Thursday, 14 October 2010

Fraudclosuregate Goes Nuclear.

Baltic Dry Index. 2748 +29
LIR Gold Target by 2019: $3,000.

“Every homeowner that’s in foreclosure now should be questioning,” said Matthew Weidner, an attorney in St. Petersburg who defends homeowners in foreclosure cases. “Every homeowner that’s already been foreclosed and lost their home should be questioning. Anybody who’s behind in their mortgage should be questioning. This entire system is now a great big question mark.”

Today, back to America’s Black Swan. Now all 50 states are discovering fraudulent foreclosures. Even the President’s settlement and discharge of his home mortgages seem to have been fraudulently attested and notarized. You really couldn’t make this sort of thing up. From shining “City on the hill” to cesspit of Latin American style criminality in the 15 years MERS has operated. Now some 60 million residential real estate titles are clouded to say the least. If you own a holiday home in Florida, it may be under new ownership by the time you next get to visit. Locks changed, with a new owner claiming to hold valid title. No matter it was paid for free and clear. It totally destroys any remaining faith that CDOs, CDOs cubed, will ever trade as triple-A again. Maybe never trade again more like.

Today read on and prepare for the next Lehman to surface as industry whistleblowers try to make a deal for exposing some of the fraud. A new US growth industry is being born as we watch. Switching sides for a piece of the recovery, in let’s make a deal. Read on, and expect the unexpected.

“Now one fine day two swindlers, calling themselves weavers, arrived. They declared that they could make the most magnificent cloth that one could imagine; cloth of most beautiful colours and elaborate patterns. Not only was the material so beautiful, but the clothes made from it had the special power of being invisible to everyone who was stupid or not fit. for his post.”

Florida’s 30-Second Foreclosure Dash Hits Wall of Fraud Claims

Oct. 13 (Bloomberg) -- Home to more foreclosures than 47 U.S. states, Florida sought to clear out its backlog with a system of special court hearings that dispensed with cases quickly, sometimes in less than a minute.

Homeowners like Nicole West now threaten to slow that system, Florida’s so-called rocket docket, to a crawl. West, who has been fighting to save her Jensen Beach house from foreclosure, has leveled a new allegation in her three-year battle: the entire process is based on fraud.

West said her case is rife with the kind of flawed mortgage documents that have caused lenders including Bank of America Corp. and JPMorgan Chase & Co. to stop the process of foreclosures and evictions across the country. The banks said they are investigating homeowner charges like West’s that signatures were forged and documents were backdated.

----The bank moratoriums are already thwarting the initiative by Florida officials to clear jammed court dockets. Now, efforts by homeowners such as West to bring claims of fraud to the attention of judges are further prolonging evictions, and in turn slowing purchases of foreclosed properties.

Third-Highest Rate

Florida has the third-highest foreclosure rate in the U.S. behind Nevada and Arizona. One in every 34 housing units -- double the U.S. average -- was in the foreclosure process or bank-owned as of Sept. 1, data vendor RealtyTrac Inc. said.

-----At the Clearwater court, lenders as of yesterday had canceled more than half of the 84 hearings to approve foreclosures that were scheduled for today, according to Ron Stuart, a court spokesman. Half of the 110 hearings originally set to take place tomorrow were canceled as well.

Among the alleged defects the banks are examining are lender affidavits signed by people, often described as “robo signers,” who repeatedly failed to verify the accuracy of the information in the documents.

In December, an employee at Ally’s GMAC Mortgage unit said his team of 13 people signed about 10,000 documents a month without verifying their accuracy, according to a deposition taken in a foreclosure case filed in West Palm Beach.

­­­­-----Florida state Judge Janette Dunnigan in Bradenton fined a Fort Lauderdale law firm, Smith, Hiatt & Diaz PA, $49,000 and ruled it was in contempt of court after finding it was repeatedly unprepared or failed to show up for foreclosure hearings in her court.

The law firm operates “in utter disregard for the consequences to other litigants,” the judge said in a Sept. 2 order. “Their disobedience of court orders is constant and flagrant.”

Roy Diaz, a partner at the law firm, didn’t return a call seeking comment.

