rights to their citizens that we do.

It is high time for this country to live by the words it so freely gives as advice to others.

Rick-

Thanks for enlightening me regarding basic economics. I appreciate your diatribe. Unfortunately, you are not offerring any solutions. This country has its back against the wall, with VERY limited options if any. The FED HAS to keep printing money at this point to save the financial institutions. This is a terrible situation, and, yes, I know what happened to Germany prior to WWII….this is a bit different. We are not yet at the inflation rate that they were at that period.

Since you never responded coherently to my questions in one of my previous posts (how we arrived in this predicament), I ask you to give me an exit strategy that is realistic based on today’s situation. Abolishing the FED may be a noble idea, however, it is not a realistic one. Let’s discuss solutions that are current options for the situation at hand. Saying we should “abolish the FED” is kind of like waving a magic wand and having all the foreclosures disappear…..not going to happen!

This is a very complicated situation, and because I stated that the government needs to be “hands off” in one area, and “hands on” in another does not mean I am contradicting myself.

Again, another option would be to implement a Value Added Tax, or another possibility would be for a “one-time” tax hit for people that earn over a certain amount in adjusted gross income. The caveat would be that the tax revenue would be used ONLY to reduce the Federal Budget Deficit (have you looked at it recently??). That may serve to reduce the Deficit, and shore up the dollar. We need a strong dollar for several reasons. You now sound like an academic, and want to “change the world” with pie in the sky ideas like abolishing the FED. That is not going to happen in our lifetime, so don’t waste time floating the idea. We need to find some “real world” solutions.

By the way, did you, or did you not work at Countrywide??? Are you the only “Rick” that is posting??? You never responded, so I will assume you are the only “Rick”.

P.S. I like the fact that you are calling me “I Like to Look at myself in the Mirror”…..it just shows that I have some ideas that you may disagree with, however, I am trying to come up with real worl solutions, not academic theory……

Rick-

I apologize for not putting this all into one post, however, I noticed you mentioned that the big banks will rule our economy. The big banks ALREADY rule the economy, and IF they fail, there will be a MUCH bigger problem than the one that currently exists. The FED must keep printing money in the short term to give the banks a chance to shore up their balance sheets. During this time, most of the Investment Banks will fail or be merged, as will many smaller banks. That is what needs to happen. The system must be cleansed. Look at the Dot Com world, similar in some ways, different in others. The reality is that creative destruction will be the only way to keep this train from completely derailing. You may want to look up “creative destruction”. It takes place much quicker when it is not the “banking” system, since it is not tax payer money that is in play. This is why the FED and the government need to take very careful, and slow steps to try to right-side the titanic. It is a very precarious position we are in, with not very many options. As far as the printing money issue is concerned, this has been explained to me in detail by a very respected economist who serves on the board of CitiBank. He is not an employee of the bank, just someone who has knowledge and real world experience……like to hear some of YOUR solutions that are realistic!

Rick, once again BRAVO !!!!

Carrie-

Are you and Rick married?? Please take a moment and comment about the posts….anyone can go “You rock”, etc….please try and add to the discussion if that is possible.

Rick- stay on track here…..don’t deviate from the realities we face TODAY! You also have never responded to my earlier post, accept by using a Nazi analogy??? Would love to hear your responses to my earlier questions and your answers. I noticed that you choosed to ignore them, since they didn’t fit your world view??? Please feel free to ask me any specific questions about the economy, and I will be happy to give you straightforward answers.

Men of Wall St were making quite a money pre FED, does anyone know who JP Morgan was ? How about Rockefellers ? Carnegie ? Mellon ? The interesting thing is the distribution of income pre-FED was even more lopsided than today. So before coming up with hypothesis that fractional reserve central banking is the cause of transaction middle men earning lots of money those inconsistencies should be addressed. I personally call bull sh.t on the theory that abolishing Fed will somehow make for redistribution of income.

The way to redistribute income is to raise taxes. Though instead of directly funding welfare programs I would rather see long term investments in public transportation system, investment in education and perhaps health care.

iliketolookatmyselfinthemirror, is your only solution the marxist theory of burn everything to the ground and start over? That is where the roots of the “destructive capitalism” ideology come from.

Alan, it is problematic. But I would rather we become a little more self reliant. If we continue on the course we are with trade, even considering the oncoming economic turmoil, we are giving our country away. Most notably to the Chinese. Our great-grandchildren will ask their parents why we allowed that to happen.

Rick,

Please read my post very c a r e f u l l y and s l o w l y this time.////// it appears you need to digest my post before your replies.

It seems you get some of my points/conclusions and completely miss the bigger concept- Here is my conclusion… ready…..
-the current financial structure is completely unfair to the public. …It is also very much stacked against the Investment/mortgage banks, not the big guys (Jp Morgan, citi, BofA, or wells fargo), that has always been my point. I am not sure how you derived I feel the system is unfair to the big banks?? Do you disagree with my analysis/conclusion of how and who it is unfair towards??

Anyway…I do get the game and see it for what it is and what it may always be…. simply a distribution of wealth. I blog with the intention to help bring light to the drama so that those not understanding what is happening know that it is possible to make it through this chaos and the end of the world is not yet here.

I am unclear and puzzled by your false premise comment, what conclusions are false? You seem to agree with my conclusions and view (my actual conclusions and not your apparent mis-comprehension of my points), except for the dynamic on the collateralized instruments?? Isn’t an MBS a portfolio component of a cash version CDO? So in some cases the 2 are one in the same depending on the complexity of the CDO…no? Synthetic CDO’s have the derivative component that are the buzz word and whipping boy for losses the past year. The mixing/matching and packaging within these various versions seems to be one of the major issues with the losses from what I have been reading. The inability of the holder to adequately price these complex financial instruments.
my point has been and always will be that the system is heavily stacked against the investment banks/mortgage bankers and especially the public…the big banks make the economic rules….period.

I completely agree that the big banks are in bed with the FED….this was sealed when the fed was formed….(as I have mentioned and harped on in my last post, the fed exists for the sole benefit of the big banks regardless of what the propagated “public agenda” put forth)…that is why the new requirements hurt the IB’s (investment banks/mortgage bankers)… not help them in any fashion. Reducing the Fed Funds rate helps the big banks ( for clarity- I mean Citi, BofA, Wells Fargo and Jp Morgan) I had expected you understood my distinction between the “big banks” and the investment/mortgage banks since you have gobs of knowledge and are an insider. Another point I am making is that CW is basically a mortgage banker and was simply a conduit for the real players in the game. I am not saying CW is an innocent but that they are not the devil everyone wants to nail. The big banks are really the culpable ones and created a big portion of this financial chaos. It is clear the game was made for them because every-time there is a financial meltdown…guess who survives and makes out…I will give you 4 chances.

what you call a “love fest” between me and lookinthemirror is actually the fact that we both understand and agree on the larger and more serious issue at present time…that the big guys already rule and run the landscape and that CW was just small potatoes compared to what big money was really made. All the unfortunate homeowners who got caught up in the hysteria (coerced or not) are faced with some hard decisions… I agree with fighting to keep their home. I understand some were possibly swindled and I also know some just had the concept to buy now, catch up later, took a big risk and wrote a check bigger than their account could handle. I also know not every broker & RE agent were the main cause of the meltdown by pushing borrowers into homes they could not afford. I can understand those that have the “let them get foreclosed on” attitude. I say to those folks that this swindle the big players have performed on us will cost us all in many ways…so do we pay now or let the dynamic play out slowly and pay much more later.

