The Mortgage Mess is Just Beginning

ARM Option Loans and All-Pay Loans are coming home to roost. Here we go again...


Now the real "fun" begins. In a boxing match, a good referee will take a boxer out who's been hit so hard, he's staggering and obviously in danger if he continues.


Why? The potential damage from follow up blows to someone already in a weakened state is exponentially higher than from the first one.


Unfortunately for the credit market, there's no referee to call a time out.


A second blow in the form of a second major wave of real estate loan defaults is on its way - and nothing can stop it. My guess is that the credit market is being propped up now during the lull so that the banks can sell off their holding to suckers (us) before the real carnage begins.


Imagine two trainers propping up a nearly unconscious fighter as his opponent warms up for one final blow and you've got a good idea of the situation we're in. Here's how it looks from the trading floor - from the mouths of people who know what's going on and aren't afraid to say so.

PROPPING UP THE CREDIT MARKET

Key Points:


"This market continues to be propped up by government intervention and manipulation."
"They're trying to prop this market up on a daily basis and they're doing a good job."
"Every single day we have some kind of backstop from the government."
"These markets are not free markets any more."
"We're at a point where no capital transactions are getting done without some intervention from Washington and I wonder how we ever get off these vitamin pills."
"It's not really healing if you're just passing liabilities from private debt to the public debt - from one balance sheet to the other."




How to get ready. People often ask me where the economy is headed. Isn't it obvious?


Here's the scoop:


1. The world runs on credit - and not just credit cards and mortgage loans. Shippers, manufacturers, miners, retailers, farmers...they're all dependent on credit.
2. The credit markets are still in disarray and the structural problems are on an epic scale
3. The only reason the credit markets are functioning is because they're being propped up by non-stop government intervention.


So you tell me... If you pay a visit on a friend and he has eighteen tubes in him and is on a ventilator, how healthy do you think he is? What do you think his prospects are?


My recommendations are simple:


1. Stop spending money on non-essentials.
2. Don't make any purchases (real estate especially) that requires credit and don't take on new debt.
4. Save every nickel you make.
5. Make sure whatever cash assets you have are distributed among several financial institutions that have the highest possible rating.
6. Learn to cook healthy food - grains and greens - and get acquainted with where your food comes from and other practicalities of survival.
7. Remember that there's life beyond the consumerist frenzy that has characterized the last 30 years.


If you think this is "alarmist" and "negative" do your own homework. The numbers don't lie.

Copyright @ 1998-2010
All Rights Reserved

"Produce the Note" a Headache for Lenders

Recently we have run articles on the Great American Mortgage Scam and how lenders have used very questionable and perhaps illegal techniques to implement their securitization scam and cheat borrowers. The articles can be found in the right hand column under archives.

The “Produce the Note” strategy is giving hope to a Pennsylvania homeowner facing foreclosure. Mark Strohecker, of Ellwood City, Pennsylvania, was successful in getting a judge to stop the foreclosure of his home, after filing a “produce the note” request with the court.

The 42-year-old former firefighter and father of two faced the Sheriff’s Sale of his home on March 11th. Two weeks earlier, he printed the document template for a “Produce the Note” request from the CWN website, filled it out, and filed it in Lawrence County Court. At a hearing the day before the scheduled Sheriff’s Sale, Honorable Judge J. Craig Cox, granted Strohecker a motion to stay the Sheriff’s Sale.

Strohecker says he was so overwhelmed by the Judge’s decision he broke down in tears.

CLICK HERE TO READ ENTIRE STORY

...and here is another:

A State Supreme Court Judge in Brooklyn, New York is on a mission to force mortgage companies to stop foreclosing on homeowners unfairly. Judge Arthur Schack has become a friend to the little guy. Instead of rubber stamping and waving foreclosure cases through his court, he is standing up to mortgage companies who try to foreclose on homeowners without proper standing or proof.

He’s not a pushover, but is diligent about enforcing the law. As a result, he’s tossed out 46 of the 102 foreclosure motions that have come before him in the last two years.

CLICK HERE TO READ ENTIRE STORY


The banks and lenders are in trouble. Keep up the good work, folks.

