This is a complete record of evidence to support the allegation that the housing boom was a fraudulent plan that begin in 1996. A choreographed disaster.
Some of you know that I have been researching and writing about this for over 2 years. A bit of what I have reported is just surfacing in the news, even though I constantly contacted them and provided information. Others have picked up a lot of the foreclosure information, which is helping. But the A-Z story needs to be told. I have the details.
This is offered to help homeowners fight to keep their homes and the news media to grow some and get the whole story out in the open.
Below are some suggested SOLUTIONS TO FORECLOSURE/INVESTOR problems.
I will begin with a simple analogy:
Please feel free to improve on it.
Pretend if you will, that I have an antique car I want to sell in excess of its real market value. I am willing to finance the sale to the buyer, because I know I am going to sell his debt to someone else. I plan on accepting an offer from a naive buyer only.
What can I do:
Contact and make sure all the appraisers in my area use my inflated value in case the buyer calls around..
Convince someone to buy the loan from me.
Naive buyer shows up, loves the car, and the fact that I will only charge him interest for the first year on the variable interest loan I offer him. He signs and drives off.
I call the "secondary 1" loan buyer, who looks forward to jacking the interest price up to 8% next year, and get all my money back PLUS a $1,000 loan origination fee.
Then "secondary 1" loan buyer decides to do the same and sells the loan to "secondary 2" loan buyer and collects $1,000 loan origination fee.
"Secondary 2" sells to "Secondary 3", to "Secondary 4", "5", "6", and so on as this happens a few times thereafter. Sometimes even a couple of times a week. Why? PONZI !
The fees are added to the total debt.
In the end, the loan is placed in a bundle with a bunch of other loans purchased by a TBTF bank, rated as AAA, and sold to investors.
Not being stupid, the TBTF banks also purchase Credit Default Swaps from RottenEGG, and a PMI policy for extra cushioning just in case the complete stranger they are now financing disappears.
RottenEGG has the protection of the NY FED, Geithner.
All this happened without paperwork ever being updated at the Department of Motor Vehicles Registry, as there is an electronic/internet process in place called MARS (Mortgage Acquisition Repossession Scheme)
The original title on the car still has the original owner’s (the seller/lender) name on it with the purchaser’s name.
Out of no where the car buyer gets notice that his car is about to be repossessed by a Bank/Loan Servicer, let’s call them Spank of America.
At the same time the buyer hears on TV that the Federal Government has a program call RUSE for people who were sold cars whose value was misrepresented, to help any car owner whose car may be repossessed. So the car buyer calls and is told to Stop Making Payments, until things are sorted out and a new agreement can be reached.
A couple of months later MARS comes to repossess the car and a court/hearing date is set.
The buyer calls his lawyer who orders an Audit for the Record of Title from the Registry of Motor Vehicles. No where in the records is the Spank of America or MARS listed as having any standing to repossess the car.
They perform a Car Ownership Audit and find that nothing in the records at the Registry seems to have transpired since the day the buyer signed the Promissory Note with the original car owner for an overstated value.
Now, in the meantime, the original owner has died even though he is shown as the holder of a note on the car.
WHAT’S THE SOLUTION?
Did the buyer’s obligation end upon the death (think no longer in business) of the seller/lender who sold his loan without the buyers permission?
In this mess, how is the buyer guilty of anything. He made all his payments on time before calling RUSE, who told him to hold off on the payments.
Isn’t the true recourse for those at the top of the Hot Potato Loan scheme ladder to get reimbursed from whoever sold them the loan/investment, and so on down the ladder, until the first secondary lender gets to the car’s original owner’s estate for reimbursement?
And, btw, who will stand up and verify receiving the car buyers payments the buyer made for three years? Where did that money go?
THIS is the housing mess.
THIS IS WHY THE RHETORIC THAT "BUYERS ARE DEADBEATS" MUST STOP.
And also, THE REASON WHY WE MUST KEEP LOOKING AT THE WHOLE TRANSACTION, which evidence indicates was mostly fraudulent, especially beginning in 2005, while also staying on top of the foreclosure crimes.
