Author Archive
Even the Banks Can’t Believe What the Banks Are Doing
Posted on January 6, 2015 byThe banks are turning on each other! Over the past few years, Americans have become aware of the financial fraud that was committed against the country by the major banks. The more the public hears about the Federal Reserve spending $60-70 billion dollars every month to buy garbage loans back from the banks that created them at 100 cents on the dollar, the more upset they get. Well it looks like the banks are starting to get upset with each other, too. Bank of New York Mellon (BONY) has sued JP Morgan Chase for misrepresenting the value of a pool of loans that was sold to BONY for nearly $1 billion. You would think that BONY would expect this sort of thing from Chase. After all, it has been common knowledge for years that the banks have been lying about the values of their loans and mortgage backed securities since the beginning of the housing boom. In fact, we now have the first person testimony of a person who tried to stop the fraud at Chase.
According to Chase whistleblower Alayne Fleischmann, Chase knowingly bundled up garbage loans with good ones, slapped a good rating on them, and sold them off to investors. These garbage loans were referred to as “scratch and dent” in the industry because they were a lot like dinged up cars – worth nowhere near the same amount as cars in good condition. This isn’t just an accusation though. Chase has admitted to selling hundreds of millions of dollars’ worth of these loans to investors by lying about their quality. Not only do they admit to doing this, they also admit that they were warned by people like Fleischmann that they were committing fraud by knowingly selling these mortgage backed securities. Read More→
We Know The Banksters Lied In Order To Steal Millions of Houses, But What Does It Mean For You?
Posted on December 5, 2014 byThere have been over 20 million foreclosures in the United States since 2007 and more than 5.5 million homes have been repossessed. Meanwhile the major banks have been laughing as they cash in to the tune of $65-75 BILLION dollars every month from the Federal Reserve. According to the regulators in charge of protecting our currency we should rest assured that this was all an innocent mistake. Well we now have leaked documents that show that the major banks created their tangled web of risky financial transactions not by accident, but with the specific intent of bypassing local jurisdictions’ recording requirements and taxes.
By now most real estate investors have heard of MERS as it has taken on a kind of bogey man type of presence. They might not know what it’s all about, but they know it’s bad. The concept behind MERS was fairly simple. The banks were creating so many loans and transferring ownership so much that it became an expensive nightmare to file the right documents in the right jurisdictions and pay the resulting taxes from each transaction. Instead of doing the honest and ethical thing – paying the taxes and filing the paperwork properly – more than 25 of the largest financial institutions and insurance agencies in the nation teamed up to create MERS, Inc. When a loan was originated, MERS would appear as the owner. Meanwhile, in the back office system of MERS, actual ownership and administration of the loan would be bought and sold countless times without the local jurisdictions or borrowers ever being notified, thus allowing the bank to avoid the taxes and document filing that were legally required. Read More→
Federal Court Clears Way for Homeowners to Fight Back Against the Banksters
Posted on November 11, 2014 byAnother day, another court ruling against the banksters who have fraudulently foreclosed on millions of homes! I have been writing about how the courts have been wising up to the games the banks have been playing to foreclose on properties that they have no claim to, and the latest ruling is one of the biggest. The Federal 6th Circuit Court in Ohio has cleared away a major hurdle that has stopped a lot of homeowners in their tracks.
In many homeowners’ cases, a major claim is that their note never made it into the trust that the foreclosing bank is acting as the servicer for. As soon as the homeowner makes their initial charge that the loan never made it into the trust, the bank would respond saying that, since the homeowner is not an owner or investor in the trust, they have no standing to challenge the validity of the transactions that purport to transfer the note into the trust. Since they have no standing to demand to see the chain of title on the note, their main claim is tossed out by the court, and their case is dismissed.
The 6th Circuit Court’s has ruled that the homeowner DOES in fact have the standing to challenge title and therefore the validity of the transactions that claim to show the note belonging to the trust. Not only that, but the court found that whether or not the homeowner had previously defaulted on his mortgage. The court was incredibly forceful in their ruling, almost recommending a RICO action against the banks. Read More→
Finally, an Answer to Fraudulent Actions by the Banksters!