Copyright @ 1998-2009
All Rights Reserved

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

Why I moderate comments:

SPAM: 'comments' that link to junk, 'get rich' schemes, scams, and nonsense! These are the worst offenders.

Ad hominem attacks: 'name calling' and 'labeling'.

How You Have Been Conned on Your Mortgage

The articles by The Candid Blogger about The Great American Mortgage Scam and the Follow-up to the Great American Mortgage Scam have brought a huge amount of traffic to this site and, judging from many of the responses, has generated some confusion among our visitors. We are taking this opportunity to provide a simple explanation.

How Mortgages are SUPPOSED to work – this is what SHOULD happen:

You sign a promissory note and the bank gives you the “money”.
You then use that “money” to buy the house.
The bank still fractionalizes the promissory note and turns the $100,000 into $900,000.
The bank then pays the taxes on the $900,000.

That is the understanding that is common to the American public about the real estate purchase process. One minor problem:

WRONG!

Pay attention, Mr. and Mrs. America. You are about to receive a lesson in how the banks con America. PAY CLOSE ATTENTION!

How a mortgage REALLY works

When a mortgage is created, your signature on the promissory note creates the funds. They did not exist before then.

The lender does not transfer “money” – they simply make bookkeeping entries.

The promissory note creates an Accounts Receivable with your name on it and that’s what you pay month after month after month.

The promissory note also creates an Accounts Payable with your name on it. But you never see that account. It’s the account that owes you money.

Did the lender give you the money when you signed the promissory note? Of course not. They “withheld” it from you.

The bank then fractionalizes the promissory note.
Example: A promissory note for $100,000 becomes $1,000,000 when the bank fractionalizes it.

The bank also sells the promissory note. This repays the Accounts Receivable.

The Accounts Payable is not abandoned funds. The bank is suppose to send the borrower an IRS 1099A, Notice of Abandonment, but they don’t.

When you make a monthly payment to the bank, you are actually paying the TAX the bank owes the IRS for the money YOU created, PLUS interest.


Here is one more bit of information of which you were probably not aware:

Foreclosures DO NOT hurt banks in any way. They never risked anything for the creation of the “money” and they never lend any “money”. The “money” is created from your signature.

When you sign a mortgage note it comes under UCC Article 3. After securitization, it comes under Article 8. Under US law securitization is illegal because it is fraudulent. Instruments such as loans, credit cards and receivables, are securitized. Enron was involved in securitization and someone brought charges against them. But almost all large corporations are doing it as usual business, including the banking system and the government.

Under the constitution, the government was not given authority to create money. It is a power reserved by the people. Article I, section 10 restricted the states from making gold coins. So the corporate government has to rely on the deception of people to create money. So the way money is created is to have people sign an IOU, or promissory note. It is not a debt instrument to the one who created it; it is actually an asset. The creator can pass it on for someone else to use. It is negotiable unless it includes terms and conditions as part of a contract. The property belongs to the creator, and the holder is merely using it and any proceeds that come from it should be restored to the creator.

That is the power we have if we realize we have the authority to do this. The intent is to understand the regulations and to see how they are trying to deceive us to believe we are the debtor and the slave and they are the creditor at all times. This is not legally true.

In these recent articles, we have informed you of:

1. how banks create money out of thin air on your signature alone;

2. how they make 10X that amount from just your signature;

3. how they fail to pay you money to which you are legally entitled;

4. how they obtain title to your property illegally by failing to follow through on the Reconveyance required by your Deed of Trust;

5. and how they con you into paying THEIR taxes owed to the IRS in this transaction.

What you do with this information is up to you.


This presentation explores how money is created and issued. Money used to be backed by Gold and Silver but today's money is backed by debt - your promise to pay back a loan and the government's promise to back up the currency.















Copyright @ 1998-2009
All Rights Reserved

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

Follow-up on The Great American Mortgage Scam

After yesterday's article on The Great American Mortgage Scam, the Candid Blogger received the following question:

Who would pay your lender 3.24 million (10X) for a 324,000 Note? Nobody would do that.

$342,000 mortgage @ 6% interest for 30 years: Payment = $1,942.54 monthly or $1,942.54 X 12 = $23,310 annually.