Sometimes I think, because houses are big and the amount of money is huge, and the players are all so rich and powerful, that it tamps down our innate abilities to understand what has happened.
I have come to the collusion where I feel comfortable with the allegation that the Housing Boom/Bust was planned and choreographed. The economy was in a major decline after the DotCoN bubble and only got worse after 911.
I think this plan was in the works as soon as the Gramm-Leach-Bliley Bill passed that deregulated the banks. I don’t find any innocent in this crime other than the unsuspecting home buyers, not including the flippers/crooks.
Both Democrats and Republicans in power for the past listened to the economic advise of the disciples of Milt Friedman.
My opinion of laissez-faire economics? Laissez-faire = Oligarchy Rule
Here’s an analogy to demonstrate laissez-faire economics:
A bee hive: A worker complains one day, so the Queen Bee says "If you work hard and smart enough, someday you can be a Queen Bee, too. Until then, you get to serve me. Unless I really, really favor you or you are descended from a bee I really, really favor" Well any thinking bee knows that you can’t become a Queen Bee. So all the bees become sycophants, turning on each other, all vying for the Queen’s favor.
Laissez-faire is a heartless, cruel, and destined to become oligarchy system.
Another laissez-faire example:
What could be more laissez-faire than the three paragraph Bailout Paulson presentedf for handing the banks $700 billion dollars.
It was a glaring example of his and the Bush Administrations’ lack of concern for homeowners and investors.
Oh, excuse me, that was pure, unadulterated socialism.
AMERICA IS A CRIME SCENE
And if we don’t stop this foreclosure insanity, I fear all hell is going to break loose, literally.
And everyone is guilty.
Where does Paulson live now? Dubai?
Another definition of laissez-faire could be, and you’ve heard this before, privatize the profits, subsidize the losses with the taxpayers money. And how cynical is it to use the tax earnings of the millions who are being tossed to the curb in bogus foreclosure proceedings?
They just took care of the banksters.
The Housing Boom/Bust of 2000-Present was simply a rewrite of the Savings & Loan Crash. And no one in Congress protected the American citizens or the investors, many of whom are foreign Sovereign Wealth Funds (think Saudi Arabia, for one)
Except, today 800,000 families a month are at risk of losing their homes while millions already have. That is an unnecessary and harsh reality.
THE MASTER MIND PLAN TO LAUNCH THE HOUSING BUBBLE:
Step 1. An electronic highway had to be created to enable huge quantities of mortgages to travel quickly enough to satisfy investors. This was designed so that it could feed into the computer models created by quants so bundles could be created for investor trades.
Step 2. The rating agencies had to be co-opted to provide proper ratings to satisfy investors.
Step 3. The FBI Criminal Investigators had to be removed.
Step 4. A Mortgage Fraud reporting system had to be put in place in order to cover the the missteps of the players with proof that the problem was caused by a "few rotten apples".
Step 5. Real estate appraisers had to be compromised with threats of getting no business and/or even blackballed.
Step 6. Credit Default Swaps had to be an option to hedge the losses most knew would result.
Step 7. President Bush had to announce the plan, and a few rules put in place to enable the Federal Government to back up some funding/risks, and to provide seed money to the developers/home builders.
Step 8. All had to turn their backs, as millions of unqualified buyers were allowed to buy homes, so they could also be blamed for the problems when the bubble of greed burst.
Step 9. The plans for mass foreclosures had to be in place.
Step 10. An economic disaster warning from Paulson, causing the economy to crash so millions would lose their jobs and then be ripe to lose their homes, so the same players could re-run the housing bubble.
Let me know if I missed a step or two.
HERE’S THE EMPIRICAL EVIDENCE:
Step 1. Mortgage Electronic Registration Systems. All the details in in the several diaries you will find, written by War on Error, when you click the link. The first was written in September, 2008.
Step 2. Links to articles about the Rating Agencies’ debacle.
