Posts Categorized: USAWatchdog.com

Posted by & filed under Greg Hunter, USAWatchdog.com.

Courtesy of Greg Hunter’s USAWatchdog.com

Dear CIGAs,

Now that the mid-term elections are over, it is time to get back to reality.  Just because House Minority Leader John Boehner is taking over for Nancy Pelosi as Speaker of the House doesn’t mean the economy will get better.  Yes, the Republicans can now, pretty much, put the kibosh on the Obama agenda with big victories in the House and Senate, but is that enough to turn things around?  In a word–no.

The economy is functioning so poorly the Federal Reserve has widely telegraphed it will start another round of Quantitative Easing. It has been jokingly called “QE2” by the financial press.  What is QE2?  It is more Fed money printing to finance the country and revive the economy.  This kind of QE has never been done before in human history on this scale.  How much money will the Fed print?  The consensus among many economists is $500 billion, but that is just a start. Yesterday, Reuters warned, “Fed Chairman Ben Bernanke has said long-term asset purchases are an effective way to lower borrowing costs when rates are near zero, but a program of this size and scope is untested and many worry further expansion of the Fed’s balance sheet sets the stage for inflation or another asset bubble.”  (Click here for the complete Reuters story.)  

The Fed will start small but leave its plan of action open-ended.  In other words, it will commit to print as much as needed to buy treasuries and mortgage-backed securities to get the economy going again. One senior currency trader at HSBC, Daniel Hui, said on Bloomberg last week, “We think the eventual expansion of QE could be as large as $2 trillion if the Fed is serious about preventing deflation.”  (Click here for the entire Bloomberg interview.)

Citywire, a British publication, is one of many media outlets reporting that Goldman Sachs wants twice that amount of QE.  It reports, “The bank said that based on its own analysis the Fed ought to pump in a further $4 trillion in order to achieve the monetary easing the economy needs. . . “  (Click here for the complete Citywire story.)  

Former Bush economic advisor Marc Sumerlin talked about the upcoming Fed QE about a month ago on CNBC, “To me, it starts to get interesting at six to seven trillion dollars,” Sumerlin said.  (Click here for the CNBC interview and my post called “Could a Dollar Crash Be Coming Soon?”)  

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Posted by & filed under Greg Hunter, USAWatchdog.com.

Courtesy of Greg Hunter’s USAWatchdog.com

Dear CIGAs,

In the wake of the financial meltdown of 2008, the Federal Reserve announced it would buy mortgage-backed securities, or MBS.  The January announcement by the Fed said it would buy MBS from failed mortgage giants Fannie Mae and Freddie Mac in the amount of $1.25 trillion.  At the time, the Fed said in a press release, “The goal of the program was to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally.”  (Click here for the full Fed statement.) It did provide “support” to the mortgage market, but did it also buy fraud and cover the banks that sold it?  The evidence shows, at the very least, it bought massive amounts of fraud.

We now know the Fed definitely bought valueless MBS because it has joined other ripped-off investors to demand Bank of America buy back billions in sour home debt.  A Bloomberg story from just last week, featuring Philadelphia Fed President Charles Plosser,  reports, “The New York Fed, which acquired mortgage debt in the 2008 rescues of Bear Stearns Cos. and American International Group Inc., has joined a bondholder group that aims to force Bank of America Corp.to buy back some bad home loans packaged into $47 billion of securities.  On the one hand, the Fed has “a duty to the taxpayer to try to collect on behalf of the taxpayer on these mortgages,” Plosser said today at an event in Philadelphia.”

Mr. Plosser lamented the “difficult spot” the central bank is in because it is both bank regulator and plaintiff.  He said, “Should we be in the business of suing the financial institutions that we are in fact responsible for supervising?” (Click here to read the complete Bloomberg story.) To that question, I ask shouldn’t the Fed have done a much better job of supervising the big banks in the first place?  The whole financial and mortgage crisis from sour securities to foreclosure fraud is in the process of blowing sky high.  The entire mess is clearly the biggest financial fraud in history!  It looks to me like the regulators were just supervising their pay checks being deposited into the bank.

