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by afew (afew(a in a circle)eurotrib_dot_com) on Wed Oct 13th, 2010 at 03:40:05 PM EST
States probe mortgage industry practices | Reuters

(Reuters) - All 50 states launched a joint investigation of the mortgage industry on Wednesday, a move some experts fear will cause uncertainty and threaten the recovery of the fragile housing market.

The state attorneys general are looking at allegations some banks used shoddy or fraudulent paperwork to remove struggling borrowers from their homes during a foreclosure crisis that is one of the most visible wounds of the 2007-2009 recession.

"We are in the fourth year of a housing and economic crisis that was brought on by lax practices of the mortgage lending industry," Minnesota Attorney General Lori Swanson said in a statement. "The latest allegations of corner cutting and slipshod paperwork are troubling, but perhaps not surprising."

Industry experts warn the investigation could put the brakes on foreclosure proceedings. One of every four homes sold in the second quarter was a foreclosed property and any slowing could have an impact on the broader economy, as the housing market traditionally drives recoveries after a downturn.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Oct 13th, 2010 at 03:45:50 PM EST
[ Parent ]
The Wheels Are Coming Off in MBS Land: All 50 State AGs Join Probe; Banks Abandoning MERS Foreclosures « naked capitalism
Even though the headline item is the fact that the attorneys general in all 50 states are joining the mortgage fraud investigation, the real indicator that the banks are stressed is that they have started abandoning MERS, the electronic database that passes itself off as a registry for mortgages. JP Morgan has quit using it as an agent on foreclosures; it clearly can't withdraw from it fully, given that it has become a central information service.

Despite this being treated as a pretty routine event in the JP Morgan earnings call, trust me, it isn't. The withdrawal of JP Morgan from the use of MERS as the face in foreclosures is a tacit admission that the past practice of using MERS as the stand -in for the trust is problematic. I've heard lawyers discuss the possibility of class action litigation to invalidate all MERS-initiated foreclosures in states with strong anti-MERS rulings; this idea no doubt will get more traction given JP Morgan's move. (An attorney who is in the thick of this situation told me another major bank has made the same move as JPM, but I see no confirmation in the news as of this writing).



"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Wed Oct 13th, 2010 at 06:04:28 PM EST
[ Parent ]
a move some experts fear will cause uncertainty and threaten the recovery of the fragile housing market.

Well, it is good to be able to fob blame onto those trying to uphold the law for the consequences of lawless behavior by the mortgage industry. The recovery is not "fragile" it is non-existent. In Mt. Home, AR the Building Committee of the City Council has canceled meetings for the second month in a row for lack of new work to review and the work they last reviewed had been set in motion at least a year previously, except for some permits for advertising billboards.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 14th, 2010 at 12:19:16 AM EST
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I did not have to search for an article promoting that talking point in line one - the Reuters piece was the first I looked at. (And will of course be picked up by numerous news outlets).
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Oct 14th, 2010 at 04:51:58 AM EST
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I did not have to search for an article promoting that talking point in line one...

Yeah, it's obvious to the merest bankster, I would imagine. No memo required. Investigate us and the world will collapse. Obama clearly can see that.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 14th, 2010 at 09:33:06 AM EST
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Concern trolling is part of the Zeitgeist...

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Thu Oct 14th, 2010 at 09:38:02 AM EST
[ Parent ]
How 2 civilian sleuths brought foreclosure problems to light | McClatchy

PALM BEACH, Fla. -- More than a year before lenders, law firms and document companies began owning up to widespread paperwork problems with their foreclosure filings, Lisa Epstein and Michael Redman already knew that something was wrong -- very wrong.

Redman, a former online automobile consultant, got his first taste of the problem in early 2008, when he tried to help a relative who was facing foreclosure.

As he tried to determine which of three or four supposed lenders held the note, Redman, 35, realized that not only did he not know the answer, neither did any of the companies that were asking for payment.

Epstein, a nurse who cares for cancer patients, also is going through foreclosure. She got her baptism in the world of shoddy foreclosure paperwork in the summer of 2009, however, when she tried to help a brain tumor patient keep her home.

[...]

