The Massive Fraud In Mortgages Continues–Crooks and Corrupt Politicians In Charge–Videos

Posted on October 25, 2010. Filed under: Blogroll, Business, College, Communications, Crime, Demographics, Economics, Education, Employment, Federal Government, Fiscal Policy, government, government spending, history, Homes, Investments, Law, liberty, Life, Monetary Policy, People, Philosophy, Rants, Raves, Taxes, Technology, Video, Wisdom | Tags: , , , , , |

U.S. On The Verge Of Foreclosure Crisis (Oct-2010)(NWO ECONOMICS series)

 

Whalen Calls U.S. Foreclosure Crisis a `Cancer’: Video

 

Faulty Paperwork Prompts Deepening Foreclosure Problem

Is Your Mortgage Loan Illegal? Sue Your Lender

Mortgage Servicers’ Secret

Foreclosure Tsunami Coming?

 

DYLAN RATIGAN: FORECLOSURE FRAUD & $45 TRILLION DOLLARS

 

Prof. Bill Black – Financial crisis probe, prosecution failure – Fire Summers, Geithner, Holder

 

Fraudclosure – Just the Tail End of Systemic Fraud?

Foreclosure Fraud Hits Housing Market

 

William K. Black and L. Randall Wray

Foreclose on the Foreclosure Fraudsters, Part 1: Put Bank of America in Receivership

“…We make three propositions concerning what we believe to be institutions that are run as “control frauds”. To date, this situation has been ignored in the policy debates about how to respond to the crisis. The propositions rest on a firm (but ignored) empirical and theoretical foundation developed and confirmed by white-collar criminologists, economists, and effective financial regulators. The key facts are that there was massive fraud by nonprime lenders and packagers of fraudulent nonprime loans at the direction of their controlling officers. By “massive” we mean that lenders made millions of fraudulent loans annually and that packagers turned most of these fraudulent loans into fraudulent securities. These fraudulent loans and securities made the senior officers (and corrupted professionals that blessed their frauds) rich, hyper-inflated the bubble, devastated millions of working class borrowers and middle class home owners, and contributed significantly to the Great Recession — by far the worst economic collapse since the 1930s.

Our first proposition is this: The entities that made and securitized large numbers of fraudulent loans must be sanctioned before they produce the next, larger crisis. Second: The officers and professionals that directed, participated in, and profited from the frauds should be sanctioned before they cause the next crisis. Third: The lenders, officers, and professional that directed, participated in, and profited from the fraudulent loans and securities should be prevented from causing further damage to the victims of their frauds, e.g., through fraudulent foreclosures. Foreclosure fraud is an inevitable consequence of the underlying “epidemic” of mortgage fraud by nonprime lenders, not a new, unrelated epidemic of fraud by mortgage servicers with flawed processes. We propose a policy response designed to achieve these propositions.

S&L regulators, criminologists, and economists recognize that the same recipe that produced guaranteed, record (fictional) accounting income (and executive compensation) until 2007 produced another guarantee: massive (real) losses, particularly if the frauds hyper-inflated a bubble. CEOs who loot “their” banks do so by perverting the bank into a wealth destroying monster — a control fraud. What could be worse than deliberately growing massively by making loans likely to default, converting large amounts of bank assets to the personal benefit of the senior officers looting the bank and to those the CEO suborns to assist his looting (appraisers, auditors, attorneys, economists, rating agencies, and politicians), while simultaneously providing minimal capital (extreme leverage) and only grossly inadequate loss reserves, and causing bubbles to hyper-inflate?

This nation’s most elite bankers originated and packaged fraudulent nonprime loans that destroyed wealth — and working class families’ savings — at a prodigious rate never seen before in the history of white-collar crime. They created the worst bubble in financial history, echo epidemics of fraud among elite professionals, loan brokers, and loan servicers, and would (if left to their own devices) have caused the Second Great Depression.

Nothing short of removing all senior officers who directed, committed, or acquiesced in fraud can be effective against control fraud. We repeat: Foreclosure fraud is the necessary outcome of the epidemic of mortgage fraud that began early this decade. The banks that are foreclosing on fraudulently originated mortgages frequently cannot produce legitimate documents and have committed “fraud in the inducement.” Now, only fraud will let them take the homes. Many of the required documents do not exist, and those that do exist would provide proof of the fraud that was involved in loan origination, securitization, and marketing. This in turn would allow investors to force the banks to buy-back the fraudulent securities. In other words, to keep the investors at bay the foreclosing banks must manufacture fake documents. If the original documents do not exist the securities might be ruled no good. If the original docs do exist they will demonstrate that proper underwriting was not done — so the securities might be no good. Foreclosure fraud is the only thing standing between the banks and Armageddon. …”

http://www.huffingtonpost.com/william-k-black/foreclose-on-the-foreclos_b_772434.html