Step 3. FBI was gutted evidence.
For a particular home, with all the pieces in place, the fraud began when the house was appraised at inflated prices because the banks demanded the appraisers do so.
In 2005, over 8,300 appraisers nationally signed a Letter of Alarm about the lenders demanding inflated appraisals. Yet, no one is talking about this.
THOUSANDS OF HOME OWNERS WERE UPSIDE DOWN THE MINUTE THEY SIGNED THEIR MORTGAGE, and investors were defrauded.
This IS the explanation for the huge increase is housing values, and also why the MBS securities were worth much less than the banks said they were.
A SIMPLE AUDIT OF A PROPERTIES TRANSACTIONS beginning a year before the sale and through to the present can surface a good case of appraisal fraud.
Step 4. MARI, a division of ChoicePoint, the organization that has a computer record of all the details of our lives.
google "Choice Point" MARI MBA
You know about Choice Point, right?
Interesting fact: MARI/Choice Point produce The Gold Standard Fraud Report.
This year was the Twelfth Annual Mortgage Fraud Report AND covered 2009
Well, oddly, there are no First-Sixth MARI Fraud Reports that I could find. It seems like the The Mortgage Bankers Association (MBA) did a great job accumulating mortgage fraud data beginning with the launch of the housing bubble, unleashed by low interest rates and hired Choice Point (who has ALL of our personal information in their databases) to gather and process the data.
Then the FBI and others use the MBA/MARI report as gospel truth.
What do you make of all this? The MARI report does not include any fraud done by mortgage bankers.
FLORIDA HOMEOWNERS MUST READ AND PRINT THIS. EVIDENCE that the State of Florida new home buyers were at huge risk of fraud.
This also comes up in a search for Seventh Annual Report on Mortgage Fraud. This is an indepth Florida report, written in 2005 by the Florida Department of Law Enforcement that references MARI research from 2001-2004.
Scathing report/example of the full awareness of the State of Florida. And buyers were left unprotected.
2007 FDIC Report, Uses Mari research
This link is a treasure trove of proof positive that the FBI was aware of the problems. The references at the end of the report are stunning:
Step 5. Lenders demand inflated housing valuations. Compromised Appraisers who were told by mortgage brokers/lenders either give us the appraisal we want or don’t work. Complete with fraud maps, charts, and evidence.
Step 6. Articles about AIG bailout and about how Geithner, while at the NYFED, bailed out AIG and paid the Credit Default Swap holders, making them whole.
It’s important to have a basic understanding of
Mortgage Backed Securities (MBS)(Fannie and Freddie issue),
This is in its simplest form a bond. The bond is backed by a pool of mortgages that are being paid by homeowners across the United States. Each month a homeowner makes a payment, that payment basically sent to the holder of this bond.
These securities are issued by Fannie Mae, Freddie Mac and Ginnie Mae – but can also be issued by other institutions.
Backed by our tax dollars, even the tax dollars of those whose homes are being taken, through funding for Fannie, Freddie, and Ginnie. THEY ARE ABOUT TO BE BAILED OUT AGAIN! $400 BILLION.
For all those at FM and FM who were charged with qualifying mortgages? Were they asleep?
They sold the FM/FM MBS TO INVESTORS. As the MARI reports shown above prove, there is absolutely no excuse for not knowing the stuff was riddled with fraud.
To quote MARI: "It is worth noting that value inflation is almost always a direct consequence of incorrect, fabricated or omitted comparables and other information."
In short, fudged appraisals. And 2009 was the worst year yet! See chart in MARI TWELFTH report above
But none did anything to stop this TRAIN WRECK
The investors, people like the Saudi Arabian Sovereign Wealth Fund, bought them because they were AAA rated and backed by the AMERICAN TAXPAYERS, you know, the ones being kicked out of the homes at the rate of 800,000 a month.
