Obama Foreclosure Scandal

Why has it taken the Obama Administration over three years to address the foreclosure scandal and have they actually addressed it? The scandal, which has been referred to in some quarters as “Foreclosure-gate” involves mortgage companies using a phony practice called “robo-signing” in order to fraudulently foreclose on homeowners. The company behind most of these robo-signings is Mortgage Electronic Registration Systems, known as MERS. This national company has served as a clearinghouse and as a rapid computer generated paperwork processor for the big banks and secondary mortgage investors seeking to process and re-process mortgages.

MERS tracks an average of 65 million mortgages by computer and processes mortgage transactions without human intervention. The MERS process is presently being challenged in court in several states and jurisdictions.

MERS worked closely with Fannie Mae, Freddie Mac, and the other big national mortgage lenders in the years leading up to the mortgage meltdown and the Trillian dollar TARP bailout. MERS had aided in the process of bundling, credit default swaps, and derivative leveraging by making the process seamless and efficient.

Before becoming Attorney General, Eric Holder worked as a partner in the white show law firm Covington & Burling which represented MERS. In 2006, while Holder was a partner, Covington and Burling defended MERS in a growing number of lawsuits brought by local municipalities and title providers which claimed that MERS was bypassing conventional methods of processing mortgages. It should be noted that as Attorney General, Eric Holder has failed to investigate these practices by MERS, Fannie and Freddie, and by the banks who received TARP funds. There have been no investigations, indictments, or significant changes in the status quo regarding these banking practices since Holder and Obama have been in office. Indeed, billions in TARP funds continue to flow to Fannie and Freddie.

Once the robo-signing scandal came to light, after a 60 Minutes expose in October, 2010, Holder, under political pressure, assigned several investigators, like himself former employees of Covington and Burling, to the case. Holder also directed the FBI to partner with the Mortgage Banking Association, MBA, which represents the banks implicated in this practice, as part of their investigation. Working together, Holder’s FBI and the MBA, developed a definition of mortgage fraud which exempts the big banks. Thus the banks will not be investigated under the protective wing of the Obama Administration. Instead, the FBI will go after small-time operators and mortgage holders.

Meanwhile, the foreclosure settlement is so confusing and vague that it is unlikely any relief will be received by those who were defrauded by the robo-signatures any time soon. In fact, it is being projected that the practical effect of the settlement will be that banks will increase the number of foreclosures with the assurance that they will be protected by the immunity clause in the agreement. Another byproduct of the settlement has been that housing courts around the country have become choked with backlog of cases. All the while, Obama is trotting out the agreement as a cornerstone of his justification for re-election.

The failure of the Obama Administration Attorney General Holder to investigate the mortgage scandal should be the focus of a congressional investigation. Such an investigation might open the whole can or worms around the TARP bailout of Fannie, Freddie and the big banks and the Obama Administration’s tepid actions toward banking reform and investigation of fraud.

The entire issue of foreclosures is clouded by the securities owners (mortgage backed securities) having had no titles, notes transferred, and no county property registrations done in the counties of the original sales. Taking away the legal standing of property is a crime. Forging at a later date, assumed original documents for purposes of establishing credentials in court related to the subject property in a foreclosure action is fraud.

I think the problem started with the Bolshevik Revolution, and now is here to stay. I will explain my take on the situation at some length. The problem is bigger than MERS and did not start with MERS:

As I see it...begin with the Bolshevik Revolution at the end of the First WW. Property was taken from the private citizens in Russia at gunpoint, nationalized 100%, and redistributed via direct Party control. No one had private property. PROPERTY HAD NO LEGAL STANDING in Stalin/Leninist Russia. So it is in the US today and no one is connecting the DOTS. Foreclosures are impossible if a property has NO legal standing, and trillions of dollars of mortgages have NO LEGAL STANDING. All of Fannie and Freddies stuff has NO LEGAL STANDING.

