Jim’s Mailbox

Posted at 5:13 PM (CST) by & filed under Jim's Mailbox.

Dear CIGAs,

Over the past seven years I have told you many things that have not been too wrong. Here is the top of the heap of strange goings on in finance.

How many of your mortgages have been securitized multiple times? What if your servicer folded? The real owner of the mortgage might just knock on your door demanding payment.

It has been held now by many recent court cases that only the party which made the loan has the right to foreclose.

How would you like to find out that even though you have paid your mortgage, the real party of interest says screw you, pay again or it’s foreclosure time!

Please, those of you with mortgages on your homes track down the real owner of your paper, and fast.

Regards,
Jim

Hi Jim,

I just read CIGA 503’s comments on Fannie Mae mortgage recording.  Here is a new related question to ponder :

I recently initiated Identity Theft coverage and in the course of that work, I was asked to review my credit report. I discovered that my refinanced mortgage, paid in full in July 2005, has been retained as current and OPEN with a last payment of July 2005. The account is listed on the credit report as current, not paid and closed as were other previously listed mortgages. That mortgage was paid in full and closed (at least I thought it was closed) when I rolled into a new mortgage (refinance) in July 2005. All was done with the same financial institution (which closed and became Chase). The punch line is that the paid and supposedly closed mortgage is owned by TA DA: Fannie Mae. How many billions are being carried on the books that DO NOT EVEN EXIST? The plot thickens, the whole episode sickens.

CIGA Harley

 

Hi Jim,

With respect to the failure of Lehman Brothers, the release last week of the Bankruptcy Examiner’s 2,200 page report exposes the financial fraud perpetrated by Lehman and its colluders, most notably with respect to its repurchase agreements dubbed “Repo 105s” named as such because the value of the assets it transferred were worth at least 105% of the cash Lehman received in exchange.

However, this is only the tip of the iceberg… not just for Lehman, but for the vast majority of Wall Street Investment Banks that securitized mortgage loans over the last decade.

I believe that Lehman-like balance sheet accounting fraud is inherent within the nature of the securitization process; that “true sales” never took place and the transfer of assets to and from the participants in the securitization paradigm were book-entry financing deals; that consideration was never paid by the participants; that the funding came from outside sources; that the complexity of the structure was designed to cloak money laundering; that the trusts never achieved their tax free REMIC status; and that loans were purposely designed to fail so that the participants in the securitization could control both the cash flow and the real estate assets arising from these mortgage transactions when the bubble inevitably burst.

If I am correct, this would have serious implications for consumers whose loans were securitized because the participants in the securitization would be unable to prove that they legally conveyed the loans into the trust fund. Essentially, U.S. Bank and Wells Fargo had this opportunity in the Massachusetts Land Court cases last year and they could not produce the evidence of ownership. They produced the Notes, but not the proof of how they purchased the loans from the originators. The evidence also showed conclusively that the mortgages were never assigned from party to party according to the Pooling and Servicing Agreement and into the trusts.  This, in large part, is why Judge Long overturned two out of three foreclosures.

Much of the fraud is buried in the opaque OTC derivatives trading. I know I am preaching to the choir on this topic!

Respectfully,
CIGA Marie

Marie McDonnell, CFE
Truth In Lending Audit & Recovery Services, LLC
Mortgage Fraud and Forensic Analysts
Marie.McDonnell@truthinlending.net
P.O. Box 2760, Orleans, MA 02653
Tel. (508) 255-8829  Fax (508) 255-9626

Author Michael Lewis On Wall St’s Delusion
Author Tells "60 Minutes" What Led to Wall Street Collapse and Who Predicted It


Watch CBS News Videos Online

 

RE: Lehman Said to Return to U.S. Mortgages Through Unit (Update1)
BY: Jody Shenn, Bloomberg, October 21, 2009

Dear Ms. Shenn,

In doing some research on Lehman Brothers Bank I just came across your article referenced above and I am wondering if you would be kind enough to use your sources to research some questions I have about what became of a number of super-jumbo residential mortgage loans that Lehman made prior to its failure.

Specifically, I want to know how Lehman securitized its super-jumbo loans, especially in or about December 2004. I subscribe to Bloomberg Professional and have attempted to identify issuing entities that Lehman might have used for this purpose. None of them contain super-jumbo loans in the amount of $2,000,000 plus. I suspect Lehman dealt with a number of hedge funds who acquired these loans and would like to know who they might be.

The problem for consumers is that Aurora Loan, who services the Lehman-originated loans, will not disclose the identity of the legal owner and holder of the mortgage obligation where a “private investor” is concerned. Somehow, Aurora feels that it is exempt from Section 131(f)(2) of the Truth In Lending Act and the recent amendment enacted into law on May 20, 2009 under Section 404(a) of the Helping Families save Their Homes Act of 2009 codified as Section 131(g) of the Truth In Lending Act.

This effectively deprives consumers of knowing whom to serve a Notice of Rescission pursuant to the Truth In Lending Act, or otherwise, communicate about a loan modification.

Lehman/Aurora are not the only entities attempting to “hide the ball” with respect to revealing the identity of the owner of securitized mortgage loans; and I find that failed institutions such as Washington Mutual, IndyMac Bank, Bank United, AmTrust Bank, etc. are the worst offenders.

I very much appreciate your response and I am happy to answer any questions you may have about my inquiry.

Sincerely,
Marie

Marie McDonnell, CFE
Truth In Lending Audit & Recovery Services, LLC
Mortgage Fraud and Forensic Analyst
Certified Fraud Examiner
Marie.McDonnell@truthinlending.net
P.O. Box 2760, Orleans, MA 02653
Tel. (508) 255-8829  Fax (508) 255-9626

 

Fed holds rates at record lows to foster recovery
CIGA Eric

The Federal Reserve on Tuesday repeated its pledge to hold interest rates at record lows to foster the U.S. economic recovery and ease high unemployment.

