Fear, Desperation and Doom Describe the Housing Market

Posted: Oct 13 2010     By: Greg Hunter      Post Edited: October 13, 2010 at 8:17 am
Filed under: Greg Hunter, USAWatchdog.com
(Courtesy of Greg Hunter of www.USAWatchdog.com)
Dear CIGAs,
It has been called foreclosure gate, robo signing, foreclosure fraud or just sloppy paperwork; but no matter what you call it, it’s signaling a new financial meltdown for the U.S. economy.  The securitized mortgage debt created in the real estate bubble is being called the “largest fraud in the history of capital markets” by people like renowned gold expert Jim Sinclair.  The big banks packaged mortgages into securities (mortgage backed security) and then sold them to pension funds and investors.  The mortgages in these securities had to meet what is called “contractual representation and warranties.”   That basically means the bank had to legally be able to prove it owned the property it was selling in the security.  Once more, the mortgage applications and appraisals were required to be free of fraud.  The “robo signing” is all about creating paperwork that proves the banks owned the property in the “security” and the mortgage was done correctly.  In millions of mortgages, the banks either can’t find or do not want to produce the original paperwork with the borrowers signature  (promissory note).   Now, investors want to force the banks to buy back trillions in mortgage backed securities that have lost value.   In a recent interview on MSNBC, Congressman Brad Miller said, “. . . in almost every contract if they (the MBS’s) weren’t what they were contractually required to be, the bank had to buy them back.  That’s probably more than they could buy back and we may be back where we were two years ago.”  (Click here for the entire MSNBC interview with Rep. Miller.)
Two years ago, Treasury Secretary Hank Paulson warned Congressional leaders we were just days away from a complete “meltdown of our financial system, with all the implications here at home and globally.”  I think we will be getting to that point again and soon.  Sinclair says, “Securitized mortgage debt is going to be the final shot that kills all kinds of financial entities in the Western world.”  (Click here for the complete Sinclair post at JSMineset.com.)
Some in federal and state government are calling for a moratorium in all foreclosures across the entire country.  CNBC recently reported, “40 States to Launch Probes Into Foreclosure Mess.”  The story goes on to say, “The attorneys general of up to 40 states plan to announce soon a joint investigation into banks’ use of flawed foreclosure paperwork.”  (Click here for the complete story.)  Wall Street is sending up warning flares that the economy could be damaged even more if foreclosures are stopped.  (Many banks have already stopped foreclosures in some states.)  According to a Reuters story, “The Securities Industry and Financial Markets Association said foreclosure processing mistakes should be fixed but said dramatic nationwide action could unjustly impose losses on the investors who help provide credit to the $11 trillion U.S. mortgage market.  “It is imperative…that care be taken in addressing these issues to ensure that no unnecessary damage is done to an already weak housing market and, in turn, that there is no further negative impact on the economy,” SIFMA Chief Executive Tim Ryan said in a statement.”  (Click here for the complete Reuters story.)
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In The News Today

Posted: Oct 13 2010     By: Jim Sinclair      Post Edited: October 13, 2010 at 8:41 am
Filed under: In The News
Jim Sinclair’s Commentary
It is worse than even this article suggests. It ends saying anyone who thinks this can be cleaned up promptly by the banks is delusional.

Foreclosure Fraud: It’s Worse Than You Think Published: Tuesday, 12 Oct 2010 | 1:14 PM ET
By: Diana Olick
There has been plenty of pontificating over the ramifications of foreclosure freezes on troubled borrowers, foreclosure buyers and the larger housing market, not to mention lawsuits, investor losses and bank write downs. There has been precious little talk of what the real legal issues are behind the robosigning scandal. Yes, you can’t/shouldn’t sign documents you never read, but that’s just the tip of the iceberg. The real issue is ownership of these loans and who has the right to foreclose. By the way, despite various comments from the Obama administration, foreclosures are governed by state law. There is no real federal jurisdiction.
A source of mine pointed me to a recent conference call Citigroup had with investors/clients.  It featured Adam Levitin, a Georgetown University Law professor who specializes in, among many other financial regulatory issues, mortgage finance. Levitin says the documentation problems involved in the mortgage mess have the potential "to cloud title on not just foreclosed mortgages but on performing mortgages."
The issues are securitization, modernization and a whole lot of cut corners. Real estate law requires real paper transfer of documents and titles, and a lot of the system went electronic without much regard to that persnickety rule. Mortgages and property titles are transferred several times in the process of a home purchase from originators to securitization sponsors to depositors to trusts. Trustees hold the note (which is the IOU on the mortgage), the mortgage (the security that says the house is collateral) and the assignment of the note and security instrument.
The issue is in that final stage getting to the trust. The law demands that when the papers get moved around they are "wet ink," that is, real signatures on real paper. But Prof. Levin tells me that’s not the worst of it. Affidavits assigned to the notes and security instruments are supposed to be endorsed over to the trust at the time of sale, but in many foreclosure scenarios the affidavits have been backdated illegally.
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Jim Sinclair’s Commentary
A society that does not look after its seniors is not a society; it is a group of people.

