The Credit Crisis Could Be Just Beginning

The Street.com ^ | 21 September 2007 | Jon D. Markman

[webschooner]

For many years, I have subscribed to a newsletter called Marketimer authored by Bob Brinker. I used to think no one could not predict or time the market, though certainly many try. But I have learned that Brinker's track record in this area is pretty accurate. His models produce a kind of long term timing that occasionally has recommendations to go to cash for a few years.

Anyway, Brinker's models say we are in a long-term secular bear market, but within that longer bear, we are currently in a shorter term bull market, so he has recommended to be fully invested the last few years, and that advice has paid off for me. He had us out of the market from approx. 2000 to 2003, which it turned out, was a declining market.

I follow Brinker's timing advice, but not his investment recommendations. If by chance you want to study his track record, check out the Hulbert Financial Digest, which tracks the performance of many financial newsletters ...

[Niuhuru]

You’re welcome. I just feel so impatient with the stupidity of people these days. They buy and buy and buy and then wonder why their entire financial lives collapse. I see a lot of that here in the US and I think our enemies need only wait until we have some sort of crisis.

[Blue_Ridge_Mtn_Geek]

“in my area, I just don’t see the gloom.....people are not talking about it anyway...sure, lots of houses for sale but there always is.....”

It’s similar in my area, a rural county in Piedmont NC which has had a tepid economy for years, modest appreciation (if any), but fairly steady and healthy construction activity as retiree households migrate to the area. A couple of builders in my congregation have back-orders for projects running out for the next 12 months. I’m not sure how much of that is dependent on the ability of their customers to qualify for a mortgage (perhaps they are all cash transactions, as roughly 10% of home purchases are, nationwide).

Still, the national picture is fairly dramatic and negative:
http://calculatedrisk.blogspot.com/2007/09/moodys-forecasts-house-prices-to-fall.html
http://piggington.com/commentary/housing_market
http://calculatedrisk.blogspot.com/2007/09/feds-kohn-on-causes-of-housing-bubble.html
http://www.bloomberg.com/apps/news?pid=20601103&sid=akOEPec30TR4&;
http://www.treasure-coast.us/weeklyupdate09-02-07
http://globaleconomicanalysis.blogspot.com/2007/09/bernankes-bullet-misses-mark.html

[Blue_Ridge_Mtn_Geek]

“U.S. banks developed ingenious but dangerous ways of shifting trillions of dollars of credit risk off their balance sheets and into the hands of unsophisticated foreign investors”

So we sold foreigners a bunch of worthless paper for their cold, hard cash? Color me simple, but a bunch of broke Chinese and Saudi “investors” doesn’t break my heart.

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They aren’t broke, but they’ve suddenly gotten quite reluctant to lend us more... and both US govt and private borrowers have become very dependent on the continued flow of foreign purchases of our debt in recent years. Stiff your lenders, then you will either get no more loans, or new loans offered on much less favorable terms. They will prefer to buy gold or oil, or something else with their dollars,rather than lend them to you and yours. “So sorry, all you deadbeats, no more loans!”

If that prospect warms your heart, you have nothing to worry about.

[ex-Texan]

The Real Issue is Mortgage Servicing Fraud

Mortgage Servicing Fraud is defined as the fraudulent manipulation of the payment history of mortgages. The goal is to illegally alter performing mortgages into loans considered in "default."

This is easily accomplished by:

* Entering on-time payments as late, to exact illegal and unauthorized fees;

* Manipulating account records;

* Charging force-placed insurance when the homeowner already has full coverage;

* Falsely reporting a default to the credit bureaus when it is the servicer creating the default;

* Paying property taxes late, then charging the late penalties to the borrower;

* Paying taxes and insurance on the wrong property;

* Refusing payments to guarantee default;

* Adding thousands of dollars in unearned legal fees to create a default;

* Ignoring customer complaints and "qualified written requests";

* Ignoring numerous laws and regulations;

* Coercing the homeowner into signing a forbearance agreement to strip away their legal rights;

* Falsifying records;

* Repeatedly committing fraud upon the courts by stating the mortgage service company is the Holder and Owner of the Note - when in fact - they do not own the Note;

* Intentionally causing delays to run up the victims' legal expenses;

* Forging documents;

* Blatantly committing perjury and fraud upon the courts;

* Apply to the trust for reimbursement after deducting the fees from the borrowers principal and interest payments (Known in the mortgage industry as "double-dipping");

* Increasing or "rounding up" ARM rates in violation of contract terms;

* Not adhering to the terms of the loan documents;

* Creating additional false deficiencies through a variety of questionable practices;

* Adding misc. fees to purposely create a deficiency with the borrower's next payment;

* Not applying payments to principal and interest;

* Withholding or redacting discovery evidence;

* Conjuring up events that never happened and refusing to provide documentation to support these fallacies;

* Refusing to cooperate with other lender's attempts to refinance and stop the illegal foreclosure; and

* Using abuse of litigation, appeals and malicious prosecution to litigate forever