30 X $23,310 = $699,300 total payment to holder of the note over 30 years.

You actually believe that someone would give the lender 3.24 million and only get back $700,000 over 30 years?

They would get face value of the note plus some fraction of the $375,000 in interest to be gained over 30 years.

Anyone heard of Common Sense?

Answer:

The Fed has two roles - one to be the issuer of Fed reserve notes, and the other to serve as a cartel organization for the 20 member banks. Federal reserve notes stand for nothing in particular, and to vary their number, the Fed buys or sells bonds to and from the member banks.

Suppose the Fed buys bonds from Chase in the amount of $1000, and Chase previously had the minimum reserve on hand - say it's 10% just for easy numbers. Now Chase can make additional loans from the $1000 cash that has now been added to their reserves. How much can they loan out? $900.

But whoever borrows that money will now deposit it in an account somewhere. For simplicity, say they deposit it at B of A. Now B of A has another $900 on hand, and they loan out $810, which is deposited in B of A, which then loans out $720... This is how we get the 10 times multiplier. That is, the 10 times includes all that the commercial banks create. At the end of this process, $10,000 is created from an original deposit of $1000. It doesn't matter which bank since they are all members of a cartel -- family. Pretty clever, huh?

(By the way, exactly the same thing happens if the original $1000 is in the form of a deposit from my back pocket rather than in the form of the Fed creating reserves, except that now the structure is less stable. The same thing does not happen if it is a deposit from earnings, since then it has to be matched by a withdrawal from the employer's account.)

Now do you see also why the Fed contributes only a small amount to the money creation, mathematically speaking? For every $1000 they create, the banks can then create $10,000.

So, let's go over it again. On a $100K note, they lend out $90K, which is deposited in a bank who can then lend out $81K, which is deposited and then $72K is lent, etc., until 10x the face amount of the original note has been created.

And they can do it all from just your signature on a Note. Now you can see why lenders were so anxious to give loans to any creature that could walk upright and sign their name.

Copyright @ 1998-2009
All Rights Reserved

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

Landmark Decision Promises Massive Relief for Homeowners...

and trouble for Banks!

A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.

Eliminating the “Straw Man” Shielding Lenders and Investors from Liability

The development of “electronic” mortgages managed by MERS went hand in hand with the “securitization” of mortgage loans – chopping them into pieces and selling them off to investors. In the heyday of mortgage securitizations, before investors got wise to their risks, lenders would slice up loans, bundle them into “financial products” called “collateralized debt obligations” (CDOs), ostensibly insure them against default by wrapping them in derivatives called “credit default swaps,” and sell them to pension funds, municipal funds, foreign investment funds, and so forth. There were many secured parties, and the pieces kept changing hands; but MERS supposedly kept track of all these changes electronically. MERS would register and record mortgage loans in its name, and it would bring foreclosure actions in its name. MERS not only facilitated the rapid turnover of mortgages and mortgage-backed securities, but it has served as a sort of “corporate shield” that protects investors from claims by borrowers concerning predatory lending practices.

FOR COMPLETE ARTICLE: Ellen Brown, September 19th, 2009










Copyright @ 1998-2009
All Rights Reserved

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

Trump in Bankruptcy Again!

"You're Fired!"

Famed entrepreneur and TV star of "The Apprentice", Donald Trump, is again in financial trouble. Trump Entertainment Resorts made the filing in U.S. Bankruptcy Court in Camden, N.J., four days after the real estate mogul whose name remains on the company and its three seaside gambling resorts resigned as chairman of the board.

Trump was frustrated that bond holders and their allies on the board rebuffed his offer to buy the company and take it private.

Such a filing would mark the third appearance in bankruptcy court for Trump Entertainment, which most recently emerged from bankruptcy proceedings in 2005.

Click to read FULL STORY.