William K. Black and L. Randall Wray

Foreclose on the Foreclosure Fraudsters, Part 2: Spurious Arguments Against Holding the Fraudsters Accountable

“…Who is Guilty? Let us deal with the “borrower fraud” argument first because it is the area containing the most erroneous assumptions. There was fraud at every step in the home finance food chain: the appraisers were paid to overvalue real estate; mortgage brokers were paid to induce borrowers to accept loan terms they could not possibly afford; loan applications overstated the borrowers’ incomes; speculators lied when they claimed that six different homes were their principal dwelling; mortgage securitizers made false reps and warranties about the quality of the packaged loans; credit ratings agencies were overpaid to overrate the securities sold on to investors; and investment banks stuffed collateralized debt obligations with toxic securities that were handpicked by hedge fund managers to ensure they would self destruct.That homeowners would default on the nonprime mortgages was a foregone conclusion throughout the industry — indeed, it was the desired outcome. This was something the lending side knew, but which few on the borrowing side could have realized.The homeowners were typically fraudulently induced by the lenders and the lenders’ agents (the loan brokers) to enter into nonprime mortgages. The lenders knew the “loan to value” (LTV) ratios and income to debt ratios that they wanted the borrower to (appear to) meet in order to make it possible for the lender to sell the nonprime loan at a premium. LTV can be gimmicked by inflating the appraisal. The debt to income ratios can be gimmicked by inflating income. “Liar’s” loan lenders used that loan format because it allowed the lender to simultaneously loan to a vast number of borrowers that could not repay their home loans, at a premium yield, while making it look to the purchaser of the loan that it was relatively low risk. Liar’s loans maximized the lender’s reported income, which maximized the CEO’s compensation.The problem is that only the most sophisticated nonprime borrowers (the speculators who bought six homes) (1) knew the key ratios they had to appear to meet, (2) had the ability to induce an appraiser to inflate substantially the reported market value of the home, and (3) knew how to create false financial information that was internally consistent and credible. The solution was for the lender and the lender’s agents to (1) instruct the borrower to report a certain income or even to fill out the application with false information, (2) suborn an appraiser to provide the necessary inflated market value, and (3) create fraudulent financial information that had at least minimal coherence.When the overburdened homeowner began missing payments, late fees and higher interest rates kicked-in, boosting the stated income of mortgage servicers and the value of the securities. Not coincidentally, the biggest banks own the servicers and could maximize claims against the mortgages by running up the late fees. It was quite convenient to “misplace” mortgage payments, so even homeowners who were never delinquent could get hit with fees and higher rates. And when payments were received, the servicers would (illegally) apply them first to the late fees, meaning the homeowners were unknowingly still missing mortgage payments. The foreclosure process itself generates big fees for the SDI banks.And, miracle of miracles, the banks would end up with the homes and get to restart the whole process again — from resale of the home through the financing, securitizing, and fee-for-servicing juggernaut.  …”

http://www.huffingtonpost.com/william-k-black/post_1115_b_772820.html

 

Foreclosure-Gate Fallout: How Bad Can It Get For Wall Street?

Zach Carter

“…JPMorgan Chase loves using its research department to push its political agenda, and the bank is currently characterizing the foreclosure fraud outbreak as a set of “process-oriented problems that can be fixed.” That puts them in the rosy optimist camp for this crisis, and they’re projecting a total of $55 billion to $120 billion in losses for the entire industry, spread out over a few years.

But take a look at the analysts’ methodology. The actual scope of losses gets drastically larger if you just change a few arbitrary assumptions.

JPMorgan’s analysts look at about $6 trillion in mortgages issued between 2005 and 2007 — this is the height of the bubble, but it excludes plenty of lousy loans issued in 2003, 2004 and 2008. They then estimate defaults of $2 trillion and losses of $1.1 trillion on those defaults.