Speed forward from the Bolsheviks to US in the last couple of decades...the Community Reinvestment Act of the ‘70s designed to redistribute property by various means to those who could not afford to buy private property in the US (socialist redistribution). The issuance of sub-prime by design mortgages and securitizations for bank profit were the tools employed. The Fed Res (think “Ponzi Reserve”..Charles Ponzi has had a greater negative effect on world economies than any other man in history, he beats Adam Smith, Keynes,Hayek as his process is destroying all that they might have made work) and Wall St joined forces to create credit derivatives to expand trade and profit beyond the capabilities of known capital limits...fractional reserve banking came into being unimaginably extending beyond the usual 1:8 limits of capital to loans allowed (back when banks were relatively honest,legitimate.

Unregulated credit derivatives, credit default swap derivative insurance instruments, and now currency swaps are shadow banking, black box instruments with no reporting requirements (all are voluntary reported to the Bank of Intl Settlements in Switzerland), exist with no real audits, no transparency and no regulation. A derivative instrument can have many more than one credit default swap insurance policy on it, and one does not have to own a derivative to buy a cds on it. Only one credit default swap instrument counterparty can collect on a default. No one knows, for example, how much in credit default swaps are issued on sovereign debts (think Greece).

Ninety seven per cent of credit default swaps world-wide are issued by the five biggest US banks, and they, as of 2010 from the Office of the Comptroller of the US, hold $223T of credit derivative risk between them. At 1% interest a year, that is $13T in interest due, conceptually. The 5 banks have a collective liquidation value of only $7T.

There are lots of cds’s issued and only one equity, and that one equity may or will not have legal standing with no original title, note as in the instance of a mortgage “backed” security.

No one knows the ultimate derivative exposure. It is safe to assume the exposure is much larger than comprehended presently and in a completely unaccountable manner and with no transparency, regulatory or reporting control.

The invention of almost all credit derivatives allowing unlimited leverages (commonly at 30-40 to one out to 200 or 500 to one with re-hypothecations, and issuance of a new cds on a defaulting one (think Greece) is not a good idea.

Credit derivative mortgage “backed” securities were applied to the private mortgage industry as the banks wanted to sell and securitize mortgages. The legislation was passed in 1998 repealing Glass Steagal from 1930, and the banks were off and running with the securitization of mortgages for the purpose of selling large bags (tranches) of mortgage backed securities world wide with AAA ratings. Politically, govt stakeholders in the process of property legal standing delegitimization were getting their wishes in spades.

The banks sold the mortgages they were privately administering, received 100% payment by investors who had..AAA rated securities.

The problem: the banks, and/or their mortgage processing securitizers, such as MERS (there were many), did NOT transfer the titles, the notes, and failed to register the title transfers in the counties they occurred in ( lots of US countys are sueing for taxes not collected). This happened widely, systemically all over the nation, was not just limited to MERS, and occurred especially in CA, NY, NV and FL. Subprime mortgages were issued in the millions. Of interest, in 1992, the Bank of America lost a court case challenge for refusing to issue mortgages to unqualified buyers, and, the gates were opened nationally by the precedent. Off to the mortgage, securitizations without legal paper trail registrations and transfers establishing the legal basis of ownership. Later, when the securitities owners tried to foreclose on the mortgages contained in the securities, the securities owners found they had no legal standing in US federal, or US civil courts as they held no property titles, no note assignments in order to make a claim legal. That is the “moral hazard”, the fraud, in that the rating agencies gave AAA ratings to securities that had no legal basis for collateralization at all, and no legal standing in a court of law. The buyers of mortgage backed securities were ALL defrauded in the trillions, and the US did it from legislation originating from one political party primarily.

It is the precise practice of destroying original titles and notes that makes formerly private property what I call NON-PROPERTY, with no papers in existence proving legal standing and ownership.