Copyright @ 1998-2009
All Rights Reserved

Corsi Attack on Obama is Bogus

Jerome Corsi, who writes for the right-wing rag, the WORLD NUT DAILY, has outdone himself as his relentless attacks on Barack Obama continue. To start out, Corsi is NOT a neutral reporter. He claims that an Obama presidency would, in his words, be "a repeat of the failed extremist politics that have characterized and plagued Democratic Party politics since the late 1960s." A Corsi book claims that Obama is a dangerous, radical candidate for president and includes innuendoes and false rumors such as he was raised a Muslim and attended a radical black church. Corsi made a trip to Kenya to try to prove that Obama was actually born there and was deported for his conduct in that country.

This is the background of the man who has written the following article for WORLD NUT DAILY: "Rezco Attorney "Owns" Obama Mansion". His article relies upon information in an article posted on an insignificant right-wing blog called: News and Commentary for Thinking People, in which it is pointed out that property tax bills on Obama's property are sent to the "owner", William Miceli, an attorney for the law firm that put together the real estate transaction. That article is very revealing. The author, Gina Cobb, knows nothing about the use of a land trust for holding title. Neither does Jerome Corsi. His article tries to sensationalize the fact that Barack Obama's home in Chicago is listed as owned by Miceli and infers that there is something sinister, unethical or illegal about this. Here is Corsi's revelation:

WND confirmed the tax bill for the Obama home is mailed to Miceli, not to Obama or the Northern Trust account through which Obama has claimed the home was purchased. Records from the Cook County Treasurer's Office give the PIN number for the Obama property as 20-11-115-037-0000 and list Miceli as the person who receives Obama's property tax invoice by mail. Eric Herman, a spokesman for the Cook County assessor, confirmed to WND that the Treasurer's Office records were correct and that Miceli did receive the Obama property tax invoice by mail.

THE IGNORANCE OF CORSI AND COBB

Corsi and Cobb give passing reference to the fact that this transaction was set up using a land trust, but since neither understand how a land trust works or why it is used, both just ignore it and insist that Attorney Miceli owns Obama's property and therefore something untoward must have occurred.

As a Certified Land Trust Specialist, I am very knowledgeable when it comes to this method of holding title. The land trust concept, fully developed by Chicago Title Company in the 1920's, is now fully accepted in the US as the preferred arrangement by which one person can hold property for the benefit and use of another. It is a method that provides anonymity for the homeowner as well as asset protection, in that the property is shielded from liens and encumbrances. 

A Land Trust has been in use throughout the United States for more than 100 years. It has the effect of converting ownership of real property to ownership of personal property, even though such ownership is characterized for income tax purpose as ownership in real estate. The primary purpose of the trust is to provide its beneficiaries a practical, economical (and anonymous) alternative form of real estate ownership and use.

Because both legal and equitable title is held in the name of the Trustee, all notices related to the property including property tax notices are sent to the Trustee.  This is normal in all land trust transactions and IS NOT THE BLOCKBUSTER BREAKING NEWS that Corsi would like us all to believe.  Responsibility for payment of the mortgage as well as property taxes, etc., rests with the Beneficiary (the Obamas).  This is standard procedure in any land trust transaction.  In fact, Disneyland was purchased using a land trust, which is used by the wealthy and many public figures for privacy purposes.

I use a land trust for my own home.  My property tax bill is sent to my Trustee as the title holder.  Responsibility for payment is mine.  It's not brain surgery.

It would be really nice if Corsi would put his Harvard PhD to better use than running around the world trying to find something, ANYTHING, to discredit Barack Obama.  He is becoming an embarrassment to himself and the rest of the right-wing nutcases who are pursuing the same path such as Berg, Donofrio, Martin, etc.

Let's support our President-elect and let these nutcase "authors" continue their mindless drivel in their solitude.

How Banks Scammed Borrowers Who Trusted Them

Criminal Conspiracy: Fraud

Banks across the United States convinced Borrowers to take money that the Banks knew the Borrowers could not afford to pay back, as part of a criminal conspiracy among many in the Financial Services industry. Banks started by offering adjustable rate mortgages. Very little down, very low payments and then, a few years out - when theoretically the property would be worth much more - the monthly payments would rise dramatically. The idea was that long before then the home buyer would have sold out at a nice profit, and bought their next home.