There is going to be a bailout it is just a matter of when and how it is distributed…..I would rather it go to the homeowner in some form. If that means give the big banks a “cookie” to reduce and negotiate lower terms…then I believe it is the best option given the bad list of options we have to choose from.
I am aware of the differences and any similarities between CDO, CBO, CMO, CDS, GIC, ABS, SIV, LDO, MBS, ABC’s and XYZ .. and did not equate each one to the other as the exact same instrument…. but then my point was not the instrument themselves, you have yet again dug on an issue not related to the bigger picture presented. My point of the securitized instruments was that when dealing specifically with MBS and the CDO it may be grouped within-it will not ever be worth 0….whether it defaults or not it will have some intrinsic value above 0…no? I really believe a CDO with a group of MBS in it will not be 0 due to the fact at some point, either near term or in the future, a buyer will be available to acquire the asset. Not to mention the tranches of synthetic CDO’s (swaps) typically mixed into the equation that allow for an actual value greater that the current markdown value…..the mark to market securities do not disappear they linger around and at some point will have the ability to be sold. That to me is the main issue- placing a value on a product that is constructed to be held for a finite period and then sold at a future date. As you said, the securities/derivatives are actually bets on performance…good and poor performance. Remember all the hysteria over the monolines?? This was more of an issue in my eyes…The loss of triple a status in my mind was and still is the hair trigger for most of the fear.
A major point of my contention is the mark to market of these classes of CDO’s. Many banks and IB’s are marking down close zero…not 40-50% of value. I think you covered my contention quite well…that the asset now valued at close to 0 will actually perform better than that…even if it actually defaults. Forget about foreclosing…I am not sure I suggested the owner of a CDO would assume the property…my point is that the investor will ultimately have a return greater than 0. As you know the CDO’s are made up of many different types of securities..cash (i.e. MBS) and synthetic(i.e. CDS)…so my point again is that these will perform at some value greater than 0. And even if it drops 50% based on the current climate with few to no buyers, these synthetic tranches will ultimately return a better premium than the mark to market value today. The reason…? I believe there will eventually be buyers willing to bid even on the defaulted “junk”.

I am still waiting for your explanation of the acronym….QSEP— I have no idea what you are referring to as I am only familiar of the term QSEP for Quant studies of economics and population.
Regarding the big banks who created and control the game and will ultimately be the winner of the final outcome. The real question is- how do we as the public get screwed the least?

I know that shutting down the Investment/mortgage bankers so that you have 4 major banks left to provide financing is not the solution because this will simply cut out competition and actually drive the cost to finance just about everything up for the consumer. This point is key and what most do not know is that a good portion of the legislation being knocked around does exactly the above…leaves a playing field of 4 major entities and attempts to crush any alternative.

Now to get to your suggestions about eliminating the Fed, flat tax and so forth…good ideas but we are on this planet and I was expecting a rational suggestion of concepts that are actually a possibility at this point.

Also your predictions going forward did not really indicate an end game either…I believe the fed needs to raise the funds rate. This will improve mortgage rates, boost the dollar and make oil drop like a rock. This along with the government buying the mortgage paper of the hardest hit homeowners (actual owner occupied assets) will stabilize housing….to me stabilizing housing is priority one and then a crescendo of positive events will be more possible.

I am aware we are a critical mass, however I do not see the complete collapse at this point because it is clear to me the fed will not allow a financial Armageddon. I do not yet see an environment of a complete depression either…the sheer percentages of actual defaults seem to be no where near the level experienced in the great depression. I do believe and think a shift of wealth can happen during a depression…if fact that is exactly when I think it is the best opportunity for the big guys. That has been a main point of mine, that with all this turmoil we are actually watching a shift of control of the wealth back into the coffers of the big banks.

I am not sure how clear I have to be…it seems you skim over what is opined and come to conclusions other than the actual intent. Period…..and you seem to run off on a rant or diatribe against an idea or thought that was not even really proposed. I have to admit I am puzzled by your replies and conclusions when I cite examples of my points.

Rick please clarify what you mean:

“Look at Moe. That is exactly what he has done. I would say, judging by what I see, he has succeeded, and has probably spawned others to new ideas.”
Preceding from you was this: Eliminate the Fed, establish a flat tax, with no deductions, and allow the big money to truly find a way to help create jobs by focusing on solving the myriad of problems the world faces today. That is how we get out of the mess.
I am puzzled by your connection between the two thoughts…….Talk about a love fest…

Alan, good thought process.

The problem I see with a focus on knowledge and research based assets is this: If we still sell the results of the research, whether it be through straight knowledge based data or products (ie Monsanto corn hybrids etc), the world courts will not help us in protecting those patents to the extent needed to retain 100% control.

The Chinese are turning out engineers at a rate far greater than we. They already have the capability of copying any of our new technology (which they are doing), and selling it (which they are doing) and the world courts seem impotent to stopping it. I feel this problem will only get worse.

Gator brings up a great starting point to discuss what the Chinese will do after the Olympics. Yes, more than likely they will burn more coal for energy, because in the short term, until they put other energy providing sources such as nuclear power in place, coal is very inexpensive by comparison.

The problem gets broader after that.

I do not agree with Gator that the Chinese are buying more US Treasuries, in fact, the opposite is true. The Fed believes they are selling US denominated paper assets at a great rate. Foreign sales of US Treasuries have fallen to less than 10% from almost 50% a year ago. The reason Treasuries are still selling is our own market, in a flight to safety mentality. Big money, even though they realize the government numbers are a lie and inlation, in real terms, is probably northwards of 6-7%, are buying the Treasuries because it is better to lose only 3% vs. 25% should the market take a dive.

Even worse for the US concerning China is this – China bought over $1 Trillion in MBS and other derivatives based in 2005 and 2006 originations of mortgages in the US. They have not sold these, because there is no market. The losses on these derivatives are already massive, and are only getting worse as property values decline. How pissed do you think they are about this? I have been having discussions with people that believe, just as Gator inferred about the coal, that the Chinese are putting on a happy face until after the Olympics. What they will do is anybody’s guess, but help the US protect intellectual patents probably isn’t in the cards.

Pretty soon it will be apparent that we are not selling enough Treasuries to pay the interest on what has already been issued, and the rate will skyrocket. 8%, 9%, 10% or more rates on the 10 year notes will be reality. If the Fed does not stop the crap with the swaps, we will get 15% or more as rates on the 10 year notes.