Posted on October 7, 2014 byIn the last four months alone we have negotiated 28 1st mortgages and have successfully negotiated at least a 35% discount in the mortgage balance on all 28! In addition, we have eliminated all of the 2nd and 3rd mortgages. We have been saying for years that the lenders have perpetrated significant fraud in virtually every mortgage written in the last 20 years. The media has led us to believe that the foreclosure disaster is coming to an end. They have even blamed the homeowners for causing the mortgage implosion.
It was almost eight years ago that the foreclosure crisis began. More than 5 million homes were lost to foreclosure during those eight years, many of them belonging to real estate investors who are no longer in business. But things are looking up, right? According to CoreLogic the national foreclosure rate is at 1.7%, down from 2.5% last year. The rate of foreclosure starts is at 2006 levels, and the number of foreclosed homes being sold is back to 2008 levels. So why are many analysts now preparing for those numbers to shoot back up in the next year?
The answer is simple. The government created a bunch of temporary relief programs to try to stop the onslaught of foreclosures without actually fixing the problem. Instead of focusing on principal reduction, they focused on temporarily reducing payments. Over 300,000 homeowners’ HAMP payments will increase next year alone, with 2 million set to increase over the next few years. 40% of those 2 million homes are still underwater. Read More→
Court Rules Chase Made Up Documents to Foreclose – What Does It Mean For Investors?
Posted on September 8, 2014 byIn July, fans of common sense and decency everywhere won a huge victory – in California of all places! The California Appellate Court ruled that Chase created and recorded false documentation in order to prove ownership of a property so they could foreclose on it. This is big news because it shows that the major courts in some of the biggest states in the country are catching onto the long con the banks have been playing in this country for over a decade. Not only is this a good thing for the country in general, it is creating a huge opportunity for real estate investors to do some killer deals while helping homeowners in need.
In 1998, Jan and Rosalind Kalicki secured a mortgage for their home in San Marcos California. A specialty mortgage banking company originated the loan, and Washington Mutual became the servicer. After WaMu went into receivership, Chase bought a large amount of WaMu’s interests, including the Kalicki’s loan. After being foreclosed on in 2008, the Kalicki’s filed a suit for wrongful foreclosure against Chase in 2009. The Kalicki’s claim was that Chase claimed ownership of the loan based on fraudulent documents.
In 2012, the court ruled not only that Chase had created and recorded fake documentation to show that ownership of the loan had been transferred to Chase, it was also exposed that a Chase executive had created a document that “fraudulently represented that a prior assignment had been lost and that Chase owned the Kalickis’ mortgage.” The judge ruled that the Kalicki’s owned the property and quieted the title in their favor. Chase appealed the ruling, but lost. Read More→
The Biggest Theft in the History of the World and Our Government Bails Out the Perpetrators!
Posted on August 7, 2014 byDid you hear the news? Citigroup may have to pay a $7 billion settlement to resolve mortgage probes. Why? To get the government to stop looking into whether it defrauded investors on billions of dollars worth of mortgage securities. Most of the payment will be in cash, but it will also include a few billion dollars to help struggling homeowners. How magnanimous of them! Citi created hundreds of billions of dollars worth of fraudulent mortgages, and now that they’ve been caught after 7 years of foreclosing like crazy on their fraudulent mortgages, they’re finally going to cough up a few billion to help out some of the people they haven’t foreclosed on yet.