Then they sent bank-approved appraisers out to certify the market value of your home to justify the loan being made and to convince the Borrower that they owned equity in their home that far exceeded what the Banks knew to be true. They intentionally over-inflated the so-called value of your home so that they could extend credit to you that you could not afford. Lenders, realtors, mortgage brokers, appraisers, all made out like what they truly are -- BANDITS.

The same banks who put people being into real estate loans they could not handle didn't stop there. That was only the first step. Did you know the banks also had sales "hit teams" to tempt people into taking cash advances way beyond what they could afford? They encouraged these same borrowers to take out credit lines or credit cards with very high limits, often $10,000 - $15,000, knowing full well that if ever a payment was one day late, their great introductory low rate would automatically and permanently increase to 29.99%!

Don't just take my word for it, here is proof from those that did it for the banking industry. Two insiders spill the beans:

Why did they do this? Corporate home builders got paid lavish premiums for their inventory...real estate companies and loan brokers got rich from these sales...the Wall Street banks that packaged these scam loans and sold them throughout the world made hundreds of billions of dollars...and that nutcase in the White House got to fund his wars and make billions for his cronies at Halliburton and Blackwater.

A natural outgrowth of this scam was a rash of defaulted loans and foreclosures that the Banks certainly knew would be the ultimate result. So, many Borrowers lost their entire net worth, their credit and their homes. I know of a beautiful adobe 3 bedroom, 2 bath home on the golf course that is a short walk from my house that was valued last year at $525,000. It just went at auction for $198,000. So all the home values in the neighborhood just took a big hit and all the homeowners just lost money. Think the Banks care? Hell no. They get the homes back and start all over. It's called "capitalism". I call it FRAUD.

To those Borrowers who fell victim to their scam, they pursue them relentlessly for the balance owed on their credit, and make daily telephone collection calls in a concerted attempt to force Borrowers into Bankruptcy. They want your home, and they want you out of the picture, saddled with credit that makes you ineligible for further loans from them. They have an active network of companies who specialize in assisting banks in getting the Borrowers out. Then, a network of companies specialize in handling the foreclosure and resale of the properties, with the Banks starting out with a new group of unsuspecting Borrowers and the cycle continues.

So, what did the Socialist, George Bush do? Give the Banks billions of dollars in "bailout funds". So Banks have tightened credit requirements, and are investing the money rather than making loans. What better way to say, "Screw You" to the American public? Where are Bonnie and Clyde when we need them?

By the way, what happens to those scammed borrowers? It isn't pretty: CLICK HERE

IF YOU HAVE BEEN A VICTIM OF BANK FRAUD, CLICK HERE: FIGHT BACK

FORECLOSURES: THE OTHER CALIFORNIA WILDFIRE

Less dramatic than the wildfires is the foreclosure tidal wave that's overtaking California.

* Over 700 families lose their home EVERY DAY

* "Nice" neighborhoods where every other house is vacant

* Families walking away from their homes leaving all the furnishings

It's mind boggling...



Contrary to anti-social, right wing propaganda, "sub-prime" loans were not made to help poor people get their first homes. They were created to help new home builders, especially in states like California, Nevada, and Florida, sell out their new home inventory at super-inflated prices.

Home buyers were told by the Fed chairman...by the President...by Fox News...by every idiot financial reporter on TV...that the loans they were taking out were a "good deal." The loans were very simple:

Very little down, very low payments and then, a few years out - when theoretically the property would be worth much more - the monthly payments would rise dramatically. The idea was that long before then the home buyer would have sold out at a handsome profit and moved onto their next home. Free enterprise at work.

It's easy to call these people foolish, but they are really the victims of a scam.

The home builders got paid lavish premiums for their inventory...real estate companies and loan brokers got rich from these sales...the Wall Street banks that packaged these scam loans and sold them throughout the world made hundreds of billions of dollars...and the psychopathic Bush administration got to fund its wars without raising taxes based on the illusion that the economy was good and could afford it.

Now the chickens are coming home to roost.

This is EXACTLY the same scam that Bush Sr. ran in the 1980s using the Savings and Loans real estate fraud bubble to pay for the Contra war and God only knows how many billions he and his fellow crooks siphoned off on the side. Bush Sr. even had the same Fed Chairman Alan Greenspan running the central bank. The only difference is this disaster is 1000x larger.