Equal parts agitators, activists and advocates, Redman and Epstein have made their presence felt in Florida and nationally through their respective websites, 4closureFraud.org and foreclosurehamlet.org.

Now we know whom to thank.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt ät gmail dotcom) on Thu Oct 14th, 2010 at 03:00:31 AM EST
[ Parent ]
and the banks know who to blame.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Thu Oct 14th, 2010 at 10:25:20 AM EST
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FT.com / Companies / Banks - Wells adds to crisis over home seizures
The US mortgage foreclosure crisis deepened as it emerged that Wells Fargo may have used practices that prompted rivals to halt home repossessions, and JPMorgan Chase said banks might be fined over the issue.

Bank of America, JPMorgan and GMAC have halted foreclosures after learning that "robo signers" had rubber-stamped thousands of mortgage documents without checking their accuracy. Attorneys-general in 50 states have launched a joint investigation into the matter.
More FT video

Jamie Dimon, JPMorgan chief executive, on Wednesday became the first top banking executive to say some attorneys-general may levy penalties on banks for their foreclosure practices.

Legal documents obtained by the Financial Times suggest that Wells Fargo, the second-largest US mortgage servicer, also used a "robo signer". Unlike its rivals, Wells Fargo has not halted foreclosures. The San Francisco-based bank said on Tuesday it was reviewing some pending cases, but it has maintained that it has checks and balances designed to prevent serious procedural lapses.

In a sworn deposition on March 9 seen by the FT, Xee Moua, identified in court documents as a vice-president of loan documentation for Wells, said she signed as many as 500 foreclosure-related papers a day on behalf of the bank.



"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Thu Oct 14th, 2010 at 05:55:00 AM EST
[ Parent ]
This should probably read

Wells Fargo may have used practices that prompted rivals to "halt" home repossessions

According to Naked Capitalism

GMAC announced a foreclosure halt in all 50 states; JP Morgan and Bank of America have stopped in 23 judicial foreclosure states.

Or have they? Florida is a judicial foreclosure state, and local reports suggest the banks are pressing forward with foreclosures. Note the inconsistencies between the statements of the bank employees versus the action on the ground.

by gk (gk) on Thu Oct 14th, 2010 at 06:10:14 AM EST
[ Parent ]
No surprise in Florida. A bank friendly state government and friendly judges have created "Kangaroo" foreclosure courts that allow 90 seconds for the defendants to make their case, according to one report I posted previously.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 14th, 2010 at 09:42:58 AM EST
[ Parent ]
Thinking about this from another direction, I think about my dad's office building. For years he had the mortgage with banks that kept getting bought out, eventually turning into CitiBank. They have routinely told him to forget it when he asks them for loans to do such things as repair the roof.

But, odds are that the fobbed off the original loan, or it was fobbed off long before Citi came in. As a person with a record of decades of good payment, his was probably sold with packages of trash loans to balance them out.

Citi could straighten it all out by giving him a new loan...which he wants since it would give him lower payments at a time when 3 different clients have run out on their leases over the last year, leaving a basically empty building except for the lessee who hasn't paid in two years...but he has been paying the mortgage out of his savings.

Citi could get a new clean note, my dad would get a lower payment, everyone happy. Are they that clever. No. They won't even consider giving him a new loan.

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Thu Oct 14th, 2010 at 07:15:00 AM EST
[ Parent ]
Banks propose £1.5 billion business growth fund | Reuters

(Reuters) - A taskforce of six major British banks has unveiled a 1.5 billion pounds business growth fund to kickstart funding to small businesses in the wake of a sharp downturn in business lending after the credit crisis.

The fund will offer equity support to UK businesses with an average turnover from 10 to 100 million pounds and funding requirements of up to 10 million pounds, as part of 17 initiatives proposed on Wednesday by the British Bankers' Association and the industry.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Oct 13th, 2010 at 03:48:54 PM EST
[ Parent ]
The fund will offer equity support to UK businesses with an average turnover from 10 to 100 million pounds

That would seem to be the medium-large definition of 'small.'

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Oct 14th, 2010 at 08:01:30 AM EST
[ Parent ]
BBC News - China's trade surplus falls to $16.9bn

The gap between China's imports and exports narrowed in September, official data has shown.

