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Archive for October 8th, 2010

Thoreau, RICO and Mortgage Fraud

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by Jim Willie CB
Originally posted Oct 6 2010
http://www.GoldenJackass.com

SOME SIGNIFICANT EVENTS ARE IN PROGRESS, EXTREMELY IMPORTANT DEVELOPMENTS IN THE GRAND PATHOGENESIS that reflects the deep decay and deterioration in the US financial structure. The most recent events pertaining to mortgage loans, home foreclosures, and disclosed fraud carry great potential to open wide cracks in the American social order. Revealed fraud is slowly coming into the open by the big banks. Civil disobedience has already taking form in popular protest. However, the recent events surrounding illegal home foreclosure seizure of properties elevates the exposed fraud to a new level.

This is a boil ready to break open upon the society. The cases where people have been removed from their homes, even when no bank loan exists (as in owned free & clear), by means of fraudulent and forged documents, has finally provoked RICO law provisions. Witness the prima facie case of organized crime extended from Wall Street, whose roots lie most likely in Fannie Mae itself. The legal industry has finally joined the fray in class action lawsuits. Defense citing errors made have been met with accusations of fraud, quite a different game.

The Racketing Racketeer Influenced & Corrupt Organizations Act of 1970 was designed to fight organized crime. RICO has been invoked in class action lawsuits in at least two states in the past month, each related to mortgage fraud, securities fraud, and illegal property seizures. At the center of the firestorm lie JPMorgan Chase, Bank of America, and GMAC (now called Ally). Little did the USCongress realize that RICO laws might be used to oppose criminal activity on Wall Street. When tracked with some forensic analysis, the roots are found in REMICs, those perverse financial instruments that functioned as umbilical cords to Fannie Mae in past years, funding its powerful centrifuges. They fed the housing bubble and mortgage finance bubble, each valued over $10 trillion in size.

Bear in mind that RICO has been used primarily against mafias and crime organizations dealing with gambling, drugs, murder, and prostitution, where property seizures are routinely carried out. Abuses have been seen in states like Florida, where motorboat owners guilty of owning small bags of marijuana have lost their boats in legal seizure. It seems that selective enforcement is obvious. The target within the crosshairs has moved to Wall Street banks and their servicer arms. These are dangerous times.

Recent cases threaten to encourage the Strategic Loan Defaults and highly charged Civil Disobedience which could actually contribute in powerful ways to commercial chaos, popular disorder, public disruptions, creeping distrust, and even systemic failure. Hundreds of thousands of people are not making their mortgage payments, intentionally stopping payments, many when they do have the ability. Over 250,000 Bank of American mortgage holders have stopped making monthly payments, in open defiance, reacting to financial distress.

The maneuver of Strategic Loan Default, together with challenges (even with attorneys) to the banks to produce legal property titles, has grown sharply in practice. The RICO cases underway threaten to toss an accelerant on that fire. Henry David Thoreau would certainly be observing closely, perhaps smiling, at the current developments of citizen action against corrupt bank practices, mortgage bond fraud, and forgery of securities as well as critical legal documents. His essay had a profound effect on me when young, when cruel abuses were endured within my catholic school locally and observed in the Vietnam War globally.

Of course, the Jackass does not sponsor, endorse, or encourage any such action, believing that the highest level bankers should receive their due. The question is what is due? Objective reporting of the news, such as the viral news of the fraudulent home foreclosures, seems to have escaped the mainstream news, a consistent theme that hints of concealed sympathy. The last thing a network news systems wants is to encourage civil disobedience, since banks lose from widespread social protest.

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Is a 90 day “Mortgage Meltdown” foreclosure moratorium imminent as the RoboSigning scandal goes mainstream?

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by Tyler Durden
Posted originally Oct 4, 2010
on zerohedge.com

THE MASSIVE MORTGAGE MESS AS WE AFFECTIONATELY CALL IT SEEMS TO BE getting new names with each passing day. The latest one is, quite appropriately, RoboSigning Scandal (funny how after the stock market, “robotic” technology will soon becoming equated with the biggest mortgage scam in history). During today’s Kudlow segment, CNBC’s Diana Ollick who is by and far the company’s best (and only) investigative reporter, confirms various so far unfounded rumors, that the government is planning to institute a 90 day foreclosure moratorium as it deals with the realization of just how big and pervasive the mortgage problem is, and even worse, will soon be. It is so bad that even a typically ebullient Larry Kudlow is forced to note that this is the “housing equivalent of the credit financial meltdown” and that “this is going to go on for ever.”

The biggest issue that is now developing, as we noted last week, is the fact that title insurers (firms such as Fidelity National, First American, Stewart Info and Old Republic) are refusing to insure mortgages in foreclosure or otherwise, uncertain as to who actually owns the title. And for all those who believe this will merely keep prices artificially high, we have very bad news – the problem with the title insurers walking away on fears of lawsuits is that no lender will be willing to write a mortgage without title insurance, meaning that suddenly the up-front component of home purchases will either necessarily have to surge, or home prices will have to plunge by a like amount, as there is simply not enough equity (read money) to cover the resulting debt deficiency. Alas, this mess is just starting, and as people realize how bad it is, it very well may lead to a total collapse in the housing market.

For all those hoping on a quick resolution so that Americans can go back to watching Dancing with the Stars, you may wish to reconsider. Quote Kudlow: “We’re not talking just a few weeks, or a few months. This sounds like a long, drawn-out, bureaucratic, robotic process with lawyers, and, oh my gosh.” Another implication: a veritable bonanza for both lawyers and defaulters, the former of whom will end up making billions in legal fees (collected from the same banks which are still sucking off the ridiculously low TLGP-funded, and thus taxpayer sponsored fees), while the latter will be able to live mortgage free for years, while continuing to buy useless trinkets instead of paying what is contractually their duty.

Another important topic discussed is the fact that due to decades of faulty securitizations, suddenly no bank knows who owns what. Courtesy of several trillion in now title-undefined mortgages, which in turn form the basis for thousands of CDOs, which in turn are split up into millions of tranches, and includes the complicity of Fannie, Freddie and private label, it is the banks and their clients that have shot themselves in the foot: as other have noted, very soon, the entire MBS process can and very may grind to a halt (if that happens, goodbye Pimco).

As mentioned earlier, Ollick confirms that according to rumors, the government is going to impose “some kind of 90 day foreclosure moratorium on the banks which would melt down the housing market.” In fact Congressman Merkley already indicated he is for a foreclosure moratorium.

At the end of the day: the one true loser, is the law-abiding, conscientious, tax and mortgage paying middle class American, who is now preparing for TARP 2 as the banks will all almost definitely need to run to the bailout through because of this catastrophe. This is a massive story.

http://www.zerohedge.com/article/90-day-mortgage-meltdown-foreclosure-moratorium-imminent-robosigning-scandal-goes-mainstream