This news brings to mind a case I read about recently where a REGIONAL bank had the owner of a property falsify mortgage documents in order to originate a riskier loan. That’s right, the regional bank has the owner of two VACANT lots certify that there were houses on the two lots. Then the bank made a loan as if the nonexistent homes were actually on the two vacant lots. Why on Earth would the bank lie and increase their risk by loaning out so much more money than the land was worth? It was all part of a large scale scheme to rake in as much money as possible by defrauding the bank’s investors. Read More→
How to Fight a Foreclosure and Win
Posted on July 7, 2014 byOver the last two years I have covered in great detail the Securitization Swindle the banks have been perpetrating for over a decade. The banks were successful because they created such a tangled web that it was nearly impossible for everyday people, lawyers, and judges to understand what was happening. For years homeowners just couldn’t catch a victory in court, but things have been changing… Courts across the country have started to see the light and rule in the homeowner’s favor. In this month’s article I’m going to explain how an ordinary homeowner can stand up to the banks and win.
The first step is to find an attorney who truly understands securitization. This was a process that was specifically designed to confuse intelligent people and convince them nothing fishy was happening. You can’t expect just any attorney with an ad in the yellow pages to understand the process well enough to convince a judge that you were wronged. You must find an attorney who can convince a judge that the transaction laid out in the mortgage paperwork never happened. The lender never loaned a dime of their money to the homeowner.
In a securitized loan, the money for the loan was provided by an unrelated third party who was never named on the note. The bank got this money from investors who believed they were buying into trusts that funded mortgages. Instead of creating these trusts, the bank pocketed the money and used some of it to fund mortgages in its own name. The bank then covered up its tracks by fabricating a series of sham transactions it called “proprietary trading.” Read More→
What the Mortgage Forgiveness Debt Relief Act Expiring Means for Investors
Posted on June 9, 2014 byOMG! The Mortgage Forgiveness Debt Relief Act has expired! Homeowners owe the IRS more than they could ever pay. This is a catastrophe – not really.
On December 31, 2013, the Mortgage Forgiveness Debt Relief Act expired. For months prior to the expiration and immediately after, there was a rush of “experts” howling and screaming about how homeowners and the housing market were going to suffer. Well, we’re now five months into the 2014 and the sky hasn’t fallen. Were the experts wrong? For the most part, yes they were.
On December 20, 2007, President Bush signed the Mortgage Forgiveness Debt Relief Act into law. The point of the law was to provide tax relief to the millions of homeowners who would have faced regular income taxes on any forgiven debt after going through a foreclosure, short sale, loan modification, or cash for keys scenario on their primary residence. Normally, forgiven debt is taxed at the homeowner’s income tax rate. For example, let’s say your annual salary is $60,000. You bought your house for $325,000 during the anything goes days of 2005. In 2009, you still owed $300,000 but had to sell it for $200,000 through a short sale. The bank forgave the deficiency for the $100,000 you still owed. Before the Mortgage Forgiveness Debt Relief Act was passed, that forgiven debt counted as income, making your total taxable income $160,000 in 2009! The resulting $53,000 income tax bill is almost your entire year’s salary! After the Act was passed, the forgiven debt would have been waived, and you would only owe taxes on you regular income of $60,000.
You can see now why that law was a major help for homeowners during the foreclosure crisis… Read More→
The Government Politely Asks the Banks to Please Double Check Their Foreclosures
Posted on May 6, 2014 byWere you or someone you know foreclosed on by a lender who is widely known to committed massive and systemic fraud in their mortgage practices? Have no fear. After having been bilked by independent consultants to the tune of $2 billion dollars, the Office of the Comptroller of the Currency has given up investigating the issue itself and asked the banks to please hand over any proof they might have of having improperly foreclosed on people.
That’s right. After being provided with $17 trillion in various forms of taxpayer-funded relief, the government is now allowing the banks to be in charge of the investigation into their own foreclosures.
There is a charitable way to view this development. The regulators could be setting up the banks to nail them for failing to comply with regulations. This would extend the statue of limitations for future federal actions against the banks. This tactic is possible, but forgive me for thinking it slightly more likely that the government is abdicating its responsibility to the banks after having been nailed for squandering the time and money it was given to handle the problem on its own.