Under Investigation

Also under investigation by McCollum is Lender Processing Services Inc. The Jacksonville-based company has produced documents known as mortgage assignments with signatures of the same person that vary “wildly” from document to document, according to the attorney general. The documents are necessary for banks and mortgage servicers to show they have the legal right, or “standing,” to pursue foreclosure lawsuits. McCollum is investigating whether the documents have been forged.

So the Emperor gave the swindlers large sums of money and the two weavers set up their looms in the palace. They demanded the finest thread of the best silk and the finest gold and they pretended to work at their looms. But they put nothing on the looms. The frames stood empty. The silk and gold thread they stuffed into their bags. So they sat pretending to weave, and continued to work at the empty loom till late into the night. Night after night they went home with their money and their bags full of the finest silk and gold thread. Day after day they pretended to work.

OCTOBER 13, 2010

Probe Targets Foreclosure Paperwork

Tens of Thousands of Proceedings Are Suspected of Being Tainted; Return of the 'Robo Signers'

From Suite 350 at a suburban Atlanta office to a bevy of law firms in Florida, thousands of documents were signed, and many sworn to, in order to ensure that foreclosure proceedings were sound.

Now, that work—at a mortgage-processing company called Lender Processing Services Inc. and four foreclosure law firms that processed documents on behalf of lenders such as GMAC Mortgage and Citigroup Inc.—is at the center of an investigation in Florida. Lender Processing and the four law firms are being investigated by the Florida attorney general. At issue is whether improper paperwork taints tens of thousands of foreclosures.

In recent days, some lenders named in the foreclosure inquiries have said they would no longer use the services of some of these law firms for new foreclosures. Ally Financial Inc.'s GMAC Mortgage has pulled business and dispatched executives and a new team of lawyers to Florida to ensure foreclosure cases are being handled correctly, according to a person familiar with the situation.

Florida, hard hit by the housing crisis, is emerging as a central hub of the mortgage-related problems. The AG's investigation casts a light on the legal ecosystem that worked on behalf of big lenders and mortgage servicers representing mortgage-bond investors

The law firms and a Lender Processing unit, Docx LLC, which did work at a suburban Atlanta office, handled the nitty-gritty paperwork necessary to verify key document batches, including ownership transfer of a loan, known as an assignment, and the amount owed by a borrower losing his home.

That paperwork processing at the law firms and lenders allegedly didn't review all information needed, such as who owned the loan or borrower financial information, the Florida attorney general claims.

The Florida attorney general's office is looking at possible use of "fabricated documents" used in foreclosure actions in court, according to the attorney general.

----A Lender Processing spokeswoman said the company took "remedial actions" to correct improper signatures on assignments of mortgages. She added that Docx relied on information provided by mortgage servicers or their legal counsel to complete templates used in the assignment of mortgage process. "Docx employees made every effort to ensure the substance of the document accurately reflected what was provided," she said.

Spokesmen for the Marshall C. Watson law office and the Florida Default Law Group didn't return requests for comment.

In a statement, Gerald Richman, an attorney for Shapiro & Fishman, said, "This is a sad example of the Attorney General's office's continual fishing expedition that wastes taxpayers' money. Nevertheless, we still maintain our willingness as we have from the beginning of the improper investigation to voluntarily cooperate with the AG's office."

-----On Tuesday, Citigroup Inc., which had used Mr. Stern's firm, said that federal mortgage giants Fannie Mae and Freddie Mac had approved the use of his services: "Pending the outcome of the AG's investigation, Citi is not referring new matters to this firm."

A Citi spokesman said it continues to refer new matters to two of the mortgage agency-approved firms in Florida—Marshall C. Watson and Shapiro & Fishman—and that the bank will continue to monitor any developments concerning their performance.

Mr. Stern's firm had been on Freddie Mac's and Fannie Mae's list of designated counsel. Spokespersons for both said Freddie Mac and Fannie Mae had instructed their mortgage-servicers to suspend foreclosure referrals to Mr. Stern's firm.

GMAC won't grant new business to Mr. Stern's firm as well as the other firms Mr. McCollum is investigating, according to a person familiar with the matter. Jeffrey Tew, a lawyer for Mr. Stern's law firm, declined comment about Mr. Stern's clients.