Collateralized Debt Obligations or CDO’s (Sachs, BoA, etc),
Pretend that you have a mortgage (okay, most of us aren’t pretending) and you make principal and interest payments each month – these payments are made to your loan servicer and then split up as follows:
Investor A – Gets all of the interest payments from years 1 – 4
Investor B – Gets all of the principal payments from years 1 – 4
Investor C – Gets all of the interest payments from year 5
Investor D – Gets all of the principal payments from year 5
Investor E – Gets the interest and principal payments from years 6 – 10
Investor F – Gets interest payments from years 11- 24
Investor G – Gets principal payments from years 11 – 24
Investor H – Gets the remainder of principal and interest payments, if made from years 25 – 30
A trustee is in charge, which is why there is no chance of a workout, and these go into foreclosure.
Credit Default Swaps or CDS (AIG)
There is nothing wrong (highly debatable these days, mine) with a Credit Default Swap – it is basically an insurance policy against the failure of a specific asset. The reason these have been in the news is because some companies – like AIG, Lehman and Fortis (and many others) found these insurance policies to be very lucrative business.
However, when the reality that the MBS and CDOs were for overvalued houses with predatory loans that wouldn’t be paid, the insurers just didn’t have the money needed to cover everyones losses.
So Geithner bailed out AIG and made investors whole. Well, those that had CDS.
Step 7. Youtube of President Bush’s "We are a Homeowner Society". Listen carefully to his words as he launches programs to give our tax dollars to developers and builders and ease the paperwork burden. Bush specifically targets low income, miniority buyers in this speech.
Step 8. Proof that everyone had a clear picture of the disaster as it was unfolding. See evidence #4 above. The MARI reports regarding mortgage fraud (for all but the brokers and lenders) were widely distributed.
Step 9. An interactive map.Rules for foreclosure, written by MERS in 1999!
And the longer the economy stays down, the more homes will be stolen from good, hard-working, honest Americans.
GET ANGRY, and help people fight to keep their homes.
Vote straight Democrat and see if that helps improve the plight of the people against the Corporatists.
SUGGESTED SOLUTIONS: For Home Buyers/Owners and Investors
STOP THE MUSICAL HOME GAME NOW!!!
I have a solution.
It will keep people in homes. Hell, there are homes empty or about to be empties and people/families/babies and children/grandmas and grandpas who need a home.
Will make investors whole
And will make those who bent the law and fudged the numbers pay the difference to the investors
PROPOSED SOLUTION TO THE MESS:
First the Investors: Investors stand to lose a lot. Pension Funds and foreign sovereign funds as well as many, many others.
I believe a polygram test will prove that absolutely everyone involved in rating, buying and selling the MBS and CDS knew in 2005, the height of the frenzy, that something wasn’t quite right.
That said, contracts were made. However, because the foundation product for the investment was worth much less than everyone said they believed they were worth, the investors have losses.
There is no way the banks have enough to make up for the contractual losses. We are certainly not going to bail them out again, not after how poorly they have treated the majority of citizens in the US for the past 2-3 years. They can go hang.
And, in a laissez-faire model, it’s really not anyone’s problem other than the investment fund Trustees and the institutions/people that sold them the MBS, CDOs.
Who bails us out if we are snookered? Um, no one.
So, there is no way, in the short run, to resolve the losses.
However, the two most commodities in the deal still exist: The House and the Home Owner/Buyer
The market still exists. No one took the houses off the board and the people are still needing homes.
So………….to minimize the losses to the investors and to minimize the failure of the TBTFs, it’s time for a do over.
New contracts need to be written BETWEEN the investors’ Trustees and those who sold MBS and CDOs if, and only if, the investor hasn’t been made whole via Credit Default Swaps for a property/properties. I believe the NY FED under Geithner gave the money to AIG to take care of the investors so we could avoid World War III.
There is also a possiblity that the bank/lender could have been made whole, as well, via a PMI policy.
And, if the BANK/Mortgage had PMI insurance, and the bank was made whole via PMI for a home/homes, than those homes have no outstanding debt owed. Period.
