In a nutshell, heres the problem: and you wont hear this in the M.S.M.
iF YOU DO ITS ON PAGE 787 AND IN VERY SMALL PRINT.
Mortgage notes put in securitization pools typically
appear as data transfers rather than actual legal transfers,
a move intended to speed the process.
However, if the mortgage note in question has not been
legally transferred and assigned to the securitization trust,
the trust has no legal standing to foreclose.
Trillions in CDOs Could Be Stuck in Court
Another worry for big banks: They might have trouble even
proving they own your home.
The massive repackaging of loans into collateralized debt
obligations (CDOs) $6.5 trillion in outstanding securitized
mortgage debt, by one estimate is making it hard enough to
price investment risk.
But a recent court ruling could make it hard for banks to
foreclose at all, adding to the potential losses as each case ends
up in court instead, adding interminable legal time to the process.
Ohio Federal Court Judge Christopher A. Boyko dismissed 14 foreclosures
actions brought on behalf of mortgage investors.
He ruled that they failed to prove their ownership of the properties on which they wanted to
foreclose.
d.. In a nutshell, here the problem:
Mortgage notes put in securitization pools typically appear as data transfers rather than actual
legal transfers, a move intended to speed the process.
e.. However, if the mortgage note in question has not been legally
transferred and assigned to the securitization trust, the trust has no legal
standing to foreclose.
f.. “The institutions seem to adopt the attitude that since they
have been doing this for so long, unchallenged, this practice equates with
legal compliance.
Finally put to the test, their weak legal arguments compel
the court to stop them at the gate, Boyko wrote in his ruling.
g.. Editor Note: The Mother of All Financial Disasters. Protect Yourself Now.
h.. Industry observers and consumer advocates note that mortgage
securities make fixing troubled loans difficult because their complex
structure and disparate ownership make identifying just who hold their
mortgage notes difficult if not impossible.
i.. "This court ruling in Ohio means that the securitized trusts own
nothing," according to Bob Chapman of the International Forecaster.
"The investors in these securities might have assumed wrongly, it turns
out that they actually owned some real estate in these deals.
The problem is, they own nothing."
j.. The ruling involves foreclosure actions brought by Deutsche Bank
National Trust Company, which acts as trustee for the mortgage
securitization pools that claimed to hold the underlying mortgages DBNTC
wanted to reclaim.
k.. Deutsche Bank attorneys provided documents that showed intent to
convey mortgage rights rather than actual proof of mortgage ownership on the
date the foreclosure actions were filed.
l.. The Ohio court action is expected to bolster the position of
attorneys representing distressed borrowers and may encourage other judges
to demand more compelling evidence of ownership from lenders bringing
foreclosure actions.
m.. Once the lender with which the borrower initially deals with grants
the loan, it typically becomes part of a pool that contains thousands of
other mortgage loans. Once such a pool is created, it offered to
investors.
n.. A trustee bank oversees the pool operations to make sure that
investors receive the payments borrowers make. However, there is no central
repository for securitized mortgages, which can show up in more than one
pool.
o.. Attorneys arguing for borrowers assert that trustees acting for
investors frequently do not produce proof of mortgage ownership.
p.. Their assertions are supported by a recent study of 1,733 foreclosures
conducted by University of Iowa associate professor of law Katherine M.
Porter, which reported that 40 percent of the foreclosing creditors studied
did not show proof of ownership.
===========
Predatory Politicians, Destructive Leftwing Policies and the
Roots of the Housing Crisis...and
they have been voted in
In the midst of the economic crisis and the wake of the Paulson bailout, the mainstream media have begun publishing obituaries for the free market. The elite press has begun to trumpet “the end of American-style capitalism” and “the bankrupt dogma of Reagan-Thatcherism.”
But are free markets at the root of the current economic crisis, or meddling politicians?
In short: Is our problem predatory lenders, or predatory politicians?
Predatory Politicians Use Government to Get What They Want
Predatory politicians are vastly more dangerous then predatory lenders because they bring the full authority and vast resources of the federal government to their attempts to coerce and control the American people.