Securitization Flaws May Lead Investors to Fight Mortgage Deals

Oct. 13 (Bloomberg) -- Potential paperwork errors on as much as $1.34 trillion of securitized home mortgages may give investors an opening to back out of deals, threatening to unnerve financial markets, according to Joshua Rosner, managing director at Graham Fisher & Co.

Some loans to borrowers with poor credit before 2007 may not have been transferred to mortgage trusts in the manner required by their pooling and servicing agreements. That raises questions about the ownership of the loans and may allow investors to force lenders to buy back the securities, Rosner wrote yesterday in a note to clients.

The failure to include MBS trust names on documents and to properly assign loans to the trust may encourage MBS holders to challenge the entire securitization, rather than press lenders to take back individual loans that were fraudulently issued, according to Rosner, whose firm advises investors and regulators. That could set off legal fights over almost all subprime MBS sold to investors.

“If plaintiffs bring suit it could rock the market,” Rosner, 44, said in a telephone interview. “If courts allowed those suits to proceed it would well feel much like 2008,” when the bankruptcy of Lehman Brothers Holdings Inc. led to the biggest market collapse since the Great Depression, he said.

Wall Street firms stopped selling almost all so-called private-label mortgage-backed securities in 2007 after defaults began to surge on loans to borrowers with poor credit. MBS values plunged as foreclosures climbed. More than 90 percent of mortgages are now issued by government sponsored enterprises, such as Fannie Mae and Freddie Mac, or are insured by the federal government.

“We believe nearly every single loan transferred was transferred to the trust in ‘blank’ name,” Rosner wrote in the note. “That is to say the actual loans were apparently not, as of either the cut-off or closing dates, assigned to the trust” as required by the securitization agreements.

An unraveling of mortgage-backed securities could cripple a housing market already struggling with a freeze in foreclosures prompted by legal challenges to the documents mortgage servicers used to seize homes of delinquent borrowers, said Jeffrey Gundlach, chief executive officer of DoubleLine Capital LP in Los Angeles.

“If people say that you cannot prove that you own the loan, it could be really cumbersome to untangle,” said Gundlach, whose firm manages $5.5 billion in investments, mostly mortgage-backed securities. “It has the potential to spiral into much, much more. There have been many twists and turns to the foreclosure process since the credit crisis started and this is one more turn of the wheel, and it can spin out of control.”

Banks Pressed by Attorneys General to Halt, Fix Foreclosures

Oct. 13 (Bloomberg) -- Florida’s attorney general asked U.S. lenders to come up with a solution to the foreclosure crisis, just as state officials around the country are set to open an investigation into their practices.

Florida Attorney General Bill McCollum asked five lenders and mortgage servicing companies yesterday to meet with him to “discuss ways to promptly and effectively redeem the integrity of the foreclosure process,” according to a letter sent to the companies.

“The first and foremost thing is to do it right, but we can’t sit and do this for weeks and weeks,” McCollum said in an interview. “It’d be very deadly for Florida’s economy.”

The move by the top prosecutor in Florida comes as a coalition of about 40 state attorneys general, led by Iowa’s Tom Miller, is planning to announce a multi-state investigation today. Authorities in at least 10 states have begun investigations into foreclosure practices at some of the nation’s largest lenders.

These states will be part of the coalition, attorneys general or their representatives confirmed: California, Ohio, New Mexico, Texas, Florida, Iowa, Illinois, Michigan, Louisiana, South Dakota, West Virginia and Minnesota.

New York Attorney General Andrew Cuomo yesterday called for lenders to halt foreclosures in his state amid allegations of fraudulent documents used in the cases, according to a statement from his office. California Attorney General Jerry Brown demanded a freeze on Oct. 8.

“All lenders should halt foreclosures until they clear up this mess and ensure that the process is fair and complies with California law,” Brown said in a statement.

----Wells Fargo isn’t planning to suspend foreclosures, Jason Menke, a spokesman for the San Francisco-based company, said in a telephone interview.

“A number of officials have contacted us about our foreclosure process and we will be sharing our views with them,” Menke said. “We remain confident in the controls and procedures we have.”

Gina Proia, a spokeswoman for Detroit-based Ally Financial, declined to comment about the actions by the attorneys general. GMAC said in a statement that it has hired law and accounting firms to conduct independent reviews of its foreclosure proceedings.