S&P warns on cost of aging population BY PAUL HANNON
LONDON—Government debts will surge in coming decades if action isn’t taken quickly to cut the cost of paying pensions and providing health care to aging populations, Standard & Poor’s Ratings Services said in a report published Friday.
If governments don’t cut age-related spending, S&P said, the size of the state relative to the economy will jump and credit ratings will fall, with developed economies suffering the largest downgrades.
S&P said people aged 65 and over will account for 16.2% of the world’s population by 2050, up from 7.6% now. If current pension and other programs aren’t scaled down, S&P estimates …
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Jim Sinclair’s Commentary
I am surprised the Banksters did not outsource Robo foreclosures to a Yerk in Mongolia.

Robo-signers: Mortgage experience not necessary
Banks hired hair stylists, teens to process foreclosure documents, workers’ testimony shows
Michelle Conlin, AP Real Estate Writer, On Tuesday October 12, 2010, 9:21 pm EDT
NEW YORK (AP) — In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in "foreclosure expert" jobs with no formal training, a Florida lawyer says.
In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn’t define the word "affidavit." Others didn’t know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers’ accusations about document fraud.
"The mortgage servicers hired people who would never question authority," said Peter Ticktin, a Deerfield Beach, Fla., lawyer who is defending 3,000 homeowners in foreclosure cases. As part of his work, Ticktin gathered 150 depositions from bank employees who say they signed foreclosure affidavits without reviewing the documents or ever laying eyes on them — earning them the name "robo-signers."
The deposed employees worked for the mortgage service divisions of banks such as Bank of America and JP Morgan Chase, as well as for mortgage servicers like Litton Loan Servicing, a division of Goldman Sachs.
Ticktin said he would make the testimony available to state and federal agencies that are investigating financial institutions for allegations of possible mortgage fraud. This comes on the eve of an expected announcement Wednesday from 40 state attorneys general that they will launch a collective probe into the mortgage industry.
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Jim Sinclair’s Commentary
Not only are the pension funds below water on their commitments, but they are not worth what they say they are because of being stuffed to the eyeballs with OTC derivative securitized mortgage debt instruments now with extremely questionable collateral.

US Cities Face Half a Trillion Dollars of Pension Deficits Published: Tuesday, 12 Oct 2010 | 5:32 AM ET
By: Nicole Bullock, Financial Times
Big US cities could be squeezed by unfunded public pensions as they and counties face a $574 billion funding gap, a study to be released on Tuesday shows.
The gap at the municipal level would be in addition to $3,000 billion in unfunded liabilities already estimated for state-run pensions, according to research from the Kellogg School of Management at Northwestern University and the University of Rochester.
“What is yet to be seen is how this burden will be distributed between state and local governments and whether the federal government will be called upon for bail-outs,” said Joshua Rauh of the Kellogg School.
The financial demands of unfunded pension promises come as state and local governments grapple with years of falling tax revenue related to the recession.
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Jim Sinclair’s Commentary
There simply is NO money to meet these commitments.
The next QE bailout is not going to banks. It is going to be pension funds and non funded sate and local entitlements.

N.Y. Faces $200 Billion in Retiree Health Costs By MARY WILLIAMS WALSH
Published: October 12, 2010
The cities, counties and authorities of New York have promised more than $200 billion worth of health benefits to their retirees while setting aside almost nothing, putting the public work force on a collision course with the taxpayers who are expected to foot the bill.
The total cost appears in a report to be issued on Wednesday by the Empire Center for New York State Policy, a research organization that studies fiscal policy.
It does not suggest that New York must somehow come up with $200 billion right away.
But the report casts serious doubt over whether medical benefits for New York’s retirees will be sustainable, given the sputtering economy and today’s climate of hostility toward new taxes and taxpayer bailouts.
The daunting size of the health care obligation raises the possibility that localities will be forced at some point to choose between paying their retirees’ medical costs and paying the investors who hold their bonds. Government officials aim to satisfy both groups, and have even made painful cuts in local services when necessary to keep up with both sets of payments.
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Here Is Your Chance To Check If You Are The Victim Of Mortgage Fraud 

 Warning...The above website is run by the scum at the seiu union...you have been warned...

Citigroup Call On Implications On Foreclosure Crisis: "Just The Tip Of The Iceberg"

 

 

 

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