Beware: The Machiavellian Mortgage Scam Continues

In 2008, U.S. foreclosure filings shot up by 81% nationwide, and since the financial crisis began in September 2008, there have been almost 5 million completed foreclosures across the country, with millions more expected over the next few years. It's easy to conclude that this disaster was merely a result of incompetence but when you add up all of the facts, it becomes clear this calamity was the result of something much more Machiavellian (“Machiavellism” justifies power politics without ethical standards) at work. Moreover these Machiavellian powers are doing everything in their power to continue the biggest financial swindle in history.  And if you think you're in the clear just because you haven't been foreclosed upon, think again.

By design, it's very confusing, so the following is my attempt to clarify matters  for myself as well as for anyone else who might be interested. 

Firstly, we were set up.  Since the early to mid 1990s, in particular, Americans were strongly encouraged to buy their own home...whatever it takes, get yourself a home. Policies and programs (guarantees, tax breaks, etc.) were created to encourage home ownership, to finance the "American Dream".  And it worked.  The government pushed home ownership past 69% in 2004.  Not to mention, the banks opened up the floodgates and made credit available to anyone, regardless of   income. In fact, between 2003-2008, income wasn't even required!   NINJA (No Income No Job No Asset) loans and LIAR loans-loans structured to fail--predominated.

Meanwhile, Wall Street was ready to cash in on the financial ignorance of We, the Suckers. Thanks to the creation of MERS ( Mortgage Electronic Registration Systems, Inc. a subsidiary of MERSCORP, Inc.), in 1995, and the securitization instruments like SPVs (Special Purpose Vehicle) or SIV (Special Investment Vehicle) they were all set up to track the transfers electronically on Wall Street, obfuscating the chain of title, as our promissory notes, split off from the deed, were securatized-- sliced and diced and sold and resold 30 times over--without our permission.  Hello robo-signing!  Of course, nothing was recorded in the land records, and the counties were not paid their fees.  In other words, the chain of title goes one way and the chain of custody, (the movement and location of physical evidence from the time it is obtained until the time it is presented in court) the other.

Most of us presume the chain of title on our property is clean and in order, however,  you may be shocked to find out otherwise, especially if you brought your home after 1997.  The financial swindlers who created the mortgage loan securitization scam made sure of it. Even if you are current--paying your mortgage on time every month--if you settled anytime over the last two decades, there is a very good chance you have a cloud on your title to the note. 

What is a clouded title? It's an apparent claim or encumbrance, such as a lien, that, if true, impairs the right of the owner to transfer his or her property free and clear of the interests of any other party. In other words, a breach in your chain of title that might jeopardize the conveyance of that title. Obviously this could very well reduce  the value and marketability of your property.

How can you tell?  Well,  it's highly recommended you either do, or get a  COTA (Chain of Title Assessment), a forensic loan audit to to determine if it was properly executed, especially to uncover any of the various misapplications of borrower's payments that generate revenue for the servicer, and/or a securitization audit which is directed at the REMIC process of sponsoring and registering the trust and its issuance of securities (Watch out for scams!). Keep in mind, the information gathered during these audits are just that, information, until it's submitted as evidence and the judge decides that the information is accurate and clearly demonstrates error or wrongdoing on the part of the other party, not to mention the judge's acceptance of the person who conducted the audit as credible.

But before you begin this arduous task, get out your deed of trust and look for a MIN # (MERS Identification Number).  It should be  right next to your document title.  If you see this number, it's almost certain your title has been compromised, as over 70 million homes are affected.  The bottom line is that the homeowner is not obliged to pay the WRONG lender!

Remember, MERS is a shell entity, a bankruptcy remote entity that is basically a computer. It has no employees, no assets, no liabilities, no income, and no expenses. It’s an electronic database managed by MERS Corp Holding, INC It is the brainchild of the Mortgage Bankers Association – Fannie Mae, Freddie Mac, land title association and all the major banks, yet it.has essentially destroyed 400 years of recorded property rights in the U.S. And, as admitted in testimony, most of the original notes were destroyed after the scanning, which, according to Carpenter v. Longan - 83 U.S. 271 (1872), the uncoupling of the deed and the note renders the note null and void. Hence, without the original promissory note, any copies used as evidence in court are sure to be counterfeit. So how are the banks getting around this issue? Well, so far, the ignorance of the public, and the supposed ignorance of the attorneys and judges seems to be working out quite well for them.  Nevertheless,  now that people are waking up to their scheme, the banks are doing their utmost to create pro-bankster legislation and there are already plans to legalize these  counterfeit notes, which they will call eNotes and eMortgages.

Let's take the state of Florida as an example. Currently, there is a backlog of 366,250 foreclosure cases just sitting there waiting to be processed, not to mention, they expect another 680,000 foreclosures within the next three years. What are they waiting for? More than likely, Florida's fast-track foreclosure bill,  H.B. 87 to go through.

H.B. 87 is very likely to become law by mid-June unless Governor Rick Scott decides to exercise his veto power, which seems unlikely at this point. This is a gift to the banks and to make matters even worse, they’re using the foreclosure settlement money to run it through. If this bill becomes law, it essentially gives banks that wrongfully foreclose on your property a go pass. They get to keep the house and the homeowner can’t come back and claim they’ve been wronged.