To avoid moral hazard, as most of the homes have been or will be foreclosed EVEN IF investors and banks/lenders were made whole, and to save entire neighborhoods from blight and violent crime/crack houses, there is absolutely every reason to reunite the homeowner/buyer with their home and play LET’S MAKE A DEAL.
NO ONE HAS TO ADMIT TO APPRAISAL FRAUD or fraudulent behavior. We will let the FBI work that all out if they ever get enough funding.
Most of the foreclosed homes end up auctioned off for peanuts to wealthy flippers, the very people most guilty of inflating home valuations to begin with. This just doens’t make sense.
The market today, if we don’t stop and correct this mess will just get more and more corrupt, as proven by the most recent MARI Report:
This table is from an April, 2010 Mortgage Asset Research Institute’s TWELFTH PERIODIC MORTGAGE FRAUD CASE REPORT (MFCR) submitted to the MORTGAGE BANKERS ASSOCIATION.
Mortgage fraud is a relatively low-risk, high-yield criminal activity that tempts many. However, according a May 2006 Financial Crimes Enforcement Network (FinCEN) report,
finance-related occupations, including accountants, mortgage brokers, and lenders, were the most common suspect occupations associated with reported mortgage fraud2. Perpetrators in these occupations are familiar with the mortgage loan process and therefore know how to exploit vulnerabilities in the system.
What is a reasonable price for the homeowners to pay to be able to either stay in or return to their home?
Does it really take a Rocket Scientist (I revere them) to understand that there absolutely HAS TO BE a relationship between the cost of housing and household wage?
Are we to believe that entire industries hadn’t caught on to this basic of rules for financing? No. Which if all would be honest, all would admit that we got to play pretend monopoly with real homes and real people, and their childrens’ lives. Shame.
Those who are the haves, who want to bring up moral hazard for helping desperate people get on with their lives, simply shut up. Where was your moral hazard squawking when the billions were flowing like a chocolate fountain at a mid-sized wedding?
Both homeowners and investors need a reasonable solution that isn’t fraught with risk.
America (and other countries) that suffered from exploding house-price bubbles, had no excuse, the tools were there, just they chose not to use them.
The reason was mainly because there was no agreement on what is the correct or fundamental value of a house; even though some people were warning about potential problems with housing in USA and also in UK in 2003, there was no consensus. Alan Greenspan spoke of a “bit of froth” in 2005, but he had no courage in his convictions, and even as late as early 2008, just before the slump really started in UK, Gordon Brown was saying that housing in UK was “affordable”, and so there was no risk of catching the American disease.
Even now, after a cataclysmic wake-up call, there is no consensus about what is the “right” price for housing.
What is the right price?
At it’s simplest level (it gets more complicated), the “right” price for housing is that which allows the population to spend a fixed proportion of their income on “shelter”, that proportion is broadly well-known, it works out somewhere between 20% and 30% (and I’m not going to argue-the-toss about exactly where it is, although there is a broad consensus in that the calculation of the weighting of “shelter” in the CPI analysis provides good base-line).
Homeowners deserve their homes at true value (costing no more than 30% of their income total for mortgage, taxes, and insurance) and those who issued the MBS and CDOs owe the investors the rest.
And here is where we can get creative.
Today, many are un, under or low wage employed because, as Evidence #10 above clearly lays out, cash rich companies/banks are refusing to hire or loan money to small businesses and, instead, are using their trillions to buy more stock, pay higher bonuses, and reward shareholders with higher dividends. On top of the past decade of shipping manufacturing jobs, and the tax revenues as well, America is at a cross roads, perhaps a solid stand still.
The corporations and the TBTFs will do just fine. They can move to tax-free Dubai. Hope that works out well for them.
But we have to glue this mess together again, NOW, stop the bleeding and heartache.
And there are millions of families that have been displaced, tens of millions of children. This will destroy our country’s social fabric if it is resolved instantly. And it can be. Unless we are just heartless enough to watch the house burn rather than help tens of millions of people whose only sin was being laid off and/or lied to, or both.
