Holder to Prosecute Bankers?

Holder starts 90-day clock on potential prosecution of bankers

US Attorney General Eric Holder says that the Justice Department will decide within the next 90 days whether to charge individual Wall Street Executives with crimes related to the 2008 financial crisis. Holder asked prosecutors who have been investigating the big banks to recommend whether to bring charges or close the probes.

This revelation was made during a speech to the National Press Club Tuesday, February 17. Many have harshly criticized the attorney general for failing to prosecute the people who nearly sent the global financial system into collapse in 2008. Holder is leaving after six years as AG, to be replaced by Loretta Lynch, the U.S. attorney for Brooklyn.

Read about some of the fabulously wealthy ex-bankers who would be targeted:

Ex-Wall Street chieftains living large in post-meltdown world

Bank Regulation Needed

America Needs Bank Regulation More Than Ever!

At a time when Congress seems dedicated to rolling back as much of the Dodd-Frank Wall Street Reform and Consumer Protection Act as possible, it gets clearer every day that America, as a nation, and all Americans as individuals need reform of the too-big-to-fail Wall Street banks more than ever.

The first signal was the economic catastrophe so narrowly averted in 2008, when these grotesquely bloated institutions led the world economy into chaos. Then, over the intervening years that we’ve battled those same banks every day in court, the overwhelming lesson we’ve learned has been that Banks simply don’t do business like business. They routinely, almost universally, fail to adequately perform the very basic functions for which they are responsible. It is these lapses that make it possible to fight the banks in foreclosure court.

More recently, we read one news story after another about how the big banks consciously engage in absolutely unmistakable criminality, such as assisting drug barons, arms merchants and other felons to launder the proceeds of their crimes, evade paying their fair share of American taxes, and generally conduct themselves like there is no such thing as law.

Over the same period of time, we have learned more and more examples of huge amounts of money being lost to forgery, larceny, and other forms of theft, most examples of which go unreported, because the banks don’t want the bad publicity. They just quietly cover the loss, and allow the taxpayer to get left holding the bag when they eventually get in trouble. Most of these problems are a function of nobody at the bank ever actually looking at signatures on checks, or the many other routine functions designed to protect the financial system. These things don’t get done mostly because the banks aren’t willing to hire enough people, well enough paid to do what it takes to make banking safe in this day and age.

Finally, as the danger of remote attacks from hackers increases every single day, the banks are not responding appropriately to tighten their systems. The New York Times (among others) has written about a 2013 attack on banks all over the globe, of breathtaking size and complexity. It is an illuminating read:

Bank Hackers Steal Millions via Malware
This new threat is actually another threat to the global economic system, one in the very backyards of the Wall Street bankers, but they are asleep at the wheel, as usual. Their failure to respond aggressively to this threat may turn out to be many times more damaging than the 9/11 attacks on the World Trade Center and Pentagon.

Wall Street’s Revenge

Wall Street’s Revenge
“Whiners with Warchests”

Dodd-Frank Damaged in the Budget Bill

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Last week, Nobel-Prize winning economist Paul Krugman coined the term “Obama rage,” to explain the ju-jitsu like turns in which the banking oligarchs engage to evade responsibility for their historic crime in destabilizing the world economy through reckless banking practices.

“On Wall Street, 2010 was the year of “Obama rage,” in which financial tycoons went ballistic over the president’s suggestion that some bankers helped cause the financial crisis. They were also, of course, angry about the Dodd-Frank financial reform, which placed some limits on their wheeling and dealing.

“The Masters of the Universe, it turns out, are a bunch of whiners. But they’re whiners with war chests, and now they’ve bought themselves a Congress.”

“Before I get to specifics, a word about the changing politics of high finance.

“Most interest groups have stable political loyalties. For example, the coal industry always gives the vast bulk of its political contributions to Republicans, while teachers’ unions do the same for Democrats. You might have expected Wall Street to favor the G.O.P., which is always eager to cut taxes on the rich. In fact, however, the securities and investment industry — perhaps affected by New York’s social liberalism, perhaps recognizing the tendency of stocks to do much better when Democrats hold the White House — has historically split its support more or less equally between the two parties.