And remember, the $1.25 trillion of mortgage-backed securities the Fed bought from Fannie and Freddie?  How much of that is fraud?  William Black, the outspoken Professor of Economics from the University of Missouri KC, says all the big banks were committing “major frauds”in the mortgage-backed security market.  Black says, at Citicorp, for example, “. . . 80% of the mortgage loans it sold to Fannie and Freddie were sold under false representations and warranties.” (Click here for the complete Black interview.) Black claims the frauds increased at some banks, and it is sill going on today!   (I admit I used this same video in a recent post.  I use it again, because it is the single most important and damning indictment of the big banks out there.  Professor Black defines the size of the entire fraudulent mortgage mess.)

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Posted by & filed under Greg Hunter, USAWatchdog.com.

Courtesy of Greg Hunter’s USAWatchdog.com

Dear CIGAs,

When I was an investigative reporter at the networks, the first question we would ask when trying to decide if we wanted to do a story was: How many?  How many people have been hurt by a defective product?  How many defective products of a certain kind were in use? How many dollars will it take to fix the problem?  In the case of the recent mortgage crisis – “Foreclosuregate,” the question of how many has been answered.It has been widely reported that there are a little more than 60 million home mortgages in the Mortgage Electronic Registry System (MERS).  If every one of the 60 million mortgages are worth $100,000, that would mean a total of at least $6 trillion in home mortgages that are electronically filed.  In MERS, there is no physical written record of a “Promissory Note.”  In almost all states, you need that original “Note” to prove ownership of a home.  That means in almost every single state, the banks cannot legally foreclose on your home without this document.  Some say the loan documents were lost on purpose because the bankers did not want their massive fraud to see the light of day.  Whether or not the “Notes” were lost on purpose or accident, the fact is the original “Notes” are nowhere to be found.  That is what the “Robo Signing” part of the story is all about.  It has been widely reported that “foreclosure mills” were creating massive amounts of counterfeit Promissory Notes so banks could legally foreclose on homeowners.

In the post I did earlier this week called “The Perfect No-Prosecution Crime,” I laid out several layers of fraud and white collar crime of mortgage and foreclosure fraud.  The lack of the Promissory Note is the biggest of all the problems in this chain of chicanery.  Here’s why.  A Promissory Note is a financial instrument.  It is in the same family as a Federal Reserve Note.  For example, if you copied a $100 bill and then tried to spend that copy in a store, because you lost the original, is it still money?–Of course not. You need the original financial instrument (in this case, $100 Federal Reserve Note) to make a legal transaction in a store.  The same is true for a Promissory Note. You need the original Promissory Note to legally complete a foreclosure.  A counterfeit, or copy, of a Promissory Note is not a financial instrument, just like a counterfeit or copy of a $100 bill is not a financial instrument!

Can you see how big this problem really is for the banks?  This is $6 trillion in real estate that fat cat bankers cannot legally prove they own. Likewise, that means trillions of mortgage-backed securities HAVE NO BACKING.   I think this is the biggest financial fraud in history.  This was not an accident made by someone pressing the wrong button or a few documents that weren’t handled properly, but fraud on a massive scale that took years and tens of thousands of people to pull off.  Ironically, this is all playing out against a backdrop of outrageous Wall Street pay.  This year the big banks are going to pay a record $144 billion!  (Click here for more on that story.)

One of my regular readers thinks Congress can simply pass a law and make all the crimes retroactively legal.  To that I said, “So Congress is going to change hundreds of years of real estate document law in each and every state? Along with IRS tax laws broken, trust laws broken, security laws broken and on top of that, make crimes retroactively not crimes anymore? That’s a lot even for Congress. I think the path of least resistance is more likely printing money to paper over the problem. . . . I hope you are wrong on Congress because if they do change all of these laws to comfort the criminal banksters, we might as well change the name of the country to the United States of Crime.”

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Posted by & filed under USAWatchdog.com.