If predatory lenders seek to take advantage of peoples’ desperation and ignorance to make bad loans, predatory politician take advantage of taxpayers money and the power of the government to advance their leftwing agenda. And as we will see, predatory politicians made the work of predatory lenders much easier by putting the U.S. taxpayers in the role of guaranteeing all the bad paper predatory lenders could produce.
· Predatory bankers (and there were plenty) exploited a booming housing market to give loans to people who never should have received them. But predatory politicians forced banks to make bad loans.
· Predatory politicians (and the pursuit of profits) pushed Fannie Mae and Freddie Mac into buying up more and more risky, subprime loans, creating incentives for mortgage providers to issue even more bad loans.
· “Predatory politicians resisted attempts to reign in Fannie Mae and Freddie Mac as the lenders put the taxpayers on the line for trillions of dollars in bad loans – all while Fannie and Freddie cooked their books to boost their executives’ multi-million dollar compensation packages.
· Predatory politicians took millions in campaign funds from Fannie Mae and Freddie Mac in exchange for political protection against attempts at reform.
· Predatory politicians funded radical groups like ACORN which receive millions in taxpayers dollars to extort banks into making risky loans, all the while they work to get out the vote for the liberal politicians that are their benefactors.
Predatory politicians forced banks to make bad loans.
During the Carter Administration Congress passed the Community Reinvestment Act (CRA) with the laudable goal of helping the poor afford homes. It forced banks to prove they weren’t “redlining” inner city neighborhoods by refusing to lend to urban residents while using their deposits to lend to suburban homeowners with better credit.
The CRA, as strengthened under the Clinton Administration, gave leftwing, anti-free market groups (more about them below) veto power over bank mergers unless banks could prove they were making loans to credit risks. Wielding this power, these leftwing so-called “community groups” have extorted hundreds of millions from banks. These community groups, in turn, finance both lending to low income mortgage seekers and get-out-the-vote activity for liberal politicians. As the City Journal reported in 2000, using the power to extort granted in the CRA, the radical, anti-free market group ACORN received $760 million from the Bank of New York, the Boston-based Neighborhood Assistance Corporation of America dragged $3 billion out of the Bank of America and a coalition of “community groups” in New Jersey got an astounding five-year, $13 billion agreement with First Union Bank.
Predatory politicians (and the pursuit of profits) pushed Fannie Mae and Freddie Mac into buying up more and more risky, subprime loans, creating incentives for mortgage providers to issue even more bad loans.
To understand the central role that Fannie Mae and Freddie Mac played in the making of the economic crisis – at the behest of predatory politicians – it is important to first understand what these two government-sponsored enterprises do.
Fannie and Freddie don’t make mortgages to individual home owners. Instead, they purchase mortgages from banks and other mortgage providers. The theory is that, by taking these mortgage obligations off the books of private bankers, Fannie and Freddie would free up capital for these banks to make more loans to other home buyers.
Fannie and Freddie would then take these mortgages and “securitize” them by bundling them together and selling them to investors such as investment banks and pension funds. Investors received returns on their investments as long as home values continued to climb and the underlying mortgages were paid. The risk for the investor, then, is in the quality of the underlying mortgages. And under pressure from predatory politicians and in pursuit of profits, Fannie and Freddie became increasingly involved in risky subprime mortgages in the 1990s. But because Freddie and Fannie are backed by the federal government, investors continued to buy their securities, safe in the knowledge that if there was a problem, the government would bail them out.
In 1999, under pressure from the Clinton Administration to increase home ownership rates among low income borrowers, Fannie Mae CEO Franklin Raines lowered his company’s lending standards to include, “individuals whose credit is generally not good enough to qualify for conventional loans.”
The result, government regulators testified last month, was that by 2008 about 33 percent of Fannie and Freddie’s business involved risky loans. And as of May 2008, Freddie and Fannie had guaranteed $2.2 trillion in mortgages, about 75% of all mortgages in the U.S., and owned a quarter of the all the mortgage back securities issued on the market.
Here’s how a new report from the minority staff of the House Oversight and Government Reform Committee captures Freddie and Fannie’s role in the current crisis:
“As the largest purchasers and securitizers of mortgages and [mortgage-backed securities] in the world, Fannie Mae and Freddie Mac exert a powerful influence on the rest of the mortgage lending market. By signaling their willingness to dip ever deeper into the pool of risky subprime and Alt-A mortgages, they created powerful incentives for non-bank lenders like Countrywide Financial and Lehman Brothers to continue scraping the bottom of the mortgage barrel. This fueled the disastrous housing bubble that collapsed with such dire consequences for the U.S. and global financial system.