So the faithful old minister went into the hall where the two weavers sat beside the empty looms pretending to work with all their might.

The Emperor's minister opened his eyes wide. "Upon my life!" he thought. "I see nothing at all, nothing." But he did not say so.

The two swindlers begged him to come nearer and asked him how he liked it. "Are not the colors exquisite, and see how intricate are the patterns," they said. The poor old minister stared and stared. Still he could see nothing, for there was nothing. But he did not dare to say he saw nothing. "Nobody must find out,"' thought he. "I must never confess that I could not see the stuff."

Fear, Desperation and Doom Describe the Housing Market

13 October 2010 By Greg Hunter’s

It has been called foreclosure gate, robo signing, foreclosure fraud or just sloppy paperwork; but no matter what you call it, it’s signaling a new financial meltdown for the U.S. economy.  The securitized mortgage debt created in the real estate bubble is being called the “largest fraud in the history of capital markets” by people like renowned gold expert Jim Sinclair.  The big banks packaged mortgages into securities (mortgage backed security) and then sold them to pension funds and investors.  The mortgages in these securities had to meet what is called “contractual representation and warranties.”   That basically means the bank had to legally be able to prove it owned the property it was selling in the security.  Once more, the mortgage applications and appraisals were required to be free of fraud.  The “robo signing” is all about creating paperwork that proves the banks owned the property in the “security” and the mortgage was done correctly.  In millions of mortgages, the banks either can’t find or do not want to produce the original paperwork with the borrowers signature  (promissory note).   Now, investors want to force the banks to buy back trillions in mortgage backed securities that have lost value.   In a recent interview on MSNBC, Congressman Brad Miller said, “. . . in almost every contract if they (the MBS’s) weren’t what they were contractually required to be, the bank had to buy them back.  That’s probably more than they could buy back and we may be back where we were two years ago.”

------The White House is also against a moratorium on home foreclosures because it is afraid of “unintended consequences” for the residential real estate market.  This comes out after the White House said it would not sign a bill (HR 3808) that some say would make it harder for homeowners to fight foreclosure.  I wrote about this in a post last week called “Did Congress try to Legalize Foreclosure Fraud?”  Now, some are calling into question whether the President will truly Veto the bill.  If the President does nothing (which is the essence of what is called a “Pocket Veto”), it might become law anyway.  (Click here to read more on this story.)

According to independent analyst Reggie Middleton of, the housing market and economy are headed for another crash.  In a recent post, Middleton says, “The robo-signing mess is just the tip of the iceberg, mortgage putbacks will be the harbinger of the collapse of big banks that will dwarf 2008!”   Middleton goes on to say, “This is what is truly at stake – the United Statesis now at risk of losing its hegemony of the financial capital of the world! Why? Because when we had the chance to put the injured banks to sleep and redirect resources into new productivity, we instead allowed politics to shovel tax payer capital into zombie institutions as they turned around and paid it right back out as bonuses. As a result, significant capital has been destroyed, the original problem has metastized, and the banks are still in zombie status but with share prices that are multiples of the actual values of the entities that they allegedly represent – a perfect storm for a market crash that will make 2008 look like a bull rally!”  (Click here to read the entire Middleton post.  It is a good one!)

The latest housing scandal has been with us for awhile.  The bailouts of the 2008 meltdown just papered over the near financial collapse with printed money from the Federal Reserve.  This did not address the real problem with the banks, which is enormous debt and leverage. The government just painted over rust, and it’s starting to show through again—only this time, even worse.

Soon after this the Emperor sent another official to see how the men were ,getting on and to ask whether the cloth would soon be ready. Exactly the same happened with him as with the minister. He stood and stared, but as there was nothing to be seen, he could see nothing.

"Is not the material beautiful?" said the swindlers, and again they talked of 'the patterns and the exquisite colors. "Stupid I certainly am not," thought the official. "Then I must be unfit for my post. But nobody shall know that I could not see the material." Then he praised the material he did not see and declared that he was delighted with the colors and the marvelous patterns.

At the Comex silver depositories Wednesday, final figures were: Registered 52.20 Moz, Eligible 60.49 Moz, Total 112.69 Moz.