“Significantly, the new legislation will shift the burden of proof in mortgage foreclosure cases from the plaintiff (bank), to the defendant (homeowner). Thus, if H.B. 87 is ratified, the homeowner will now have to prove that the bank lacks the legal right to foreclose at the very onset of the proceedings. This shift will significantly restrict the homeowner’s ability to defend the case as banks will now be able to seek what is being termed an “expedited foreclosure.”

A title agent addressing the subcommittee on this fast-track foreclosure bill warned them not to buy a foreclosed property because it's almost impossible to tell which titles are infected with fraud. Of course, it's not just Florida; it's nationwide.  According to HUD and Fannie and Freddie, the majority of foreclosure inventory that they'll try to sell to unsuspecting people is concentrated in California, Florida, Georgia, Illinois, Minnesota, Missouri, Michigan, Ohio, Texas. They've even admitted to relying on companies like Fidelity National Financial which has a huge myriad of title companies to whitewash the titles to these properties. In other words, when you buy one of these properties, you're indemnifying them from suit.

Pro Bankster Legislation:

H.R. 992 - This bill exempts broad swathes of trades from new regulation and could authorize bailouts for credit default swaps

H.B. 87 - see above

Washington State Bill SHB 1435 covers up the felonious business practices by covering up reconveyance issues in allowing banks to foreclose without providing official promissary note. All they will have to present is a Declaration of Ownership. These properties are being reconveyed regularly by the large lending institutions with only a “Lost Note Affidavit” and an indemnity agreement between the parties.

“Escrow and title are not bringing the original note to the table. We need a bill that mandates producing the original note, not a copy or an affidavit, before a reconveyance can occur. A homeowner does not know if they are paying off the right bank since the loan is securitized and serviced. This bill will create more red tape for the borrower and cause fraudulent defaults and foreclosure. This is not addressing the real problem, but rather it is
covering it up.“

What about government's role? 

Now,  banks are only part of the equation.  Without the protection of government, in particular, the justice department, this treasonous deception would've failed before it started. To be sure, from the get go, our oh-so-trustworthy politicians and the banksters marched in lockstep. 

From the government encouragement of home ownership to the repeal of Glass-Steagall  to deregulation  to the resignation of Criminal Division Chief, Lanny Breuer  after a Frontline documentary aired, exposing his role--and Eric Holder's role-- in allowing the banksters to bury their crimes to Breuer's return to Covington and Burling, one of Washington's biggest white shoe law firms to represent MERS in court, to the persecution, silencing and yes, even death of whistleblowers, such as Dr. Joseph H. Zernik, Ph.D. and now deceased notary, Tracy Lawrence, Lynn Szymoniak, Kyle Lagow, amongst many others, the banks and government ensure its progression.

It’s important to emphasize that the whistleblowers whose actions were False Claims Act cases involving fraud against the federal government have legal protection whereas if your whistleblowing case does NOT fall within the narrow confines of this law, you have NO legal protections and it is practically impossible to get media attention and/or legal representation even if you have money to pay attorneys.

“I believe that the level of corruption in Los Angeles increased, but also diversified. The collapse of the housing market is a huge court corruption scandal, where the judges and the bankers are acting as a racket.

And Los Angeles was identified already in the early 2000s in FBI reports as ‘the epicenter of the epidemic of real estate and mortgage fraud.’ In my reports I documented that at least as early as 1998 they had a routine for real estate fraud in the court in collusion with a straw purchaser.

The fraud being perpetrated on the people of the United States in recent years through the financial crisis is unprecedented in human history, and it results in dispossession of the people on a scale typically seen only in war.” --  Dr. Joseph H. Zernik, in hiding since 2010

Links:

Landmark National Bank v. Kesler

How Bad Can It Be for SEC Whistle-Blowers?

What is a REMIC (Real Estate Mortgage Investment Conduit)? They are a form of IRS tax shelter sold to investors as part of the mortgage-backed securities package (Real Estate Mortgage Investment Conduit (“REMIC”) pursuant to I.R.C. §§860A-G). The documents that killed the REMICs may actually help save your home.



MERS – TOO MANY DEAD DUCKS

“Actually, the banks patented nearly every single move they made – even the behavioral aspects of dealing with the customers, judges, politicians, etc. as if to legitimize their scheme...The patent extensively outlines the legal requirements for the magical change of the negotiable promissory note into securities instruments chopped up into pieces for distribution to numerous investors who were to become the “Certificate-holders” of securitized REMIC trusts."

Clouded Titles (Who really owns your home?)


Banks’ Lobbyists Help in Drafting Financial Bills

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Bank Forecloses on Elderly Woman Over $49 She Already Paid

An elderly Texas woman, Aron Ezilla Ridge, 75, is being thrown out the home she's lived in for 47 years--the home that she raised six children--over $49 in property taxes, taxes that she paid early. Ms. Ridge is confined to a wheelchair, and is for the most part, housebound as she is partly blind, has diabetes, congestive heart failure and had surgery for colon cancer several years ago.

Ridge paid off the mortgage for her 900-square-foot home about 20 years ago. In 2007, her home needed major roof, kitchen and bathroom repairs, so she signed a reverse mortgage with James B. Nutter & Co. which provided her with $39,000 for the repairs. In 2011, she received a property tax bill for $20.31, which she said she paid in full and on time. In April 2012, the assessor's office informed her that her home was valued at $60,743 and that her taxes were estimated at $46.87. Ridge says she did not receive a tax bill, but later received a receipt stating that $49 in taxes were paid in late 2012.