What’s coming may be very bad for the US. Many countries invested in these Derivatives, and the really big losses on them is still in front of us. The turmoil with the banks in Europe has been over losses on derivatives. The two banks nationalized by the German government are a prime example, the losses they realized were on derivatives built on US mortgages. Consider that, at best, we are maybe only 20% into the actual tally on losses involving derivatives, and you can see this is far from over.

If the Fed begins to print more money, as has been suggested, you can turn out the lights, it will be over. The Amero will become reality, and Canada, the US and Mexico will become one economy, and eventually one government.

This is why I have said the only solution is to abolish the Fed. Their failing to properly regulate the actions of the banks has caused all of this to happen.

If we don’t, the banks will only get larger and gain more control of our economy. And, pull the same malarkey over and over again.

We must bring back the manufacturing base that made this country great and reclaim those jobs we have given to other countries.

And, we must not let any foriegn money into our society unless they can prove they provide the same rights to their citizens that we do.

We must swallow the medicine. If we don’t…..

So can anyone guess the name of “organization” that was formed by Countrywide’s, Anthony Mazillo and Fannie Mae’s, James Johnson ten years ago it start with an M? No not the Mafia. It Mortgage Electronic Registration Systems Inc. commonly reffered to as MERS. Yes thats right Countrywide and Fannie Mae were the lead organizers of MERS and are shareholders and “members” of MERS. Here are excerps from an investigative report on MERS I have been working on for the last several months. This may help shed some much needed light on MERS and the cozy relationships many of its so-called ‘memmbers” have between each other and with our congress. It may also explain why no one in congress has bothered to investigate MERS and it crazy “paperless” system that these greedy mortgage executives invented so they could line their pockets by originating and flipping phoney mortgage loans into so-called mortgage backed security trusts and then selling trillions of dollars of bonds to investors around the world. By reporting false profits from these sales Fannie Mae’s and Countrywides executives were able to make hundreds of millions of dollars in “bonuses”.

THE MERS FIFTY MILLION MORTGAGE MELTDOWN.
By Kevin J. Lamson. May 15, 2008.

PART I. The Promissory Note Evidence Ownership of Debt and Standing to Bring Suit.

· The Fundamentals:
In the period beginning in 1999 and ending in March of 2008, Mortgage Electronic Registration Systems Inc., a/k/a/ MERS, has been named as a “mortgagee” on over fifty million mortgages. Yet MERS has never orginated a single mortgage loan nor loaned a dime to a single borrower. In 2001 the New York Surpreme Court ordered the Sufulk County Clerk to accept MERS mortgages for recording as a purely ministerial duty. However the Court denied MERS request for a judgment declaring that MERS mortgages were “lawful in all respects”. The New York Court of Appeals affirmed the Supreme Court’s order directing the County Clerk to record MERS mortgages. The Court of Appeals did not reverse the Supreme Court’s denial of MERS request for a judicical declaration that MERS mortgages are “lawful in all respects”. MERS, for obvious reasons, did not want a published opinion the fact that MERS mortgages are legal nullities and/or that MERS has no standing to enforce a mortgage when it is not a creditor entitled to collect a debt. The New York Court of Appeals did address and frame these two issue but left them to be decided at a future date.

· No Note No Foreclosure
In reality MERS is really nothing more than a shell, or a front corporation for its so-called “members”. Many of these MERS members were once some of the most prestigious names in American finance. Many MERS members are now reporting hundreds of billions of dollars of losses as result of their illconcieved scheme to ramp up mortage orgination so they could pretend to flip millions of mortgage loans into trusts in exchange for trillions of dollars of investors money. One big problem was that the promissory notes were never actually deleivered to the trustees of these trusts. Therefore these trusts have no evidence of ownership of the debts they puportedly purchased. Akin to purchsing a home without being given a deed. To make matters worse many of the debts evidenced by these undelivered promisssory notes were supposed to be secured by mortgage liens. However in place of mortgages being executed in favor of the original lender many of these mortgages were executed in favor of MERS. Because MERS never holds these notes or owns a debt it is not a creditor. MERS has no legal standing to enforce a debt, or so it told the Nebraska Court of Appeals in 2005. However this lack of standing defense must be raised by property owners who are sued. The most effective economic way to raise this lack of standing defense is by bringing a motion to dismiss in response to the complaint to foreclose. In many states and in federal court this is called a Rule 12 motion. This motion is brought in place of answering the complaint. An honest attorney in most areas of the country should be willing to prepare and bring such a motion for $500.00 to $1,500.00 for a distressed homeowner. Or you might be able to find a lawyer to do it for you pro bono and perhaps a legal aid attorney. At least five judges around the country have dismissed these actions for lack of standing sua sponte, which means they did it on their own volititia. Perhaps more judges will feel the duty to do the same thing in the future. To protect the integrity of the Court.
MERS members, mortgage industry executives, invented the so-called MERS paperless system to short cut standing mortgage lending safe guards and circumvent the legal requirements for originating mortgage loans and/or for selling and transferring these loans to subsequent holders. This would allow MERS members like Countrywide Financial, Fieldstone Mortgage, and Option One Mortgage to make loans to anyone with a heart beat and then quickly flip these questionable loans to other MERS members such a Fannie Mae, Freddie Mac, Bear Stearns, Merrill Lynch, Lehman Brothers to name just a few. (“Secondary Mortgage Market Players’)

These Secondary Mortgage Market Players would claim to package millions of these loans, with or without being delivered the promissory notes, into loan pools or “mortgage backed security trusts” and then flip the loans by selling trillions of dollars of bonds to investors around the world. The bonds were touted by Secondary Mortgage Market Players as producing safe yet high returns. The investors who bought these bonds included many of the worlds largest national banks. Initially MERS members reported windfall profits year after year by quickly originating, packaging into pools and then flipping trillions of dollars of mortgages loans to investors. Other MERS members, such as title insurance companies, also took their cut from each of the fifty million loans that were made while this high speed gravy train was rolling. MERS itself would earn over a billion dollars a year by charging its members $250.00 for each mortgage that MERS would be named as “mortgagee”.

A June10, 2007 article in Forbes magazine details the carelessness in the securitization process by which mortgage loans were packaged and sold off to mortgage pools is now coming back to bite the trustees of these mortgage backed trusts who are now seeking to foreclose millions of loans that are in default:

· The financial engineering (ie. mortgage securitization) helped oil the housing boom by making credit more available. But stalled housing prices and rising defaults have revealed a mess: In the rush to flip paper, lots of the new lenders or pools don’t have the proper paperwork to show they even hold the mortgage.

The reported profits from the sale of these mortgaged backed securities would result in billions of dollars of salaries and bonuses being paid to the senior executives of many of MERS member corporations. Ultimately the bond investors who actually provided all the money would learn that their “safe” investment was anything but safe. As hundreds thousands and then millions of these loans fell into default. These bondholders would lose hundreds of billions of dollars. As of April 1, 2008, the largest banks around the world had already written off loses of one hundred and fifty billions dollars relating to bonds they had purchased. One Swiss bank, U.S.B., has recently reported 40 billion dollars in losses. These loses may only be the beginning. What many people refuse to admit is that because of the so-called MERS paperless “system” many of the so-called mortgage backed security trusts do not actually hold the promissory notes which evidence the debts that are supposed to be backing the bonds purchased by these investors. The situation is reminiscent to the great Great Olive Oil Scandal in the late 1800’s when banks were duped into investing millions of dollars into Olive Oil only to later discover that the tanks which were supposed to be holding millions of gallons of olive oil backing their investments were mostly empty.