“But that all changed with the onset of Obama rage. Wall Street overwhelmingly backed Mitt Romney in 2012, and invested heavily in Republicans once again this year. And the first payoff to that investment has already been realized. Last week Congress passed a bill to maintain funding for the U.S. government into next year, and included in that bill was a rollback of one provision of the 2010 financial reform.

“In itself, this rollback is significant but not a fatal blow to reform. But it’s utterly indefensible. The incoming congressional majority has revealed its agenda — and it’s all about rewarding bad actors.

“So, about that provision. One of the goals of financial reform was to stop banks from taking big risks with depositors’ money. Why? Well, bank deposits are insured against loss, and this creates a well-known problem of “moral hazard”: If banks are free to gamble, they can play a game of heads we win, tails the taxpayers lose. That’s what happened after savings-and-loan institutions were deregulated in the 1980s, and promptly ran wild.

“Dodd-Frank tried to limit this kind of moral hazard in various ways, including a rule barring insured institutions from dealing in exotic securities, the kind that played such a big role in the financial crisis. And that’s the rule that has just been rolled back.

“Now, this isn’t the death of financial reform. In fact, I’d argue that regulating insured banks is something of a sideshow, since the 2008 crisis was brought on mainly by uninsured institutions like Lehman Brothers and A.I.G. The really important parts of reform involve consumer protection and the enhanced ability of regulators both to police the actions of “systemically important” financial institutions (which needn’t be conventional banks) and to take such institutions into receivership at times of crisis.

“But what Congress did is still outrageous — and both sides of the ideological divide should agree. After all, even if you believe (in defiance of the lessons of history) that financial institutions can be trusted to police themselves, even if you believe the grotesquely false narrative that bleeding-heart liberals caused the financial crisis by pressuring banks to lend to poor people, especially minority borrowers, you should be against letting Wall Street play games with government-guaranteed funds. What just went down isn’t about free-market economics; it’s pure crony capitalism.

“And sure enough, Citigroup literally wrote the deregulation language that was inserted into the funding bill.

“Again, in itself last week’s action wasn’t decisive. But it was clearly the first skirmish in a war to roll back much if not all of the financial reform. And if you want to know who stands where in this coming war, follow the money: Wall Street is giving mainly to Republicans for a reason.

“It’s true that most of the political headlines these past few days have been about Democratic division, with Senator Elizabeth Warren urging rejection of a funding bill the White House wanted passed. But this was mainly a divide about tactics, with few Democrats actually believing that undoing Dodd-Frank is a good idea.

“Meanwhile, it’s hard to find Republicans expressing major reservations about undoing reform. You sometimes hear claims that the Tea Party is as opposed to bailing out bankers as it is to aiding the poor, but there’s no sign that this alleged hostility to Wall Street is having any influence at all on Republican priorities.

“So the people who brought the economy to its knees are seeking the chance to do it all over again. And they have powerful allies, who are doing all they can to make Wall Street’s dream come true.”

Read Full Article

TOM’S COMMENTS

It’s difficult to believe, after all we’ve been through, but once again the Too-Big-to-Fail Banks are getting their way, and the likelihood is climbing that we will end up having to bail them out again, and in our lifetime! When will the American people learn?

Hurricane Readiness

HURRICANE READINESS AND SURVIVAL

When comparing properties, it is obvious that masonry, especially cement block (or even solid concrete) construction is more resistant to hurricane-strength winds and other storm effects than frame houses.

No matter how sturdy a home may appear, if the roof blows off in a storm, the likelihood that the structure will fail generally is greatly increased, and it will likely be a total loss.  Hurricane straps are metal straps that firmly connect each roof truss and beam to each other and to the walls are very effective in keeping roofs on buildings during all but the most powerful storms.

South Florida building standards in place for many years required the following structural elements:

Concrete foundations with steel reinforcement

Concrete slab floors with steel mesh reinforcement

Concrete block walls steel re-bar vertical members, with cement poured through the wall at building corners and every X feet along walls

A solid-poured top of wall concrete collar around the perimeter of the structure, containing steel reinforcement

The physical joining of the steel reinforcing elements of each part of the structure with each other.

Roof trusses constructed of a minimum of 2 X 6 members

Happy Birthday, CFPB!

The Consumer Financial Protection Bureau (CFPB) turned three years old this month, and every American consumer should celebrate!

For those who don’t know, the CFPB was originally proposed by (now Senator) Elizabeth Warren in 2007, and was passed as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act.