Here's the thing. Ridge says she was told by the Travis County Tax Assessor's office in 2000 that she did not need to pay property taxes because the value of her home was below homestead and senior exemption caps, so she assumed that the receipt meant she was exempt from property taxes.

Fast forward to January 2013, and Nutter's attorneys told Ridge her reverse mortgage had been accelerated (see acceleration clause), and that she had to pay off the entire loan "or the lender would exercise its right to enforce the lien on her home. Ms. Ridge does not remember receiving this letter," the complaint states.

Her home was foreclosed on on Jan. 30, and she received notice on Feb. 6.

According to the complaint:

"The application [for foreclosure] stated that Ms. Ridge was in default 'for failure to pay property taxes.' The only property to which the application could possibly refer were the taxes for 2012 - which were not due until January 31, 2013. Yet defendant intended to enforce its right to foreclose on Ms. Ridge's home because she had not paid $49.00, which at the time the application was filed, was not due yet."

After Ridge was served, she tried to pay the taxes again at the assessor's office. They told her they could not accept payment because the taxes had been paid by the defendant before they were due. In other words, the taxes were already paid!

Ridge lives on $641 in monthly disability payments, therefore, is unable to pay the accelerated reverse mortgage. She has no other source of income. Meanwhile, Nutter is demanding more than $66,700, plus attorneys' fees - double the amount she was paid in 2007 and more than the appraised value of her home in 2012.

Links:

Reverse Mortgage Foreclosures On The Rise, Seniors Targeted For Scams

A Risky Lifeline for the Elderly Is Costing Some Their Homes

5 Reverse Mortgage Scams

Banks hit new low – Wells Fargo evicts homeowner undergoing cancer treatment

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Elderly African Americans/Hispanics Hit Hardest by Foreclosure Crisis.

Home "ownership" does not equal security later in life anymore, as older minorities - especially for those over 80-years old - are facing foreclosure rates that are almost double those faced by white borrowers of the same age, mirroring a nationwide trend seen in other age groups as well.

According to AARP:

• About 600,000 people who are 50 years or older are in foreclosure.
• About 625,000 in the same age group are at least three months behind on their mortgages.
• About 3.5 million — 16 percent of older homeowners — are underwater, meaning their home values have gone down and they now owe more than their homes are worth.

The mortgage crisis has slammed every age group—especially the oldest Americans 75-plus—and has hit Latino and African American seniors and their families the hardest, according to a study being released today by AARP.

About 1.5 million people ages 50 or older lost their homes to foreclosure from 2007 to 2011, and another 3.5 million aging boomers and seniors in the United States “are at risk of losing their homes,” says the report, “Nightmare on Main Street: Older Americans an the Mortgage Market Crisis.”

“Despite the perception that older Americans are more housing secure than younger people, millions of older Americans are carrying more mortgage debt than ever before,” the report says.

Trouble Rising Fastest for Seniors

For instance, during the five years covered by the study, seriously delinquent mortgage loans—those in the verge of foreclosure -- for people age 50 or older rose faster than delinquencies for people younger than 50. These loan payments, 90 days or more late, swelled for the 50-plus group by 456 percent from 2007-2011, compared with the also disturbing jump by 361 percent for those under 50.

AARP’s analysis included 17.4 million home loans tracked by CoreLogic, a leading data base on home equity. The report reveals that at the end of 2011, more than 600,000 home loans by people 50-plus were in foreclosure. Additionally, 625,000 older homeowners were 90 or more days delinquent—a least three mortgage payments behind, a common trigger for foreclosures.

Furthermore, the research found, by last December 3.5 million loans by older people were “underwater.” That is, they owed more than the value of their property.

The AARP analysis found that middle-income mortgage holders “have borne the brunt of the foreclosure crisis.” Although those with incomes at less than $50,000 held one-quarter of the home loans in the study — but accounted for one-third of the foreclosures.

Most Age 75-Plus Have No Savings Left

“The biggest problem we found is for the oldest of the old, those age 75 or more,” stated Debra Whitman, AARP executive vice president for policy, in a call-in press briefing on Wednesday.

She noted that two-thirds of those ages 75 or more “have no retirement savings left to make up these differences.” They can’t refinance or sell their homes, even to have enough to move into assisted living or a nursing home when they become frail.

“Older homeowners often rely on their home equity to finance their needs in retirement – things like health care, home maintenance and other unexpected needs. The fact that so many older Americans have no equity at all is troubling,” Whitman said.

Although four out of five Americans older Americans own their homes, many tapped their home equity before the recession struck for such customary needs as home repairs or rising health care costs. Once the housing bubble burst, millions of seniors depleted their retirement savings and other accounts hoping to save their home.

Even though retirement income is fixed or declining for many, says the study, their costs have escalated.

The report reveals that from 2007-2010 “average expenditures for mortgage interest and charges increased 16.3 percent; average property tax expenditures increased 4.9 percent; average expenditures for utilities increased 5.2 percent; and average health care expenditures increased 5.7 percent.”