This problem with the missing trust assets/promissory notes manifests itself each time MERS and/or the trustees for the bondholders brings a legal action to collect on debt through foreclosure. Because neither MERS nor the bondholders trustees are holding the notes they lack proof of standing to maintain their legal actions and the actions are subject to dismissal. Many actions have been dismissed based upon lack of standing. This a problem that it is a direct result of MERS “system”.

It appears that after MERS mortgage loans are flipped to the mortgage backed trusts the promissory notes are not actually delivered to the trustees. Nor are assignments of mortgages executed and delivered which evidence the fact the original lender has transferred the debt which is secured by the mortgage. This leaves the trusts with absolutely no paper evidence of ownership of the secured debt it purportedly owns. One informed lawyer who represents homeowners in Florida, April Charney, had foreclosure proceedings against 300 clients dismissed or postponed in 2007 for lack of standing. She is quoted as saying that “80 percent of them involved lost-note affidavits”. . . They raise the issue of whether the trusts own the loans at all,” Charney said. “Lost-note affidavits are pattern and practice in the industry. They are not exceptions. They are the rule.” Ms. Charney, started challenging MERS and it members lost note affidavits after becoming skeptical of the a lender could possibly lose hundreds of promissory notes.

At least two Florida judges shared Ms. Charney’s skepticism regarding the copious amounts of MERS lost note affidavits and they issued show cause orders, sua sponte, challenging MERS to show proof that it held and/or lost notes in numerous actions. After evidentiary hearings these two alert judges dismissed twenty nine (29) MERS actions to foreclose for lack of standing. One judge struck MERS pleadings as being sham. A South Carolina court dismissed a MERS action to foreclose for lack of standing even though MERS filed an affidavit wherein a person claiming to be an officer of MERS claimed that MERS was holding a promissory note.
The South Carolina court vetted the MERS affidavit claim that it was the holder of the note after being apprised of the fact that MERS had previously told the Nebraska Court of Appeals that it never held promissory notes.

In late 2007 three Federal Court Judges in Ohio dismissed over fifty law suits brought by trustees of mortgage backed trusts where they could not produce the original promissory notes. Following these decisions the Bankruptcy Court in Los Angelas, California adopted a rule of practice which requires all foreclosing trustees or other plaintiffs to produce the original promissory note when bring an action to foreclose a debt or face sanctions for not doing so.

It is disturbing to know that National Bank’s are the trustees of thousands of trusts that may be missing millions of promissory notes. This might explain why, to date, not a single National Bank has publicly disclosed the fact that they are not actually holding what may be millions of promissory notes which evidence ownership of debts supposedly owned by their respective trusts. An independent audit of these trusts would probably be quite revealing. This writer is also unaware of any such audits that have been performed to date. These National Bank’s, as trustees are accountable and therefore liable for missing trust property or the documents evidencing ownership.

As more borrowers, lawyers and judges learn that neither MERS nor these trustees are actually holding the promissory notes evidencing the debts they seek to collect through foreclosure, dismissals of these foreclosure actions for lack of standing will become routine. This will also means that bondholders from around the globe will be seeking to recover their loses from the National Bank trustees.
· A Review of problems with basic MERS paperless system:
The members of MERS, had from the onset three serious problems which would ultimately derail their high speed and high volume mortgage lending system. . . The first the problem was finding millions of Americans who could qualify for a loan to purchase any home. The second problem was how to quickly endorse and deliver of millions of promissory notes from the originating lender to Secondary Market Players and then on to subsequent holders, like the trusts. The third problem was executing millions of assignments of mortgages and recording these assignments in the public land records, which each successive transfer of the promissory notes. The last two would require significant administrative time and expense. MERS and its members didn’t want to be bogged down by trivial administrative details. They wanted to make big money fast by making millions of loans with other peoples money and making those loans at lightning speed. Their attitude was “Damn the torpedoes full speed ahead”.

· Rather than finding people who could actually qualify for loans, meaning pay it back. MERS members simply lowered the qualification bar by creating all kinds of “creative loans”, including two which they called “No Doc” and “Sub prime loans”. No Doc (no documentation) loans would be made to borrowers who had good credit scores but would not require verification of actual income of the borrowers. Sometimes relying on income as stated by the borrower. Sometimes putting in fictional numbers. These loan would later become known as liar loans. Sub Prime loans would be made to borrowers who had less than stellar credit history or no credit history. Many people from minority groups and newly arrived immigrants became targets for these loans. Both No Doc and Sub Prime loans carried higher interest rates than regular mortgage loans. By lowering home loan qualification bar these greedy geniuses had invented a larger market of residential home purchasers. Swarms of previously unqualified borrowers could now be swooned by real estate agents, mortgage brokers into buying a house by borrowing money, not from a bank or savings and loan, but from investors who were at two times removed from the closing table. This expanded market of previously unqualified home buyers and/or investors created a real estate bonanza on the street level for realtors, mortgage brokers, and home builders. Prices for homes rose dramatically as this new demand by buyers who really were not qualified out-stripped the supply of homes. The high foreclosure rates in the Las Vegas, Miami, California and rust belt areas as no relationship to geography. But clear relationships with the ease of No Doc and Sub Prime loan acceptance.