But analysts say the decline is unlikely to ease the pressure on Beijing to strengthen its currency.

The US has been among its strongest critics, claiming China deliberately undervalues the yuan, boosting China's exports by making them cheap.

China's trade surplus fell to a five-month low of $16.9bn (£10.7bn), down from $20bn in August.

Exports rose 25.1% year-on-year in September to $145bn, but the pace of growth was slower than the 34.4% growth seen in August.

Imports rose 24.1% year-on-year to a record high of $128.1bn, compared with August's growth of 35.2%.

by Nomad on Wed Oct 13th, 2010 at 03:53:27 PM EST
[ Parent ]
... narrowed?

Exports rose 25.1% year-on-year
Imports rose 24.1% year-on-year

Mind-boggling numbers eh?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Thu Oct 14th, 2010 at 04:38:13 AM EST
[ Parent ]
Yes; bindmoggling.

So, essentially, the unstated lead should have been, prices to the consumer are a lot lower because China hasn't revalued as fast as the criminal financiers want them to. (Because, China has been revaluing for the last couple years...just not as drastically as 'they' want.)

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Thu Oct 14th, 2010 at 07:21:12 AM EST
[ Parent ]
Fed Mulls Raising Inflation Expectations to Boost Economy - Bloomberg

Federal Reserve policy makers may want Americans to expect inflation to accelerate in the future so they spend more of their money now.

Central bankers, seeking ways to boost flagging growth after lowering interest rates almost to zero and buying $1.7 trillion of securities, are weighing strategies for raising inflation expectations as well as expanding the balance sheet by purchasing Treasuries, according to minutes of the Fed's Sept. 21 meeting released yesterday.

Some Fed officials are concerned that expectations of lower inflation will become self-fulfilling, damping demand by increasing borrowing costs in real terms, the minutes said. By encouraging Americans to believe prices will start rising at a faster pace, the Fed would reduce inflation-adjusted interest rates and stimulate the economy. Chairman Ben S. Bernanke said in 2003 that Japan could beat deflation by using a "publicly announced, gradually rising price-level target."

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Oct 13th, 2010 at 04:02:21 PM EST
[ Parent ]
FT.com / Columnists / Martin Wolf - Why America is going to win the global currency battle

The cries of pain now heard around the world, as markets push currencies up against the dollar, partly reflect the uneven impact of US policy. Still more, they reflect the stubborn unwillingness to accept the needed changes, with each capital recipient trying to deflect the unwanted adjustment elsewhere.

To put it crudely, the US wants to inflate the rest of the world, while the latter is trying to deflate the US. The US must win, since it has infinite ammunition: there is no limit to the dollars the Federal Reserve can create. What needs to be discussed is the terms of the world's surrender: the needed changes in nominal exchange rates and domestic policies around the world.

If you wish to understand how aggressive US policy might become, read a recent speech by William Dudley, president of the Federal Reserve Bank of New York. He notes that "in recent quarters the pace of growth has been disappointing even relative to our modest expectations at the start of the year". Behind this lies deleveraging by US households, in particular. So what can monetary policy do about it? His answer is that "very low interest rates can help smooth the adjustment process by supporting asset valuations, including making housing more affordable and by allowing some borrowers to reduce debt interest payments. Beyond this ... to the extent that monetary policy can `cut off the tail' of the distribution of potential adverse economic outcomes ... it can help encourage those households and businesses with money to spend to do so".

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Oct 13th, 2010 at 04:06:10 PM EST
[ Parent ]
Funny how when the euro was going down it was the eurozone collapsing, and when the dollar is going down it's the US winning the currency wars...

Wind power
by Jerome a Paris (etg@eurotrib.com) on Thu Oct 14th, 2010 at 03:28:47 AM EST
[ Parent ]
By encouraging Americans to believe prices will start rising at a faster pace, the Fed would reduce inflation-adjusted interest rates and stimulate the economy.

Wait - what? Inflation goes up, real purchasing power decreases, people borrow more from bankrupt banks that aren't lending to make up the gap, the economy grows?

Is this a plan or a comedy sketch?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Oct 14th, 2010 at 08:10:20 AM EST
[ Parent ]
Stagflation as a strategy for recovery!