Ironically, another factor for the added financial jeopardy confronting many seniors is longevity. “We’re seeing more and more people today over 100 and over 90,” Whitman observed. The combination of more people than ever living beyond age 75, and the dramatic economic downturn means fewer elders have even the modest resources they need to keep a roof over their heads.

Older people face more difficult challenges recovering from a foreclosure as a result of having fewer working years remaining to rebuild their financial security, Whitman said. In addition, seniors who have lost their jobs face longer periods of unemployment. When they do find a job, it is often at a lower pay level than their previous position, and offers little or no benefits.

Foreclosures Double for Older Blacks, Latinos

The report, conducted by Lori A. Trawinski of AARP’s Public Policy Institute, shows that Hispanic and black elders suffered “double the foreclosure rate” of older white borrowers. While Latinos and African Americans 50-plus with prime loans saw foreclosure rates of 3.9 percent and 3.5 percent, the level for whites was 1.9 percent in the five-year height of the crisis.

For the more troubling subprime loans, foreclosure levels were sharply higher for everyone 50-plus, the study shows, but particularly for ethnic elders. Overall, subprime mortgages accounted for 6.8 percent of home loans for 50-plus whites in 2011, who tended to have more of the standard prime loans. Blacks, though, had more than three times that percentage of subprime loans, 21.8 percent, and it was 12.9 percent for 50-plus Latino borrowers.

AARP’s report adds, “A recent settlement between the U.S. Department of Justice and Bank of America supports the allegation that lenders unfairly targeted African American and Hispanic borrowers for subprime loans.”

Stating that “the housing crisis is far from over,” the report calls for a range of policy solutions. It urges more help be provided to seniors with loan modification and reduction of principals, especially where housing prices have plunged well below the original principal used as the basis for the mortgage. The report also recommends increased mediation programs; more access to housing counseling and legal assistance programs; and development of short-term financial assistance programs.

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America's Wealth Fell Nearly 40% in Three Years!

A strong middle class has been what sets America apart from the rest of the world.  If you believe in the reality of the "American Dream", then you must believe in a strong middle-class, as this is what makes the "American Dream" possible.

However, for many, if they were not living the American Dream, came awfully close. That is, until the 2008 financial crisis, which crushed the middle class, in particular, waking an ever increasing many to an evolving nightmare.

According to the Fed's Survey of Consumer Finance : " Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances.", US median household net worth plunged 40% from 2007-2010, "wiping almost two decades of asset accumulation off the books". Specifically, from $77,300 in 2007 to $126,400 in 2010. Moreover, real  income fell as well, from $49,600 in 2007 to $45,800 in 2010, which amounts to a 7.7% decline.

Families in the top 10% of income actually saw their net worth increase over the period, rising from a median of $1.17 million in 2007 to $1.19 million in 2010.

Meanwhile, middle-class families who ranked in the 40th to 60th percentile of income earners reported that their median income fell from $92,300 to $65,900 over the same time period.”

Of course, it was, and continues to be the housing sector that contributed to the bulk of the huge loss. Wages and income in real terms have been stagnating for decades, while the purchasing power of the dollar continues to deteriorate, which also played a part in the recent massive transfer of wealth.  Prior to this time, the many were living far beyond their means.  Because prior to 2008,   your pet snake could, at the very least, obtain a credit card, and more than likely, a mortgage to boot..

The NINJA Loan - No Income No Job No Assets - has lead to the NINJA generation, who not only are drowning in student loan debt, but can't get a decent job, and it only follows that their chances of accumulating assets is slim to none..

From the US Bureau of Labor Statistics, health and home aides, who earn approximately $20,000 per year, are the fastest growing occupations in the nation. Need I say more.

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Predatory Banksters Push Man to Suicide.

Banks like Wells Fargo destroy lives every single day, and get away with it despite their cruel and unethical practices. Here is one of those stories that ended in tragedy.

Right from the start, homeowners, Norman and Oriane Rousseau provided proof to Wells Fargo, that they - the bank - had, indeed, received the Rousseau's mortgage payment and cashed their check; but had misapplied the payment. The bank lied, claiming they ordered a stop payment on the cashier's check, despite the fact that a  cashier's check payment can't be stopped.  Like a well-oiled machine, the bank continued their process of destruction. The bank "lost" their payment three times in the last eight months of the loan. The bank continued to lose every shred of Norman’s evidence: the cashier’s check receipts; certified mail from him with returned signatures from them; certified mail from his attorney; documentation that they were cashing the checks, etc.

“In May 2009 the bank claimed the couple had missed their April payment. They proved they had made a payment in person at the bank, using a cashier’s check and that the check had been cashed by the bank. The bank then claimed they had ordered a stop payment on the check, even though a cashier’s check payment cannot be stopped,” writes Johnson. “The runaround began. The bank began harassing them for payment, sometimes as many as six-eight calls per day, sometimes even late at night. On August 3, 2009 the bank claimed the Rousseaus hadn’t paid June or July’s payments either, demanding $3,406.50. But then on August 8 the bank assured them they were current on payments. Then the bank again claimed it had not been paid and that the bank had been trying to contact them without success, and that they now owed $3,478,25.”

The Rousseaus soon learned that the loan they believed they were paying was entirely different from what they received — a loan loaded with prepayment penalties, unnecessary fees, and one that had them paying less than the amount of interest on the loan, making it reset and actually add to the cost of their debt. The longer they continued to make minimum payments, the further they fell behind, and with the “lost” check they fell into a cycle they were unable to ever get out of.