· Rather than actually delivering millions of endorsed promissory notes to the Secondary Market Makers and then on to the bondholder’s trusts, which is the only way a debt evidenced by a negotiable instrument is legally transferred to a new owner, the promissory notes were either not delivered at all, or were simply delivered to the original loan servicer, weeks and/or months, after the originating lender had sold the debt. Thus in many cases the “mortgage backed security” trusts may not actually be holding millions of promissory notes which evidences the ownership of the debt that these mortgage backed loan pools supposedly own or hold. To make matters worse many of the original mortgage lenders and large loan servicing companies have filed for bankruptcy of just gown out of business. Decreasing the trusts likelihood of ever locating much less obtaining possession of what could be hundreds of thousand if not millions of missing promissory notes.
· Rather than actually delivering boni fide (real) assignments of each mortgage to the Secondary Mortgage Makers and then causing each mortgagee’s interest to be re-assigned to each mortgage backed investment pool, along the high speed mortgage gravy train route. The simply invented the MERS “paperless” system. The founders of MERS knew that MERS was merely a “a facade” they would employ to expedite the number of loans that could be originated, packaged and sold as mortgage backed securities. They felt they could “eliminate” such paperwork as promissory notes and mortgage assignments. Even though commercial law requires such sundry items as promissory notes and mortgage assignments. The MERS founders seem to think they could ignore and/or circumvent the law as if the “the ends justified the means” as long as they would make big money.
· Rather than record millions of mortgages and multiple millions of assignments in local land records the founders of MERS decided that it would be named the “Mortgagee” in place of the original lender. By creating (inventing) this new entity, MERS declared that it was some sort of agent for each and every mortgagee, or mortgagee assignee and could then act as a “mortgagee” in the public land records. Through this clever legal sight of hand MERS founders believed they could eliminate the commercial lending practices of having to endorse and deliver each promissory note to the new owner/holder and eliminate the execution of each assignment of mortgage by the mortgage lender for each secured note that was sold to a Secondary Market Maker. Together with incidental recording of each assignment of mortgage by the Secondary Mortgage Maker or its assigns.
MERS founders and members, went about foisting thier so-called “paperless” system on the American economy and indirectly upon the global economy. MERS studiously avoided seeking any legislative changes of long standing commercial laws relating to promissory notes, mortgages and public recording of assignments in any of the 50 states that it would ultimately be operating. It is possible that this blatant abuse, of the UCC and state recording laws might have passed itself off as the new way off doing business in our computer age. But MERS member companies, under clear instructions from their leaders, guarantied disaster by pumping up and them dumping these shaky loans onto investors through trust they set up for this purpose. These invesotor/bondholders are jut now discovering that they were duped. They just don’t know how badly they were duped.
Perhaps this is what the global economy is really all about. Seeing who can dupe international banks and governments out of trillions of dollars depositor and taxpayor money and do so with complete impunity. Yet, to my knowledge, after learning that they invested trillions of dollars into these questionable loan pools n/k/a/ cesspools, not a single National Bank has ordered an audit of these cesspools or turusts to determine the acutal contents and the value.
As a matter of sound public policy our courts should not allow MERS or its so-called “members” to circumvent and/or violate long standing laws of commerce, simply because some greedy mortgage executives thought they could shoe-horn their so-called “paperless system” into the framework of our current system of commerce. Our system still requires such sundry instruments as promissory notes be used to evidence debts and also requires that these instruments to change hands when sold or transferred to a new owner. Our system also requires a new holder of a promissory note to record an assignment of security interest or mortgage in order to enforce a lien which secures the debt evidenced by the promissory note. No one should be able to simply ignore these long standing laws just so they can reap billions of dollars in illicit bonuses by quickly originating and then flipping loans without the attendant delivery of notes and assignments of mortgages. Our system of commerce does not operate this way. This is because we have laws of commerce including the UCC which regulates our system of commerce.

The MERS paperless system simply provided an expedient way for MERS and its members to fleece the investor on a global basis, by loaning money to people who couldn’t or wouldn’t pay the money back and then flipping trillions of dollars of these bogus loans to third party investors. The MERS system does not comply with our current laws of commerce. While the computer age has admittedly changed how business is transacted it has not eliminated or replaced the legal requirement for such things as promissory notes, mortgages and assignments of mortgages, when a loan is made, a mortgage given and the loan is subsequently sold and/or resold. This is precisely why a competent and prudent lender who makes a loan to a qualified borrower takes back a promissory note and if the loan is to be secured the borrower executed a mortgage or security agreement naming the lender as the mortgagee or secured party. The lender must then record or file its mortgage or security agreement to prefect its lien. If the lender decides to sell the debt it is owed to a third party it must endorse and deliver the promissory note to the third party. And in order for the third party to enforce either a mortgage lien or security interest the original lender must execute an assignment of mortgage or security interest. Which must then be recorded or filed by the third party to give evidence and public notice of its status as assignee of the lien securing the debt it had purchased. Only the holder of the promissory note is entitled to enforce the note and/or any lien which secured the debt.

Given the extremely close relationship that MERS, its many corporate members have with the politicians who run our state and federal governments, it is not surprising that MERS and it members were able to pull off this gigantic global financial scheme without raising the brow of a State or Federal law enforcement or regulators. Only now are a few politicians and regulators paying lip service to what they refer to as the “Mortgage Meltdown”. What no politician or regulator ever seems to mention is that a millions of the mortgages that “melted down” have the name Mortgage Electronic Registration System Inc. on them. American courts should no longer tolerate or close a blind eye to the fact that the MERS has no standing to commence any legal actions relating to peoples properties because they do not hold any legal or equitable interest in the debt or in the properties. The Court’s must protect the integrity of our court system by enforcing our laws of commerce as they have existed and not allow parties to come into our courts and commence actions relating to debts that they do not own and/or have no proof of ownership.

This writer has been investor in real estate since 1976, and has owned properties in eight states and three countries. Over the last thirty two years I have witnessed and heard of many illegal or fraudulent schemes involving real estate finance. The MERS “paperless system” is the kind of scheme that is hatched in some internet boiler room in Nigeria, not in the boardrooms of our once prestigious American financial institutions. This gigantic scheme completely ignored long standing law of commerce. The effect of the system has already had a catastrophic effects on both the American and global economy. Yet many of the investment “trusts” which supposedly hold thousands of original promissory notes are hard pressed to produce them when legally required to do so. MERS admittedly does not hold any promissory notes. A party must have possession of a promissory note in order to have standing to enforce and/or otherwise collect a debt that is owed to another party. Given these facts how will these investors ever recoup there investments if the debt they were suppose to own can not be legally enforce or collected? What will be the status of title to properties that were purportedly foreclosed by MERS where MERS admittedly had no legal right to foreclose or otherwise collect debt which are evidenced by promissory notes held by someone else. Please feel free to contact me with any comments or questions you may have: kev_o_shanter@yahoo.com.

Rick-

You make a few valid points, however, the abolishment of the FED is not going to happen. As far as printing money, it is the only wasy to keep the “good” banks solvent at this time. If that does not occur, there will be a MAJOR MELTDOWN…..much larger than what we have seen. If it does occur, some banks/IB’s will fail, and we can SLOWLY unwind the unregulated leveraged market. If we try to hit this too hard, it will cause a complete meltdown of the system. Please look up Creative Destruction again…..it has absolutely nothing to do with Marxism. It is the basic premises of Capitalism in that the weak companies fail, and the strong companies succeed. This is Darwinism in a business context. Unfortunately, the U.S. is heading toward a more European/Socialistic type of government, and if this continues, we can kiss our “free market” economy good buy. Welcome to a system that lacks incentives. On that note, I will take the next few years’ off, play golf and possibly move to China where a real “market eoonomy” is taking place. It is ironic, that America was the country that allowed the “Eastern Block” nations, and so-called communist regimes to open up to a “market-based” society, and now we are becoming what they used to be. All societies go through different cycles, and unfortunately our’s is headed toward a more government regulated, socialistic type of society.

The FED is printing money in order to salvage what is left of the banking system. The downside to this is inflation (flooding the system with dollars), however if it is not done, their will be nothing left of our financial system. I would like to see a post which addresses any other alternatives our policy leaders have other than abolishing the FED which is not going to happen. Ron Paul makes some very valid points, however, he does not have the political strength or following to effect real change. Remember, there are “theoretical” solutions, and “real world” solutions. I prefer to operate in the real world. I would like to hear some more “real world” solutions????