So far, these estimates are reasonable. According to Valparaiso University Law School Professor Alan White, banks lose about 58 percent of the value of a subprime loan at foreclosure. JPMorgan is estimating 55 percent. The notion that one-third of mortgages issued at the height of the bubble will default may seem extreme, but the analysis includes both first-lien mortgages and second-lien mortgages (home-equity loans). For houses with multiple mortgages, there’s going to be a double-hit when the first lien goes bad. Right now, the official statistics from Mortgage Bankers Association indicate that 14 percent of first mortgages are delinquent or in foreclosure. The longer unemployment stays near 10 percent, the higher that figure will go. …”

http://www.huffingtonpost.com/zach-carter/foreclosuregate-fallout-h_b_770359.html

Background Articles and Videos

“Stress tests Total Sham” William K. Black on Fox Business

 

BILL MOYERS JOURNAL | William K. Black on Fraud | PBS

 

Moyers 1/3: Sharing the Blame for the Economic Crisis?

 

Moyers 2/3: Sharing the Blame for the Economic Crisis?

 

Moyers 3/3: Sharing the Blame for the Economic Crisis?

William Black on Alex Jones Tv 1/5:Former Federal Regulator Tells All !!

 

William Black on Alex Jones Tv 2/5:Former Federal Regulator Tells All !!

 

William Black on Alex Jones Tv 3/5:Former Federal Regulator Tells All !!

 

William Black on Alex Jones Tv 4/5:Former Federal Regulator Tells All !!

 

William Black on Alex Jones Tv 5/5:Former Federal Regulator Tells All !!

 

GRITtv: William K. Black: Elizabeth Warren & Consumers

 

Obama Passing On Elizabeth Warren?

 

Foreclosure Defense Attorney Roy Oppenheim Discusses Bank Fraud and Foreclosures on CBS News

The Mortgage Meltdown

 

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Deflation, Inflation and Uncertainty–Videos

The Trillion Dollar Bet–Videos

The Obama Depression Deepens–Federal Reserve Executes–QE II Plan–”Operation Pawnshop”–$2,500 Billion In Quantitative Easing–Money Printing–Will It Be Enough?

 

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Irresponsible Government Intervention Results In Huge and Continuing Government Failures–Shut Down Government Interventions–No More Bailouts!

Posted on February 19, 2009. Filed under: Blogroll, Economics, Employment, Homes, Investments, Links, Politics, Quotations, Rants, Raves, Regulations, Taxes, Technology, Video | Tags: , , , , , , , , , , |

 The essence of the interventionist policy is to take from one group to give to another. It is confiscation and distribution.

Interventionism cannot be considered as an economic system destined to stay. It is a method of transformation of capitalism into socialism by a series of successive steps.

~Ludwig von Mises

government_intervention

  red_socialism

The above cartoon combined with an excellent article by economist Thomas Sowell provides a casebook example of government intervention in the economy leading to more and more government intervention with the result being  a US and world wide recession and financial crisis.

The Radical Socialists led by Renegade President Obama are wrecking the economy and destroying jobs by their continuing plans to bailout the imprudent and irresponsible.

The market would let them fail, because that is how resources are reallocated to those who produce the wealth, income and jobs.

The Federal government wants to continue the bailouts to those who should not be bailed out.

The Fascist Democratic Radicals (FDRs), socialist all, are destroying the United States economy.

The Trouble Asset Recovery Plan (TARP) money was designed to provide sound and quality banks with capital to buy the assets of banks that were failing.

My advice is do not to do business with any bank, business, and organization that accepts government bailout money.

Why?

 The Federal Government gradually controls more and more of that bank, business, and organization once they accept their money.

 

Obama’s Focus On Foreclosures

 

Who caused the problem?

Jim Rogers : Must Let Banks Fail Feb 11 2009

 

2009 will be the year of Total decline for US Jim Rogers

 

Rogers on the Global Market Meltdown

 

Just say no to bailouts and no to businesses, banks, and organizations that accept bailouts.

 

What should you do?

Here is one interesting suggestion:

Jim Rogers Obama does not Understand Economics !!!!!!

 

Tom Woods on Glenn Beck “Meltdown” 02/09/2009

 

Upside Down Economics

by Thomas Sowell

“…It was precisely government intervention which turned a thriving industry into a basket case.

An economist specializing in financial markets gave a glimpse of the history of housing markets when he said: “Lending money to American homebuyers had been one of the least risky and most profitable businesses a bank could engage in for nearly a century.” That was what the market was like before the government intervened. Like many government interventions, it began small and later grew. …” “…Under growing pressures from both the Clinton administration and later the George W. Bush administration, banks began to lower their lending standards. Mortgage loans with no down payment, no income verification and other “creative” financial arrangements abounded. Although this was done under pressures begun in the name of the poor and minorities, people who were neither could also get these mortgage loans. With mortgage loans widely available to people with questionable prospects of being able to keep up the payments, it was an open invitation to financial disaster. Those who warned of the dangers had their warnings dismissed. Now, apparently, we need more politicians intervening in more industries, if you believe the politicians and the media. …” http://townhall.com/columnists/ThomasSowell/2009/02/18/upside_down_economics?page=2   

 

 Socialism and interventionism. Both have in common the goal of subordinating the individual unconditionally to the state.

