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ECONOMICS AND ESOTERICA FOR A NEW PARADIGM

Archive for October 15th, 2010

Robo-signers: Mortgage experience not necessary

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by Michelle Conlin
Posted originally October 12, 2010

BANKS HIRED HAIR STYLISTS AND TEENS TO PROCESS FORECLOSURE DOCUMENTS, workers’ testimony shows.

NEW YORK (AP)  In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in “foreclosure expert” jobs with no formal training, a Florida lawyer says.

In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn’t define the word “affidavit.” Others didn’t know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers’ accusations about document fraud.

“The mortgage servicers hired people who would never question authority,” said Peter Ticktin, a Deerfield Beach, Fla., lawyer who is defending 3,000 homeowners in foreclosure cases. As part of his work, Ticktin gathered 150 depositions from bank employees who say they signed foreclosure affidavits without reviewing the documents or ever laying eyes on them – earning them the name “robo-signers.”

The deposed employees worked for the mortgage service divisions of banks such as Bank of America and JP Morgan Chase, as well as for mortgage servicers like Litton Loan Servicing, a division of Goldman Sachs.

Ticktin said he would make the testimony available to state and federal agencies that are investigating financial institutions for allegations of possible mortgage fraud. This comes on the eve of an expected announcement Wednesday from 40 state attorneys general that they will launch a collective probe into the mortgage industry. “This was an industrywide scheme designed to defraud homeowners,” Ticktin said.

The depositions paint a surreal picture of foreclosure experts who didn’t understand even the most elementary aspects of the mortgage or foreclosure process – even though they were entrusted as the records custodians of homeowners’ loans. In one deposition taken in Houston, a foreclosure supervisor with Litton Loan couldn’t define basic terms like promissory note, mortgagee, lien, receiver, jurisdiction, circuit court, plaintiff’s assignor or defendant. She testified that she didn’t know why a spouse might claim interest in a property, what the required conditions were for a bank to foreclose or who the holder of the mortgage note was. “I don’t know the ins and outs of the loan, I just sign documents,” she said at one point.

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The Federal Reserve is Deaf, Dumb and Blind

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by Justice Litle, Editorial Director, Taipan Publishing Group
Posted originally October 8, 2010

IT WAS REPUTEDLY GEORGE ORWELL WHO SAID “SOME IDEAS ARE SO STUPID only an intellectual can believe them.” He could have been talking about the Federal Reserve… As touched on earlier this week, the foreclosure fraud debacle just keeps getting better. In the latest news thus far, JPMorgan and other major lenders have become sitting duck targets for the State Attorney General. Which state, you ask? Take your pick… there are seven different ones (and counting) to choose from.

“You’re going to see a tremendous amount of activity with all the AGs in the U.S.,” Ohio Attorney General Richard Cordray told Bloomberg. “We have a high degree of skepticism that the corners that were cut are truly legal.” This is rather bad news because 1) the states are desperately in need of cash, and 2) state AGs have the ability to sock lenders with truly mammoth fines.

“In Ohio, penalties include fines of up to $25,000 per violation,” Bloomberg reports, “with each false affidavit or document considered a violation, according to state law enforcement officials.” In Iowa the cap is $40K. Ouch. Multiply that times tens or even hundreds of thousands of foreclosures, and it’s not a good day to be an irresponsible lender. No wonder, then, that the Federal Reserve is anxious to get on with the job of “QE2” (quantitative easing part 2).

The Fed is so anxious to get going, in fact, that some of its most outspoken members appear to have lobotomized themselves in a show of pre-emptive enthusiasm. Radical elective brain surgery may sound extreme, to be sure, but what better explanation could there be for the sheer epic dumbness of recent comments made?

It Failed Utterly the First Time… So Let’s Do More
Lobotomy exhibit A is Charles Evans, president of the Federal Reserve Bank of Chicago. Evans is considered a barometer of consensus thinking in the bowels of the Fed. This is what the Fed’s consensus man told the WSJ in a recent interview (emphasis mine):

In the last several months I’ve stared at our unemployment forecast and come to the conclusion that it’s just not coming down nearly as quickly as it should… This is a far grimmer forecast than we ought to have, [giving reason to favor] much more accommodation than we’ve put in place.

Well, gee. That darn old unemployment number just isn’t coming down. We printed up a lot of money the first time around, and still it didn’t come down, so now we should print “much more.” Can you see, now, why one might reasonably suspect this man has self-lobotomized himself with a screwdriver and a ball-peen hammer?

Printing money is not a cure for unemployment. It has never been a cure for unemployment. Most recently, we have seen just about the most dramatic evidence possible that printing money is not a cure for unemployment. And the only thing this man can come up with is “much more accommodation than we’ve put in place.”

Never mind the example of Japan slogging along with rates at zero. Never mind that, two years into the Fed’s “great experiment” in which a great gob of liquidity has failed to hit its mark, a record 41.8 million Americans are on food stamps and the jobless rate is near a 27-year high. And never mind that, if printing money were somehow a long-term cure for lack of jobs – as opposed to a short-term fix that quickly wears off – politicians would have drunk deep of that well already and joblessness would have been eradicated some 50 election cycles ago.

To the extent that other Fed officials think like Mr. Evans, they are not just dopes. They are deaf, dumb and blind dopes, oblivious to evidence that assaults the five senses. Everywhere and always the Fed can only print money, so it makes this the solution to every problem.

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