Norman tried to make his voice heard. He took his case to authorities at every level: local, state, and national to no avail. Norman lost his job and used all their savings on lawyers and the legal fight. Eventually, pushed by banksters to the brink of homelessness, Norman Rousseau shot and killed himself. An evicted Oriane Rousseau, his wife, doesn’t even have the money to bury her husband.


Rousseau v. Wells Fargo

Husband’s Suicide Yesterday, Wells Fargo to Evict Wife Tomorrow Anyway

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Generation Homeless

Roughly one-third of our population, 70 million people, are directly effected by the ongoing housing crisis, whether they are current on their note, or not. Why? Because their mortgages were funneled into a system, created by the banks, called Mortgage Electronic Registration Systems Inc (MERS). In fact, of the 70 million people, 80% are not in default, yet, due to MERS, if they were to investigate their chain of title, the "owners" would more than likely find their title, clouded. In other words, uncertain of who really owns the debt.

What is this elaborate shell game that is MERS? Well, it was set up in the early 1990s to circumvent the land records in order to securitize mortgage loans on Wall Street; therefore, speeding up the process, without paying the recording fee. You see, MERS splits the deed from the note, takes the note to Wall Street, pledging it multiple times over numerous and various trusts without notifying the homeowner. However, due to sloppy procedure, most of the notes never even made the trust pool, leaving homeowners, and everyone else involved uncertain of who owns the note.

Moreover, as home values continue to decline, more home-owners are steadily pushed underwater. The U.S. Census Bureau reports that 11% of houses are now empty, that’s 18.4 million! And projections show millions more in the foreclosure pipeline. This avalanche of  defaulted properties will take decades to unload, driving down the value of all homes.  Not to mention, it keeps home-builders from starting new projects, and encourages qualified buyers to wait until values hit bottom. 

Meanwhile, outstanding education debt surpassed credit-card debt last year for the first time, according to Mark Kantrowitz, publisher of FinAid.org, and Bloomberg reports that student loan debt is near $1 trillion.  This - the exponential student debt curve –that began with Ronald Reagan is now heading vertically - combined with much tighter credit standards is sure to keep potential young home-buyers out of the housing market, perhaps, forever.

Despite home prices  in free fall while, rents are skyrocketing; monthly rents surpassed a monthly mortgage payment a few years back.

“Potential first-time homebuyers have been disproportionately affected by the very tight conditions in mortgage markets. First-time homebuyers are typically an important source of incremental housing demand, so their smaller presence in the market affects house prices and construction quite broadly.” -- Federal Reserve Chairman Ben S. Bernanke said at a homebuilders conference last week.

Has a college education become a curse?  A method to enslave?  Because the government banking student loan cartel has ensured - especially with no jobs available - that this generation of college graduates will never "own" a home. 

“Despotic government supports itself by abject civilization, in which debasement of the human mind, and wretchedness in the mass of the people, are the chief criterions. Such governments consider man merely as an animal; that the exercise of intellectual faculty is not his privilege; that he has nothing to do with the laws but to obey them; and they politically depend more upon breaking the spirit of the people by poverty, than they fear enraging it by desperation.” Thomas Paine, Agrarian Justice

Related Links:

Marine makes last stand in foreclosed home

Stop Foreclosure Fraud

Read more...

Longevity Swaps: Betting on How Long You Will Live

By 2007, the derivatives market had grown globally into a $516 trillion industry,  and, at the time, Warren Buffet warned of the "ticking time bomb".

Buffet wasn't the only one who warned about derivatives. "One month after Henry Paulson left Goldman Sachs as CEO with a net worth of over $500 million to become the new Treasury secretary, he spoke to the White House staff at Camp David: “Paulson held up over-the-counter derivatives as an example of financial innovation that could, under certain circumstances, blow up in Wall Street’s face and affect the whole economy.”

So, after the explosion of complex mortgage-backed securities brought down our financial system in 2008, and the speculators have been bailed out at our expense, they have the balls to speculate on our mortality. That's right, one of Wall Street's latest innovations is longevity swaps...waging in death futures.

What are longevity swaps? Well, it's the practice of hedging people's lives.  Some refer to them as death bonds.

Essentially, they are unconventional assets (little connection to more conventional stock and bond prices). Like mortgage backed securities, longevity swaps, ideally, would consist of policies from those who have diseases such as Leukemia, diabetes, cancer, heart disease, etc., in which investors buy into those life insurance policies and are paid when individuals die. Obviously, in this case, when cures are developed, the value of the life settlement plummets.

Remember, there are no profits in finding cures.



Another type of transaction involves "mortality catastrophe bonds," in which bond buyers contribute to pots of money that insurers can tap into if large numbers of people die in a disaster.

The bonds help insurers limit their exposure. If disaster doesn't strike, the investors get their money back with a preset return, typically a premium above some benchmark interest rate.

Goldman Sachs, of course, has already entered this market. When sick or elderly Americans need cash, they can sell their life insurance policies to companies that will pay them a fraction of the value.

Wall Street pursues profits in life bundles.

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them. But some who have studied life settlements warn that insurers might have to raise premiums in the short term if they end up having to pay out more death claims than they had anticipated.