If you were worried that this was a sign that the government wasn’t serious about prosecuting the people and institutions responsible for setting up one of the biggest financial crises in history, fear not! The District Attorney for New York County has moved forward with the prosecution of Abacus Bank. Read More→
So You Proved The Bank Lied About Your Loan. Now What?
Posted on April 8, 2014 bySay you are fighting a foreclosure on a securitized loan that you took out during the housing boom. Using a fraud investigator you were able to prove that the foreclosing entity forged your signature on the note. You rest your case and wait for the judge to come back with a ruling in your favor. Ten minutes later the judge rules that the foreclosure can continue as scheduled. This is surely a miscarriage of justice, right?
Not so fast. The judge made the right call, and you need a better attorney.
Here’s an example. Let’s say a friend lends you $1,000 and you agree to pay him back in installments. After a few months of making payments on time, you default on the loan and your friend sues you. In court your friend produces a promissory note that lays out the terms of the loan with your signature. You acknowledge that you were lent the money by your friend and then defaulted on the loan, but you have never seen this promissory note before. Furthermore, you have evidence that your signature on the note was a forgery. Under the rules of evidence, your proof of forgery should be tossed out. The reason is simple. You have already admitted to owing your friend the $1,000 and that you defaulted on the debt.
A note is merely documentation of the debt. If you have already acknowledged that you owed the money and then defaulted on the terms, the note itself, whether forged or legitimate, is irrelevant. Read More→
The Legal Tides Are Turning In Homeowners’ Favor
Posted on March 10, 2014 byFor centuries the courts have been rigged in favor of the banks. The banks have the kind of time and money that homeowners could never dream of, and they are more than willing to use both to get their way. You’d be wrong, however, to think that’s the only way the system was crooked.
If a homeowner whose loan was securitized tried to force the bank to show the chain of title, the court would tell the homeowner that they didn’t have standing to make that demand. The homeowner then is left with no way of proving that the foreclosing bank/entity does not have the authority to foreclose. Not anymore!
In the case of Steinberger v OneWest Bank, et al, the court ruled in a special action that the homeowner does have the standing to demand that the foreclosing bank/entity provide a securitization timeline in order to establish their claim of authority to foreclose. This timeline of assignments and transfers would prove whether or not assignments were made after a note had already been transferred to a securitized trust and could be declared invalid.
This is a huge win for homeowners because we now have the right to demand that banks prove their authority to foreclose before the court. Read More→
A Step by Step Guide to How the Banks Committed Massive Fraud
Posted on February 10, 2014 byBy this time, most people are at least aware that mortgage banks were less than honest in how they created and sold mortgage backed securities over the last 15 years. It has driven a lot of negative sentiment towards the banks since the housing market crashed in late 2007, but very few people have a clear understanding of exactly what the banks did. That is completely understandable because the banks set up an extremely convoluted system of fake transactions specifically to avoid people catching on to what they were doing. In this article I am going to attempt to break it down into simple terms.
As the housing market heated up in the early 2000s, investors began to invest in what are known as mortgage backed securities. These are securities that consist of large pools of mortgages. The idea behind these investments was to capitalize on the housing boom while minimizing their risk.
In order to do this, investors had to work through brokers who compiled mortgages into securities on the investors’ behalf.
The way the investors would invest in these funds was use their money to fund a trust that would acquire mortgages either by originating them as the lender, or by purchasing existing mortgages. In a perfect world, the trust itself would then be the lender or purchaser designated on the mortgage. Read More→
Why Do Courts Let Banks Steal Houses?
Posted on January 4, 2014 byIf the courts rule against the banks in the homeowners’ favor, but no news outlets report it, does it really happen? That’s the situation we’re in now. If you’ve been digging deep, you might have seen that the estimate of bank losses from mortgage related lawsuits has increased to $100 BILLION in future payouts. This number includes settlements and judgments as well as legal fees for defending all of the lawsuits. How many stories about this have you heard on the major news outlets? Zero.