“I am following the Story of Richard Davet very closely and hope he is victorious in his fight against injustice and for what is right.”

And undoubtedly you will try to glom some credit for his “victory”, grandstanding douchebag that you are.

now there is a perspective……

FYM – You seen to be pretty hell-bent on standing up for the criminal banking industry. This is about right and wrong genius. If they chose to skirt every rule and law ever enacted, then they damn well are going to pay the price “friend”.

- Not recording the numerous sales of the note in the county for which the home is in. Whoopsie, that’s the law, but they chose not to do it in an greedy attempt to lessen their workload and enrich themselves at the expense of the borrowers.

- Not getting proper assignment of said note from each sale. Whoopsie, that’s the law, but they chose not to do it in a greedy attempt to lessen their workload and enrich themselves at the expense of the borrowers.

- Or my favorite scam of all: Giving the court a “Lost Note Affidavit” when the bank never had possession of the note to begin with. That’s fraud perpetrated upon the court. If you had something in your hands and then realized you had lost it, that’s one thing. But, if you never had the note to begin with and then lie to the court that “lost it”….FRAUD plain and simple. 90% of every loan sold was packaged up, mis-rated, and sold to thousands of unsuspecting people, and nary 10% actually had provable ownership of the notes. Enter the HUGE “Lost Note Affadavit” trend.

There is so much more, I could easily go on for weeks about bank and brokerage criminality, law-dodging, cheating, lying, fabricating, etc..

So, FYM, get back to work at the bank or brokerage you work for, stop using their computer on company time, and start hatching the next scam to perpetrate on the people.

F*** Y** M** —

Do you have any manners?
Didn’t your momma raise you right????

Moe your heart is in the right place, keep doing what you are doing for everyone !!!!

correction….answer to those two questions…

This has been one of the best laughs today. A guy goes to a bank to get money to buy something he cant afford to pay for in cash. When he cant make the payments he agreed to, its the banks fault. Then we have some other idiot saying because the bank borrowed the funds to loan at a higher interest rate, they are criminals too. Sorry bud, thats how banking works. They take in deposits they pay 2-3% for and loan it out at a higher rate. Does it matter if they borrow the money from another source rather than the depositors? Not really, they are still borrowing the money to lend at a higher rate.

Wake up. If you borrow money, you agree to pay it back. The real criminal is the guy who hasn’t made a mortgage payment since 1996 because he files frivilous motions and ties up our court system.

“Dave in San Diego said”
“Then we have some other idiot saying because the bank borrowed the funds to loan at a higher interest rate, they are criminals too.”

Sure Dave lets foreclose on every property, when the dust settles you will not be able to obtain a mortgage for 100 years because no one will finance or insure the mortgage instrument. Gosh and I thought it was fun to go to the zoo and watch the animals climb a tree, its more fun watching a trailer park occupant utter words of encouragement as his trailer park wife is getting STD’s at a bar so she can make payment on their rental RV, HAHAHAHAHA. Good job in making those payments Dave, just make sure you wipe yourself down after the act.

The contractual mortgage instrument created today in this economic climate will cause stagflation and a great depression. The Federal Reserve and all three branches of our federal government have a constitutional duty to fix the problems today, right now. The real estate , were the debtor resides, was used to float debt that stabilized our economy.

You seem to forget the basic point. The borrower asked to borrow the funds then agreed to the terms. He signed the docs.

So you want to blame the bank for agreeing to loan him the money? You want to blame the banks for being leveraged at 50 to 1? thats not the point is it? the reason there are foreclosures is not because the bank lent the money, its because the borrowers aren’t paying it back. So does it matter how exotic the loan program was? Not really. The borrower wanted to buy a house, he felt comfortable with the price he paid for it and asked a bank to loan him the money. then he signed a PROMISORY NOTE (a promise to pay it back) with the terms clearly spelled out. Maybe he didnt understand the terms. Well then he shouldn’t have signed the papers.

It seems in America we blame everyone else for our mistakes and hire a lawyer to get us out of the problems. What about the home owner who IS paying his mortgage on time? He is the one being hurt by the other buyers irresponibility. Its not the bank, its the borrower who is messing things up.

Isnt it about time people started taking responsiblity for THEIR OWN actions?

FYM.- Where do you get that information from? Are you related to Rothchild, JP Morgan, Rocketfeller or any of those family?

Are you one of this people that think that US economy will climb back up really soon?

FYM wake up and smell the coffee.
I recommend you to do some research.
Look.. make your monthly internet service worthwhile..

I just have 2 things to share with you all posting in this site.

1.-
See who I am, and what I am about. We started 15 years ago, but they dont want us to be known.

We are the Answer to the World.
http://www.youtube.com/watch?v=bJlk24MQ3Zw
http://www.youtube.com/watch?v=Dt00CodlSzY&feature=related
http://www.youtube.com/watch?v=OWxwZlRvlK4

2.-
Read more into the History of Banking System or just youtube it
here some links for you. “1. Corrupt Banking System – Cartels Robbing the Public” http://www.youtube.com/watch?v=cy-fD78zyvI.

and FYM… just stop talking BS.

“Dave said”

“You seem to forget the basic point. The borrower asked to borrow the funds then agreed to the terms. He signed the docs.”

Bologny , the borrower had no choice. The myriad of tainted programs on his or her financial plate left the debtor with no choice but to keep borrowing to pay of the old debt. What surprises me is the willingness and ambition of many Americans to keep getting in debt probably because of their faith in the banking system that eventually they will make it right.

This is called F I N A N C I A L E X P L O I T A T I O N

My friend you need to learn these words

Banks are funded by tax payers and debtors. Therefore due to
the F I N A N C I A L E X P L O I T A T I O N they caused should be stripped of all their wealth past and present.

Whats happens when you go to court and the judge finds out that you committed a crime and you financially exploited someone. You know what happens you go to jail and you get all your money taken away from you. This is the American way or it should be.

Dave the last statement of your post states
“Isnt it about time people started taking responsiblity for THEIR OWN actions?”

I agree but start at the top, the majority of the borrowers are not at fault for this bubble / foreclosure mess we are in….
Yes some borrowers were greedy and cashed out a lot more than they should have, but most of those borrowers flipping homes, cashing out, etc were most probably in the industry in one way or another ( bank, broker, LO, realtor, appraiser etc)… those borrowers should be punished.

so for your statement – shouldn’t you go after the big fish first so this doesn’t happen again? the banks who came up with these programs, the underwriters who had new loose guidelines, the broker/LoanOfficers that BS borrowers into these programs etc.

Now as far as this blog : this guy Mr. Davet went into foreclosure why? (1996 that is almost 12 years ago) – the economy & the mortgage bubble started about 2001 & went into full gear from 2003-2007 and now we are feeling the effects of all of it….

FYM.- Where do you get that information from? Are you related to Rothchild, JP Morgan, Rocketfeller or any of those family?

Are you one of this people that think that US economy will climb back up really soon?