Risks in Derivatives Markets

Systemic risk is the aggregation of default risks; since default risk has been exaggerated, so has systemic risk. Finally, this debate seems to have ignored what we call "agency risk." Features of widely used incentive contracts for derivatives traders can induce them to take very risky positions, unless they are carefully monitored.

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The Super Rich Do Not Drive the Economy...They Drain the Economy. Isn't it Obvious?

A nationwide poll by the EARN Research Institute, revealed that more than half (54%) of all Americans, across all income brackets, do not  have a financial safety net. Another 43% said they would have to tap into retirement savings should they lose their income for three months or more.

A nationwide poll commissioned by the EARN Research Institute, revealed that more than half (54%) of American households across all income brackets do not feel they could meet their basic financial needs if income was disrupted for three months or more. Among low-income families (defined as those with annual household earnings of $35,000 or less), that figure rises to 64%.

“As the recession continues unabated, it has become bracingly clear that America’s families do not have the means necessary to weather long-term financial adversity”

This latest poll from the EARN Research Institute shows asset-building conditions worsening across America. A similar nationwide poll conducted by EARN in June 2010 demonstrated that a majority (51%) of American households reported having enough savings to cover basic expenses for more than three months; just six months later, that number has dropped to 46%. This underscores the significance between “income poverty” and “asset poverty,” or households having the financial reserves to get by on the federal poverty level for three months vs. living one paycheck, broken refrigerator, or medical emergency away from requiring public assistance.

On top of that, it appears we have at least three more years of high foreclosure rates, rising mortgage rates and a glut of distressed properties to look forward to, as more and more Americans struggle to provide the essentials for their families.

Chart Porn  , a very cool blog, charted foreclosures in the DC area with the following results:

Here's the thing. We are still the wealthiest nation in the world. Yet, 97% of us are either skating on very thin ice, or have already fallen through. What does that tell you about the Bush tax cuts for the wealthy? The elimination of the estate tax?   The low capital gains tax rate and all of the other incentives for the wealthy?  And, why are we even considering making this infinitesimally small % of the population, who have accumulated, and continue to accumulate so much wealth that their offspring, for generations to come, will never have to work/contribute to society...ever.

There is no way I can say it better than this:

I, for one, am so tired of hearing the poor and middle class in this country scapegoated by the uber wealthy, cutthroat, blood-sucking, cannibalistic, snake-in-suits, corporate psycho leeches that are destroying the country, and planet due to their greed and lust for power. It is not the poor and middle class who control policy, media, politicians, transportation, resources, energy, military and commerce.

Through their stranglehold on all these resources, the super rich and their puppets have managed to twist reality. The poor have little or no way to affect any real changes, while those who do mask their deeds in lies, misperceptions and smoke screens.

The wealthy religious fanatics who do the bidding for these snakes show unbridled hypocrisy. If they were true Christians they would not rest until every child had enough to eat, until all people had access to health care, until every person had a decent place to live. Did not Jesus say, "as you do unto the least you do unto me"? To throw off the shackles of the past we must create a new paradigm and recognize the worth of every being, not just the wealthy and religiously intolerant.

While we're on the subject, why are all these snakes donating their money to the elephants? Yes, I really wonder.

Links


Economy has sent executives to jobs down the corporate ladder.

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Most Comprehensive and Clear Explanation of Foreclosure Crisis Yet.

If you want the real story that is not being reported by mainstream media (because of course, they would rather blame the people losing their homes), and if you want a very clear and logical explanation of the foreclosure crisis, listen to Harry Shearer interview Yves Smith  of Naked Capitalism.  I listened to it today on  NPR's  Le Show today.

In a nutshell, Harry Shearer and Yves Smith discuss the mortgage ownership, mortgage modification and the role of incentivized MERS (Mortgage Electronic Registration System​) "servicers" in the foreclosure disaster.

Some of the notes I took because I have a short memory. I strongly urge everyone to listen for themselves.

• Mortgages or notes travel a very circuitous journey through intermediary parties on their way to the mortgage lockbox (trust), which must ring as a "true sale".  All parties must sign the note over - from a to b to c to d - to establish bankruptcy remoteness.
• The banks try to minimize this as an issue and tell us it's a matter of sloppy paperwork. Not true.
• Between 2002-2005, the banks quit doing the things they agreed to do to get the mortgages into the legal lockbox (trusts). In other words, the banking industry changed their procedures to save fees and hassle and never bothered to change their legal contracts. Unfortunately, the way the agreements were set up made it virtually impossible to go back and fix things after the fact.
• MERS has a bizarre corporate structure. It is almost a virtual company with 47-48 employees  (they outsource through EDS). In addition to the 47 MERS employees, there are approximately 20,000 signing officers authorized on its behalf, who have never received a dime from MERS, and who work full time for another company - sometimes a bankrupt company.  Only these 'MERS members' have access to MERS, who actually handle the payments, and the administrative duties that the bank used to handle when the bank held onto the mortgage.
• MERS, the foreclosure mill, tracks morgage servicing rights (who is servicing the loan and who owns the loan). Compliance is voluntary and there is no penalty for not inputting the data, so the A-B-C-D transfers, if even done at all, were not always inputted.
• The MERS handshake (electronic handshake) is supposed to ensure a transfer can’t happen without both parties in agreement, however, in practice, documents have the signature of the same person as representative of both parties.  Poorly paid robo-signers were/are used to sign/stamp affidavits.
• Banks aren’t foreclosing quickly due to large inventory.  The Obama Administration doesn’t want the perception of the right to foreclose in question.
• Foreclosure is a very lucrative activity for the ​servicers who get paid first. They have different motivations from that of the investor, and their fees continue to pile up during the default period to be paid out upon sale.
• Investors are being hurt by the foreclosures. The "prudent limit your loss behavior" that applies to almost all types of lending does not apply in the case of foreclosures (For example, lender write-down...repaying loan at a reduced rate). Instead, the losses the investors are suffering upon foreclosure are, on average, over 70% of the mortgage amount. ​
• The servicers gamed HAMP, forcing people into delinquency, while keeping them on the hook, making them think they're working on mortgage modification when in reality they're processing foreclosure.  
• The media hasn't covered this at all until the robo-signing scandal broke.  Foreclosure attorneys are dismissed as little more than ambulance chasers whereas banks have credibility and all of the media access.