Predatory politicians resisted calls to reign-in Fannie Mae and Freddie Mac as they put the taxpayers on the line for trillions of dollars bad loans …
Much of the current crisis could have been prevent if Congressman Barney Frank would have encouraged reform instead of prevented it. As the chairman of the House Financial Services Committee, Barney Frank resisted any regulation of Freddie and Fannie's investment strategies and even sought to increase their portfolios. The mission of Freddie and Fannie - to provide low income housing - became a smoke shield for Frank to reward his buddies from Freddie and Fannie.
Frank had a habit of making public excuses for Freddie and Fannie. In 2000, Franks said that he said concerns about Fannie and Freddie were "overblown." In 2002, Franks categorized them as "great assets." In 2003, he said that the American people did "not face any crisis" with containing the risk in Freddie's and Fannie's portfolios. Frank clearly ignored the obviously unsound investment practices of Freddie, so that he could continue to pass on rewards to industry insiders.
In 2005, Federal Reserve Chairman Alan Greenspan sounded the alarm to the House Financial Service Committee, for the second time in two years, about the undercapitalization of Freddie and Fannie's portfolios. He warned that by "[e]nabling these institutions to increase in size […] we are placing the total financial system of the future at a substantial risk."
Also in 2005, Republican Senators included John McCain, introduced legislation to tighten up regulation of Freddie and Fannie. Senator Chuck Schumer and Senator Chris Dodd and other Democrats resisted, and the legislation lacked the support to get any traction. After the Democrats took over Congress in 2006, all chances of reform were lost.
Senator John McCain has continued to push for reform. He has argued that Freddie and Fannie should be dissolved, and that new regulations should be pass that "limits their ability to borrow, shrinks their size until they are no longer a threat to our economy and privatizes and eliminates their links to the government."
… while Fannie and Freddie cooked their books to boost their executives’ multi-million dollar compensation packages.
In addition to the willful ignorance displayed by the Chairman of the House Financial Services Committee, the executives of Freddie and Fannie were busy gambling away tax payer money on dicey investment products.
Chief Executive of Freddie Mac, Richard F. Syron ignored the warnings from regulators that Freddie Mac's portfolio was built on shaky, financial grounds. According to the New York Times, Syron was warned in 2004 that Freddie Mac needed to cut back on investments in risky loans. New York Times reports that Syron received a memo from the chief risk officer, David A. Andrukonis, raising alarm about questionable loans.
Mr. Andrukonis warned Syron that the company's investment strategies were "an enormous financial and reputational risk to the company and the country." According to Andrukonis, Syron said that government regulators had no right to dictate their investment strategies. Mr. Syron reportedly said in a private meeting with investors that: "This company will bow to no one."
In apparent frustration, Andrukonis eventually left Freddie Mac to take a teaching position in 2005. Over the next three years, Freddie Mac continued buying riskier loans. And last month, in the midst of the crumbling share values, the government took the drastic step to bailout Freddie Mac and Fannie Mae. As taxpayers footed the bill, Syron brought home a reward for his ineptitude. From 2003 to Aug 2008, Syron has collected $38 million in compensation.
Like Syron, the chairs of Fannie Mae have also reaped a profit from the mismanaged endeavors. Amid an Enron-like accounting scandal in 2004, former head of Fannie Mae, Franklin Raines, was forced to resign. Raines still managed to walk out of the door with at least $20 million in compensation. Raines is now a consultant with none other than the Obama campaign.
Replacing Mr. Raines, Daniel H. Mudd became chief executive in 2004. Under his leadership, shareholders of Fannie Mae lost millions of dollars. Nevertheless, he managed to earn at least $42 million in compensation.
Predatory politicians took millions in campaign funds from Fannie Mae and Freddie Mac in exchange for political protection against attempts at reform.