FYM wake up and smell the coffee.
I recommend you to do some research.
Look.. make your monthly internet service worthwhile..

I just have 2 things to share with you all posting in this site.

1.-
See who I am, and what I am about. We started 15 years ago, but they dont want us to be known.

We are the Answer to the World.
w w w youtube com / watch?v = bJlk24MQ3Zw
w w w youtube com / watch?v = Dt00CodlSzY&feature = related
w w w youtube com / watch?v = OWxwZlRvlK4

2.-
Read more into the History of Banking System or just youtube it
here some links for you. \’e2\’80\’9c1. Corrupt Banking System – Cartels Robbing the Public\’e2\’80\’9d w w w youtube c o m /watch?v = cy-fD78zyvI.

and FYM\’e2\’80\’a6 just stop talking BS.

check w w w theunitedcities org

I can understand Dave in San Diego’s argument, however, when even Christopher Dodd from the U.S. Senate Banking Committee did not Know or realized what he had signed when he refinanced his home, what is left for common mortal like ours.

I have reviewed hundreds of loan documents in my practice and I can tell you that the art of predatory lending may have reached the Pinnacle during the last few years, the level of sophistication and deceit may surprise many. It is not that the borrowers may not have realized what they signed, it is how it was interpreted for them. How these loan products were marketed, how they were SOLD, and this is the key word. These loans were sold in a way that was totally misleading. There is a class action law suit right not known as Andrews VS Chevy Chase Bank FSB, where the loan application stated the loan was a conventional loan and with a fixed rate, the note indicated they had a fixed rate in one page and on other pages it told the real story where the interest rate would change every month, at a rate of 7.5% every month all the way to a cap of 19.9%, this mechanism was never disclosed to the consumer and never shown in any paper work. Many brokers and lender violated the Truth in Lending Act by SELLING loans to people who could not afford the homes they were buying. Under the Truth in Lending Act the lenders are prohibited from not making sure and verifying the borrowers ability to repay, this fact alone should render the whole loan void and convert the lenders and brokers into common criminals for fraud. Also the lenders and brokers lied by providing fake CPA letters to certify the borrowers tax returns, violating TILA and the U.S. Tax code and the Federal rules of evidence. Also in many cases specially in the immigrant communities the mass media was being fed with advertisings offering loans to any one who could breath. No doc, No Asset, No Job, No papers. When the time came to file the loan application the Loan Officers had their clients sign blank forms, and after that they told the consumer to wait for a phone call and settle 30 or 40 days later. They took care of everything, at settlement they were fed 250 pages of very complicated documents under very unfavorable conditions and were rushed through the process. In most of this loans the consumer was unaware of the fact that the loan officer and the lender had conspire to sell him a higher interest rate than what he could have been available for him, generating a commission to the broker and lender that was split generally 50/50. Let me explain the par rate was 6%, in other words, you could get 6% on your loan without paying any points, but the rate sheet was never made available to the consumer, on the contrary the lenders instructed the brokers and loan officers to sell the 7% or 8%, or Negative amortization loan, where the lender would pay a yield for the differential in the interest rate, the consumer would not object because no one was honest enough to tell him or her that the POC or YSP, or Fee paid to broker from lender was going to cost him X amount of money extra a month, multiplied by the amortization factor. If the Lenders and broker would have told all these people that they were making an additional commission by selling them a higher rate without their knowledge and actual consent, I believe that many people would have either walk out of settlement and canceled many deals before their illegal consummation. The argument is not whether they want a free home or not, or whether they signed the documents or not, the argument should be under what circumstances, was the sale or refinance induced or closed under the basis of fraud and deceit?, did the lender actually complied with all the federal laws and regulations, they are not only playing with the dreams and hopes of a family that is either buying and selling a home, they are also playing with the money of investors, stock holders, and even money lent to them buy the U.S. Tax payers.

The ordinary consumer and most attorneys, they will review documents and approve them for closing, but I can find in the same documents from 10 to 30 violations of RESPA, TILA, HOEPA, FHA, Civil Rights Act, etc.

The consumer needs protection and all practitioners, and professional of the real estate, banking and settlement industries must realize that if you kill the consumer/borrower financially, everyone loses. At the end of this mortgage and real estate debacle, we will see over 15,000,000 Americans who may have lost their homes , their life savings, their families. The industry in the quarterly greed for corporate results and the “I am the top producer lender and real estate agent mentality”, would have financially killed all these people. They will not be able to re enter the market for some time and many will no longer trust the system. I believe banks are important, and real estate agents are important, however, the consumer is the driving force in our economy and they are the least protected.

We need to rethink and do away with the caveat emptor mentality, it is predatory and unfair. Not every one has the possibility to attend Harvard or Yale.

Our economy revolves around the little guy, we cannot forget that, the little guy buys the house, gets the loan, buys groceries, buys insurance, buys cable tv, buys airplane tickets, we seem to forget that. There are mega companies and mega banks because of all the little guys like us.

MERS the biggest sham in the country, no you can see every lost note foreclosure with MERS as the beneficiary, If you do not hold the note, you cannot demand payment, federal rules of evidence, SHAME, SHAME, SHAME

Carrie-

There are only a few who really rip on the people in real trouble….. the ones who’s story makes sense.

You have to agree that some homeowners, now calling foul, saw the opportunity to inflate their income to buy a home because money wasa flowing all around……you know this right? Same people who fill out the credit card application and state an inflated income.

From my take many posts are actually pointing out the entire system was flawed…and even the investors themselves were swindled in some cases. Some even point out that the banks and investors also need to step up and take responsibility….not just the homeowner.

perception is reality- this is a funny thing-

good luck and keep fighting.

Jl Real Estate Broker stated
“I have reviewed hundreds of loan documents in my practice and I can tell you that the art of predatory lending may have reached the Pinnacle during the last few years, the level of sophistication and deceit may surprise many.”

Would it be possible to reproduce an actual loan doc marked up to show where predatory lending was contained in the docs? Would be interesting to see and possibly edifying to those who are not professionals.

Doing so might also put to rest so many of the arguments that “people should have known what they were signing” as proponents of that argument would plainly be able to see the degree of misleading complexity contained that would take a highly skilled professional to understand.

I think one important item overlooked in many of these discussions regarding consumer responsibility is basic trust that is assumed to exist between parties by most consumers when they engage in complex contractual legal transactions. Most people do not possess the acumen, let alone the specific education, required to analyze and correctly interpret complex legal documents to determine whether or not they are truly to their benefit. Nor do many have the time to properly educate themselves.

Therefore, most consumers rely on an assumed trust in a respective professional to act in behalf of their best interests. So often, it has been proved, this trust is non-existent. Not only is it non-exsistent but the reverse seems to be the case where the professional is acting only in his or her own self interest at the expense of the person who is placing their trust in said professional.

While the term “buyer beware” could be used as an argument to pin the full responsibility on the consumer the question then begs “what of the responsibility on the part of the professional to adhere to their respective professional code of ethics?” Theoretically, if professionals were to be strictly guided by ethics then the term “buyer beware” would not exist.