Kemp vs. Countrywide.

• The Countrywide employee (10 years) chosen by Bank of America (who now owns Countrywide ) to represent the bank in this legal case said it was their practice not to transfer the mortgage into the trust. 

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The Overwhelming Foreclosure Swindle.

The Wall Street Journal reports that the top 35 financial institutions are set to pay a record $144 billion in compensation and benefits in 2010.

Meanwhile,  one in seven Americans exist in poverty; one in five American "homeowners" are in serious trouble, and 14 million Americans remain unemployed.  Not to mention, the foreclosure horror show that spans all 50 states, and includes almost every single lender, in particular, the largest banks and servicers. Flawed and lost paperwork, mishandled mortgages, foreclosure documents, and failure to follow proper procedure resulted in hundreds of thousands of improperly foreclosed on homes. Yet, as these large institutions claim, we're supposed to believe this is merely the result of  a bad case of "overwhelm"?

If this is true, why not take all that cash (thanks to we the taxpayers) they're sitting on and hire the overwhelming number of unemployed? People need jobs! Or haven't they heard? JPMorgan Chase third-quarter profit rose 23%! Yep, Wall Street swims in the money while we the people drown in debt.  At the same time that JPMorgan reported their windfall profits, they said that "it expanded its initial review from 23 states to 41, and to about 115,000 homes."

Here's the thing.  "Overwhelmed" does not lead to  fabricated and forged documents, thousands of cases of lost paperwork that would have revealed to investors that they had been scammed, several reports of a single employee signing off on 8-10,000 foreclosure papers a month without checking the information, signing off on two documents that stated conflicting amounts of mortgage, misrepresentations of fact (such as who actually owns the mortgage) ...all of this from Bank of America, JPMorgan Chase and GMAC Mortgage, and more.

“In foreclosure controversy, problems run deeper than flawed paperwork...Millions of US mortgages have been shuttled around the global financial system – sold and resold by firms – without the documents (to) prove who legally owns” them. With millions now in default and homes seized, “judges around the country have increasingly ruled that lenders had no right to foreclose, because they lacked clear title.”

Once again, another "crisis" that punishes the "little" guy while lining the pockets of the banksters and the wealthy. Federal officials are not forcing the banks to clean up the paperwork. Instead, President Obama is backing state investigations while rejecting a nationwide freeze on such seizures because of potential “unintended consequences.”

What about cram-downs? Banks have no excuse but to agree to principal writedowns.

Over 20% of households are upside down on their loans. likely to require some sort of federal response.

“From the beginning, mass modifications would have been better and I still think they’d be cost-saving. Doing new paperwork and doing it right is still a better choice.” - Harvard Law School Professor, Katherine Porter, whose 2007 research examined practices of mortgage lenders and servicers foreclosing on bankrupt borrowers.

Links:

Confusion Roils HARP Program for Refinancing

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The Pull Yourself Up by the Bootstraps Businessman is a Welfare Case at Best.

Over two years ago, in July, 2006, Nouriel Roubini predicted and explained why the U.S. would experience its worst housing recession in the last 50 years, why home prices would fall approximately 20%, and why it would all start with the “subprime” market. Mr. Roubini also predicted that this housing and mortgage collapse would lead to the collapse Fannie Mae and Freddie Mac.

Fast forward to September of 2008 and our government is taking control of Fannie Mae and Freddie Mac in what can only be called the "nationalization" (not fully nationalized as "companies’ common and preferred shares will remain outstanding, but will be junior to new preferred shares that the government will receive.") of the mortgage industry as these two giants guarantee three-quarters of all new US mortgages.

On July 11, 2008 Nouriel Roubini's article "Insolvency of the Fannie and Freddie Predicted Here Two Years Ago. What Happens Next? Or How to Avoid the “Mother of All Bailouts” said,

"So let’s call a spade a bloody shovel: nationalise Freddie Mac and Fannie May. They should never have been privatised in the first place. Cost the exercise. Increase taxes or cut other public spending to finance the exercise. But stop pretending. Stop lying about the financial viability of institutions designed to hand out subsidies to favoured constituencies. These GSEs were designed to make losses. They are expected to make losses. If they don’t make losses they are not serving their political purpose." -- Nouriel Roubini

Once again, we, the taxpayers will pay the price for the lack of regulation in our financial markets, a.k.a., legalized corruption, that we were brainwashed to believe is/was absolutely essential for our economy to thrive. Of course, the ones who defined and declared their version of laissez-faire capitalism or "free market" economics sacred, are the same ones who profited so egregiously. They will not pay the price...we, the taxpayers will pay, potentially, up to $200 billion.