In order for the communist-minded, without a publicly recognized intention of nationalization, centralization of property, to take property out of the private sphere and house it centrally, such is accomplished by the tool of creating NON-PROPERTY by the securitization process. For a communist-minded politician and associated banker, the bank gets paid immediately, the property goes to investors who will be completely defrauded, and the “property” falls by default in the hands of Fannie, Freddie, the Federal Reserve, and is thus centralized for.....redistribution at a later time simply because IT CAN GO NOWHERE ELSE, having no papers of legal standing.

Because the derivative MBS and credit default swaps related to ALL the Fannie and Freddie holdings have no legal standing, as with a one way basket-fish-trap...the property stays in govt hands, and shifts from one govt agency to the other. For example, to take “stress” off Fannie and Freddie, the Fed has “purchased, mbs’s with no legitimate titles or note transfers of note, and that it in itself a fraud on the US taxpayer, who guarantees the Feds purchase of...NON-PROPERTY. THe Fed buys property that is not real, but which has legal interest due on the securities short term financing rollover payments via the derivative obligations, and with 30 year maturities, and the public is ultimately and fraudulently responsible for the debt.

The fraud of “robosigning” or the outright re-creation of the missing titles, notes, county registrations is outright fraud. ALL the mortgages, in derivative obligations within Fannie Freddie and the Fed, have no legal standing to re-enter the private markets.

The Obama administration is trying to force/encourage the 50 state Attorneys Gen. dealing with the fraud and the lack of titles and notes problem to find a way to bail out the banks who hold liability privately for trillions of securities that have NO legal standing, and to excuse the banks for being an initiator or hiring mortgage processing agencies and being prosecuted for FRAUD. The Attorneys Gen are being asked to issue a fine of $25B on the banks for allowing the NON-PROPERTY mechanism and the resulting fraud, and, thus establish a precedent of a penalty for “misbehavior” rather than proceeding with prosecutions for fraud. If the penalty is established, any future challenges to banks can be met with a few billion for an additional multi-trillion continuance of the creation of NON-PROPERTY.

With the establishment of a proposed $25B penalty by the 50 state Attorneys General for trillions (thousands of billions) in MBS fraud, then the banks can recapitalize with QE from the FED at 100% taxpayer expense and go on their merry way with MORE mortgage backed security derivatives, more profits within a falling currency, until oblivion is reached.

In all the “bailouts” to date (over $16T worth since 2008 to EU and US banks and financial institutions (think AIG)), only interest is paid on short term financing of up to 30 year maturities. The intention is to keep up the centralization of formerly private property into central, nationalized Federal control for redistribution at a later time. The goal is a marxist goal, and the process technique of the mortgage securitization process is the creative tool of centralizing property and it can never be private property again.

Geithner a few weeks ago stated in effect that strengthening the banks with stimulation money will allow them to support lending again for mortgages so they can continue with mortgage securitizations and make profits again....the securtizations and the legal standing of property destruction are intended policy. The public is paying 100% the cost of centralizing their formerly private property. The first right the Constitution protects is property rights...take away property and there is no justification for having a Constitution. Educated communists understand that.

Another complexity to the issue is the establishment of the Consumer Financial Protection Bureau, housed within the Federal Reserve, funded by the Federal Reserve, and void of Congressional interference, oversight function. Regulations made by the CFPB will have the full force of law, and the desires of the Fed will be unfettered in implementation, risk free from challenge.