 Every step which leads from capitalism toward planning is necessarily a step near to absolutism and dictatorship.

~Ludwig von Mises, Omnipotent Government, page 44 and 53. 

 

Background Articles and Videos

 

Glenn Beck Socialism to Fascism 

 

The Economic “Stimulus”

by Thomas Sowell

“…In short, it can be years before the money that is supposed to stimulate the economy actually gets into the economy. And nobody knows what the economy will be like when that money finally gets into circulation.

A common problem with government economic policies in general is that it is very hard to predict how long it will be before the policy actually affects the economy. An economic stimulus policy created during a contraction in demand can take effect during an inflationary expansion of demand– and fuel still more inflation.

A trillion dollars or so, created out of thin air by a government that already has a huge deficit, can set off another round of inflation that can take some very painful new policies to bring under control– or can have even more painful effects, if it is not brought under control. The new administration may need that get-out-of-jail-free card.”

http://townhall.com/columnists/ThomasSowell/2009/01/06/the_economic_stimulus?page=2

 

 

Regional Banks Reject TARP Funding

“…When Congress approved $700 billion for TARP, it was supposed to buy troubled mortgage securities from banks. The bill’s language was broad, and former Treasury Secretary Henry Paulson decided in October he would use $250 billion to buy preferred stock in banks to bolster their capital. In late October, Paulson forced the nation’s nine largest banks to accept a total of $125 billion, regardless of their health.[17] This was former Treasury Secretary Henry Paulson’s original vision for the TARP fund, but he switched course and decided to devote $250 billion to direct equity stake investments in banks before waffling again and heading back in the direction of asset purchases.[22] The Treasury has repeatedly said that TARP is not a bailout, and that it expects to eventually make money on the program. A study this month by the Congressional Budget Office found that, of the $247 billion the government had spent through Dec. 31, taxpayers were on the hook for about a quarter, or $64 billion. That amount represents the difference between what the Treasury paid for assets versus their market values. The Office of Management and Budget must submit semiannual reports on the costs of TARP, and the CBO must assess those reports.[1] Buying toxic assets was the original plan for government money until the Treasury shifted gears toward investments. “The first step has to be removing these toxic assets,” Kaufman said. He sees the government buying up bad loans similar to the way the Resolution Trust Corp. bought distressed homes from savings and loans nearly two decades ago. Just as the RTC wound up costing taxpayers less than one-half the original estimates, the public could be on the hook for less than the full $700 billion this time, Kaufman said. Toxic-asset purchases can be tricky when it’s hard to figure out a reasonable, fair price.[11] Parts of the discussion taking place within the government revolve around ways to leverage the remaining money in the TARP. The Fed already plans to use $20 billion from the TARP to set up a $200 billion program to support consumer and small business loans.[18]

…”

“…Until we start recognizing the losses, we’re just engaging in crony capitalism,” said Mason, who is also a banking industry consultant. Executives of banks that get federal support without being force to take adequate writedowns, he adds, are “using Congress as a piggybank.” Treasury Secretary Henry Paulson used much of the first half of TARP to buy preferred shares in banks, using the rationale that banks’ capital shortfalls needed to be filled before they could be depended on to extend loans to expand the economy. Under the plan, big banks such as Citi, JPMorgan Chase ( JPM, Fortune 500 ) and Goldman Sachs ( GS, Fortune 500 ) got billions of dollars in federal funds with few strings attached. Paulson said the plan — which he adopted after regulators in the U.K. launched their own plan to buy banks’ preferred shares — resulted in a more stable financial system.[4] The program, which is similar to the ones that U.S. regulators have extended to Citigroup ( C, Fortune 500 ) and Bank of America ( BAC, Fortune 500 ), aims to “reinforce the stability of the financial system, to increase confidence and capacity to lend, and in turn to support the recovery of the economy,” the U.K. Treasury said in a statement. Offering loan guarantees to a broad array of banks is reportedly among the options being considered by incoming President Barack Obama as he seeks to restore economic growth.[4] …”

“…Instead of using the first payment of $350 billion to purchase troubled assets, as the name Troubled Asset Relief Program suggests, the money has been erratically and arbitrarily distributed in a monstrous act of government intervention and ownership over our financial markets.[25] More than 200 banks have gotten $191 billion in relief from the $700 billion Troubled Asset Relief Program, according to Keefe Bruyette.[22] Two local banks have garnered millions from the controversial $700 billion Trouble Asset Relief Program, often called the banking bailout bill.[19]