As Nouriel Roubini said regarding Fannie Mae and Freddie Mac,

"...socialism for the rich, the well connected and Wall Street; it is the continuation of a corrupt system where profits are privatized and losses are socialized."

Affordable housing and health care are crucial to the existence of a civilized society. Privatizing profits and socializing losses does not work in the "human rights" realm. How can an industry maximize investment return to shareholders, which only serves to increase housing and healthcare costs for everyone, and at the same time see to it that everyone has access to those necessities?

The risk-taker...the pull-yourself-up-by-your-bootstraps (PYUBYB) businessman doesn't exist. At the same time the PYUBYB rants and raves about universal health care, welfare, and/or any social program designed to level the playing field a tad, PYUBYB relies on hard working Americans who can just about afford to put food on their table, can't afford to go to the doctor, can't afford medicine, as his safety net.

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The Forgotten Victims of the Sub-Prime Crisis

According to the National Coalition for the Homeless, more than two million foreclosures occurred in 2007 alone, that is a 75% increase from 2006 to 2007, 149% increase from 2005, and exceeds the projected number of foreclosures for both years, 2008 and 2009.
It is now estimated that in 2008-2009, "2,258,457 more homes will be lost to foreclosure in the United States".

These statistics and many other factors fully explained in the foreclosure report, provide the grounds for believing the existence of a strong link between the foreclosure crises and increasing homelessness in communities around our nation.

The media seems to strongly suggest that the foreclosed upon are as much to blame as the lenders and the industry at large. This is not true for a number of reasons. The first one is the deliberate, needless complexity built into disclosing the terms of the mortgage contract itself, a huge problem (financial contracts) through the financial industry as a whole. The second one is apartment foreclosures. Numerous renters are suffering and sometimes homeless due to the actions of people they knew nothing about and had no control.

"People don't think of low-income families in apartments being hurt by the mortgage crisis, but in many ways, they are the most vulnerable -- and the least to blame when they get tossed out." Rev. John Estrem, CEO of Catholic Charities

There is no doubt greed and dishonesty characterized a certain percentage of the people who agreed to the terms of these loans, however, a much bigger percentage ended up as victims of a systemic greed and dishonesty that gradually infiltrated the infrastructure that supports and protects our financial system from corruption.

Once again, those we profess to support and honor are once again the group of people who suffer the most from the injustices intentionally incorporated into our prevailing social order as the housing crisis is hitting veterans especially hard.

"A recent Pentagon study has shown, military personnel are particularly vulnerable to predatory lending, and the financial stresses for many military families has been well documented". - Ellen Harnick, Senior Policy Counsel, Center for Responsible Lending

The people who get paid to understand how the housing and financial markets work not only dropped the ball, they greased their hands with a pound of butter before the game started. The integrity of the lending and investment banking profession has reached an all time low.

These mortgage foreclosures are hitting our communities already facing an uphill battle due cutbacks in federal programs designed to assist American citizens bear the weight of hard times in order to prevent them from sinking to a point of no return.

Meanwhile, our government rushes to the aid of the corruptors and corrupt, - Bear Stearns and all the legislation passed to facilitate the greedy agendas of faceless corporations and heartless hedge fund managers - the perpetrators of this financial fiasco, to prevent our economy from crashing. We, the people must demand, at the very least, the same concern for the innocent citizens paying the steepest price and safeguards put in place preventing the greedy, unethical behavior of a few from effecting the security and livelihood of the many.

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Operation Hope

Crown Prince Haakan and John Bryant Hope
John Hope Bryant is the founder of Operation Hope, a non-profit center, partnered with carefully chosen banks, that provide services to those who have no hope of purchasing a home, due to bad credit, financial illiteracy and lack of assets, and assists them through the process of saving for home ownership, to the point where they are empowered to buy and own their own home.

Operation Hope works hand in hand with each person. They begin the process by pulling a credit report on him or her, map out a strategy to get the person’s credit score up, open a savings account and will match every dollar that person saves up to $7,500. Throughout this whole process Operation Hope emphasizes how important it is to make each person financially literate not only for the individual but for the health of our economy.

John Hope Bryant asserts that healthy, responsible sub prime lending has lifted more poor people into home ownership than anything in the last 50 years. Operation Hope assumes everyone has common sense, a sense of dignity and a desire to do better but have not had access or the opportunity to learn the very basics of finance.


"It is arrogant that some people should not or don’t deserve or shouldn’t be a homeowner. If you’re renting and you can afford a payment equal to what a mortgage payment would be…why wouldn’t we want that person to be a stakeholder? They will be net contributor to the American Dream and they’ll feel better about themselves."

Mr. Bryant points out that the current sub prime lending crisis is mostly a result of independent mortgage brokers who have been misrepresenting under qualified financially illiterate people from the poor to people of middle-class. These mortgage brokers have no ongoing relationship with these people. Banks, on the other hand have a long term relationship with their borrowers and Operation Hope will only partner with FDIC publicly traded banks and so far, none of Operation Hope’s loans have gone bad.

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