The Fed will design credit software programs for control, data gathering, monitoring and consumer behavior modification as fast, high frequency, front-running financial transaction software program technology to be adapted to specifically monitor all financial accounts...no more privacy down to the nanosecond. Mortgage products will be designed for the public to choose from. ALL accouts will be actively reported to the IRS. The IRS has stated last year that it will have to add 16,000 employees and train them over two years to interface with the CFPB through the Director of the CFPD. Many Executive Branch agencies and sub-agencies will, thru the interlink councils of the Executive Branch, link with the CFPB. The mortgage products of the CFPB will be designed to maximize bank profits, enhance credit AAA ratings for bank profit and administrative efficiency as well as security sales. The Fed now has, in addition to monetary policy duties, fiscal duties and control and control and management of the financial activies of every citizen. No one notices,...yet. The regulations will not be challengeable by Congress. The Dodd/Frank bill divorced the population from Congress and has thru the CFPB accomplished a “shotgun” marriage, where the population has no rights at all with the new administrative “spouse”. The Fed Rules, and Congress does not govern....and, far from being protected, we are now passed into what is a form of receivership, unnamed as such, within the Fed as being accountable for funding ALL of the banks risk exposure and controlled to maximize band profits. We have essentially been bagged up, collectivized, collateralized thru data gathering, sliced and diced at, by and for the pleasure of the Fed and their current partner, the current administration.

Think about this stuff!! Private property is being sucked into the Fed govt in a way that prevents is from reentering the private sphere under current law. Stalin and Lenin stole property at gunpoint. Today it is being done in a diabolical manner financially and legislatively that is so complex, no one sees it.

In sum, the destruction of original titles, notes in the securitization process, and the resultant forgery (MERS and “robosigning” that is necessary to attempt illegally to proceed with a foreclosure in a court of law), is a historically unprecedented process for the theft of property from private citizens at their own expense, and, the collectivization of the population, including illegals, in the Fed Reserve via the CFPB. is nothing short of complete disenfranchisment and the indenturing of all to the Fed Res to guarantee the NON-PROPERTIES held by the Fed, about a $T worth, the Fed “bought” from Fannie and Freddie, are paid off.

Another aspect of the CFPB is that with data gathering and analysis, the credit rating of the US can be manipulated within the Fed for application to data given to rating agencies for the purpose of strengthening the ratings of mortgage backed securites, US T-bonds. Controlling, modifying consumer behavior is considered necessary by the Fed to keep the Fed strong and in power. We are now a managed, controlled, data gathered population. The CFPD is to be cross-linked to the IRS, DHS, Obamacare, and the linkages are all in the Executive Branch. The CFPB, thru linkages with the other agencies, places an umbrella over all of them as a protection from Congressional “rain and high winds” of oversight or even monitoring. Congress can ask for information from the CFPB, but has no power to demand it.

A comment on MERS. MERS was a small outfit with less than 30 employees. The employees were mostly out of high school or with a couple of years of college, and were made vice-presidents of MERS with six figure salaries. They had NO education for what they were doing, a characteristic that was systemic also outside of MERS. Additionally, of interest, a securitization and foreclosure outfit in FL did about 10,000 processings, and used the notary stamp of a notary dead for 11 years. The principal officer is in jail.

Banks shoud not be securities dealers, as the repeal of Glass Steagall allowed. Credit derivatives should be taken from the control of the Fed Reserve and Wall St. and returned to the Congress. Democrats are not going to do it, and “Corporate” Republicans will not do it either. There are no answers for this situation now, because the situation is deliberately confused, misconstrued, and the confusion feeds on itself.

The massive mortgage and mortgage derivative and other derivative issuance problem is institutionalized by the Fed completely by virtue of the passage of the Dodd/Frank bill, and both the CFPB and Obamacare are the law of the land. The Fed and the 5 biggest US banks intend fully to expand derivative issuance to the Moon. Derivative issuance and debt service of derivative interest is the primary purpose of the US economy today, and the military apparently exists to protect the Fed and the Executive Branch of government exclusively.

Times have changed exponentially, and the Congress has linearly small minded Representatives and Senators in general who have been side-lined by the Dodd/Frank bill and its included CFPB.

The Executive Branch uber-alles is the result to date. The Republicans have to win the House, the Senate, the Presidency in 2012, and in addition have to somehow coalesce into a functioning party and focus on the direction exactly the opposite of the direction we are headed. We are going to need lots of luck and some talented elected officials. Are they out there?

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