Pledge to keep interest rates low? That certain has been implied as stocks, gold, silver, commodities and anything not nailed to the floor have rallied into the announcement. Can you believe that the miracle of liquidity will foster the U.S. economic recovery and ease high unemployment? Two words – jobless recovery. The best liquidity will do is encourage a little more leveraged-based consumption from people unaware that the economic landscape has changed.

U.S. Dollar Index (ETF):
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The U.S. dollar index is toying will critical up trend support. The setup in the COT diffusion index suggested a transition. Turns usually take time. Usually, 1-2-3, or three drive to a top.

Source: finance.yahoo.com

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Jim Sinclair’s Commentary

A sort of Gresham’s Law.

Change needed as Argentina coin shortage grows
CIGA Eric

The Argentina coin shortage is growing as inflation makes a coin’s metal worth more than its face value.

Despite Argentine President Cristina Fernández de Kirchner’s promise more than a year ago to introduce electronic bus tickets in Buenos Aires, the vast majority of the capital’s bus lines still only accepts coins. This would not be such a big deal if not for the fact that Argentina has had a coin shortage for more than three years. The crisis has turned normally mundane tasks – like buying a newspaper or a snack – into a big hassle.

We talked about this for some time. When the intrinsic value of a coin’s composition exceeds its face value, they tend to disappear from circulation. A problem for not only Argentina but also Canada, the United States or any other nation that devalues it currency.

Source: csmonitor.com

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Dear CIGAS,

Track down who owns your mortgage. It could be very helpful to you in the future.

Regards,
Jim

Hello,

I wish comments were turned "on" on your website.  I would have made the following comments on the posting today on the ‘quiz’…

I don’t have to call – I already know who owns my mortgage.  I received a letter a while back from Fannie Mae. It was informing me that although my mortgage had been sold to Fannie, the same old servicer would continue to service my loan. Further, the most puzzling part was that the letter went on to tell me that there would be no documents recorded at my county recorder’s office showing the change in ownership. I couldn’t believe that the quasi-governmental entity that owned my mortgage wasn’t interested in recording their interest in my property for all to see.

My other questions, which I’ve never asked Fannie, included how much did Fannie (aka the US taxpayers) pay the ‘old’ mortgage holder to ‘own’ my mortgage?; how much additional did/does Fannie pay the ‘old’ mortgage holder to now be the servicer?; if I default, who would ultimately receive the proceeds from a sale of the property – Fannie (who has an unrecorded interest) – or the ‘old’ mortgage owner? If the answer to the last question is the old mortgage owner, then how many trillions or quadrillions are the banks ripping off the US taxpayers in this scheme?

CIGA 503

 

Breakdown of commercial bank credit

In case this one got buried.  The trends in commercial bank credit are brutal.

Breakdown of commercial bank credit

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Jim Sinclair’s Commentary

If this is not Orwellian then tell me what is.

Cross a lobster with a tomato and you have a red hand grenade

Rising food prices may start with seeds
CIGA Eric

Farmers say consolidation in the industry means they’re forced to buy more costly seeds. But Monsanto, the world’s largest seed firm, says competition ‘is alive and flourishing.’

Competition to one is monopoly to another. It’s all a matter of perspective.

Today the Leakes have little choice: There are four seed companies in their area, and all sell seeds that include genetic traits patented and licensed by Monsanto Co., the world’s largest seed firm.

"There’s basically nothing else available," said Leake, 48. "You have to use their seeds and pay their prices."

For those MBA types, this is five star industry using Porter’s model. It is also a byproduct of authoritative free enterprise and devaluation.

Source: articles.latimes.com

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Gold Prices Rise in N.Y. on Demand for Alternative to Currency
CIGA Eric

“Gold is a good spot to be parking your money for the time being,’ said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “Gold has that flight-to-safety aspect to it. It’s going to hold its value.”

Demand for alternative to currency and flight-to-safety aspects to it. You don’t see that combined with gold to often in printed media. Keep this up and spin that labels gold holders as gold bugs (implied a little crazy and fanatic) get as many laughs as in the past. In the end, gold will go mainstream in terms of demand and general acceptance within the investment community.

Source: businessweek.com

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As bull market turns 1, is it time to party, or worry?
CIGA Eric

It is hard to kill a bull market in its first year of life. The last time a baby bull was buried on Wall Street before celebrating its first birthday was during the Great Depression.

Ah, the desperate need to be in a bull market. Depressionary boxes are characterized by bull and bear markets to nowhere. Gen-Xer’s can draw the analog from the Karate Kid, 1984. Leverage on – leverage off, Danielson!

1929-1944 & 2000-Present Comparison: S&P 500 (Nominal):
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Source: usatoday.com

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Hartford Financial selling $3B in securities
CIGA Eric

Hartford Financial Services Group Inc. said Tuesday it will sell $3.05 billion in securities as part of its plan to repay the $3.4 billion it received under the federal financial bailout.

Here’s the model for all recipients of federal funds. Bailout, devalue/boost the stock market, issue equity to repay, devalue/boost the stock market more. Everyone wins, right?

It’s an illusion. Eventually the temporary boost fades, as the price of gold accelerates relative to stocks and other financial assets. While the government is certain to cite the terrific returns made on TARP as a great success, they are unlikely to hear much applause from a largely public without devaluation hedges.

U.S. Large Cap Stocks Capital Appreciation Index (LCSCAI); S&P 500 to Gold Ratio
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Source: finance.yahoo.com

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