Fannie and Freddie worked hard – and paid millions – to protect themselves from reform efforts in Congress. Between 2000 and 2008, Fannie and Freddie employees contributed nearly $15 million to the campaigns of Members of Congress on key committees responsible for their oversight.
Topping the list in the Senate was Senate Banking Committee Chairman Chris Dodd at $165,400 in contributions. But coming a close second is Barack Obama, despite having been in the Senate only since 2004.
OpenSecrets reports that in just four years in office, Senator Obama has received $126,349 in political donations, whereas Senator McCain, first elected in 1986, has only received $21,550.
Predatory politicians funded radical groups like ACORN which receive millions in taxpayers dollars to extort banks into making risky loans, all the while they work to get out the vote for the liberal politicians that are their benefactors.
As we’ve seen, the radical, anti-free market group ACORN has been one of the most successful of the leftwing “community” groups at working hand-in-glove with predatory politicians to fuel the economic crisis.
Perhaps that’s why last summer’s housing bailout bill, and the Paulson bailout bill after congressional Democrats got done with, contained hundreds of millions in new funds to groups like ACORN.
Whether they’re receiving funds from banks via the Community Reinvestment Act, through contributions from Fannie Mae and Freddie Mac, or direct payments from the taxpayer via Congress, these radical groups have been the shock troops of predatory politicians seeking to advance their leftwing agenda. They disrupt meetings, harass public officials and use other “in your face” tactics to justify their funding. And in return, they work to get out the vote for the liberal politicians who support them.
More than any other single factor, predatory politicians used the weight and power of the federal government to create the market for the subprime loans that are at the heart of our financial melt-down.
And now these same predatory politicians are looking into the cameras and saying:
“The private sector got us into this mess. The government has to
But are free markets at the root of the current economic crisis, or meddling politicians?
In short: Is our problem predatory lenders, or predatory politicians?
Predatory Politicians Use Government to Get What They Want
Predatory politicians are vastly more dangerous then predatory lenders because they bring the full authority and vast resources of the federal government to their attempts to coerce and control the American people.
If predatory lenders seek to take advantage of peoples’ desperation and ignorance to make bad loans, predatory politician take advantage of taxpayers money and the power of the government to advance their leftwing agenda. And as we will see, predatory politicians made the work of predatory lenders much easier by putting the U.S. taxpayers in the role of guaranteeing all the bad paper predatory lenders could produce.
· Predatory bankers (and there were plenty) exploited a booming housing market to give loans to people who never should have received them. But predatory politicians forced banks to make bad loans.
· Predatory politicians (and the pursuit of profits) pushed Fannie Mae and Freddie Mac into buying up more and more risky, subprime loans, creating incentives for mortgage providers to issue even more bad loans.
· “Predatory politicians resisted attempts to reign in Fannie Mae and Freddie Mac as the lenders put the taxpayers on the line for trillions of dollars in bad loans – all while Fannie and Freddie cooked their books to boost their executives’ multi-million dollar compensation packages.
· Predatory politicians took millions in campaign funds from Fannie Mae and Freddie Mac in exchange for political protection against attempts at reform.
· Predatory politicians funded radical groups like ACORN which receive millions in taxpayers dollars to extort banks into making risky loans, all the while they work to get out the vote for the liberal politicians that are their benefactors.
Predatory politicians forced banks to make bad loans.
During the Carter Administration Congress passed the Community Reinvestment Act (CRA) with the laudable goal of helping the poor afford homes. It forced banks to prove they weren’t “redlining” inner city neighborhoods by refusing to lend to urban residents while using their deposits to lend to suburban homeowners with better credit.
The CRA, as strengthened under the Clinton Administration, gave leftwing, anti-free market groups (more about them below) veto power over bank mergers unless banks could prove they were making loans to credit risks. Wielding this power, these leftwing so-called “community groups” have extorted hundreds of millions from banks. These community groups, in turn, finance both lending to low income mortgage seekers and get-out-the-vote activity for liberal politicians. As the City Journal reported in 2000, using the power to extort granted in the CRA, the radical, anti-free market group ACORN received $760 million from the Bank of New York, the Boston-based Neighborhood Assistance Corporation of America dragged $3 billion out of the Bank of America and a coalition of “community groups” in New Jersey got an astounding five-year, $13 billion agreement with First Union Bank.