Which is why I believe we need a new mortgage model. For lack of a better name, I will call it a Sliding Scale Mortgage. Whatever wages are made in a home, no more than 20% will be used to pay off the mortgage.
There will be no transfer of funds for the homes other than payments from the homeowners to the investors/lenders IF they can prove a stake in the house. Money already paid the builder, developer, and the real estate professionals at least once for the homes which stand ready to occupy.
It can be called The Cost of Housing Payment. Buyers could pay off faster if they wanted to with no penalities, because we are not going to use this life sustaining commodity, a roof over the heads of a family, for speculation again. Overtime, this can make the investor whole again and, in the interim provide a stream of returns.
20% of income is all people can afford because of all the ways and means money is taken from them at every turn in this country. Health care insurance/costs being one of the worst financial assaults on the American family.
For instance, people in flood zones surely can’t afford Flood Insurance anymore. My quote jumped from $350/year to $2,100/year this year. Thank FEMA. Guess I just rot if a rain cloud hangs around for too long. Who, at FEMA, thinks middle class families can pay $2,100/yr on top of a mortgage, taxes, and insurance. Flood insurance is now comparable real estate taxes. It’s ridiculous. Why pretend there is a national flood insurance program, when no one can afford it. Just another example of how every penny we make is being squeezed from us.
Also, there is a need for some clawback in lieu of prosecutions.
Have you ever wondered where all that money collected by the FBI, Justice, the IRS goes? I believe the American people deserve a transparent, easy to navigate open window to this process for resolving The Housing Disaster.
Have you ever read the Federal Budget? I have. Good Grief, it’s a poorly written fairy tale, quite frankly. Besides which, I want to see, on a weekly basis, where every penny is going. It’s our money!!!
The clawback money could be bundled and put into a Housing Restoration Fund, divided by states, and monitored by volunteer citizens groups within each county. I think we have learned we can’t trust money making people to always do the right thing when it comes to housing. A portion could also be distributed to a Disaster Fund to help in future disasters.
We can let Justice, the IRS (maybe deduct the clawed back monies from income in a kind gesture), and the FBI work that out.
The citizenry deserves to see that crime does not pay, and certainly children need to see that there are consequences for bending the rules and fudging the numbers.
Of course, some did much worse and may have to pay a higher price than clawback.
I would rather see the guilty white collar criminal be sentenced to working for minimum wage AND HAVING TO LIVE AT THAT RATE of income (taken from his hoard of cash and paid to him every two weeks like the majority of Americans), with the wage he earns paid directly to fund programs for the needy: needy children, the elderly, infirm, etc., quite frankly, than jail.
Enough with prison industries profiting privately run, corporate prisons whose stocks are traded on Wall Street! HAVE WE COMPLETELY LOST OUR MORAL COMPASS IN THIS COUNTRY?
Perhaps we could boost our compassion commodity, which is sorely undervalued at this time.
These suggestions would STOP THE FORECLOSURE INSANITY and
keep people in their homes and/or
fill the empty homes,
punish those who cheated the investors, and the payments made by homeowners
would fulfill the investors’ contracts over time which, I suppose, could be leveraged when necessary by the very banks that sold the MBS.
We have to put aside the moral hazard issues. No one was ringing that alarm while millions became millionaires playing with people’s homes.
And, no way in hell should the enriched by The Housing Disaster be allowed to buy foreclosed properties at auction, to start the whole corrupt process all over again with the very same players who bent the rules and fudged the numbers.
We have the homes that need to be filled.
We have people in need of homes.
Fill the damn homes.
STOP THE MUSIC. Stay in the home you landed on. Agree to pay 20% of your income for the home.
MUST READS TO KEEP UP WITH THE MORTGAGE FRAUD IN YOUR AREA:
Justice Department – Mortgage Fraud
Justice Department – Foreclosure Fraud
FBI Mortgage Fraud/Schemes – Beware of Reverse Mortgages, btw
And a fascinating history of the MERS system that made the housing crisis possible:
Even President Obama’s property was RoboSigned!
AND maybe that will be a good thing.