(Courtesy of Greg Hunter’s of USAWatchdog.com)

Dear CIGAs,

Did you know that in the aftermath of the Savings and Loan (Thrifts) scandal there were more than a thousand felony convictions of financial elites?  The cost of the wrongdoing associated with the rip-off and closure of nearly 800 Thrifts cost taxpayers more than $160 billion.  The current sub-prime/mortgage-backed security scandal is 40 times bigger according to Economics professor William Black.  That means the size of the crime is $6.4 trillion by my calculation.   Can you guess how many indictments there have been on financial elites who created this enormous mess?  Zero, none, nada, zip.  Yes, not one single prosecution or conviction has been started of achieved. 

That is simply outrageous considering the width and breadth of the many crimes committed.  There was “rampant” mortgage fraud in the loan application process according to the FBI as far back as 2004.  (Click here to see one of many stories of the FBI warning of mortgage fraud)  There was real estate document fraud when the original Promissory Notes and loan documents were “lost.”  The Promissory Notes were required to create tens of thousands of mortgage-backed securities (MBS).  No “note,” no security.  That is security fraud.  No security means the special IRS tax treatments for the MBS’s were fraudulently obtained.  That is IRS tax fraud.  Because there were no documents, the rating agencies fraudulently made up triple “A” ratings for the securities.  When the whole mess blew up, big banks hired foreclosure mill law firms to create forged documents.  That phony paperwork was and is being used to wrongfully remove homeowners from their property.  That is foreclosure fraud.

It appears to me the entire mortgage/securitization industry is one giant criminal enterprise.  And yet, last Wednesday, Housing and Urban Development Secretary Shaun Donovan said, “We have not found any evidence at this point of systemic issues in the underlying legal or other documents that have been reviewed.”  What!  Well, look a little harder Mr. HUD Secretary.  (Click here for the complete Reuters story with Donovan’s quote.)  Donovan did say the foreclosure fiasco is “shameful,” but that is not the same as a criminal prosecution now is it?  Where is U.S. Attorney General Eric Holder in all of this?  I guess he’s busy planning a lawsuit to stop California from making pot smoking a misdemeanor.  Holder is probably also very busy with continuing legal actions against Arizona’s immigration law.  I guess trillions of dollars in mortgage and securities fraud is just not enough of a legal priority for America!

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Posted by & filed under Greg Hunter, USAWatchdog.com.

(Courtesy of Greg Hunter’s of USAWatchdog.com)

Dear CIGAs,

There are some big questions facing the real estate market after the foreclosure fraud story exploded in the last few weeks.  The number one question for anyone who has a mortgage is “Who really owns your home?”  This would be simple to answer before the mortgage-backed security (MBS). These MBS’s were mortgages that were bundled together and sold to investors such as pension and bond funds by big banks.  They were considered as safe as U.S. Treasuries but paid a much higher interest rate.  The big banks received gigantic profits from MBS’s especially in the 2005 to 2008 time frame when most of the bundling was done.  It was all about the fees, and damn the paperwork.  Recently, Congressman Alan Grayson said, “It appears that on a widespread and probably pervasive basis they (the banks) did not take the steps necessary to own the note . . . which means that in 45 out of the 50 states they lack the legal right to foreclose. . . .  So they have simply created a system where servicers hire foreclosure mill law firms whose business is to forge documents showing or purporting to show they have a legal right to foreclose.”   I wrote about this recently in a post called “Could Foreclosure Fraud Cause Another Banking Meltdown?”

Guess what?  Some investors are already demanding their money back from companies like Countrywide Mortgage because it didn’t maintain “accurate loan records,” and that is “in violation of underwriting guidelines.”  This week, investors asked for $47 billion back in a demand letter delivered to Countrywide!  Because Bank of America bought Countrywide a couple of years ago, B of A is on the hook for the refund.  (Click here for the complete story from PR Newswire.)  This kind of investor outrage is just the beginning and will only intensify in the days and weeks to come.  Will the Fed be forced to, once again, save the big banks by printing trillions of dollars?  Who knows, but the banks cannot afford to buy back all their sins without going bust!

This will, also, further cloud the chain of custody for documents that prove who the rightful owner of a property is.  Adam Levitin, a Georgetown University Law Professor, said last week on CNBC, “The problems coming out in the foreclosure process raise questions about whether, and frankly this is frightening, but whether anyone in the U.S. has clear title to their property.”