In the wake of the financial meltdown, the CFPB was tasked with standing up for consumers, making sure they’re treated fairly, and restoring trust in the consumer financial marketplace.

Their core mission is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products, including student loans, payday loans, and even retirement products, while always enforcing the consumer protection laws.

Their website, which is very informative is located at: www.consumerfinance.gov

TOM’S COMMENTARY:

Making sure that consumers are treated fairly and restoring trust in the marketplace is a huge task, given the fact that every corner of the American political sector has sold out lock, stock and barrel to Wall Street.

Nevertheless, the CFPB is the very best that consumers have, and is making a measurable difference.

One example will show you how much better it would have been for homeowners had the CFPB been in place a long time ago:

The $25 Billion settlement with the Big 5 Banks (negotiated in the political sphere by the 50 state Attorneys General) provided that the banks could get credit toward their share of the huge penalty by reducing the principal balances of mortgages. Through clever political slight-of-hand, the Banks got the biggest gift in the world, and the homeowner got the shaft. That is, the banks got credit toward their penalty for FRAUD by reducing principal balances of mortgages in the course of forcing short-sales, i.e., putting Americans out of their homes!

Compare: the more recent Ocwen settlement, by the CFPB for $2.5 Billion, specified that any credit for reducing principal balances had to be to help people stay in their homes! The difference? Many hundreds of thousands of American families displaced for no good reason. The remedy itself had turned out to be a crime.

That will not happen on the CFPB’s watch.

Wells Fargo Foreclosure Manual

Wells Fargo
foreclosure manual under fire
By Danielle Douglas, The Washington Post

Robo-Signing Revisited?
In the course of defending a New York homeowner attorney Linda Tirelli says she found a 150-page manual instructing Wells Fargo lawyers how to process foreclosures when the endorsement to the note is missing. Lenders need endorsements to prove that they own the mortgage, before they can foreclose or sue on the note.