Predatory politicians (and the pursuit of profits) pushed Fannie Mae and Freddie Mac into buying up more and more risky, subprime loans, creating incentives for mortgage providers to issue even more bad loans.
To understand the central role that Fannie Mae and Freddie Mac played in the making of the economic crisis – at the behest of predatory politicians – it is important to first understand what these two government-sponsored enterprises do.
Fannie and Freddie don’t make mortgages to individual home owners. Instead, they purchase mortgages from banks and other mortgage providers. The theory is that, by taking these mortgage obligations off the books of private bankers, Fannie and Freddie would free up capital for these banks to make more loans to other home buyers.
Fannie and Freddie would then take these mortgages and “securitize” them by bundling them together and selling them to investors such as investment banks and pension funds. Investors received returns on their investments as long as home values continued to climb and the underlying mortgages were paid. The risk for the investor, then, is in the quality of the underlying mortgages. And under pressure from predatory politicians and in pursuit of profits, Fannie and Freddie became increasingly involved in risky subprime mortgages in the 1990s. But because Freddie and Fannie are backed by the federal government, investors continued to buy their securities, safe in the knowledge that if there was a problem, the government would bail them out.
In 1999, under pressure from the Clinton Administration to increase home ownership rates among low income borrowers, Fannie Mae CEO Franklin Raines lowered his company’s lending standards to include, “individuals whose credit is generally not good enough to qualify for conventional loans.”
The result, government regulators testified last month, was that by 2008 about 33 percent of Fannie and Freddie’s business involved risky loans. And as of May 2008, Freddie and Fannie had guaranteed $2.2 trillion in mortgages, about 75% of all mortgages in the U.S., and owned a quarter of the all the mortgage back securities issued on the market.
Here’s how a new report from the minority staff of the House Oversight and Government Reform Committee captures Freddie and Fannie’s role in the current crisis:
“As the largest purchasers and securitizers of mortgages and [mortgage-backed securities] in the world, Fannie Mae and Freddie Mac exert a powerful influence on the rest of the mortgage lending market. By signaling their willingness to dip ever deeper into the pool of risky subprime and Alt-A mortgages, they created powerful incentives for non-bank lenders like Countrywide Financial and Lehman Brothers to continue scraping the bottom of the mortgage barrel. This fueled the disastrous housing bubble that collapsed with such dire consequences for the U.S. and global financial system.
Predatory politicians resisted calls to reign-in Fannie Mae and Freddie Mac as they put the taxpayers on the line for trillions of dollars bad loans …
Much of the current crisis could have been prevent if Congressman Barney Frank would have encouraged reform instead of prevented it. As the chairman of the House Financial Services Committee, Barney Frank resisted any regulation of Freddie and Fannie's investment strategies and even sought to increase their portfolios. The mission of Freddie and Fannie - to provide low income housing - became a smoke shield for Frank to reward his buddies from Freddie and Fannie.
Frank had a habit of making public excuses for Freddie and Fannie. In 2000, Franks said that he said concerns about Fannie and Freddie were "overblown." In 2002, Franks categorized them as "great assets." In 2003, he said that the American people did "not face any crisis" with containing the risk in Freddie's and Fannie's portfolios. Frank clearly ignored the obviously unsound investment practices of Freddie, so that he could continue to pass on rewards to industry insiders.
In 2005, Federal Reserve Chairman Alan Greenspan sounded the alarm to the House Financial Service Committee, for the second time in two years, about the undercapitalization of Freddie and Fannie's portfolios. He warned that by "[e]nabling these institutions to increase in size […] we are placing the total financial system of the future at a substantial risk."
Also in 2005, Republican Senators included John McCain, introduced legislation to tighten up regulation of Freddie and Fannie. Senator Chuck Schumer and Senator Chris Dodd and other Democrats resisted, and the legislation lacked the support to get any traction. After the Democrats took over Congress in 2006, all chances of reform were lost.
Senator John McCain has continued to push for reform. He has argued that Freddie and Fannie should be dissolved, and that new regulations should be pass that "limits their ability to borrow, shrinks their size until they are no longer a threat to our economy and privatizes and eliminates their links to the government."