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Posted by & 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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Posted by & filed under Greg Hunter, USAWatchdog.com.

(Courtesy of Greg Hunter of www.USAWatchdog.com)

Dear CIGAs,

This weekend, Bank of America became the latest lender to delay all foreclosures in 23 states because of possible problems with the necessary documents needed to repossess a home.  GMAC Mortgage and JP Morgan Chase have had similar problems recently with documents that prove the bank has the right to foreclose.   ADINews.com posted a statement from B of A, “We have been assessing our existing processes. To be certain affidavits have followed the correct procedures, Bank of America will delay the process in order to amend all affidavits in foreclosure cases that have not yet gone to judgment in the 23 states where courts have jurisdiction over foreclosures,” BofA spokesman Dan Frahm said in a statement.”  (Click here for the entire ADINews.com story.)

Florida Congressman Alan Grayson says the foreclosure document “problem” is really fraud on a massive scale.  He calls what is happening now a “foreclosure fraud crisis” that could affect 60 million properties in the U.S.  It is all because the banks have lost track of promissory notes signed by the homeowners.  I was the first mainstream media reporter to do a story on this problem in 2008.  (Click here for the 2008 “Produce the Note” story from CNN.)    Back then, some big banks could not “produce the note” that proved it had the right to take back a home.  The problem has gotten much bigger as more homeowners discover the banks do not have the original documents. 

After physical paperwork was filled out and signed by the borrower, the banks electronically filed the paperwork into a computerized system called the “Mortgage Electronic Registry System” (MERS).   According to Congressman Grayson, 60%, or 60 million, mortgages are in MERS.  The banks lost track of the original paperwork, the note, signed by the borrower.  That is what actually proves the bank owns the property.  Grayson says, “It appears that on a widespread and probably pervasive basis they (the banks) did not take the steps necessary to own the note . . . which means that in 45 out of the 50 states they lack the legal right to foreclose. . . .  So they have simply created a system where servicers hire foreclosure mill law firms whose business is to forge documents showing or purporting to show they have a legal right to foreclose.”  (Click here for the entire Congressman Grayson video statement from 9/30/10.)  

Please take a moment and grasp the enormity of this problem for the banks.  There are 60 million homes which banks loaned money on, and now they might not be able to legally get the property back if the homeowner defaults!  Another colossal problem for the banks is the trillions of dollars in mortgages bundled into securities.  Remember, the banks were giving anyone who could fog a mirror a mortgage which allowed them to create and sell lucrative mortgage backed securities.  So, there are trillions of dollars in mortgage backed securities that now could have NO backing!   Would you like to be the pension fund manager who bought that security?  Do you think this just might cause an accounting problem for the banks?  Do you think this could push some of the big banks into bankruptcy?  Will there be another financial meltdown and government rescue?

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Posted by & filed under Greg Hunter, USAWatchdog.com.

(Courtesy of Greg Hunter of www.USAWatchdog.com)

Dear CIGAs,

I was pulling up to a store yesterday in my car, listening to CNBC on XM Radio, when an interview with banking analyst Meredith Whitney came on.  I shut the car off and listened because, over the years, I have learned when Whitney talks, everybody should pay attention.  There are only two reasons why I think this way:  (1) Whitney has a track record of many good calls on the economy and banking.  (2) Her predictions are usually spot on.   

For those of you who are not familiar with Ms. Whitney, in November of 2007, she first raised the specter that Citigroup might have to cut its dividend because of losses in mortgage backed securities.  At the time, Citigroup stock was trading for around $50 a share, and everybody looked at her like she had two heads.  Whitney never backed off that call in her many interviews in the months that followed.  Citigroup, of course, did cut the dividend and almost went bankrupt.  The stock now sells for less than 4 bucks a share.

In June of this year, when everybody in the mainstream media was still hyping “Green Shoots” and the so-called “Recovery,” Whitney predicted on CNBC, “Unequivocally, I see a double-dip in housing.  There’s no doubt about it . . . prices are going down again.”  Bang!–another direct hit.  I wrote about this in a post called “Double Dips Coming Everywhere.”

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