Citigroup tops the list with $25 billion in TARP funding, while some smaller community banks have taken around $1 million. J.W. Davis, Carolina First chairman, said his company discussed the TARP program extensively before exchanging equity for money with the federal government. He said a tight credit market makes it difficult to raise capital, and the TARP program was an efficient and low-cost solution.[19] “I am convinced that our bank and many, many others are lending more than we would have if we hadn’t taken the TARP money, says Ken Wilcox, chief executive of SVB Financial, which operates Silicon Valley Bank in Palo Alto. Wilcox says his bank, which caters to startup and publicly held technology companies, was able to raise several billion in new deposits since it took $235 million in TARP funds in early December.[17] We’ve also in the interbank market we have had on average $40 billion or $50 billion out and into bank market, that is also a form of lending. All of this is helped by the TARP so we think it’s a valid question people to ask what are doing with the TARP money and we do say its hard to separate exactly what is TARP money because remember we’re making loans all the time but we are trying to follow the intent and spirit of TARP which is to help the economy of the United States recover and make sure we’re financing people.[27]

…”

 

http://newsfeedresearcher.com/data/articles_b5/banks-buyouts-tarp.html

 

Two local banks get a piece of bailout

“…Critics, however, point to a lack of oversight surrounding the federal program and a shift in direction from the bill’s original intent.

Under the terms of the agreement with the Treasury, South Financial and Mountain First must pay the money back with interest. The banks are charged 5 percent annually for the first five years. After five years, the rate goes up to 9 percent.

“The reason we participated in that was we wanted to provide more services to Western North Carolina,” said Greg Gibson, Mountain First Bank and Trust CEO. “This TARP program offered the best alternative to offer credit to our customers.”

When Congress originally approved the TARP program, Treasurer Secretary Henry Paulson planned to purchase troubled loans from shaky financial institutions. Paulson quickly changed course, and the Treasury has used the money to purchase stock in nearly 300 banks, thrifts and finance companies. Citigroup tops the list with $25 billion in TARP funding, while some smaller community banks have taken around $1 million.

J.W. Davis, Carolina First chairman, said his company discussed the TARP program extensively before exchanging equity for money with the federal government. He said a tight credit market makes it difficult to raise capital, and the TARP program was an efficient and low-cost solution.

“We saw it as an opportunity to pad our capital,” Davis said. “Given the slowdown, we thought padding those ratios was good. We also want to take advantage of things in the marketplace.”

http://www.blueridgenow.com/article/20090119/TOPSTORIES/901180996/1042/NEWS?Title=Two_local_banks_get_a_piece_of_bailout 

 

What Just Happened?

“…And where did the ultimately successful plan come from, anyway?  Ten days ago it appeared that it was UK Prime Minister Gordon Brown’s idea (doubtless crafted for him by Bank of England Governor Mervyn King). True enough, Brown boldly and confidently tackled his banking crisis at its root. A cartoon in the Financial Times depicted leaders of other industrial nations following him along in a cheerful dance. There followed the standard paeans to John Maynard Keyes.

 

But the basic blueprints Brown adopted had been drawn up in Stockholm in late 1992, when central bankers in Sweden, Norway and Finland moved swiftly to rescue their big banks after the collapse of a property bubble. The rescue succeeded, though its aftermath lingered on for four years.

 

What were the channels through which Swedish influence flowed to London and Washington? This is an especially interesting question because of the experience of the early 1930s, when Gustav Cassel argued without success that overly restrictive American monetary policy was making matters worse, and Gunnar Myrdal devised budgetary policies implemented by the new Social Democratic government in 1933 that spared Sweden the worst of the Great Depression.

 

In other words, economists of the Stockholm School implemented successful macroeconomic policies several years before John Maynard Keynes published his General Theory of Employment, Interest and Money, even if they were unable to make the case for what they were doing to the wider world. The Swedes have taken economics very seriously ever since. Would they sit on their hands at a time when the world was threatened with another serious depression? What overtures would they make instead? …” 

http://www.economicprincipals.com/issues/2008.10.26/341.html

 

1/3) Tom Woods: Meltdown (Lew Rockwell Show 2/11/09)

 

2/3) Tom Woods: Meltdown (Lew Rockwell Show 2/11/09)

 

3/3) Tom Woods: Meltdown (Lew Rockwell Show 2/11/09)

 

 

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