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Thu Oct 14th, 2010 at 08:11:44 AM EST
[ Parent ]
Well, "everyone" was clamoring for the Fed "to do something"! But the lurking danger is that if they go too far in promoting "currency revulsion" as a way to get people to spend they could end up getting hyperinflation. That would solve the debt problem.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 14th, 2010 at 09:52:07 AM EST
[ Parent ]
Hyperinflation? No, I don't think so.

BruceMcF:

A structural imbalance of the external accounts is part of the story in all the hyperinflationary episodes that I can bring to mind, with notable examples from the Confederate States of America in the 1860's through the Wiemar Republic, through Brazil in the 1970's, through Argentina at the turn of this century.
Unless the US' trade deficit is a structural imbalance large enough to trigger hyperinflation. If the US dollar collapsed, would the US stop importing, or would it continue to inflate its currency in a futile attempt to import more than it can possibly?

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Thu Oct 14th, 2010 at 10:08:05 AM EST
[ Parent ]
The US has a major domestic economic crisis in that the entire finance industry is built on foundations of mortgage debt and property laws that are just about to get pulled out from under and the whole edifice may come crashing down.

I don't think we can predict what the US finance industry will look like at the end (although I'd be willing to bet Goldman sachs do well) but I really doubt they're gonna be in any position to protect the dollar at the end of it.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Thu Oct 14th, 2010 at 10:34:02 AM EST
[ Parent ]
The "lurking danger" to which I alluded is largely that of the Fed going overboard with QE directed overseas. I can see that such a development could lead to a revulsion for the US$ by other countries, but I doubt that it would. But sometimes plans go astray.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 14th, 2010 at 11:50:55 AM EST
[ Parent ]
Were oil to go back well over $100/bl., were China to retaliate for newly imposed import restrictions on their goods by dumping US$ reserves and were the Fed to persist in an externally directed QE strategy things might get out of hand. I don't think it is wise to totally discount such a possibility, especially if you want to guard against it.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Oct 14th, 2010 at 11:55:54 AM EST
[ Parent ]
oil would go to, say, $120 fairly mechanically. China would be forced to re-evaluate against the $, the American way of life would be very negotiable indeed... a real Marshall plan for alternative energy...

Where's the downside?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Fri Oct 15th, 2010 at 04:21:10 AM EST
[ Parent ]
"Where's the downside?" -- likely will depend on where you live. In the USA the downside would be the consequences of allowing the existing financial sector to continue to squeeze the life out of the rest of the economy while we attempt to transition to a more sustainable energy regime. And German industry, especially, would not be too happy with the super strong euro, though no doubt many unemployed Germans would take great pride in its strength. So you might well see the ECB engaging in massive "easing" of its own. Hello competitive devaluations.  

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Oct 15th, 2010 at 02:01:26 PM EST
[ Parent ]
Why would such a large swaps market be a possible exemption from FinReg?:

The traded foreign exchange market is the big enchilada. It is the largest financial market in the world. The Bank for International Settlements estimates that the daily turnover in this market, including swaps, futures and spot purchases, is $4 trillion as of April 2010. This turnover increased more than 20% in the last 3 years. Trading is concentrated in London, accounting for 36.7%, while the New York share of the market is around 18%.

Since FX swaps and forwards are based on currency values, it is very easy to embed other financial transactions in a dealtransaction that involves exchange rates on its face. For instance, a loan can be the primary purpose for a swap of currency values. The danger in such obfuscation is illustrated by the foreign exchange transactions between the Greek government and Goldman Sachs, which disguised the debt burden of Greece and triggered a crisis.

In the Dodd-Frank Act, clearing (if available) is mandated for most derivatives, with "end user" hedging transactions carved out. But a second carve out, for FX swaps and forwards, is permitted if the Treasury orders it. There is significant concern among progressives monitoring the implementation of Dodd-Frank that the Secretary will soon exempt FX instruments from the clearing mandate.



"Beware of the man who does not talk, and the dog that does not bark." Cheyenne
by maracatu on Thu Oct 14th, 2010 at 05:47:43 AM EST
[ Parent ]

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