… while Fannie and Freddie cooked their books to boost their executives’ multi-million dollar compensation packages.
In addition to the willful ignorance displayed by the Chairman of the House Financial Services Committee, the executives of Freddie and Fannie were busy gambling away tax payer money on dicey investment products.
Chief Executive of Freddie Mac, Richard F. Syron ignored the warnings from regulators that Freddie Mac's portfolio was built on shaky, financial grounds. According to the New York Times, Syron was warned in 2004 that Freddie Mac needed to cut back on investments in risky loans. New York Times reports that Syron received a memo from the chief risk officer, David A. Andrukonis, raising alarm about questionable loans.
Mr. Andrukonis warned Syron that the company's investment strategies were "an enormous financial and reputational risk to the company and the country." According to Andrukonis, Syron said that government regulators had no right to dictate their investment strategies. Mr. Syron reportedly said in a private meeting with investors that: "This company will bow to no one."
In apparent frustration, Andrukonis eventually left Freddie Mac to take a teaching position in 2005. Over the next three years, Freddie Mac continued buying riskier loans. And last month, in the midst of the crumbling share values, the government took the drastic step to bailout Freddie Mac and Fannie Mae. As taxpayers footed the bill, Syron brought home a reward for his ineptitude. From 2003 to Aug 2008, Syron has collected $38 million in compensation.
Like Syron, the chairs of Fannie Mae have also reaped a profit from the mismanaged endeavors. Amid an Enron-like accounting scandal in 2004, former head of Fannie Mae, Franklin Raines, was forced to resign. Raines still managed to walk out of the door with at least $20 million in compensation. Raines is now a consultant with none other than the Obama campaign.
Replacing Mr. Raines, Daniel H. Mudd became chief executive in 2004. Under his leadership, shareholders of Fannie Mae lost millions of dollars. Nevertheless, he managed to earn at least $42 million in compensation.
Predatory politicians took millions in campaign funds from Fannie Mae and Freddie Mac in exchange for political protection against attempts at reform.
Fannie and Freddie worked hard – and paid millions – to protect themselves from reform efforts in Congress. Between 2000 and 2008, Fannie and Freddie employees contributed nearly $15 million to the campaigns of Members of Congress on key committees responsible for their oversight.
Topping the list in the Senate was Senate Banking Committee Chairman Chris Dodd at $165,400 in contributions. But coming a close second is Barack Obama, despite having been in the Senate only since 2004.
OpenSecrets reports that in just four years in office, Senator Obama has received $126,349 in political donations, whereas Senator McCain, first elected in 1986, has only received $21,550.
Predatory politicians funded radical groups like ACORN which receive millions in taxpayers dollars to extort banks into making risky loans, all the while they work to get out the vote for the liberal politicians that are their benefactors.
As we’ve seen, the radical, anti-free market group ACORN has been one of the most successful of the leftwing “community” groups at working hand-in-glove with predatory politicians to fuel the economic crisis.
Perhaps that’s why last summer’s housing bailout bill, and the Paulson bailout bill after congressional Democrats got done with, contained hundreds of millions in new funds to groups like ACORN.
Whether they’re receiving funds from banks via the Community Reinvestment Act, through contributions from Fannie Mae and Freddie Mac, or direct payments from the taxpayer via Congress, these radical groups have been the shock troops of predatory politicians seeking to advance their leftwing agenda. They disrupt meetings, harass public officials and use other “in your face” tactics to justify their funding. And in return, they work to get out the vote for the liberal politicians who support them.
More than any other single factor, predatory politicians used the weight and power of the federal government to create the market for the subprime loans that are at the heart of our financial melt-down.
And now these same predatory politicians are looking into the cameras and saying:
“The private sector got us into this mess. The government has to
get us out of it.”
The truth is, predatory politicians got us into this mess. Now the
The truth is, predatory politicians got us into this mess. Now the
taxpayers are footing the bill to get us out of it.
It’s not the free market that’s sick, it’s government that’s sick. As P.J. O'Rourke once
It’s not the free market that’s sick, it’s government that’s sick. As P.J. O'Rourke once
wrote, "Giving money and power to government is like giving whiskey and car keys to
teenage boys." It’s time to take away the whiskey and the car keys from the
predatory politicians.
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