At the bottom of this crisis, I believe, is the base issue that morals can never be fully and utterly legislated. Hence, I see no end to future debacles of a similar type. At least not until a major shift takes place within our culture regarding certain, rather many, misleading mass beliefs, such as the beliefs behind the current mass addiction of pursuing money as the number one goal of earthly existence.

I believe greed is the ultimate issue here and it’s many insidious effects are visibily, painfully, being played out for so many to see. Yet before we look to change another I believe we must first look within ourselves for change. That may be our ultimate individual responsibility.

Cheers.

He does dog, you’re right. But and this is a BIG BUT, he looks out for those who’s hearts are in the right place, just not their minds.

My guess is that many drunks will be just OK, but many of the fools we see, well, he has A LOT of work to do with them.

We are talking about huge lumps of clay that need shaping and to be stuck in a kiln for many many days and weeks and quite possibly years.

In the end, those fools who’s hearts are in the right place, who deserve the best, will get just that. And the ones who don’t will get just what the have sewn in the path that the have walked and it wont be pretty.

I am a little curious as I went into the Cuyahoga County
auditor and recorder sites. Now, I admit I am not the most
computer savvy person but I went back to 1970 and see four
different transfer deeds “to” a Richard Davet per the recorder.
Per the auditor, I only see three properties currently owned
by a Richard Davet and they all appear to be commercial.
They also all show in foreclosure w/ horrendous back taxes
due. The most recent mortgage I can find on a Richard Davet
was filed 9/22/95 and am wondering if this is the mortgage that
is pending foreclosure since 1996?

Perhaps someone else would care to look at the sites and see
if you can determine a sequence of events. I also could not
help noticing many tax liens filed and one of the deeds to
one of the commercial properties was a quit claim from a
Peter Davet to a Richard Davet and this possibly Ries Flooring.

Was the Richard Davet in question in business for himself and
was a business failure his undoing?

Maybe folks should nose around these public sites and then form their opinion as to a Richard Davet’s intentions.

TO: Proud Homeowner,

Can you determine what the actual property address is?

If the foreclosure never went through, (still in litigation)then why is there no residential property listed in his name?

Who is the listed owner of record now? And since horrendous
back taxes on the three commerical properties (that may
or may not be the same Richard Davet??????) I am curious
if the taxes are being paid on the residence?

If the mortgage in question was in 1995 and the foreclosure
started 1996, how many payments did he make, if any? If he
did make payments, is this not his acknowledgement of the
debt owing? Does the recorded mortgage mean nothing if the original note is lost?

Why do so many believe that if he gets out of paying his
mortgage he is some kind of hero vs. the thug that knocks
over the 7-11?

Here we go again…..please answer the following questions:

1. Is it a requirement that people in the United States purchase a home?

2. If one decides to purchase a home, would it not make sense to read the documents in detail (especially the documents that are notarized and recorded) to ensure that they understand the type of loan they were applying for?

3. Why do you think banks specifically require a buyer sign documents in front of a notary and then record the signed note and deed of trust (or mortgage contract)?

4. There are basically 3 types of loans:
a) a fixed rate note…..the payments are fixed for the
determined period of the note (30/20/10 yrs.) SIMPLE.

b) a “hybrid” adjustable loan that has a fixed payment
for a specified time period (i.e. 2,5,7, or 10 years’)
These loans will then adjust to a SPECIFIC Index with
SPECIFIC margin (spread) over the index, and then
adjust periodically thereafter (i.e. every 6 mo/12mo)
These loans also have a LIFETIME CAP which is
SPECIFIED in the note. These loans may have an inter-
est-only option as well, whereby the buyer pays NO
PRINCIPAL until the loan resets. A LITTLE MORE COMPLI-
CATED.

c) The Option ARM Adjustable Mortgage that has a fixed
PAYMENT (NOT A FIXED INTEREST RATE) that adjusts on
a monthly basis. The underlying rate changes monthly
based on a SPECIFIC INDEX, and a SET MARGIN. Each
year the buyer’s MINIMUM PAYMENT generally will in-
crease by 7.5%. The underlying ACTUAL payment still
adjusts monthly, and there is also a SPECIFIED Life-
time CAP on the note. If the buyer consistently pays
the MINIMUM payment, there will be deferred interest
that is added on to the principal at the end of the
year. These loans also have a maximum amount of
deferred interest that is allowed over the initial
loan amount (usually loan can not go above 10% its
original balance). MORE COMPLICATED.

Now that we know what the 3 types of loans are, why in the world would someone not get a 2nd, 3rd or even 4th outside opinion prior to accepting terms on the largest financial decision they will make in their life?

5. Why wasn’t anyone complaining about the terms of their loans a couple of years’ ago when property values were booming?

If someone can answer these questions with a coherent concise answer, I would like to hear it??? Maybe, I am one of the only people in this society that believe in personal responsibility. Sure, there are times when people lose their jobs, and there are other extenuating circumstances, however those instances are generally rare.

Let’s look at the REAL issue. Just because someone is trying to “sell” you something, does not mean you have to “buy” it. That is why we have a free society (for now). It rewards people for making intelligent financial decisions, and it punishes people for making unwise decisions. (take a look at the number of foreclosures, bank failures/stock declines, investment blow ups to see who made POOR BUSINESS DECISIONS). As far as the first line of defense in ANY business decision…..LOOK IN THE MIRROR!!!!!

Tippaporn you posted on Jun 18th, 2008 at 10:15 pm

you stated it so eloquently – the exact problem some of us are facing… now for those people who keep stating it is only the borrowers responsibility and they should have gotten a 2nd opinion theory…. there were contracts with deadlines, $deposits in escros to lose and that 2nd or 3rd opinion might have been as corrupt if not more than the first person you trusted with their expertise & professionalism to guide you through this process.

I for one remember getting hundreds of pages at closing and could barely understand some of the ‘lingo’ when asked I trusted what the title person & broker where saying – ( i mean shouldn’t they know, they do this for a living as their profession)-

to: JRB you posted on Jun 19th, 2008 at 5:20 pm
the analogy you used was perfect !
Some borrowers I will accept were just as corrupt (but some of those borrowers were realtors, brokers, appraisers, a/e’s purchasing 2nd homes etc to flip)

for the rest of the borrowers that are truly going through hardship and were mislead, and did experience predatory lending – you are not alone ! we need to fight for what is right.

Pist-

You keep falling back on the tired old excuse of “the paperwork was overwhelming”, “they pushed me to sign it”, “if I had a 2nd or 3rd opinion, they would be corrupt”…..give me a break. You made a poor business decision and bought over your head. It is really that simple, and the sooner you take personal responsibility for your decision making, the better off you will be. In your case, it sounds like you should have consulted at least 3 trusted friends/associates before you made this decision. I hope you have learned a valuable lesson, and won’t let this happen to you again. IF YOU CAN NOT AFFORD IT, OR ARE NOT SURE YOU CAN AFFORD IT, DON’T BUY IT!!!!!!!!!!