Tirelli has filed a lawsuit that has caught the attention of state and federal regulators.

~~~

Tirelli said she has long suspected Wells Fargo of manufacturing documents. A number of her past cases involving the bank featured mortgage notes that were not endorsed by anyone, but when she brought it to Wells Fargo’s attention the bank would “magically” produced the document, Tirelli said. It happened so often to her and other consumer lawyers that they started to call paperwork “ta-da” documents, she said.

The bank denies wrongdoing, but the allegations are a reminder of the history of lenders, including Wells Fargo, using a practice known as “robo-signing.” Those charges, of course, led to a $25 billion national mortgage settlement that was supposed to put an end to such abusive practices, but many lawyers say that nothing has really changed.

The manual, reviewed by The Washington Post, outlines steps for obtaining the missing document after the bank has initiated foreclosure proceedings. It also lays out what lawyers must do in the event of a lost affidavit or if there is no documentation showing the history of who owned the loan, paperwork the bank should already have.

“This is a blueprint for fraud,” said Tirelli, who attached a copy of the manual as evidence in the lawsuit filed in U.S. District Court in White Plains, N.Y. “The idea that this bank is instructing people how to produce these documents is appalling.”

Adams explained that the company updated the manual in the midst of the investigation that led to the national mortgage settlement to help its lawyers keep pace with changing laws, regulations and foreclosure procedures. What’s more, the procedures laid out in the manual are legal, she said.

“What’s so unfortunate here is the exaggeration on behalf of litigation,” Adams said. “There are a number of procedures in place and triple checking before a foreclosure is brought. This is a misrepresentation of facts.”

Banking lawyer Jeffrey Naimon at Buckley Sandler said the law does allow lenders to endorse notes after filing for foreclosure. He said lenders can transfer ownership of a mortgage by filling out the endorsement or leaving a blank endorsement.

“All you have to do is have a note endorsed in blank. . . . The reason why is because the note could be sold to a few more people,” he said. “The bearer of the note still has the right to enforce it.”

Tirelli said she was also contacted by the Consumer Financial Protection Bureau and the monitor for the national mortgage settlement, both of which declined to comment for this article. A fifth agency, the Justice Department’s U.S. Trustee Program, which oversees bankruptcies, could not be reached for comment.

Read Full Article

Foreclosure Manual (150 Pages)

TOM’S COMMENTS

In Florida, court rules require the plaintiff to have a complete cause of action BEFORE they file a lawsuit. For that reason, an endorsement executed after filing is insufficient. The problem is, they aren’t dated, making it easy to mislead the court and the defendant.

Under Every Rock

In explaining the labyrinthine world of foreclosures to new clients, I always find myself explaining that “Under every rock you turn over (in mortgage foreclosures), you will find a snake.”

And just about everyone (on the plaintiff’s side of foreclosures) gets to play the part of the snake.  The big Wall Street bankers played that role all along, in fact, it obviously comes quite naturally to them.  The bank’s lawyers also seem to find it easy to “slip that skin on.”  We’ll talk more about their contributions in another post.

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The loan servicers represent a very big snake, and are perhaps the best example of what I’m talking about.  They don’t own the loans, they don’t have “skin in the game,” as they say, but they drive the bus.  All their decisions while doing that “driving” are influenced by their own narrow, selfish interests.  This is what we call a conflict of interest.  They abound in foreclosures.

Here’s a small example of that.  Most homeowners complain about the behavior of the banks, whether it be the handling of homeowner payments and escrows, in filing a foreclosure in the first place, and, of course, their decisions in the course of modification negotiations.

Even when they’re losing in Court, the banks are reckless, seemingly oblivious to reality.  Part of the reason for that is that they are insulated from reality.  The banks (and their servicers) tend to “award” foreclosure cases to their law firms in huge lots, typically hundreds or even thousands of cases at a time.  Those lawyers lives are literally changed by this “windfall” of business, and if they do it right, they can get rich off those cases.  So, they tend to live in fear of losing them.  As a result, they try very hard not to give their clients any bad news which they can possibly avoid.  To do so would be to risk having all their cases pulled out, and assigned to another law firm (and that law firm get rich…).  So, even if they’re losing in Court, they don’t necessarily share that information with the bank

The lack of that “feedback” mechanism that most people have with their lawyers permits them, even causes them to act just the same as ever, without regard for what is going on in the case.  So, they don’t act in a business-like fashion like most litigants would, instead they are essentially schizophrenic.

Just my opinion…

Schemes: Equity Stripping

Equity Stripping

Another Common Rescue Scheme

Equity stripping or equity skimming is a variation on lease-buyback and is one of the most common types of foreclosure rescue schemes.  In it, the perpetrator assumes ownership of the house while allowing the former owner to continue living there, provided that he or she pays rent to the perpetrator, who is the new owner. The perpetrator often claims this ownership is temporary, and the victim will later reassume ownership of the home once the terms of the loan are renegotiated. But after taking over the deed to the house, the perpetrator cashes out all the equity in the home. The perpetrator also collects money from the victim by charging rent to the victim for living in the house while not owning it.

The final result is always the same: eviction from the house, with zero equity paired with greater financial loss to the victim. The perpetrator, who then has ownership of the home, will either sell the property or allow it to go into foreclosure.

Scheme: Lease-Buyback

Lease-Buyback Schemes
A Classic and Widespread Scheme

A lease-buyback scheme starts with an offer where the owner can turn the lease over to another, with an option to buy it back later. The owner is promised to be able to rent the property back, which will be counted toward an eventual buyback. These will almost certainly end in the loss of the property, or considerable additional cost – The rental prices maybe made so high that the original owner cannot afford to continue paying and/or the buyback price maybe set far above the fair market value of the property.

TOM’S COMMENTARY:

We have seen many examples of this scheme around Florida. Thanks to the tough Florida law, the perteptrators (at least so far) have always agreed to sign a deed immediately returning title to the homeowner, in order to avoid being reported to the States Attorney. That does not mean that the simple act of signing the deed to the scammer in the first place doesn’t complicate the task of helping the homeower.

Please, PLEASE, contact a licensed real estate attorney before deeding your home to anyone (including the BANK)! You have rights, and your chances of retaining your home (if you simply defend) are much better than you may imagine.

Video: A Moment for Humor

We’re Suckers for a Cute Dog!

We spend a lot of time thinking about such heavy, complicated subjects as mortgage securitization, credit-default swaps, and advanced strategies for keeping people in their homes.  Once in a while, though, you just need to relax and enjoy a little simple humor.  In that spirit, meet Clark!