Crooks and Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

Today two people who took on the crooked banksters and criminal lawyers they hired to cover up their crimes and won. Now the whole world is aware how US real estate laws were routinely ignored or trashed in the greed to securitise US mortgages and peddle them to unsuspecting marks worldwide. In the process, generating massive profits for the banksters who rushed them out of the now doomed banks as bankster bonuses. Some of the giant vampire squids even set up some of the RMBS to deliberately fail. Profiting like Ebenezer Squid by betting on the failure of the very security just sold to the stupid dupe! Along the way, the banksters and squids bought off the US politicians via massive campaign contributions and soft mortgages.

Below, McClatchy Newspapers on the two who did what US courts were paid to do but didn’t.

They advised the Emperor to have some new clothes made from this splendid material to wear in the great procession the following day.

"Magnificent." "Excellent." "Exquisite," went from mouth to mouth and everyone was pleased. Each of the swindlers was given a decoration to wear in his button-hole and the title of "Knight of the Loom".

The rascals sat up all that night and worked, burning more than sixteen candles, so that everyone could see how busy they were making the suit of clothes ready for the procession. Each of them had a great big pair of scissors and they cut in the air, pretending to cut the cloth with them, and sewed with needles without any thread.

How 2 civilian sleuths brought foreclosure problems to light
By Tony Pugh | McClatchy Newspapers

PALM BEACH, Fla. — More than a year before lenders, law firms and document companies began owning up to widespread paperwork problems with their foreclosure filings, Lisa Epstein and Michael Redman already knew that something was wrong — very wrong.

Redman, a former online automobile consultant, got his first taste of the problem in early 2008, when he tried to help a relative who was facing foreclosure.

As he tried to determine which of three or four supposed lenders held the note, Redman, 35, realized that not only did he not know the answer, neither did any of the companies that were asking for payment.

Epstein, a nurse who cares for cancer patients, also is going through foreclosure. She got her baptism in the world of shoddy foreclosure paperwork in the summer of 2009, however, when she tried to help a brain tumor patient keep her home.

Epstein helped draft a letter challenging the foreclosure because, as in Redman's case, it was unclear from court papers who owned the home's mortgage.

After arriving at the summary judgment hearing in her nurse's uniform, an emotional Epstein, 45, watched as the ill woman read their letter aloud in court. When the opposing attorneys never showed, the judge refused to finalize the foreclosure. The woman remains in her home as the legal wrangling continues.

---- Within a year, she and Redman — who didn't know each other at the time — would leave their respective jobs to pursue their passion for helping others and exposing injustice in the foreclosure industry.

After meeting late last year at a foreclosure fraud seminar, they teamed up to become two of the nation's most influential civilian beat cops for the beleaguered foreclosure industry.

Equal parts agitators, activists and advocates, Redman and Epstein have made their presence felt in Florida and nationally through their respective websites, and

Under a sun-drenched sky last week, Redman proudly perused his Web log to see recent visits from the Internal Revenue Service, the Homeland Security Department, the Justice Department, Fannie Mae, the Housing and Urban Development Department and the CIA, among others. Someone from the executive office of the president took a recent look, too, he said.

Major banks also are peeping at Redman's frequent postings and snarky analysis of embarrassing documents that appear to show foreclosure industry fraud.

---- In Florida, where one of every 56 homes was in foreclosure proceedings in the third quarter of this year, Redman and Epstein have shone a light on efforts to ram cases through courts without much fact-checking.

----- In Florida, where one of every 56 homes was in foreclosure proceedings in the third quarter of this year, Redman and Epstein have shone a light on efforts to ram cases through courts without much fact-checking.
Read more:

But among the crowds a little child suddenly gasped out, "But he hasn't got anything on." And the people began to whisper to one another what the child had said. "He hasn't got anything on." "There's a little child saying he hasn't got anything on." Till everyone was saying, "But he hasn't got anything on." The Emperor himself had the uncomfortable feeling that what they were whispering was only too true. "But I will have to go through with the procession," he said to himself.

So he drew himself up and walked boldly on holding his head higher than before, and the courtiers held on to the train that wasn't there at all.

The Emperor's New Clothes. Hans Christian Andersen.

The monthly Coppock Indicators finished September:

DJIA: +227 Down. NASDAQ: +321 Down. SP500: +221 Down.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. September is the fourth down month in a row.

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