Over the last 15 years, the banks concocted a scheme to defraud their investors and borrowers that resulted in over 15 million people being displaced from their homes, and you have not seen a single story detailing the fraud the banks perpetrated and the damage it caused. You would think this is the type of story that would be all over the news, but the media remains silent.
Despite the lack of coverage from the media, the payouts and estimates of future payouts from the banks keep getting bigger. The reason for this is simple. Investors and homeowners are filing valid claims of fraud against the banks and judges and juries keeping awarding bigger and bigger settlements. Read More→
Why Are Banks Letting Criminals Steal Homes From Them?
Posted on December 6, 2013 byThe last several months have been extremely encouraging for real estate investors who are purchasing notes from banks! Every day more and more judgments in foreclosure cases are coming down in the homeowner’s favor as judges become aware of the depth of fraud the banks have committed. What we are seeing in the market is more judges making the right decisions, and the banks starting to run scared of this turning tide.
Several judges across the country are clearing their dockets with surprising speed using one simple trick. They are forcing banks to prove that they made a loan to the homeowner. Simple, right? All of the signed documents the banks can throw at the judge don’t matter if they can’t prove that they ever loaned money to the homeowner. The fact of the matter is that the banks never actually loaned out any money to the borrowers. For years judges have been taking the banks’ word that they have all of the signed paperwork from the homeowner that they need, and inferring that a loan was made, but that is starting to change. The number of judges accepting this smokescreen, while still too large, is shrinking. Read More→
How Countrywide Created 3.5 Million Fraudulent Loans and What It Means to You
Posted on November 6, 2013 byMy last two articles focused on the great Securitization Swindle the banks have been perpetrating for over a decade. It was successful because the banks created such a tangled web that it was nearly impossible for everyday people, lawyers, and judges to understand what was happening. But what if they committed a comparatively straightforward fraud? Surely that would be caught and stopped, right?
In this month’s article I’m going to explain how Countrywide fraudulently created 3.5 MILLION loans at taxpayer expense with a scheme so simple it seems impossible they got away with it at all.
In 2003 Countrywide wanted to dominate the housing boom. The problem they were facing was that each state has its own licensing fees, corporate taxes, and regulatory costs that Countrywide would have had to pay in order to do business. That’s when they cooked up the scheme. Instead of becoming licensed and registered in every state, Countrywide simply made up a trade name (DBA) that they could register in every state that would slide under the radar of the regulators. They made up the innocuous name America’s Wholesale Lender and got to work.
Their scheme worked and nobody noticed that America’s Wholesale Lender wasn’t a corporation registered or licensed to do business in their state. Countrywide got cranking and created 3.5 MILLION loans across every state in the country under the DBA “America’s Wholesale Lender.”
The catch is that a DBA such as America’s Wholesale Lender is not a legal entity. It is simply a trade name. A DBA has no ability to own property, file lawsuits, or hold any security interests. Read More→
What Is Securitization and Why Is It Fraudulent? Part 2
Posted on October 9, 2013 byIn last month’s issue, I began to explain exactly what securitization is and why it is fraudulent. For several years the mortgage banks in this country were flat-out making up transactions and trusts to cover for the fact that they were pocketing their investors’ money. But that wasn’t enough for them. They bundled up the loans, intentionally loaded them with toxic mortgages to increase their rate of return, and sold them to themselves for a “profit.”
But what does this all mean for the title on a property that had a loan go through this process?
Basically, the title was flawed from the get-go. Nobody who was a signatory to the loan had ANY interest in the repayment of that loan. MERS and all the others were just filling a role by pretending to be officials of the bank that was lending the money, when in reality they were a signature factory. If the trusts had been managed correctly from the beginning, the name of the trust should have been on the note and on the mortgage. They weren’t. Instead the banks set up a huge maze of companies to process the loans with defective notes and mortgages. Read More→
What Is Securitization and Why Is It Fraudulent? Part 1
Posted on September 6, 2013 byBy now you have heard in the news about robo-signing, MERS, etc. and how the economy was brought down by Mortgage Backed Securities. But what, specifically, does that mean and how does it affect us as homeowners and real estate investors? As can be expected, the greatest financial fraud every pulled over in the history of the world began with taking away responsibility from banks and brokers…
When a broker purchases a stock or bond with your money, it’s standard practice to buy the stock in the name of the brokerage. This was all well and good when the owners and partners of the brokerage were personally liable for all of the consequences of an investment. After brokerages were allowed to incorporate and become “legal persons,” the owners of the brokerage houses were shielded from all of the legal and financial responsibilities for the consequences of their investments. This took away all of the personal risk they incurred by making wild bets on exotic investments with their clients’ money. After all, it was just the company that would get in trouble, not the individual brokers or owners of the company!
This left the commercial and investment banks free to concoct the securitization scheme.
The way a bond is supposed to work is that an investor purchases a bond from a trust. The trust then was to use this money to purchase mortgages or originate their own. The trust then uses the money made off of these mortgages to pay off the bonds to their investors.
That’s how it is supposed to work. Read More→
Is Buying a Note a Good Deal?
Posted on August 6, 2013 byWhich is better for real estate investors – buying a note in pre-foreclosure, buying the house through a short sale, or waiting until the house comes on the market as an REO? That depends on the difference in the discounts expected, the condition of the house, and the likelihood of reaching an agreement with the current homeowner to either move or purchase the note at a discount and remain in the house.
The discount on the note may well be less than the amount of discount the lender will be willing to take for the house as an REO. Having the note gives the note holder considerable flexibility—and some additional risks. The note buyer can decide to set up a new mortgage with the current homeowner, negotiate a “cash for keys” or deed-in-lieu of foreclosure with the homeowner, or may be stuck taking the homeowner through a long, drawn-out foreclosure process. If the latter happens, then the note buyer may well be better off waiting until the home comes on the REO market rather than tying up funds unproductively waiting for the foreclosure process to complete. However, if you have a cooperative homeowner, buying the note presents you with some incredible opportunities. Read More→
How Pervasive is the Problem of Mortgage Fraud and Clouded Title Issues?
Posted on July 5, 2013 byLenders like to argue that when a homeowner gets behind on the mortgage the issues involved in foreclosure are cut-and-dried. The homeowner owes on the mortgage, they have not been able to catch up over many months, so they should pay and/or lose the house. The reality is far less clear-cut. In many cases homeowners do not argue in court that they don’t owe on a mortgage; the real questions are who does the homeowner owe the loan to and does the party bringing a foreclosure action really have standing to file for foreclosure?
An audit ordered by San Francisco assessor, Phil Ting, of about 400 foreclosures was reported in a New York Times article by Gretchen Morgenson showing pervasive irregularities in how mortgages are written and how foreclosure filings are carried out. While the study was specifically of problems with San Francisco area foreclosures, similar findings could be made nationwide. For example, a recent whistleblower report on Wells Fargo exposed the systematic fabrication and alteration of mortgage documents nationwide. Their fraud was so rigorous that they even took loans that were endorsed properly and altered them as well! Read More→
Nine Tips for Spotting a Fraudulent Loan or Foreclosure
Posted on June 10, 2013 byThere are innumerable issues that can be caught in a forensic audit and used to argue either that a title is clouded or a foreclosure proceeding is improper. Here’s a list of nine common problems that may lead to a positive outcome for a homeowner doing legal battle with a lender or servicer:
- An individual purporting to be an officer of one lender or servicer shows up as the officer of several other companies at the same time. It is improbable, if not impossible, for one individual to simultaneously serve as an officer of several institutions. This is an indication that someone hired by a document processor was told to sign thousands of forms per day for many different institutions. Such individuals are required to swear by virtue of signing the documents that they have personally examined all documentation and personally know of the loan—again an impossibility.
- A name appears on several different documents for the same person but in different handwriting. For example, there are many different handwriting samples of the same purported bank officer, Linda Green showing on thousands of different loan and foreclosure documents. Read More→
